Karma after pivoting: Meet the founder fighting food waste in Sweden and beyond
Karma took off when Elsa Bernadotte and her cofounders realized the problem they were meant to solve was food waste. There was a huge market for tackling food waste, but no one was trying to solve it at scale, she told Startup Guide.
Founded in Stockholm in 2016, Karma is a marketplace that enables restaurants and grocery stores to reduce food waste by selling unsold food at a discount direct to consumers.
Sellers are able to generate revenue from food that would otherwise go to waste, reach new customers and reduce their environmental impact, while users get delicious food at half-price or lower.
We feel the most purpose when we connect with a process or product that makes a difference in people’s lives.
A notable achievement for the company includes raising $12 million in Series A funding in August 2018. Early last year, Elsa was also included in the Forbes 30 under 30 list of social entrepreneurs.
Karma is moreover increasingly being recognized as an attractive place to work for fresh graduates. It was also named one of Europe’s hottest companies at the ongoing 2019 Next Web conference for its social impact and company traction.
Today, Karma operates in 150 cities across Sweden, in London and in Paris. It has saved 295 tonnes of food to date.
Tell us a little bit about the early days when you founded Karma.
Karma is actually my second venture. Prior to Karma, I founded Pop Fruits, a healthy ice cream alternative made of frozen fruit on sticks where I spearheaded operations in four different geographical markets.
This included the business development, setting up production in southern Vietnam and the sales and marketing operations. I eventually sold the company and soon thereafter founded Karma together with my current cofounders Hjalmar, Ludvig and Mattis.
Initially, we started the company as a platform where users could upload deals they uncovered for a range of different products and share them with an online community. This data was helpful to both retailers who wanted to make better offerings and to consumers who were seeking better deals.
When we launched the early versions of the platform, however, our users didn’t behave as we’d anticipated, and that’s what eventually led to our pivot in 2016.
Was it difficult to make this pivot?
It really was a learning process, and a necessary one for doing the work we do now. Nine months in, people loved uploading discounts for everything to the platform – food, clothing, movies, all of it was being shared – and we were gaining huge amounts of crowd-sourced data on products and deals. This was where the difficulties started.
When we discovered a massive number of restaurants were trying to find customers for excess food, we realized the problem we were meant to solve.
The target groups varied wildly, and we were struggling to keep the offerings niched and relevant enough to attract the same target audience. We had to face the hard fact that we’d have to consolidate our efforts in order to remain effective at what we were doing, so we started looking at which data sets had the most value and where we had the most traction.
What we discovered was a massive number of restaurants trying to find customers for excess food. It was then that we realized the problem we were meant to solve: food waste. There was a huge market, and no one was trying to solve it at scale.
From further research, we also found that global food waste amounts to a staggering total cost of a trillion dollars per year.
What was your biggest mistake during this founding period where you were figuring out and implementing your new approach?
To be honest, we made many mistakes in the early days, especially in the first few months; but for each mistake made, a new opportunity was understood.
For example, we didn’t embrace MVP-thinking as much as we could have. Instead, we tried to build something that would scale and attract a mass market from day one, which ultimately slowed us down.
We also didn’t stress-test our theories enough or work with an end user – but now we do. Through working very hard and making many, many mistakes, we’ve learned to get into the habit of speed in all that we do, to test and measure literally everything, and to become super customer-obsessed.
In our view, it’s best to strive for perfection. Even if we don’t reach it 100 percent, we’re most effective as a company when there’s an ideal scenario to envision and aim for.
What advice would you give to other professionals?
The best things I can suggest are to always start sooner, since there’s always more work to be done than anyone expects, and everything takes a little bit longer than imagined. Also, test everything.
Building products alongside the people and businesses you’re trying to serve makes things much better later on when you’re working at scale. It’s always better to solve a problem earlier rather than later.
Next, test things quickly. Though it’s important to be methodical, at the end of the day, an MVP mindset is key. No amount of thoughtful research and testing is of any use if it takes too much time to help your business face its current challenges.
We’ve learned to get into the habit of speed in all that we do, to test and measure literally everything.
By having an MVP mindset in everything you do, you’re constantly focusing on the most important sources of value that you offer and can deliver on. Lastly, when it comes to your own capabilities, don’t underestimate yourself or overestimate others.
Testing things early and often has become a thing of major importance to us, from our product to our internal processes. We focus a lot more now on doing things that don’t scale, in order to learn what should and shouldn’t be built at scale.
All of our changes have taught me to embrace change as part of a learning process and not to compromise on working with something that I truly love – something that is solving a real problem. All of us here love being entrepreneurs, and we feel the most purpose when we connect with a process or product that makes a difference in people’s lives.
In addition to what you like about your work, what do you like about working in your city?
I truly love it here. Stockholm has a great ecosystem for startups, especially tech startups. We have a lot of great access to incubators and coworking spaces, as well as lots of tech-savvy, curious and highly educated people who want to test new things.
The city is also very central and has a lot of events and networks for finding new hires and investors. We have active role models and investors who you can definitely meet if you have the ability to fight a little bit for it.
Many people make themselves available to offer advice, offer “dos and don’ts,” and will bring you into the networks of their peers. This makes Stockholm accessible as both a business cluster and more generally as a community.
Financially, there’s also a lot of local capital from successful entrepreneurs and investors for those who need funding. I’m also a big fan of many of the local podcasts.
I guess I would say that it’s not just one thing that makes Stockholm a great city, but a combination of things that drive this ecosystem and make it stronger each year. For me, it’s been a huge change over the last five years when I started off – a good change.
[ Read also: This urban farmer in Lisbon is turning waste into produce ]
Main photo by Startup Guide