Two Founders, One Name: How Modern Milkman Merged With a Connecticut Dairy Farm

The Blue Planet Spark

Anthony Codispoti (00:00)

Welcome to another edition of the Inspired Stories Podcast, where leaders share their experiences so we can learn from their successes and be inspired by how they've overcome adversity. As you listen today, let one idea shape what you do next. My name is Anthony Codispoti, and today's guest took a delivery model most people assumed had disappeared decades ago and turned it into a tech platform now serving more than 100,000 households.

The idea came together after watching a documentary about ocean plastic, and the service now delivers groceries and returnable glass bottles and reusable containers instead of single-use plastic. He grew up around farming, founded an e-comm butcher shop with his brother, and spent years running a wholesale food supply company before starting over in 2018. Since then, the business has expanded from the UK into the United States.

And added a service collecting unwanted electronics and toys alongside grocery deliveries. His name is Simon Mellin, founder and CEO of Modern Milkman, a sustainable doorstep delivery company that sources groceries from local and independent suppliers and replaces single-use plastic with reusable packaging. The company has raised more than 60 million British pounds in funding, including a recent 10 million pound growth round led by Salica Investment.

But before we get into all that good stuff, today's episode is brought to you by my company, AddBack Benefits Agency. And you'll want to hear this because it's hurting

Simon (01:30)

Thank

Anthony Codispoti (01:31)

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Imagine what could be done with the extra cash flow. Get your free consultation today at AddBackBenefits.com. All right, back to our guest today, the CEO of Modern Milkman, Simon Mellin. Thanks for making the time to share your story today.

Simon (02:35)

Thanks for having me, Anthony.

Anthony Codispoti (02:37)

So Simon, I understand that the idea behind Modern Milkman came about as you were watching the popular uh documentary it was at years ago called Blue Planet. Tell me more about that.

Simon (02:50)

Yeah, that's correct. That was a big part of the starting journey. David Attenborough is quite a hero in our business and I think Blue Planet really did change the outlook, especially on Singularity's plastic for many people. There was quite an amalgamation of thoughts what came into the beginning of Modern Milkman. So, you know, I'd very much, as you mentioned, grown up in food and farming and I've watched the industry of food and I suppose, you know, a lot of retail evolve over the last 30 years.

and recognize that we've got to a point now where we wrap food in plastic so that we can lengthen supply chains and make big box retailers work in the way they do today. But if you rewind 30 years, most consumers would go to their local shop, whether it be your butcher, your greengrocer, your baker, and you'd buy little and often baskets of food to fulfill what you needed to eat at home for the next two, three days. And I suppose that was an opportunity that I saw to fix.

And I suppose Blue Planet was a big epiphany really to show the impact that plastic was having and the opportunity there were to solve that.

Anthony Codispoti (03:54)

And so what did you do with the idea then? Like what were the first steps you took?

Simon (03:59)

I started rooting around for things that had existed before. A big part of my career was as an engineer. spent six or seven years building racing cars and traveling the world doing that. And so I suppose the engineering me wanted to find a solution. as I went looking around, we stumbled across the milk route. And we found that this industry that existed in both the UK and the US.

It served around 85 % of the UK population in the 60s, 70s, around 40 % of the American population in the same era. And I suppose I question why it died away. It was an industry that was so far ahead of its time. It delivered fresh groceries in returnable packaging on a subscribed basis to homes. You what happened? And so we went and bought the Walk On Milk Round and that was the start of it all.

Buying the Old Milk Round

Anthony Codispoti (04:51)

So what was the state of that company when you bought it?

Simon (04:55)

It was literally an old truck, a hundred customers and a little black book and every page in this little black book was a customer. know and he would say what that customer wanted each day, how much they owed and there was probably more debt than revenue at that point and it took me three weeks to learn this this note route so you know would get up every morning at 3am I'd go out with the guy that owned the route at that point and I'd drive it with him and literally this whole route was in this guy's head.

There was no routing, no software, no nothing sporty. was literally complete analog uh business.

Anthony Codispoti (05:33)

And so what are you doing as an engineer? Are you like mapping each of the stops and putting it in a spreadsheet and then making a Google map with it?

Simon (05:41)

I'm literally thinking this is absolutely crazy. How has this business ever worked?

Anthony Codispoti (05:47)

And did you feel prepared to buy a business at that stage in your life, or was this really kind of jumping out into the wilderness for you?

Simon (05:56)

I'm a big believer in just getting stuck in and trying. I've never been somebody that learns from textbooks. I've always been somebody that learns from doing. And so for me, that was the most relevant first step to understanding the problem and trying to fix it.

Anthony Codispoti (06:12)

Okay, so you step in, um, you're learning this analog system, and how are you, once you get your arms kind of around what it is in that present moment, what are your next steps to grow it, to start turning the dials, to start putting technology in? I want you to walk us through this process.

Simon (06:31)

Yeah, absolutely. So as mentioned, we bought this milk round. We spent three weeks learning this milk round and literally understanding how to deliver it. And then the next step for that was we wanted to start understanding demand and testing that. So we started just using simple ads in Facebook and we sat behind chat messages of, you know, inbound content of people wanting to use the service. And so we were trying to connect the two things together of one, how do we deliver this service? How do we collect money from customers?

which at that point was all cash. So it was literally people leaving money under the milk bottles or under the doormat.

Anthony Codispoti (07:07)

Really?

Simon (07:08)

Yeah, and one of the biggest challenges in the early days was at the end of the first month of delivering milk, we'd been buying all this product and delivering it to customers. And it's probably the only business in retail that gives credit at this point. So, you know, already we're wondering what's going on. We went to knock the doors of the customers to collect the cash and of the hundred, I'd say 90 went in.

Another 10 that were in five didn't have any cash. So instantly I'm thinking this is a big problem. Like how do we solve this? So we started into like hook together two or three different pieces of SAS to create a simple infrastructure to prove the system. So we had a little billing platform. We had Google sheets for the orders and then Facebook for the content or contact. And we sort of put these three things together and started one.

adding customers onto the billing platform so we could collect money from them. And then two, understanding where we could get new customers from and the cost to acquire those new customers and spend the first three to six months just really understanding like the economics of how we could make this work. But I think what was most surprising for us was the demand was huge. People were really looking for this type of service. There was just no of interacting with it at this point. And that was the idea to go and build a platform to enable us to do it.

Anthony Codispoti (08:24)

What do you think appealed most to people about the service? Was it that they didn't have to go to the store? Was it that it was you know, you know, not had the disposable uh one time use packaging? Was it something else?

Simon (08:39)

think it means different things to different people. So the two biggest strengths from a consumer perspective of what we're building is one, convenience. And it's not just convenient around, you know, it's on your doorstep in the morning ready for when you get up. It's also like the access to local suppliers and the ease of using returnable packaging. So there's a lot of emotion in our service. And I'd say the biggest emotion is pride. People are very proud of using this type of service.

And I think they're the things that we're trying to capture and we've been trying to build on since the beginning.

Anthony Codispoti (09:11)

So when you guys were running these ads, what was the the hook? What was the thing that really brought people in?

Simon (09:19)

A lot of nostalgia. So, you know, everybody talks about glass bottles. Everybody talks about things tasting better out of glass bottles. You know, there's a reason why we put things like wine and beer in glass. know, milk is no different. But then the other side of it is just again, that emotional connection, you know, the nostalgic feel of glass, you know, the old fashioned milk round, what that stands for, how it's part of the community. All these things are really hooks for the customer. I'd say the other big thing that we've

And we sort of stumbled across this, what we're realizing is people understand this service. So there's no such thing as an early adopter. You're not trying to explain what this thing is. People get it. And that's, makes acquiring a customer and bringing them into the business much simpler than it would have been if we were having to, you know, try and articulate what, this is.

Anthony Codispoti (10:08)

How does weather play a factor in this? Right? If it's really cold, you're setting milk out on the the doorstep, maybe it gets frozen if it's really hot, maybe it's spoiling before they get to it? Or am I overthinking this?

Simon (10:20)

That's all, no it's a huge factor. So I think obviously we began in the UK, the UK doesn't have the same weather as the US, know, it's much grayer, it rains most of the time. So we didn't have the same challenges in the UK as we've had in the US. But yeah, heat's definitely a thing, know, through summer we do have to prepare a lot more. We have to think about the delivery windows, we ice the product on the truck. yeah, it does bring its challenges, but it's just a...

a much smaller challenge in the UK than it is in the US.

Anthony Codispoti (10:51)

Mm. And so as you're starting to grow, still in the UK here, at what point are you having to expand your supplier network?

Simon (10:59)

So each depot that we operate from generally carries its own unique suppliers. So in the early days, for the first probably two or three years, we only really operated in the Northwest of England. So we had a small group of suppliers that could help us get these regions up and running. It was at the point where we started moving down South into the Midlands and then into London and surrounding areas. That was the point then where we really started to expand our supplier base and bring in a broader set of regional suppliers that could support.

each area that we operated with them.

Anthony Codispoti (11:31)

Mm. And so you are owning the trucks and you are um hiring the drivers. This is all your infrastructure, the delivery network here.

Simon (11:43)

Yeah, in the early days we did all that ourselves. And then as we started to scale, we recognized actually breaking down some of that infrastructure made sense for quality of service to the customer. And at that point we started to bring in, we sort of looked at Domino's and Amazon. We looked at the benefit that Domino's had as a franchise network and Amazon had delivered as a DSP network, delivery service partner. That would mean that, you know, they'd bring in partners to manage the delivery network. And we sort of mashed those two things together and created what

you know, what we now run in the UK as our delivery network. So, you know, we have four partners across the UK that we work with. They manage the logistics part of our business and make those deliveries to the consumers on our behalf. And given it's a nighttime service, that helped us with resilience and helps us with quality in the network to ensure that, you know, the customer receives the products in the best way.

Anthony Codispoti (12:34)

Is that more beneficial for you because there's fluctuations in that demand? And if there's sort of this DSP type of arrangement, then they can take those slow periods and pick up other kinds of delivery business to supplement their own business.

Simon (12:51)

For us it was more about network resilience. So our deliveries in the UK done through the night. So we generally start around 11 p.m. finish at 7 a.m. If you get to 10 p.m. and you've got drivers that haven't shown up for whatever reason, it's very difficult to backfill that at that point. know, most people are in bed. And so if you then multiply that across the country, you know, we have uh 15 depots in the UK. If you have problems in each depot from a central position, it becomes very difficult to fix.

And therefore by breaking that down, meant the network was more resilient and therefore we didn't fail orders for the customers.

Anthony Codispoti (13:29)

Why is it more resilient though, though? Is it because that they've got the DSP partners, they've got other delivery oriented businesses and so they can pull folks from those other routes that they're running?

Simon (13:42)

think one is ownership. You've got four business owners now in the network that really care about making that work. So there's a high level of uh want to succeed. I think that's a big part of it. And then yeah, your point's correct. And the second point is they've got a network within that region of other drivers. They can pull people in, they can jump on themselves. So there's just a deeper level of resilience that comes from it.

Anthony Codispoti (14:05)

Mm. So as you're starting to get some traction and grow here, what are the things that are really working well and what are the big challenges? You know, you've got the sales and marketing side of it, you've got the distribution component of it, you've got the supplier relationships. Take us through.

Simon (14:22)

Yeah, so think the biggest challenge for us was uh like stabilizing growth. So because it's very operational heavy business, it's really important that you don't have spikes in demand. You that obviously creates challenges both for fulfillment and showing that, you know, you've got enough people to make the deliveries that you've sold, but also from a quality perspective, you know, if you have too many new customers joining all at once, it's really difficult to give them the service that they would expect as a starting customer.

So they were always the things that we were trying to balance and trying to manage on top of that would be density. So a big part of our business is we are both the sales engine and the delivery engine. Whereas a lot of DTC brands would have, you know, a third party managing logistics on their behalf. That means that we have to ensure that we've got enough deliveries within a route to make that route profitable. So, you you're managing multiple different fronts or warrants to ensure that you're building something that generates margin as you're building it.

Anthony Codispoti (15:20)

That's challenging, right? You're going into a new area, right? If you've only got one customer to start with, do you tell them no? I mean you gotta you've gotta start building the foundation somewhere, but that route is not profitable yet.

Simon (15:33)

Yeah, you've got to accept some losses in the early days from building those routes. The challenge is how long do those losses go on for? And that really is a function of how dialed in you can get your marketing channels to ensure that you build density.

Anthony Codispoti (15:47)

Facebook, was this the best marketing channel for you? Any others that you tried and found success with?

Door-to-Door Marketing

Simon (15:53)

The best marketing channels for us have been the real old fashioned ones, surprise, surprise. So one of our main marketing channels, especially in the early days is door to door sales. It's a huge part of our success. The reason is because you can literally knock a street, knock the doors and get customers exactly where you need them. So in the early days, of our network was built.

on door-to-door sales and that's the same in the US as we build out the US. You know, we use door-to-door sales to do the same thing.

Anthony Codispoti (16:25)

Interesting. And what does that door to door sale look like? Are you walking around with a bottle of milk or how are you doing it?

Simon (16:31)

Yeah, we literally, have guys in cow aprons. They'll go knock on doors, they'll talk to customers about the service. And obviously, you know, not everybody signs up, you you might knock a hundred doors in a day, you might get 10 customers. So, but also it's the shared word of mouth. It's the brand presence you create in the area. It's the understanding of the service. And we always get a hail or post those door knocks where, you know, people will trickle through and continue to sign up for weeks after we've been in that area.

Then you see the trucks in the area. Again, the trucks are cow print so you can't miss them. And you just slowly start to build this presence in regions and understanding for the service that we offer.

Anthony Codispoti (17:10)

Uh I mean ten out of a hundred, is that an actual hit rate? 'Cause that's really good for door to door.

Simon (17:17)

It depends on the person on the door, right? So we have good people, we have bad people, but again, back to what the service is, it's a very nostalgic service. It's not like you're knocking the door selling, know, double glazing or broadband or energy. You know, those are all unemotive services where when you knock the door and say, I'm helping the milkman to fill his roundup, you get a very different response.

Anthony Codispoti (17:40)

Yeah. Now I get the nostalgic element, but I have to assume there's a lot of folks whose doors you're knocking on that maybe didn't even know that milk delivery used to be a thing. Am I right?

Simon (17:53)

Yeah, I'm quite surprised by this as well. Even younger generations, whether they've seen it on TikTok or Instagram, the old gloss bottles are a thing, right? And whether

Anthony Codispoti (18:03)

Okay.

Simon (18:04)

you're buying them to use as a vase for some flowers or just to use a returnable jug in the house, most people have seen them. And I think that's a really important connection for us when we're out trying to sign customers onto the service.

Anthony Codispoti (18:19)

Mm. You know, and what you're doing here, you've got this DSP delivery network. There's there's a complication of when it's not just a one-way delivery, right? When there's like a round trip and things have to come back. Talk to me about that part of it.

Simon (18:35)

Yeah, and I think that's the biggest value to the network that we've created and it's what's allowing us to add more products and services as we mature. So, you know, the fact that we are building a habit with a customer where not only are they used to picking something up from the doorstep, but they're also getting used to putting something back down the doorstep to leave the home. You know, that's a really powerful habit that we're forming with that customer. And it's also same for the driver, right? The driver being able to put something down and pick it back up.

and this two-way circular network that we've got. That's where we see the value long-term and the bit that we want to leverage as we continue to scale.

Anthony Codispoti (19:13)

So you don't look at it as though this is a challenge to solve. It's like, here's an opportunity to do even more.

Simon (19:19)

Yeah, exactly that. It's a real opportunity and the biggest opportunity we've got.

Fundraising Ups and Downs

Anthony Codispoti (19:24)

I wanna talk about that opportunity a moment, but I wanna um talk a little bit about the money that you've raised. It's a substantial amount of money, sixty million pounds since twenty eighteen, including uh recent ten million pound investment. Why do you think there's so much excitement from investors?

Simon (19:42)

I think there's definitely been a journey to our fundraising. As I would say, there has been for most companies, we started fundraising probably late 2019. And we've obviously fundraised throughout that time up until today. I think as we came out of COVID, we saw substantial growth. As I mentioned, Doorknocking was a large part of our growth and we'd canvassed many areas. People had heard about our service.

And then obviously, you know, we saw COVID kick off in, I think, March 2020. All of sudden, lots of consumers were looking for ways to buy core groceries or feed that need. And obviously, we knocked the door, they'd heard the brand and therefore they signed up to the service. So we saw huge growth out of the back of that. And that also taught us how to grow faster. So through enabling that growth, we then learned how to do that and continue to do that into 21 and 22.

So I think there was a huge appetite for consumer and we raised quite a lot of funding through that to fund and enable us to grow at the pace we did through those years. Then I think coming out of 2022, we saw the impact of the war in Ukraine kicking off. And I think that had the opposite effect of what COVID had had for consumers. So all of a sudden, financial markets changed significantly. All of a sudden, the zero interest era was gone.

And therefore cash generation, profit generation became a much bigger factor than revenue growth. many businesses like ours all of a sudden had to regare themselves to think differently about fundraising. And the cost of capital became much higher and that changed the outlook going forward. So to answer your question, I think there was huge appetite for what we did uh in 2021, 22. But then since then, there's been very little appetite for what we do.

Anthony Codispoti (21:32)

Mm. So no more investor dollars flowing in. You guys shift gears from a focus on just sheer top line revenue growth to now we gotta get to profitability. And was it during COVID where you guys first expanded outside of milk? Or was that prior?

Simon (21:50)

Yes, when we started the service, we had a very core offering. You know, it was literally milk, eggs, fresh orange juice. I that was it, to be honest. And then we started to add, you know, flavored milks, uh know, non-dairy. We started to add, we were one of the first in the UK to do an oat milk in a returnable glass bottle. And then as the platform became established and the platform gave us the ability to offer more services to the customer. Remember in the early days, you know, this was still a

an analog business, having multiple products added a level of complexity we couldn't manage at that point. And so it was an evolution over time enabling us to add more categories and products.

Anthony Codispoti (22:32)

And talk to me about how you handle that from the operational standpoint. Do you become a central warehouse for all these goods? Are you sort of a combination of Instacart as well as your own warehouse where you're picking up some of these supplies from other grocers? How do you do it?

Simon (22:51)

Yeah, so we have our depot, I suppose, or warehouses act as like the linchpin between the supplier and the driver or the delivery network. So our suppliers will drop in on a very, very regular basis. We hold very little stock, most stock is pre-ordered and out the same night. So skews will land into the warehouse during the day and then we deliver it out during the night. And so it was just building a network that could deliver into our depots and allow us to do that.

Anthony Codispoti (23:21)

Okay. Talk to me about the idea to expand into America. Was it that you had just hit the saturation point in the UK or you just saw, hey, here's a another market that's ripe for this kind of a thing?

Expanding to America

Simon (23:35)

Yeah, so it started in the weirdest way. So when we were right in the very early days in 2018, when we were starting ModernMiltman, we started buying things, domain names, social handles. And we got modernmiltman.com.uk, which is a UK-based domain, but the .com had gone. so you start to, curiosity kicks in, right? You start to think about these things. It was the same with some of the social handles. I think we got Facebook, Twitter had gone.

you know, Instagram wasn't there. And we were like, who is this modern milkman? And for the first 12 months, we were just focused on ourselves. We were just focused on getting the UK up and running and really understanding if this could work. And then after that point, we started to dig in to try and find out who this was. that led us to a fifth generation dairy farmer called Seth Baylor in Ellington, Connecticut, who had also started a business called Modern Milkman late 2018.

Anthony Codispoti (24:35)

What are the odds?

Simon (24:36)

What are the odds?

And yeah, so I think it was during COVID, I reached out to Seth through Instagram and we got talking. We were sharing stories around growth and how we dealt with it and sort of supporting each other from afar. And then in early 2023, I started to think about operations outside of the UK. We'd been very successful in the UK. We wanted to understand if this could be an international business. And so I rang Seth and said, how do you feel about meeting up? I come out and see you?

see your operations, can I see what you look to? And he was really open to that idea. And therefore we met in August, 2023, I flew out to America, I met him and his family. I saw his operations and we sort of discussed what we were both trying to achieve. And we realized at that point that whilst we were doing the same thing, we were also doing very different things. Seth had looked for a way to decommoditize his family farm. You know, they were being crushed by...

commodity pricing in the American dairy market and therefore wanted to find a way to go direct to consumer. We had built, we'd very much built a tech company, right? So we built a platform, a marketing engine, and we had a certain set of techniques that we'd use in the UK to scale. So we had a conversation and we sort of agreed that if we could make these systems work in the US, we would look to merge. And we did that. And so we started to test these ways of working, you know, in Connecticut.

They worked and in Jam 24 we merged the companies.

Anthony Codispoti (26:08)

Wild. So say more about the tech platform that you've built. We haven't really touched on that a whole lot yet.

The Tech Platform

Simon (26:15)

Yeah, so we'd built effectively a two-sided marketplace. You we had one element for the driver enabling them to give them a route and a set of products you need to deliver. And our business works very differently to most logistics businesses where we pick a lot of the orders on the van. So we'll preload the van with an amount of stock required to fulfill that route. And then at each stop, the system will tell them what to deliver at each doorstep.

Anthony Codispoti (26:41)

It's not like a prepackaged, you know, two dozen eggs, a carton of milk or a bottle of milk and no, it's just like all the milk's here, all the eggs are here. Okay.

Simon (26:50)

Exactly.

And that is evolving now as the business is evolving and doing more things. But in the very early days, that's what the business did. You we used to put a hundred bottles of milk and 30 boxes of eggs and whatever the route required. And then at each stop, the driver would know what he needed to leave there. And so there was one element of the system that was doing that. And it was managing the stock and the flow of stock and right at the doorstep. And then the other side was the consumer side. know, most

consumers today have a level of expectation from subscription management platform or whatever that might be. And therefore, we needed to build that element for the consumer. So we then had the front end, which was app and web based, which was literally a platform for the consumer to place and manage their orders through and take payments.

Anthony Codispoti (27:38)

So you guys merged and now you're in the business of also running a dairy farm for the first time. But they stay on, so the operators are in place. You don't have to completely learn that part of the business, or did you?

Simon (27:50)

No, so we don't buy the farm. So when we merged this with Seth at Oak Ridge, which is the family farm that Seth was operating from, that remained as it was. And they started to build the infrastructure to be able to pack uh and sort of expand the range of products they offer with the milk from their family farm. So Seth continued to think about how he could scale and expand his offering to underpin the growth of modern milkman. And then we took all of the last mile

delivery network lifted that into the modern milkman business and continued to scale across the northeast of America. So it really did work perfectly for both of us. We were scaling the output direct to consumer and Oak Ridge as the family farm continued to build the infrastructure to pack milk and produce other products and then started to expand the range that they offered to support modern milkman.

US Operations & the Ohio Acquisition

Anthony Codispoti (28:45)

So what does the delivery availability look like in the US today as we're recording this in late twenty twenty six? Where can folks get you?

Simon (28:54)

So yeah, so we now operate within five states. So we're in, you know, all of New England, Massachusetts, Connecticut, Rhode Island, and just a little part of New York state. And then we also expanded into Ohio. We made a second acquisition of a business in Cleveland, Ohio in 2018, sorry, in 2024.

Anthony Codispoti (29:15)

And they were also delivering milk in glass bottles, or what what was their core business at the time?

Simon (29:22)

Yeah, exactly that. know, was a... you hear that Hoover in the background?

Anthony Codispoti (29:28)

Just a little. It's all right.

Simon (29:29)

Do you want me to

this one? Give us one second, I'll just shut the door.

I've definitely picked the best time to do that.

Anthony Codispoti (29:44)

Who's gonna complain though, right? She's she's staying busy, she's helping keep things clean. Gotta love it. Yeah.

Simon (29:48)

Exactly yeah I do not dare to complain so...

Anthony Codispoti (29:52)

Or she's gonna hand the vacuum to you. Yeah. So this this

Simon (29:54)

Yeah, yeah, exactly.

Anthony Codispoti (29:55)

company in Cleveland then, they were they were already they had this milk delivery business going themselves, huh?

Simon (30:01)

Yeah, so what we've what we've recognized in America is the milk, the milk round still exists all over America in very small pockets.

Anthony Codispoti (30:08)

I had no idea.

Simon (30:09)

So you've got, you know, small, small farms where they have some bottling infrastructure just like it was in the 1900s. And they will have a small amount of customers that they're delivering to. But if you think about it from a farmer's perspective, they've got this super long supply chain. You know, they're going right from growing crops to feed their cows right through to.

bottling milk, packing it and putting it on doorsteps. And so when we approach a lot of these farmers and say, let us take on the last mile element of it, let us, you know, manage the customer, manage the deliveries, you just sell this product from your farm, you know, and packed in the way you're doing it. We can take a large chunk of that problem away from them. And that then allows them to continue to scale their farm, scale their output in glass bottles, but without the complexity of managing the customer.

And that's been something that's allowed us to scale in America very effectively without having to organically, you know, landing in a new area and build it up from nothing.

Anthony Codispoti (31:08)

And as you've come into the US, are you using that same style of Amazon D S P delivery network? So good.

Simon (31:17)

So

right now all of our drivers are employed. We are thinking about how we can expand. Obviously America is huge. So as a Brit, especially coming here, you don't realize how big it is until you land here and start to grow here. And so even Ohio is a two and a half hour flight from Boston. So even servicing that area is really important that it can stand on itself and it has the infrastructure management to do that well. And so we're definitely thinking about as we think to open new states and new environments.

you know, are the better ways of us operating to enable that.

Anthony Codispoti (31:51)

Are there reasons that you didn't hit the ground running here in the States with that same DSP model?

Simon (31:58)

It was just what we acquired. the business that had been created and set up employed its drivers and we continue to do it in that way. So.

Anthony Codispoti (32:06)

much easier to tap into what's already in place and working. Yeah.

Simon (32:10)

yeah don't fix what's not broken

Anthony Codispoti (32:12)

Yeah, for sure. okay, let's talk a little bit more about how you guys are now thinking about leveraging the somewhat unique characteristics of this two-way logistics channel. You're delivering things, you're taking things away. Uh how does this start to get the the hamster wheel turning for new ideas?

Collection Services & Parcels

Simon (32:33)

Yeah, so a big part of new ideas came from me moving to America. So two years ago I moved here. So I moved to America around August 2024. And obviously I was emptying my house in the UK to move here. And I started coming across all these things. You know, I had a drawer full of wires and I didn't know what to do with. had a lot of kids clothes, kids toys, books. And I'm sat there and you, you parent it all up and you start to feel really guilty because

The only outcome I can see for all this stuff is the bin, when yet it shouldn't be going in the bin. It's all got a value of some sort, but I just didn't have a way of dealing with that value. And that got me thinking about what are the problems we could fix in the home for our customers? know, already they're in this habit of picking things up from the doorstep and putting things back down on the doorstep. So I started to think about, what if we could help them do that? What if we could create a supply chain that recycled or donated these things in a better way?

And that gave us the idea to sort of launch a collection service within Modern Milkman where we looked at core recycling streams that had value or that we could fix and therefore launch bags that our customers could buy or subscribe to through the platform where all they did is get these bags, fill the product in, leave the bag out with the doorstep with the empty milk bottles and we did the rest. And so we launched that in the UK.

about now months ago and launched it in the US about six months ago.

Anthony Codispoti (34:02)

And what's then the reception to it? How successful has it been so far?

Simon (34:07)

It's had really good uptake. obviously some things are a repetitive nature or need. you know, soft plastics, hard plastics are things that we've found people are subscribing to on a weekly basis. There's some more seasonal things. So obviously kids clothes, you know, we've just been through a new school term beginning. That's a big time for these sorts of things. Books and toys, you know, at Christmas time and seasonally they come well. So.

It's been a huge value creator for our customers and it's definitely fixed a problem for them. But I think there's many more we can go at right. So the next problem that we're attacking is parcels. We all feel the pain of returning parcels or sending parcels we've sold online. know, thrifting peer to peer retail is a huge thing now, you know, growing through brands like Vinted, ThreadUp, Depop. And so we're now looking to launch service where you can leave a parcel out with your milk bottles.

which we either return on your behalf or send on your behalf. And I think this is the thought process we're going through as a business. How do we fix more problems for our customers? How do we make it easy to do the right thing?

Anthony Codispoti (35:15)

Okay, I want to zoom back out because I'm realizing I failed the audience and we haven't talked at all about the pricing model. Is this a monthly subscription? I'm paying a flat monthly fee for access to the service, and then for each additional thing that I order, I'm paying the value of that product.

Simon (35:33)

So it can work in multiple ways. The core service is just a weekly delivery network. So you subscribe to the products you wanna buy and they come on a weekly basis and that has a weekly delivery charge depending on what you spend. We also have a membership model. So you can become a monthly or an annual member. That then rolls, to roll in much more value. So we'll remove the delivery fees as part of that. We'll start to add.

You know, there's member week, there's special bonus discounts on certain products. And that's the, really that's the core we're looking for. We're trying to find a way of, if customers can commit to us, we can then pass back value to those for that commitment and come back to the thinking around the requirement for density for our business to work well. You know, stable delivery network for us means that, uh you know, our margins are much more stable and therefore we can pass more value back to the customers.

So that's why the membership model is super important for us. And then you can pick and choose what you build on top of that. So you might choose this for the collection service. You might just want milk delivered. You might want to spend a hundred dollars a week and do your full grocery shop with us. So there's a real variation in what it can be.

Anthony Codispoti (36:44)

So talk to me about the collection service a little bit more. Is the revenue model strictly or mostly from the charge to the customer? Or is there any value for you in taking that thing that they're getting rid of and making use of it, selling it somehow?

Simon (37:02)

So right now we don't sell anything downstream. So we're just trying to understand what comes back, uh is the value there? The first part of the challenge we were looking to solve was just giving people an easy route to do the right thing with something that they don't want anymore. And that was just a starting thought. I'm confident over time that there's value we can create in that downstream and therefore we can pass that value back to the customer. But we needed to understand what we got first before we could do that.

Anthony Codispoti (37:30)

So what happens to these items in the meantime then?

Simon (37:34)

We have partners that work with us, so we aggregate those collections back at our depots and then those partners for each chain of uh products, they take that away and recycle it or donate it, you know, in the correct way.

Anthony Codispoti (37:47)

Okay. And obviously all along you guys are logging what it is that you're getting so that you can see where these trends are and potentially develop relationships or come up with your own ideas on how to repurpose these items in a way that

Simon (38:00)

Exactly.

Anthony Codispoti (38:01)

would create another revenue stream for you. Are you seeing any early indications of where there might be some opportunities there?

Simon (38:08)

Yeah, I mean, we were quite surprised, especially from an electronics perspective and some of the stuff that comes back. So obviously there's value in old wires, old keyboards, and it's just understanding how those get broken down. we've seen quite a few old laptops, old phones, things that do carry real downstream value. And I weren't expecting that. I thought those would get sold through networks where consumers can literally get paid for those coming back.

Anthony Codispoti (38:35)

Mm-hmm. Um, any other ideas that you've toyed around with or are currently experimenting with to leverage this delivery network that you've built?

Simon (38:46)

The other thought is how do we help other consumer brands to get to customers? So, know, as it seems silly for everybody to have a delivery network, right? uh You know, ultimately if we can all share the network, we can all share the value and then get, you know, become more efficient and use that in a way to pass that value back to the customer. And something I've been thinking about a lot is the impact of inflation. So obviously,

We've spent the last three years in the UK and the US, we've seen significant inflation, especially in food, you know, as the impact of oil prices, a war have had on manufacturing and production costs. So we're thinking a lot around how we can offset some of that because it's, you know, it's becoming harder and harder for the consumer and therefore where do we find savings? And I think the biggest opportunity for those savings is offering more things through the same network to those customers. And so...

We're also looking at how do we build that out? How do we partner with other brands that make sense and offer those to consumers through one single network?

Anthony Codispoti (39:53)

And so a brand, for example, might be Apple and you start warehousing Apple products to deliver to people, or can you maybe give us a specific example?

Simon (40:04)

Yeah, sure. So I'm more thinking about consumer services. So, you know, whether it's pet food, uh whether it's, you know, veg boxes, whether it's meat boxes, I think focusing on the household needs and the repetitive household needs and things that could come through that network. So rather than going through, you know, a FedEx, a USPS, a DPD, why not instead put them through Modern Milkman? You know, we can share access to customer base, but we can also give value back to the customer through.

consolidating the splat you

Anthony Codispoti (40:35)

And you had thrown out one example and I don't know if this is a current day example or something you're working towards of maybe doing all of their grocery shopping with you. Is that a possibility today?

Simon (40:46)

It's not today, but there's nothing to say that it might not be in the future. If we can build the right network of partner brands, we really could uh fulfill the house in a much more sustainable way.

Anthony Codispoti (40:58)

Talk to me about how you're using AI in your

Simon (41:02)

Yeah, so over the last 12 months, think, know, as I would expect from many businesses, AI has been a real game changer in how you think about things. We've heavily leveraged it from a technology perspective. you know, a lot of how we think about design, development, testing, you know, lot of these things we've been able to leverage AI for. We're also looking at it within our supply chain. So, you know, it's helping us to make that more efficient, how we look at demand planning, order planning.

There's just, think it's so powerful, isn't it, as a tool, and it's growing more and more that way. But we've just been focused on trying to introduce it in a controlled way. think AI, obviously there's a curve, isn't there, to AI adoption. I think when you first start using AI, you see the power of it and you use it for everything. But then you realize that actually 90 % of what it's pumping out is garbage.

And then you go into the second stage of AI adoption where you start to try and understand like, what can I use it well for? Where does it actually save me time versus me just creating a lot of garbage that I have to root through and fix. And we've tried to think about that in the same ways how we introduce it into the company. you know, picking up the low hanging fruit of how we leverage it, but then trying to learn, you know, in piece by piece of each area of how we then do that well.

Anthony Codispoti (42:27)

What's something that you would like to be able to do with AI, say in the next six to twelve months? Like, I've got this cooked up in my head, we just don't quite have the pieces put together yet for

Simon (42:39)

Yeah, I think there's a huge opportunity for us around order prediction and supporting the consumer. So we've spoke a lot about what we can sell to the customer, but a big part of our business was always around reducing waste. How do we help the customer not order something they don't need? You how do we really help them understand the demand of the household and begin to think about automating replenishment of the household? That's something that I'm very keen for us to leverage AI for.

Anthony Codispoti (43:08)

Are there ever moments where it feels like there's this tug of war between sort of this, you know, part of the company's mission and purpose is to reduce this packaging waste, right? And then obviously, as a business, you can't do any of this material good over here, this good for the planet, unless you're profitable. And so does it does it ever feel like these two worlds are are pulling against each other? And and how do you how do you resolve that when you feel it?

Simon (43:37)

Yeah,

always. And I think also that comes not just to be about profitability, different types of products require different things. So, you know, bakery is a great example of this. Since the inception of modern milkman, obviously bread is a huge part of people's weekly grocery basket. But bread needs to be in a sealed plastic bag to keep it fresh. You remove it from that sealed plastic bag and you literally halve the shelf life. So they therefore you go from.

Do you remove the bag or do you create a lot of food waste? And so we've been working with Bred for a long time where it's been a skewer in our catalog that we've delivered in single use plastic, which goes completely against the mission of the company, but it's something the consumer wants and needs and it adds value to the basket. And so a big part of the collection service was an enabler to allow us to sell products that are in plastic where we can create a closed loop recycling supply chain for them.

And that is a tension that we deal with frequently in the business. But I think to learn to fix a problem, you've got to first understand the problem. And so putting bread through the supply chain in the way that it was, was an enabler to allow us to then fix the problem downstream at a later date.

Anthony Codispoti (44:50)

Do you think there is a solution? Is there a glass container, reusable container for bread?

Simon (44:56)

Yeah, we've been working on a silicone bike which is washable and recyclable and that's a product that we've been using now in the UK. So we have found a solution but we wouldn't have found that solution if we hadn't have worked with bread through the supply chain to get to that point.

Anthony Codispoti (45:11)

interesting.

Simon (45:12)

So it's hard, you can sometimes look like you're a hypocrite. And this is more internal and externally, people join our business for the mission and the vision.

And then if all of sudden you're doing something that goes against that, people can look at you and go, well, why you doing that? But I think this is a prime example, you you need to learn and understand the problem to be able to fix the problem.

Anthony Codispoti (45:35)

Did you get pushback internally or externally from customers who are like, What are you doing? This doesn't match with who you are, what I signed up for.

Simon (45:44)

Yeah, we got called out a lot, especially internally around it. then you've, you know, just like I've explained to you how we think about this, you know, it's the same. It's the same internally. I think the team, massive believe in the mission and what we're trying to achieve. And therefore, you know, again, it's a very emotive thing to then think people are going against that.

Anthony Codispoti (46:03)

Mm. Simon, what's the hardest thing you've had to overcome personally? And what did going through that teach you? I think there's a lot of good lessons for other folks in hearing these stories.

Hardest Challenge: The Layoffs

Simon (46:13)

Yeah, I think you always learn the most in the bad times, not in the good times. So, know, the good times are easy, right? You're going through, everything's going to plan. I think it's when you've got to make real hard decisions uh that there's no real good outcome from that are the most difficult times. You know, we spoke before around the big pivot in direction when we entered 2022 and the landscape changed around fundraising.

You know, we had to make significant changes very quickly in our business. We probably laid off about 40 % of our workforce mid 22. A lot of people that, you know, were doing good things for us, there was no fault of their own. was just this focus on growth or cost was gone and the need to be efficient with capital was, you know, was the new era. And so we very quickly pivoted the business away and made these changes and that was difficult. It was needed, but it was very difficult.

We went a lot through that process.

Anthony Codispoti (47:14)

Talk to me more about that. I mean, you're building this team, folks who are joining it to be, you know, because they they get on board with the purpose behind the brand. So you're close with these folks. You know them. You know their names, you know their faces, you probably know, you know, family stories. I mean, what's it like walking into the room and you know, overnight, you gotta let forty percent of the people go. If if there's anybody listening who's never had to let an employee go, especially one that's not for cause.

In my experience, one of the hardest things to do emotionally. Right. It's like it's like you're dumping somebody, like you're breaking up with them and you're taking their wallet at the same time. It's like you just feel like you're delivering this awful news, this awful pain on multiple fronts.

Simon (47:58)

Yeah, it's really challenges, isn't it? think firstly, you you obviously you approach it from what does the business need to continue and therefore you define, you know, what that team looks like at that point. And then, you know, you've then got people that are the unfortunate ones. So I think part of it is like delivering that message well uh and being fair and supportive. And, you know, I think what made it bit easier at that point is there was lots of companies doing it. So it wasn't like, you know, modern milkman was an outlier.

Literally the market just spun on a six pence at that point and we changed. think the other challenge is the sort of what that leaves behind and you've got then got a team of people that have friends no longer work with them or they've built these relationships and it changes their role changes, the expectation of their role changes. It's then rebuilding the culture from that point to accept the change and move forward in a positive way without losing.

the output of the organization going forward.

Anthony Codispoti (49:01)

How did you get through it emotionally? Who did you go to for support? Did you have peers you could lean on?

Simon (49:07)

Yeah, I think I'm very fortunate. I've got a very good team around me. You know, we all work well together. We're all very open and honest with each other. And we just work together to do that. And I think that was a really important part of it. It is lonely as a founder at times, it is lonely to see you at times. So I think I've always tried to be very honest and open and lean on my team for support in the same way that they would lean on me for support. And I think that made it a lot easier at that time.

Nobody has all the answers and I think pretending that you do, you just set yourself up to fail. if I don't know the answer or I need support from the team, I'll be very open and honest about that.

Mentors & Peer Groups

Anthony Codispoti (49:48)

Are there any peer groups or mentors outside the company that you're involved with?

Simon (49:54)

Yeah, I've had multiple mentors through my journey as a founder and that's been very supportive and super useful. So I would definitely advise anyone that's going on the journey to find a mentor. And you you might have multiple mentors, they might come and go, but they're very important. I think the other thing is finding a peer group. I became a part of a four-unquote YPO around 2021.

That's been a very good thing for me. Having peers in your group that aren't involved in the company that can advise from their feelings or experiences has been super helpful.

Anthony Codispoti (50:33)

How did you find your mentor or mentors? I think this is something people are like, I'd love to learn from somebody smarter than me. I don't know how to go about. Finding somebody, asking them what the relationship looks like. Tell us about your experience.

Simon (50:48)

Yeah, I've always sort of stumbled across mine in a way. Whether it's been introductions through, you know, potential investment in the early days, whether it's been through local people that you've met that, you know, you just get on well with and they take a like to you. I generally find that like successful people that are 10 years ahead of you get a kick and enjoy helping people. And therefore, if they meet you and you gel well and they believe in what you're doing.

I think it's very easy to ask someone for support at that point and they generally want to give it you. So think it's just thinking about the people you bump into, thinking about the experiences they've had. Always have been open minded, always been in the back of your mind around, this person help me, could this person be a mentor. Yeah, so that's how I found them through the networks that I've built on the journey.

Anthony Codispoti (51:38)

These are people you've just kind of met along the way. You guys sync up, like you this is a person who's a little bit further ahead in their career. They've seen the things that you're about to experience or are going through now. What does that conversation look like? Is it sort of like a like a second grade, do you like me? Check this box, like, you know, will you

Simon (51:57)

Ha ha ha.

Anthony Codispoti (51:57)

be my mentor? Or is it not as formal as that? And it's just somebody you click with and you call every once in a while when you've got a question.

Simon (52:05)

the latter for me and that might be different for other people but I always find you don't necessarily need to speak to somebody every quarter so having that plan meeting from my perspective I don't actually think that works because you end up it becomes a waste of time and then the other person feels like it's a waste of time and I think the relationship can dwindle very quickly from that. How I work is if I've got a problem and it's something that I want to chat somebody about I will reach out to that person and say hey I've got this issue.

I really think you'd be well placed to help me with this. Have you got 30 minutes to kind of chat to you? And it's very rare somebody says no. And therefore I build a relationship from there. So it's very much an ad hoc relationship and that's how I work.

Anthony Codispoti (52:52)

Excuse me. As you think about the work that you're doing now, Simon, what is it that you most want to be remembered for?

Simon (52:58)

That's a good question. So in honesty, it's weird that you never really think about, or I don't think about it like that. think I always think about, I'm always looking forwards, never really looking backwards. You know, you're always thinking, how do I build this? How do I make it better? How do I create more value? I think it's just really cool to be able to bring something back that fixes a problem and then modernize it. You know, if you look at, it's all in the name, right? Modern Milkman. You know, we've taken a very nostalgic service that was way ahead of its time.

And we've not only brought it into the new world, but we've also created it in a much better way. So, you know, the fact that we've added more recycling collection services, the fact that looking at parcels and leveraging this network, I think we're creating a really cool business that can hopefully last forever.

Anthony Codispoti (53:49)

Is there one rule in business that you would never break, no matter what it cost you?

Simon (53:57)

I'm a very old fashioned person in the way of, you know, I think if you say you're going to do something, you should do it. And I think for me, that's, that is, you know, the number one rule. think whether it's through your team, your investors, your customers, but I think we've built a lot of trust, especially my investor group and our people, because we always do what we say we're going to do. And I think it's, think that old fashioned trust is very powerful.

Anthony Codispoti (54:25)

Mm. What's your favorite thing to do outside of work? Any hobbies?

Simon (54:30)

Yeah, I've trained, I've done a lot of mixed martial arts probably 10, 12 years. I used to fight in the early days that stopped when modern movement took off, but I still train a lot. I find it amazing for, you know, balance. think it's really important that we use our brains a lot during the day. We should use our bodies a lot also to, you know, create that balance, stress, anxiety, all those things for me are dealt with in that way. So yeah, I love it and continue to do that.

Anthony Codispoti (55:00)

Simon, before I ask my last question here for you, I want to do three quick things for the audience. First of all, anybody who wants to learn more about what Simon Mellin is building, go to their website, modernmilkman.com. it'll be in the show notes, but it's two simple words and it describes exactly who they are and what they do. Modernmilkman.com. Also, if you're enjoying the show, please take a moment to subscribe wherever you're listening. It also sends a signal that helps others discover our podcast. So

I appreciate you taking a quick moment to do that. And as a reminder, you can finally get your employees access to therapists, doctors, and prescription medications that counterintuitively actually increases. It increases your company's net profit starting in the very first month. There's no copays, there's no deductibles. A lot of part-timers qualify. Even these high turnover environments are great. So learn more about how to have happier employees and a stronger bottom line.

with this Bain Capital Insurance product, AddBackBenefits.com. So last question for you, Simon. A year from now, what is one very specific thing that you hope to be celebrating?

Simon (56:10)

The launch of the new services that we spoke about and the success of those, again like I said I'm really keen to look at ways to combat inflation for our customers and I think that's the best way of doing it.

Anthony Codispoti (56:21)

Say more. Say say more. I want to hear more about it. Get in a little bit more that.

Simon (56:25)

Okay cool, yes

I think it's broadening the offering from just a traditional milk round into a suite of home services that enable the consumer to live more sustainably but also create value for them and offset the impact of cost inflation. So know things like the parcel services, the recycling collections, the partner services for us to deliver through the network, these are all big ambitions for us over the next 12 months.

Anthony Codispoti (56:51)

And these are in both the US and the UK markets that you have these aspirations.

Simon (56:56)

Correct, yes.

Anthony Codispoti (56:57)

Love it. Simon Mellin from Modern Milkman, I want to be the first to thank you for sharing both your time and your story with us today. I appreciate you being here.

Simon (57:04)

Thank you, thank you for having me.

Anthony Codispoti (57:06)

Hey folks, that's a wrap on another episode of the Inspired Stories Podcast. Thanks for learning with us. And if one thing stood out, put that into action today.