Blue Apron Holdings, Inc. Goldman Sachs 26th Annual Global Retailing Conference September 5, 2019

Heath Terry (Analyst, Goldman Sachs): Great. Thank you all for joining us this morning. My name is Heath Terry. I cover the internet sector for Goldman Sachs.

Really excited to have with us today Linda Kozlowski, Chief Executive Officer of Blue Apron, and Tim Bensley, CFO at Blue Apron.

Linda, first, thanks for taking the time to be here with us. I know it's an incredibly busy time for the company. Maybe just to start out for people in the audience that know you best maybe as a customer of Blue Apron or just are aware of the product, what's the right way to think about what you're trying to build as a company?

Linda Findley Kozlowski (Chief Executive Officer, Blue Apron): Well, first, I'm always happy when people know us first as a customer and a product, because I think we have such an exceptional product. And frankly, one of the things that's really amazing about Blue Apron is we still have the highest brand recognition in the industry. And I think that comes from the fact that we have such a strong product. So, I actually love it when people think of that first.

I think that as a company there's a few interesting things. So, first of all, we are a meal solution company that has both the kits as well as wine and marketplace products, and I think that's really about creating these amazing culinary experiences at home. And what makes us different is part of this culinary DNA that really draws people because our recipes, our ingredients and everything are such high quality and so unique in the industry.

But I think when I think about the company it's really about this concept of the opportunity for growth really stems from the fact that we have this incredibly high brand recognition and we also have so much left to do in the process. So, the changes that we have been through really have put us in the best position from a solid financial stability, financial rigor, operational rigor that has been developed over the last 18 months with Tim and with Alan, our COO, working together on really driving some efficiencies. So, they've got us to a point where we can grow from this level through our new strategy, which is really about three parts.

One, we've talked a lot about our best customers and our customers are really – they love us. They're really quite strong. But there's a lot more of them out there. So, first, we're expanding our customer audience to think more broadly about modern demographics, including singles and including empty-nesters.

Then, secondly, we're behind, frankly, on the evolution of our product. So, we are planning a lot of different areas where we're going to be improving and changing the flexibility, the choice within our product and making that a lot more friendly to consumers. But the exciting thing about that piece is because of the infrastructure that we've built we do feel strongly that we have the ability to not only learn from what's been happening in the industry but, frankly, leapfrog when it comes to choice and flexibility, going forward.

And then the third piece is there's a huge amount of untapped opportunity in large-scale partnerships, and that's one of the bigger areas that we're going to be going after over the next couple of years, is thinking through how do we get people to come to our core product, our direct-to-consumer product, through these partnerships that would actually bring the right level of scale.

So, I think what people may or may not understand about the company itself is what we've been through has put us in such a strong foundational position for growth, and now we have a really focused and clear strategy in order to get us to the next phase.

Heath Terry (Analyst, Goldman Sachs): Great. So, there's a lot to dig into there. But to start with, you've been at the company five months as CEO. I guess maybe, first, what drew you to the opportunity at Blue Apron? And what's surprised you in the time that you've been there?

Linda Findley Kozlowski (Chief Executive Officer, Blue Apron): Honestly, what drew me is, first of all, I've been a customer, first. So, I've been a customer for three years and a very loyal and very high-usage customer, as well. I tend to only skip when I travel. And I come from a background of cooking has always been a passion for me. It's always been something that's important.

But what's been more important to me is this concept of how food figures into health and life, and I think that's changing over time in how people think about it. Cooking at home itself, by every piece of research out there, automatically is healthier than eating out. Then you move into this idea of when you are using whole ingredients and you're much more aware of what you're eating, then you become even healthier. On top of that, you actually have the connection in the community that's built from cooking with your family, cooking with your partner, which is something that is also consistently an aspect that ranks high in some of the healthiest populations in the world, is that feeling of connection.

So, one of the first things that drew me to Blue Apron was I love the product, but also I feel that it's actually a critical part of society in thinking about how we can make it easier for people to cook at home. Eighty-two percent of meals are actually prepared from the home. There's a lot of data out there that talks about the increase in eating out, and the reality is it's an increase in spend in eating out because eating out is getting more expensive. The frequency of eating out is actually going down. And so, that's part of the reason that we think we have such a great opportunity.

I also personally like opportunities where the brand is strong, the product is strong, the customer love is strong, and there's a lot of room for execution. So,

personally, I saw a lot of parallels between Blue Apron that I saw when I came to Etsy, of that same type of gap between the potential of the brand and also things that had not yet been leveraged in order to grow, and that was attractive to me.

The final piece of it was back to what I said before. It's rare that you come into an opportunity for a turnaround situation where much of the hard work of the financial and operational foundation has already been done. And because of the strong team with Tim and Alan and the organization before, a lot of that had already been addressed and put the company in a much better position to start the growth process.

Heath Terry (Analyst, Goldman Sachs): That's great. When you – obviously, whenever you start a new job you come in with a lot of sort of expectations and plans. How have your, sort of your plans for Blue Apron evolved as you've learned what it's like to actually be inside?

Linda Findley Kozlowski (Chief Executive Officer, Blue Apron): There was a lot of open discussion about what needed to happen in the process of interviewing and talking to people at the company. So, a lot of it was fairly clear. I think the thing that's very exciting to me is truly understanding the operational strength and capability that we've developed and how much more room there is for scale. We're at a point right now where we have the ability to scale our operations and maintain and grow our efficiency as we scale, as opposed to needing to invest significantly more money in order to gain this flexibility. So, I think that's actually very exciting.

The area that I see even more opportunity than I originally saw before was the technology platform itself. So, the ecommerce platform itself I think has a lot of room for improvement, which again I only look at as a good thing because it's open field.

Heath Terry (Analyst, Goldman Sachs):

So, you made the point about scale. Obviously, the investments in operational infrastructure, Tim, were a big part of where the company had been focused over the last couple of years. When you look at sort of where capacity utilization is – or whatever the right term, the right KPI that you sort of look at in measuring this – where is Blue Apron now? And how high is that ceiling?

Tim Bensley (Chief Financial Officer, Blue Apron): Right. Absolutely. It's – we definitely as a company put a lot of capital into the ground in 2017 with the expectation of continuing on a very high growth rate. Obviously, that hasn't happened. The good news is that at the same time that we did that – we literally built out our fulfillment centers, the newest one in Linden, New Jersey, as well as in Texas and in California, really fully automated, ready to go. We have the ability to significantly increase our revenue now behind some of the growth plans that Linda is talking about without really putting any more significant capital into the ground. And we're not utilizing it all today, but it's all beautifully maintained and ready to go. It's not just a lot of open floor space that we have to put equipment in. We have the equipment there ready to go, built out at this point.

The other side of that, though, what's kind of interesting is even with that underutilization of our capacity – and this had a lot to do with bringing in our new Chief Operating Officer, Alan Blake – our operating margins are actually the best that they've ever been. And it's a little bit hard to tell with who reports publicly and who doesn't in the space, but we believe they're basically the – we're running at the best variable operating margins in the industry right now.

To be able to do that with the lower volume that we're running, with all this overcapacity, is really a great place for us to be. So, that puts us in the position that Linda was talking about, that as we now start executing this return-to-growth strategy we have a very leverageable operating base that will – not only can we just really increase the amount of revenue without investing in it, but we'll also get our operating margins up as we do that, as well.

Linda Findley Kozlowski (Chief Executive Officer, Blue Apron): There's an interesting aspect to that, too, which is during all of this increase in efficiency and getting these operating margins, we actually increase quality, as well; so, as far as quality of delivery, making sure ingredients are fresh and on time. All of that actually went up with the efficiency. So, there wasn't a trade-off.

Tim Bensley (Chief Financial Officer, Blue Apron): I think it's a little unusual to say we had a deliberate strategy that would result in a lowering of revenue temporarily, at the same time that we significantly increased our operating margins and really quite significantly increased how we measure service to the customer in terms of a metric that we use called perfect box, which just means when it gets to your house is everything in it, is it perfect, is it in good shape, is it temperature-controlled, everything. So, to do all three of those things at the same time is pretty unusual. But again, the good side of that scenario is it's all there ready to go now. And as we execute this return-to-growth strategy that's all very leverageable for us to move forward on.

Heath Terry (Analyst, Goldman Sachs): Are there non-organic opportunities to improve that capacity utilization or leverage all of this investment and expertise that you've built? When you look across ecommerce and everyone is sort of doing logistics as a service these days, given the number of companies that are trying to do what you do is there a role there?

Tim Bensley (Chief Financial Officer, Blue Apron): I think as we look further out in the future, there's plenty of things that we could go do. Right now I don't think we want to distract ourselves with that. We're really very focused on the opportunity that Linda was talking about in our direct- to-consumer meal kit business – with the addition of we have the wine and marketplace businesses, as well – but really focusing on that DTC business right now and getting that back to growth first. I don't think we want to distract ourselves with a lot of ancillary things right now until we get that back where we want it to be.

Heath Terry (Analyst, Goldman Sachs): And so, Linda, that gets into kind of I think the main question that most people have, is returning to revenue growth or returning to that kind of growth. What does that path look like?

Linda Findley Kozlowski (Chief Executive Officer, Blue Apron): So, in the strategy that I laid out about increasing our audience to more opportunities and more people, adjusting the product and making sure that it's meeting people's needs, and then the final piece about partnerships, really we think of this in two different areas. One is how do we actually improve the products that will both improve retention as well as increase the new customers that come in. So, that's everything from how do we get a lot more choice and more recipes, how do we introduce more healthy options that aren't necessarily diet-focused. So, we believe strongly that most people – and we've seen data that proves that most people say, "I don't necessarily want to be on a diet; I just want to be healthier and I want to have those choices."

So, in the fall we're going to be piloting out of our California facility a new program that actually would combine some of our healthier options and some of our more indulgent options into a menu that you can actually sort and choose based on your preferences. So, maybe you want something healthier during the week and you want to treat on the weekends. We're not going to force you into a certain type of program in order to do that. So, we'll be piloting that in September.

But then we get into more flexible options, including how can you maybe upgrade your proteins, how can you swap out carbs for vegetables, how can you customize a little bit more about the portion and serving size. So, those are all areas that we're exploring, that we think we can do better than anyone else because we have such a unique facility. And everything that Tim was talking about in what's in the ground, we have the ability to be a lot more flexible because we do control our own packing and we also have our own facilities for kitchen, for sorting spices, for creating our own spices, for using ingredients that other people can't use

because they don't need to come prepackaged to us. We can actually package them ourselves. So, we have so much more flexibility in the ground that we can then parlay that into a much more adaptable offering.

And so, there's that one piece of how do we actually adjust the product itself to make sure it's meeting more people's needs. And then I think the second critical piece is how do we better engage customers. And this is where thinking about partners that more align with our D2C core strategy and use our existing products on a much larger scale than some of the partners we've done in the past is our other big opportunity where we can say, okay, instead of just using more traditional marketing channels, how do we actually use partners more intelligently to get people that look very much like our best customers already.

Heath Terry (Analyst, Goldman Sachs): You touched on some of the protein upgrades and other options, but what role does pricing play in that revenue growth piece?

Linda Findley Kozlowski (Chief Executive Officer, Blue Apron): From what we've seen, actually, it's less about price sensitivity, because keep in mind when we announced our TAM in our last earnings call we talked a lot about, okay, let's be realistic about who are the right customers for this offer, highly valuable customers. And one of the challenges I think we had in the past – which a lot of other companies have fallen into, as well – is if you just do broad sort of approach to marketing where you're just going after everybody, you're going to capture a lot of people who actually are not the right customer for the boxes – therefore, they churn out quickly – whether that's based on income or lifestyle or anything else.

So, by being a lot more targeted and getting our marketing a lot more efficient, we're now with less than a 12-month payback period. We're much more focused on customers that meet our needs.

When we look at a TAM we're looking at households that have $70,000 income and above. We have households that have lower than that, but just $70,000 and above, if you actually look at order raise in the meal kit industry, if you look at average order value in the industry, and if you look at the penetration of online grocery spend, which we think is a good indicator for people who are interested in our box, that's already still today a $9 billion opportunity. And it's growing very, very quickly. I think the online grocery spend is growing around 35% between 2018 and 2020. So, that is already exponentially growing. And we can be a lot more focused about the right customer.

So, I think that for us when we think about how we're targeting people the best, that's really how we're narrowing down our focus.

Tim Bensley (Chief Financial Officer, Blue Apron): I think the – a lot of times you take pricing to cover input cost inflation. And one of the things that's really neat for us right now is this year and even as we move forward we've still got the opportunity to drive input costs down. So, there's not a real need to go take pricing to cover that. But the big part of the strategy is this idea of not rate pricing, but getting average order value up. And all the things that we're talking about doing, really most of the things we're talking about doing have the opportunity to drive average order value up without actually taking individual meal plan rate pricing.

Linda Findley Kozlowski (Chief Executive Officer, Blue Apron): I think my approach has always been how do we create value, rather than thinking about a (inaudible) pricing.

Heath Terry (Analyst, Goldman Sachs): And my question was really more aimed at really that opportunity to take it up. Obviously, when you're talking about people's food that's not generally something we want to go cheap on. And I think particularly the audience that you're targeting – that $70,000 and above sort of household – there is a price/quality relationship, at least in people's minds, that I would imagine you've

got the opportunity to benefit from. I would assume if you give someone the opportunity to upgrade their protein, I would imagine you're going to see a very high take rate on that.

Linda Findley Kozlowski (Chief Executive Officer, Blue Apron): And I think that's really where we see customization being the key to how we actually make this more flexible for people based on pricing.

Tim Bensley (Chief Financial Officer, Blue Apron): And it's also just you talk about just the average order value part of the equation as opposed to the order frequency part of the equation, just getting – as we continue to expand the offering and provide people more choice, just getting people to upgrade from, "Hey, I'm doing the two menu a week program, going to three," I'm getting better programs and that attract more people with families to get on the family plan, which is obviously a higher AOV program.

The idea of a swap out to a higher-value protein is interesting, but also just putting more protein in the box. Like, I have a teenager that's on the family plan and they need two pieces of chicken, not one. Great. We'll put an extra piece in. A lot of the things that we're talking about doing in terms of moving forward with our capability really is around getting that average order value up.

Heath Terry (Analyst, Goldman Sachs): Great. That makes a lot of sense. Linda, you touched on it a little bit when you talked about the marketing side of things, but how are you thinking about the cost of customer acquisition and how you see leverage out of what you're spending on marketing?

Linda Findley Kozlowski (Chief Executive Officer, Blue Apron): I think that we've gotten a lot smarter about our performance marketing and everything that we're doing on that front. Again, we've been able to get within a 12-month payback period. And also at the same time, Tim was just referencing metrics like order rate and AOV. As you can see, we've already been steadily – as

we've been focusing on our stronger and stronger customer base, you're already starting to see those metrics continue to improve, as well. So, how we can actually drive more value out of each customer I think is key to how we think about marketing, going forward.

There is a lot more that we can do on performance marketing. So, I don't mean to indicate that we're done on that point, by any stretch of the imagination. I think there's a lot more we can think about with channel experimentation. But audience segmentation and the ability to target is probably number one, with the expansion of the singles and empty-nesters being a key part of that, as well. So, that's part of it.

Another part of it are the partnerships and thinking about who are the large-scale companies that have customer bases that are well aligned with what we're trying to do and what we're trying to achieve as a company around encouraging culinary discovery, health, and lifestyle moves based on being able to cook at home with your family. So, that's sort of number two, and that really drives customer costs down because it's a much more targeted approach and it's a much more aligned approach.

And then I think the third piece is also leveraging community and word of mouth. Obviously, our best referrals come from existing happy customers. And changing how we leverage and maximize the use of that community to actually market to each other drives costs down, as well.

So, there's a few different areas of efficiency. We've already gotten very efficient, but I do think there's more opportunity to lower our cost of acquisition through that sort of triple approach.

Tim Bensley (Chief Financial Officer, Blue Apron): And I think the growth strategy that we're talking about, the nice thing about it is it positively impacts every metric that we're trying to drive. So, if you have a better offering out there and you can put that in front of prospective subscribers,

more people that come to the website are actually going to convert to become subscribers. That drives your acquisition cost down, the more people that you can convert that you're driving to the site. So, everything that we're doing kind of helps across all these metrics, but a lot of the things that we're talking about will also help our customer acquisition cost stay low as we move forward, as well.

Linda Findley Kozlowski (Chief Executive Officer, Blue Apron): This goes back to that first piece that we talked about, discovering what opportunity lies in the ecommerce platform itself. There's a lot of efficiencies to be gained there, which make all of your dollars spent in marketing even more efficient on the conversion end, as well.

Heath Terry (Analyst, Goldman Sachs): So, a big part of customer acquisition in this category has always been couponing. How do you see, particularly, the competitive environment around that? What role does that play, particularly as you try and improve customer retention over time and go after a higher-value, maybe less couponing-sensitive customer?

Linda Findley Kozlowski (Chief Executive Officer, Blue Apron): I'll start and then Tim can jump in. But I think we see an opportunity as we're engaging these more aligned and high-affinity audiences to change the dynamic of couponing and think more about loyalty than we think about necessarily couponing for customer acquisition. I think you're going to see a lot of changes in the industry over the next couple of years as people feel through how couponing works and how it sort of comes together.

We feel strongly that the partnership and high-affinity audiences that we can get that way, that strategy is a much more efficient way to acquire customers that not only are going to be valuable to the company, but also are going to stay with you for a longer period of time. It doesn't mean that coupons will ever go away, but I think they can be used differently.

Tim Bensley (Chief Financial Officer, Blue Apron):

I think it would be difficult to go coupon-free all of a sudden and expect that you're going to be competitive, and I think our competition has been this year a bit more aggressive than us in kind of leaning into even higher rates on coupons, probably further than we're willing to go. But really just for that reason, if you're bringing people in just because they essentially want to get the free food and don't really – and when the free food goes away they basically aren't buying boxes anymore, that's really not a good strategy.

So, there's a role, obviously, for coupons in any DTC ecommerce business that we're going to stick with, but this idea of the balance between how much you're willing to pay somebody on a coupon or a discount to come in and what's the real value of the offering you're giving them is something that we're pretty focused on.

Heath Terry (Analyst, Goldman Sachs): Speaking of the free food side of things, how do you think about the impact that delivery companies, food delivery companies – Grubhub, DoorDash, or Postmates – and all of the free food that's going out from those companies as they attempt to take share, how do you think about the impact that that's having on your business?

Linda Findley Kozlowski (Chief Executive Officer, Blue Apron): From my perspective, I think that delivery is always an interesting area to look at, but when you look at it from the consumer perspective you aren't getting as great of food because there is no comparison to something you prepare yourself. And the more we can make it easier to prepare something fresh at home, quickly and easily, that's incredibly delicious, that can be far more efficient.

Then you also just do look at the cost. The free food distribution is there because when it's not free it's $22 for a salad.

Heath Terry (Analyst, Goldman Sachs): Thirteen dollar delivery fee.

Linda Findley Kozlowski (Chief Executive Officer, Blue Apron): Exactly. And so, that at some point becomes fairly unsustainable for people. And you're missing out on a lot of the opportunity, not only from a spend perspective but, frankly, from the ability to sort of sit down with your family and sit down with your partner and share a meal together. So, we're seeing a little bit of a backlash on some of the cost aspects of delivery, and I think that's why you're seeing some of the free food.

I will also say that the other thing that we're seeing that's very interesting, the University of Michigan released a study in May that traced the carbon footprint of cooking a meal kit like a Blue Apron kit compared to the same recipes at the grocery store, and we were one-third lower because of the complete reduction of waste through the D2C model and through direct sourcing to the customer.

And when you compare that to the delivery industry and the amount of packaging and everything involved in the delivery industry, there's also I think a tension there, as well, that we're pretty proud of how we've been able to reduce waste and impact that from both a recycling standpoint and from a food standpoint. But I think that's going to be another challenge facing delivery.

Tim Bensley (Chief Financial Officer, Blue Apron): And they're used for just such very different things. Our average subscriber is using us two or three times a week. Right? That's the offering that we have. And it's when you do want to eat healthier and you do have a few minutes to go ahead and cook and put a home-cooked meal on the table. The delivery services are for something completely different. "I need it right now. I don't care what I pay, and I don't really care if it's healthy or not." I think there is certainly room for both to exist pretty nicely.

Heath Terry (Analyst, Goldman Sachs): The point that you just made about the carbon footprint, those kind of messages about the value of Blue Apron from a health standpoint, from an environmental standpoint, how do you get that message across in such a crowded ecosystem?

Linda Findley Kozlowski (Chief Executive Officer, Blue Apron): And I think that's going to take some time and it's going to take some focus, but that is – we not only hear it from our customers when we talk to our customers, which we do daily. We hear a lot from them about how from their perspective even, just, "I feel healthier. I've lost weight. I've been able to control not only my eating but, like, teach my family better habits about using whole ingredients."

So, you start to see that a lot more, and we need to bring that through more in the messaging because I think what we know from our customers, they're not actually using us purely for convenience. Convenience is only one aspect of it. It's actually more about, "I'm cooking things that I've never cooked before, and I'm learning things I've never learned before. I have removed one stressful decision from my day, which is what am I having for dinner tonight," which turns out is much more stressful than actually going to the store. Once you've decided what you're going to eat, that's actually the biggest hurdle. "And I also have this feeling of accomplishment in something that I'm able to do and pull together and provide."

So, those are the reasons that we hear from our customers. So, I think going out with a message that's more aligned with that around health, around discovery, around the culinary authority we have, which is strong – we already have more than 3,000 recipes out there, and growing on a regular basis – really focusing on those messages rather than just convenience and cost I think are one of (inaudible).

Heath Terry (Analyst, Goldman Sachs): That makes sense. You referenced before the opportunity in partnerships. You've done a few of those here recently with Weight Watchers. Where do you see partnerships playing a role, both from that messaging standpoint potentially and then also distribution, which you've tried some in retail, as well?

Linda Findley Kozlowski (Chief Executive Officer, Blue Apron):

So, we can address those a little bit separately. One of the things that we very explicitly said as we've been rolling out the strategy is we're actually going to be focusing on the direct-to-consumer product. So, we're moving out of some of the retail partnerships.

And to be honest with you, in looking at where the biggest opportunity is and the room for growth, it's really in D2C. Retail is challenging from a meal kit standpoint because you have a different margin structure. You have shrinkage that's – any retail situation you're going to have shrinkage. These are perishable items. You lose the advantage that I was talking about of being able to know and predict how much you need, how much produce you need, how much protein you need because you're now stocking something in advance, which means things are going to go bad and you're going to have breakage.

And so, what we're trying to do is we're trying to avoid that situation and really give a solution that's much more tailored to the consumer. So, that's sort of number one. I think we've learned a lot from those partnerships and they've been great partnerships, but they aren't the biggest opportunity for growth in the future and for scalable profitable growth in the future, at least in the immediate future.

Then on the flip side, from partnerships where they're more acquisition partnerships – for example, our partnership with WW – a big part of what we're thinking about with health initiatives, going forward, has come from the learnings from those audiences. So, we saw a huge demand from our existing customer base to engage with healthier items when we launched that partnership, and that's something that we're using to help grow and evaluate how we actually offer something healthy in the market that doesn't necessarily taste like diet food.

So, those types of partnerships where you're bringing in customers to something that is very inherently core to Blue Apron, that's really the biggest opportunity for us. And it's not just looking at millions of potential users, but tens of millions of users in those partnership channels.

Heath Terry (Analyst, Goldman Sachs): Great. So, we do have time for questions from the audience. If you have one please raise your hand and we'll get a microphone over to you.

So, maybe while the microphones are getting around, when you look at the competitive landscape now within that D2C category how do you see it, particularly as we have seen some consolidation within the space? How should an investor think about sort of where Blue Apron fits competitively?

Linda Findley Kozlowski (Chief Executive Officer, Blue Apron): I think from a differentiation standpoint our biggest asset is our culinary authority. We are known to have some of the best recipes, some of the best ingredients, and that comes from a long history as a company of really focusing on that and driving something that's truly going to be unique and exciting for customers. So, I think that's a primary competitive differentiator for us on that side.

On a business side, I think everything that Tim was talking about of what we've been able to achieve from a variable margin standpoint, what we've been able to achieve when thinking about our scale in marketing, what we've been able to achieve in setting the right foundation for financial rigor, those are the areas that we've really accelerated on and had to address very, very quickly and very aggressively.

And I think from combining those two things of having the brand differentiator of the culinary authority that we have on that side, being one of the most recognized brands – being the most recognized brand – in the meal kit industry, combined with that core foundation of operational excellence, fiscal discipline, and really just rigor around how we think about the business and focus is those are really the two (inaudible).

Heath Terry (Analyst, Goldman Sachs):

And so, if you were to look ahead five years, if everything that you have planned for Blue Apron is successful, what does the company look like?

Linda Findley Kozlowski (Chief Executive Officer, Blue Apron): I think primarily this idea – and you touched on it – specifically of really focusing first on how do you actually create an environment where cooking at home is understood to be healthier. It's also easier. You're reducing the carbon footprint of people because they're able to do this in a much more efficient way and, frankly, even more efficient for themselves, as well. You look at – if you're an urban customer you probably have a kitchen the size of a closet. You don't want to store a bunch of food. If you're a rural customer, then access to some of these ingredients in grocery stores isn't readily available. So, we find we are evenly spread across the country.

And that gives us what I think is the opportunity, too. Blue Apron is a growing company that is addressing the needs of the modern household, introducing discovery and new foods and able to expand through this concept of how does health become more of a lifestyle as opposed to a restrictive diet sort of focus. That's a big part of where I see the vision of the company and where we're headed in the next five years.

Heath Terry (Analyst, Goldman Sachs): Great. Linda, Tim, thanks so much for taking the time to join us. I really appreciate it.

Linda Findley Kozlowski (Chief Executive Officer, Blue Apron): Absolutely. Thanks so much.

Tim Bensley (Chief Financial Officer, Blue Apron): Thank you.