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Why you shouldn't invest in Parsnip 📈
and why we believe in our mission more than ever
Fundraising for a startup involves pitching a lot. It also involves hearing a lot of similar feedback. This post is a compilation of the most common objections to Parsnip.
When starting any venture, it’s important to choose the right problem to work on. Josh Kopelman calls this the pick and claims it accounts for over 50% of a startup’s success or failure. You don’t want to “rush the pick” and spend several years of your life on a dead end, so we always had a healthy dose of doubt in our early explorations.
With accumulating evidence over time, however, we’ve built stronger conviction than ever that Parsnip is on the right path. So while we understand these objections, we also understand the problem we’re working on so well that we believe in our approach far more than when we started.
If you’re following along with us, we don’t want you to “outsource your conviction”. We want to share our learnings transparently so that you can see what we see!
If you haven’t read our pitch yet, it may be helpful to do that first. Here are the three categories of common objections to Parsnip:
Your retention isn’t good enough yet—it’s unclear if people like Parsnip
Venture-funded content is hard to monetize
The market for this is small—people actually don’t care about learning to cook
Below, we steel maneach of these arguments and share evidence we’ve seen that they may not be true.
1. Your retention isn’t good enough
Retention, retention, retention. It’s probably 80% of what any consumer VC cares about, and for good reason:
A good product might not have good retention, but a bad product definitely won’t have it. So looking at retention is a foolproof way to filter out bad products.
Acquiring users takes money and/or effort (CAC), so low retention is a “leaky sieve” where those resources are wasted.
If you’re not making money already, retention is the most reliable predictor of being able to monetize (your users) in the future.
While we’ve recently devoted more time to improving retention, our existential challenge for most of this year was to create a product that users love. That meant de-risking something much harder: whether we could actually teach people to cook through a fun, engaging app. This is actually the third product we’ve built, but this time we know it’s working because we get spontaneous love notes from users constantly. Here’s a large compilation of them, with one example below:
Last week we shared Parsnip’s Thanksgiving dishes on r/cookingforbeginners. The post went viral in the subreddit, as have all the other posts about Parsnip or “Duolingo for cooking” (receipts: 1, 2, 3, 4, 5, 6, 7). That’s an 8 for 8, 100% virality hit rate. We also hit #1 on Hacker News for 8 hours. So far this year, we’ve gotten over 15,000 downloads of Parsnip while spending $665 on marketing materials. That’s a CAC of less than $0.05—so while the sieve may still be leaky, it’s not costing us much.
This product love should translate into retention, and it does. Over the last 4 months, we’ve increased the important metric of day 1 retention from ~10% to over 20%. This isn’t the result of luck, but a disciplined, data-driven product process, and that number just keeps going up.
For longer-term retention, the number of levels in the app is a blocker for us: users become dormant when they run out of things to learn. But, they’re eager to return when Parsnip has more to offer. The effect of our recent Thanksgiving content push on weekly retention numbers provides the best evidence we have for this: we got over 30% of a cohort that first used Parsnip 3 months ago to re-engage with the app.
And our Thanksgiving content boosted more recent cohorts on newer versions of Parsnip to almost 50% retention even after 5-6 weeks.
So, perhaps one could frame the retention question this way: would you bet that a world-class team that is incredibly passionate about our mission can turn this product love into sustained daily retention, especially with two profitable high-retention consumer apps (Duolingo and Down Dog) as angel investors? We think we can!
2. Venture-funded content does not make a business
Some investors have seen the ability of food-related apps to attract and retain users, and have even invested in them before. That’s where they got burned, and believe that even with good retention, capital-intensive content is hard to build a business around.
The are two versions of this argument:
Recipe apps are an undifferentiated business model that either requires appropriating others’ content (legally dubious), or laboriously creating your own content (very costly).
Other apps use venture capital to essentially create a verticalized YouTube/TikTok/MasterClass just for cooking. This is also hard to differentiate, and shooting good video is expensive (and the media industry does it better!)
We agree with both of these points. The difference is that Parsnip’s goal is not to create content, but a platform. The fundamental insight behind this approach is our underlying tech tree, which creates a creates a sticky game-like experience for a real-world skill. The tech tree is also a scaffold that contextualizes millions of recipes in the world without having to create them ourselves, but also doesn’t involve unethically using others’ content.
For more about how the tech tree works, see this memo:
3. Most people don’t care about learning to cook
Some investors see our product love and a path to monetization, but still aren’t sure if Parsnip can create venture-scale returns. To summarize this objection: even if Parsnip has strong retention, and is able to monetize, it won't matter because the market is too small. If the market for Parsnip is small, it doesn’t make sense to build it with venture capital. Variants of this concern about market risk include:
People are ultimately lazy and don’t want to cook
Cooking is like sewing — it's an obsolete skill in the modern world
Learning to cook is a recreational, nice-to-have skill with a niche market. People don’t pay much to level up on recreational skills, especially in a recession (which we may be approaching).
If this were true, it would be a serious risk for us—we’ll have spent several years of our life working on a dead end. But what we’ve seen is that learning to cook is a hair-on-fire problem that’s only growing. Posts like these epitomize the pain that our users are trying to solve:
Systemically, cooking is a core life skill that we used to learn from our families and our schools — but neither of those teach us anymore. At the same time, millennials and Gen Zs care deeply about the quality of food they eat and its impact on the planet, and want to make food themselves. r/cookingforbeginners has grown from 350k members in mid-2021 to 1.1 million today, tripling in size in just over a year. This is the wave Parsnip is riding, and it’s a big one:
What about cooking being just a recreational, nice-to-have skill, for which demand declines in a recession? One big difference between cooking and most other recreational skills is that you eat 3 times a day, and all other ways to eat cost more. The closest recent proxy we've had to a recessionary environment was the first year of COVID, and cooking habits skyrocketed during the pandemic.
If “software is eating the world”, however, there’s something peculiar about the cooking market. Even though the TAM is massive, no one’s managed to create a clear winner yet—like Spotify for music, or AirBnB for lodging.
But this also means the potential for a massively convex outcome if our tech tree approach to personalizing learning to cook and meal planning works. These wizards of Silicon Valley said it best:
“Being ‘right’ doesn’t lead to superior performance if the consensus forecast is also right." — Bill Gurley
”At a startup or early-stage project, the only massive early-stage projects are where you’re contrarian and right.” — Reid Hoffman
Thanks for reading Friends of Parsnip! Please follow our journey to get the world cooking.