From 3k to an acquisition by an Uber co-founder, Roy Shaby talks lessons and newest venture, Tradestars

London-based serial entrepreneur Roy Shaby has an impressive CV. His second startup, FoodStars, was acquired by a firm led by Uber co-founder Travis Kalanick and his latest venture, Tradestars, described as an offline community for online businesses, has hit a healthy 4m in revenue with three London sites in just three years.

But all that, of course, is not the entire story. We have to go back to 2011 when the twenty-five-year-old Shaby was flat-sharing in Camberwell, armed with nothing but £3k in his bank account and a relentless desire to start a business. “That should have lasted me for living expenses,” says Shaby. “But I just couldn’t let go of the ambition of wanting to run a business.”

His light-bulb moment came when ordering from food delivery service, Just Eat. He thought about the ease of the customer experience, from the digital selection of dishes to the driver arriving at your front door and wanted to do something similar, but didn’t have the funds to invest in a restaurant.

That’s when he decided to start a dark kitchen, also known as a delivery-only kitchen. Shaby was ahead of the curve here, as dark kitchens only began to take off by the time his second venture was up and running in 2013.

Going back to 2011, he decided upon a sushi delivery business to combat the lack of sushi options in the Camberwell area, and that’s when he thought about his local kebab shop and its underutilised kitchen. He walked over and proposed a £200 weekly fee for its use: “The owner turned around and said, Roy, this sounds like the most stupid idea ever, but I will take your money, and we shook hands.”

I would stare at the ceiling thinking what the hell am I doing with myself? But then in the morning I would wake up, get ready and go again.”

He then came up with the name Running Sushi, created the menu, and hired a sushi chef and a driver. He managed to get the business onto Just Eat, and the modest team of three started their first evening of service. “All I had was a prayer that it would work,” he reflects.

It turned out it did work. What started with a £25 sushi order at 5pm on night one, ended with over £500’s worth of orders by closing time at 11pm. Within a year, Running Sushi was generating £300k in revenue, not bad for a 3k funded business based in a South-London kebab shop.

Running Sushi – from a 3k investment to 300k revenue

However, the Running Sushi story wasn’t all smooth sailing, Shaby assures us. The first major challenge came within two months of trading in the form of a cash flow problem. He had two choices: use the money available either to pay his rent, or his staff. He chose the latter and spent two months sleeping in the Running Sushi kitchen on a chest freezer.

“I didn’t want to give up on the business,” he states. “People were depending on the money, and so I made a choice, and I suffered. It was really hard. I would stare at the ceiling thinking what the hell am I doing with myself? But then in the morning I would wake up, get ready and go again.”

Countless entrepreneurs have found themselves in a similar situation to Shaby, faced with either having to find a solution to save their business or to cut their losses and bow out. In business life, the latter is often the most common. But Shaby’s venture didn’t become another startup failure statistic.

“Just Eat was the platform where I could really build a business from. Without it, there wouldn’t have been Running Sushi or FoodStars.”

This period, although challenging, taught him the importance of being multi-functional and cash-flow conscious. “Anyone running a restaurant will tell you the margins are very thin and you have to put on various hats as an operator,” he explains.

“This isn’t just knowing how to work in the kitchen when the chef isn’t well,” he continues. “You need to be the cleaner sometimes and a really good accountant because you’re paying suppliers and wages. The money just slips from your hands. You also need to have control to make sure you don’t get into cashflow issues.”

Running Sushi was something of a trial by fire for Shaby. “Ever since I’ve been very conscious,” he says of his varied operational and cash-flow duties. “That early lesson sticks with me.”

It’s clear that Shaby’s experience with Running Sushi and now with Tradestars is an example of innovating what is already there, rather than reinventing the wheel.

“With the current business, Tradestars, we haven’t invented a new type of real estate,” he explains of the flexible rent space provider. “We’ve taken distressed real estate that wasn’t performing well before and modernised it in a way that makes sense for today’s entrepreneur.”

In Shaby’s experience, it’s the market gap that matters more than an original idea when working on a business.

Innovation, not invention

He first suggests looking at the problems or gaps in the market, then creating your offering from that point. “Figure out the current problems in the market where you are present or want to be present, and then reverse engineer your product from there. It’s not about making a nice product, and customers will come. It’s about what you are solving for them.”

Speaking of not reinventing the wheel, the dark-kitchen entrepreneur is open about crediting Just Eat as the petri-dish that enabled Running Sushi to become successful. Initially, he leafleted alongside using Just Eat, but that generated little interest. “Just Eat was the platform where I could really build a business from. Without it, there wouldn’t have been Running Sushi or FoodStars.”

“I had two choices: either crash and burn or go really, really hard. And I chose the latter. I went super hard. I got out of mourning, and I then co-founded FoodStars and created the first three kitchens in Bethnal Green in East London.”

The seed for FoodStars was planted in 2013 when Shaby was looking for space to run another sushi kitchen, with an extra kitchen to sublet to cover his overheads.

He received so much interest from operators that he ended up renting his kitchen out to multiple businesses twenty-four hours a day and was making a healthy profit. It was then that he decided to shelf the sushi part of the business and move fully into the kitchen for rent space.

FoodStars, the kitchen for rent sector and acquisition

Shaby was then running two dark kitchens. Profits were healthy, work output was less, and he could pay himself a decent salary; however, this is when he felt he needed a new challenge: expansion. “I was going crazy out of boredom.”

Next, he went to Virgin Startup, a founder funding and mentoring community, to secure a loan and present case studies for new sites. “I showed them all the sales and inquiries that came through. They thought it was amazing, and they funded me the highest they could at the time, which was £25k.” 

Then in 2015, Shaby was confronted with a tragic personal situation: his mother suddenly passed away. “I had two choices: either crash and burn or go really, really hard. And I chose the latter. I went super hard. I got out of mourning, and I then co-founded FoodStars and created the first three kitchens in Bethnal Green in East London.”

In under two years, they had forty-five kitchens in operation. The client-base, he says, was varied and included everyone from professional caterers to ex-bankers pivoting into their dream careers of making and selling food. “The community mix was just incredible.”

“It took me from being, let’s say, a successful entrepreneur, but scrappy and not knowing all the big tools, into acquiring a really nice tool set over the period of working with Travis…It was the best business university. And I operate today with all of those learnings.”

Shaby credits the explosion of interest in his kitchen-to-hire model to the high costs involved in the food retail space, with escalating rents, business rates and operational costs forcing physical food retailers to consider other options, such as dark kitchens.

“Our solution was providing ready-made spaces,” he explains. “So you don’t have to invest much capital into moving in and starting a business. Operationally, the most you would have to worry about is paying your rent. They were coming to us because the barrier to entry had been lowered.”

Then came a call that took Shaby’s entrepreneurial career to the next level. Uber co-founder Travis Kalanick wanted to acquire FoodStars via his dark kitchen company, CloudKitchens. 

Shaby decided to stay with FoodStars post-acquisition and be part of its scale-up journey. The experience, he says, was deeply educational. “It took me from being, let’s say, a successful entrepreneur, but scrappy and not knowing all the big tools, into acquiring a really nice tool set over the period of working with Travis, which was about three years after FoodStars was acquired. It was the best business university. And I operate today with all of those learnings.”

One of those learnings, according to Shaby, is understanding what motivates people. “One thing I learned from Travis is how to lead by giving people the freedom to manage their areas of responsibility, and empowering them to do that is so powerful when scaling a business,” he shares. “You give them that freedom and tell them you don’t work for me, I work for you, this is your area of responsibility and I am your plumber, and if any issues are blocking your way, my job is to make sure you are successful in what you’re doing and operating.”

Now we come to Shaby’s latest venture, Tradestars. Its London properties, which are all owned by the company, are home to various businesses, from hairdressers to architectural firms and influencer marketing companies. What links them, Shaby explains, is their “strong social media presence.” As such, they don’t require the usual brick-and-mortar storefronts and the high rents and business rates that come with them.

Tradestars – this is no WeWork

Tradestars, Shaby confirms, offers businesses bespoke studios from which to operate. Customers and business employees alike benefit from breakout areas, including coffee shops and other open areas where founders can mingle, and customers can enjoy some downtime before their service. 

Before you assume Tradestars sounds like a WeWork under a different name, think again, says Shaby. “A lot of the operators that come here didn’t really have a good solution. For example, you cannot do a media production shoot from a WeWork because it’s not very private. You cannot run a beauty business out of a WeWork, because if you’re selling online, which is another cross-sector that we serve, then logistically it’s not convenient to move boxes up and down stairs and ship them from a WeWork building.” 

What makes Tradestars unique, Shaby explains, is the fact that they “try to combine the logistics and the needs of all these operators into one building.” Businesses can find a logistics hub at every Tradestars site in London, meaning they can manage their inventory at their place of work.

They also have a nine-to-five presence on site who will ensure a courier picks up the goods if the founder isn’t available to manage the collection. “That was a big pain point for a lot of them, especially the early-stage ones,” says Shaby of the founders he hosts at Tradestars.

Shaby has a bold vision for Tradestars over the next one-to-two years: to expand from three to ten sites with a projected £18-20m revenue and an overall aim to have twenty-five sites UK-wide. He’s confident about a significant site expansion in a short space of time: “I’ve done more in shorter periods before, it’s totally achievable,” he concludes. 

Well, considering his work with Running Sushi, Foodstars and his now three-site Tradestars portfolio with a £4m revenue in just three years, maybe it is.

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