For much of 2020, Vicente Zavarce has been running Yummy, the delivery app he founded last year in Venezuela, from San Francisco. When the coronavirus pandemic hit, Venezuela shut its borders, leaving him stranded thousands of miles away from his Caracas-based team. Zavarce, who previously worked at Postmates, started Yummy in the hopes of bringing a similar delivery app model to his home country — a market most investors and tech companies have been unwilling to touch.
Thanks to vast oil reserves, Venezuela was among the richest countries in Latin America. But in 2014, as oil prices fell, the country’s economy began collapsing. President Nicolás Maduro cracked down on the civil unrest that followed, leading the United States and other countries to impose sanctions on Venezuela. In September, the Trump administration levied a new round of penalties on the country, accusing the government of depriving citizens of “free and fair elections.” The International Monetary Fund estimates that the country’s GDP will drop by 25% this year and that inflation will remain at its breathtaking high of 6,500%. Since 2015, around 5 million Venezuelans have fled the country, and of those who remain, nearly 65% live in poverty.
Zavarce says those circumstances didn’t deter him from starting a company in the country where he grew up. His gamble on Venezuela, one of the last untouched markets for delivery and e-commerce in the region, paid off. Yummy raised $450,000 from investors and now employs 50 people. The platform has more than 250 delivery drivers, and more than 200 merchants have signed up. In October, just six months after it formally launched, Yummy was acquired by the Central American super-app Hugo.
In October, Rest of World spoke with Zavarce about how he built Yummy. The following interview has been edited and condensed for clarity.
Venezuela is a market other tech companies have avoided. Can you talk about why you started Yummy in what you knew would be a really difficult environment?
Everyone — my friends from [delivery app] Rappi, my friends from Uber Eats, my friends from Postmates — told me I was insane, but they supported me.
I am from Venezuela. I grew up in the streets of Caracas until I was 18 and then went to college in the U.S. Regardless of being abroad, my heart is still Venezuelan. At Postmates, I was in charge of user acquisitions, and I helped lead our expansion into Mexico City, where we were not the biggest player. I faced challenges that I overcame, and it gave me great experience. At a certain point, it felt almost irresponsible not to use my experience to start something in my home country.
We started working on Yummy in October 2019. We thought it was ridiculous that this kind of thing didn’t exist in Venezuela. I knew there was a market because there was already a lot of restaurant e-commerce happening on WhatsApp and Instagram. People would message a restaurant on Instagram to get its WhatsApp number, and then they would call them and have a ten-minute conversation just to place a delivery order. It was happening in this very hacky way because there wasn’t a platform to aggregate the restaurants and provide a fleet of drivers.
Knowing that Yummy was really the first service of its kind in Venezuela, what things did you have to think about that you wouldn’t have to at a company like Uber Eats or Postmates?
We really had to teach drivers about the service. In the U.S., people know what Uber Eats is, and if you want to work for them, you can just download the app. Because we were starting from scratch, we created a three-day training course for applicants to get certified as Yummy drivers. We cover things like how to interact with restaurants and customers and how to properly store food. A lot of our customers pay in cash, and we don’t want our drivers becoming targets for robbery. Once a driver collects a certain amount of cash, they’re instructed to go to one of Yummy’s offices to drop it off.
Connectivity is also a huge issue. To ensure some of the restaurants we worked with had consistent Wi-Fi, we actually had to buy them hotspots, which they paid us back for in installments. When we were designing the app, we were very conscious about its size, to be sure that images and menus could load without eating up too much data. Because cell signals can be unreliable in urban areas, we also acquired a company called Dingo. It built a way for people to place and receive orders over WhatsApp using a chatbot; you don’t need the fanciest phone to order from Yummy. So you can order in the app itself or over WhatsApp.
Were investors worried about supporting a company working in Venezuela?
If I were to start a business in the U.S., as someone with experience, a strong team, and a good idea, I probably would have raised money before launching. That wasn’t the case for us because no one really believed that we would succeed, at least not enough to dip into their own pockets to support us.
Whenever we would talk to investors, the conversation would go something like: There’s no competition there. You have the advantage of being first. Your team is fantastic. You have experience with a larger food-delivery company — but Venezuela is very risky.
We launched with our own money and by raising capital from family and friends. Once we had three months of results that showed hypergrowth, then I could approach investors with a different story. We grew at a rate that made us one of the fastest-growing food-delivery apps in history. That was attractive to investors, despite the risks of the Venezuelan market.
How did you take into consideration wealth inequality in Venezuela when you thought about who your ideal customers would be?
At the beginning, we were more of a luxury service. We had to think strategically because we wanted to capture wealthy individuals first. When we started, we didn’t have any funding, so the service wasn’t cheap. In cities, the wealth divide is really geographical, and the wealthier neighborhoods were also safer for our drivers.
But our goal was always to make Yummy cheaper once we had funding, and that’s essentially what we did. Now, we’re focused on having options for everyone. For instance, you can order from McDonald’s now. There’s much more diversity in the neighborhoods where we’re receiving orders from — it’s definitely no longer relegated to only the wealthy communities.
The pandemic has been a boon to a lot of delivery apps globally. Did that hold true for Yummy?
I’d say that, overall, we netted zero, between the positives and negatives. All the high schools and universities are closed in Venezuela, which are historically hot zip codes for food delivery no matter where you are in the world. Offices are also closed, which is another big user base. Venezuela has a huge party scene — clubs stay open until 6 in the morning. Late-night food and drinks were a big portion of our business model, and then suddenly all of that was gone.
We started focusing more on breakfast orders and also delivering from supermarkets. We also tweaked the app so that you can get food from multiple restaurants in the same order. Parents can order sushi, and kids can get pizza.
On the positive side, it really drove merchant adoption. When the pandemic started, the government mandated that restaurants operate with only pickup or delivery. So that gave us the opportunity to introduce this business model right on time. We approached restaurants and convinced them to open “dark” kitchens [restaurants optimized for delivery with no front-of-house service] and sell through us. Some restaurants ended up making essentially what they were making before the pandemic.
Are you worried about competition?
We knew that if we proved this could be done, a big company might move into the country within 10 months. We have continued trying to quickly expand. One way we’ve guarded against competition is by having about 50% of the restaurants we work with sign exclusivity agreements. That’s also part of why we began expanding to grocery-store delivery and delivery from other kinds of shops, and it’s why we want to go beyond food. We want to be the app where people go for everything.
You’ve just been acquired by the El Salvadoran app Hugo, only six months into Yummy’s operation. How is that changing the company’s future?
We really felt that the team at Hugo, which is a super-app expanding throughout the Caribbean, really understood our vision. They started out in their home country, El Salvador, which is also a risky market. They had some of the same challenges we did. They really understood underserved economies, connectivity issues, the culture; what they built is oriented around what we were trying to build. We can use their technology and really focus on growth.
In Caracas, there are maybe 500 restaurants you would want to order from, whereas, in New York City, there are thousands. If you focus on only one vertical — like food delivery — there’s a limit there that might not exist in the U.S. Once we raised a seed round from AngelList, we decided we were going to expand and become a super-app. In a smaller economy where there is no e-commerce, we have the opportunity to become a one-stop shop for our customers.
As part of the deal, we will be staying on for at least the next four years and continuing to build the company. That was really important for Hugo and us.