“We were burning the cash. Everything that was in our pockets, we were burning,” says Vincent Thuilot, who helped start the French unit of HelloFresh. When HelloFresh France struggled and was shut down later in the year (unionized truckers increased shipping costs, and many of the customers quit during August, when much of the nation goes on vacation), Thuilot was named HelloFresh’s head of business intelligence.
It was during that time, he says, he got the sense Richter and Griesel didn’t want to share bad news with Samwer or other investors for fear they might be cut off. “I was polishing the numbers for them, so I know what we were doing,” says Thuilot. “From an ethical point of view, it was very–we were on the edge. Anything that was not looking good, we were not communicating it. If we talked about the number of issues we had with boxes”–like those arriving with spoiled food–“I don’t think they would have invested much further.” Other times, they’d cherry-pick figures to share, according to Thuilot, who didn’t deal directly with investors. “It’s not that we were manipulating or 
tampering with the data. It was just ‘This week was bad–so I’ll take the average of the last 12 months.’ ” (Richter says this is a mischaracterization, by an ex-employee, of how the company reported to investors. “We have always been transparent and consistent with investors with respect to surfacing issues and sharing our financials,” he says.)
By the end of 2012, the global operation of HelloFresh had posted considerable progress–signing up enough customers to generate some $3 million in revenue. However, it was nowhere near the $5 million to $10 million Samwer liked to see from his first-year companies, says Jonas Larsson, Rocket’s former CFO. “I didn’t think HelloFresh was going to survive for a while,” he says. “Even Oli [Samwer] thought: We’re done; we’re not going to support it.”
“This Spanish-style powdered red pepper is proof that where there’s smoke, there’s flavor.”–From “Smoky Stuffed Mushrooms With Tomato Quinoa and Cheesey Breadcrumbs,” HelloFresh recipe WK 12 NJ-10
By 2014, Richter and Griesel were trapped between their investors’ ambitious expectations and the meager economics of meal kits. Shipping fresh groceries was expensive, requiring refrigerated warehouses, hundreds of laborers to pack boxes, and insulated containers. From 2012 until 2014, the company’s cost of goods and fulfillment expenses made up 81 percent of annual revenue, leaving little behind to cover overhead or other costs.
They had to prove there was demand for meal kits–that HelloFresh was primed for the kind of wildfire growth venture capitalists loved
Then there was the price tag for finding customers. The spawning of the meal-kit category was fueled, in large part, by VCs rushing to bring subscriptions to all kinds of product categories. It began with software, but soon there were shoes (ShoeDazzle), cosmetics (Birchbox), dog toys (BarkBox)–the list went on. Investors liked subscriptions because they appeared predictive: They could input certain assumptions–customer acquisition costs, margins, the number of subscribers who would likely quit over time–and then model their return on investment. Within this framework, all marketing expenses, from social media ads to direct mail to salespeople stalking people on street corners, were the price of buying customers. And in its first three years of business, HelloFresh went on a customer shopping spree–$2.3 million, and then $5.9 million, and then $30 million on marketing–more than a third of its revenue each year.
Richter and Griesel decided to go for broke, pouring their remaining funds into growth marketing
Now the company was running out of cash, and its three biggest investors, including Rocket, were unwilling to pony up more money. In 2014, HelloFresh’s next two largest investors, Holtzbrinck and Kinnevik, bailed on the company, trading and selling their shares. Then, with months of runway remaining, they flew to America to woo new investors.