How we achieved a return of 8,990,900% on £100

The story of Machine Labs is very linked to the story of Diet Chef. Diet Chef is an e-commerce business founded just over 10 years ago by Kevin Dorren (chairman of Machine Labs) and me (the CEO). We were later joined by Ben Ledbury who sorted out our technical systems who is now the CTO at Machine Labs.

From a total equity investment of £100 ($130), shown above, we incorporated the company in 2007 and went on to achieve sales of £15 million ($20 million) with no further equity investment. In our first three years of trading we achieved a return on equity of 8,990,900% and were #3 in the Fast Track 500 of the fastest growing companies in the UK in any sector.

I was the Marketing Director at Diet Chef and used the company as a test bed for some of my ideas. I then put together a 20-hour marketing course which was mainly designed so that I could train some young people to do my job so that I could spend less time in the office. We’ll be updating that course and publishing it over in the Marketing Training section of the website.

(I’m planning to do this really cool green screen thing so that a video of me will be superimposed on the slides as they are presented. Kevin thinks this is a dumb idea. Let’s see who’s proven right.)

Machine Labs is developing the software that I wished I’d had at the time. I knew what the problems were but I didn’t have a very good solution. There have also been huge developments in machine learning, software frameworks and of course AWS which makes so many of the things that were so hard 10 years ago very easy.

But at a high level the things we did were:

  1. Developed a product customers loved at a lower price than any of our competitors.
  2. Recruited customers with a Cost per Acquired Customer (CAC) less than Average Order Value (AOV).
  3. Created a negative working capital requirement by buying on circa 60 days terms but receiving payment from our customers on an N+1 basis (one working day from purchase).
  4. Bought marketing on 30-60 days with payback before the invoices were due.
  5. Put together some high quality operational systems which coped with sales growth averaging 238% per year.

We tried giving this framework to two very talented entrepreneurs who are behind Parsley Box and were delighted to see that they have achieved even faster sales growth than we did.

At Machine Labs we won’t be able to help you with the first and last items on the list above but if you manage these then we can help you create an outstanding e-commerce business.

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