The Pomp Podcast - #601 The Story Behind Bitcoin Pizza

Episode Date: July 8, 2021

Nick Sopchak and Rushir Parikh are the co-founders of PopChew, where creators launch their food brands. PopChew has developed a new drop-ship style of executing the launch and operations of a national food brand.   In this conversation, we discuss Bitcoin Pizza, the origin story, how we launched it, metrics of success, what we are doing next, and why virtual food brands are the future.  ======================= LMAX Digital - the market-leading solution for institutional crypto trading & custodial services - offers clients a regulated, transparent and secure trading environment, together with the deepest pool of crypto liquidity. LMAX Digital is also a primary price discovery venue, streaming real-time market data to the industry’s leading analytics platforms. LMAX Digital - secure, liquid, trusted. Learn more at LMAXdigital.com/pomp ======================= NEAR, now listed on Okcoin.com, is an open-source platform that accelerates the development of decentralized applications overcoming high fees and slow speeds with its fast, scalable, low-cost, and climate-neutral blockchain protocol. This is why NEAR was recently awarded the Climate Neutral Product Label from South Pole. One transaction on NEAR consumes about 1300x less carbon than a similar transaction on other chains. Learn why NEAR is the infrastructure for innovation at NEAR.org (N-E-A-R [dot] O-R-G) today. ======================= Cosmos is building the Internet of Blockchains, marking a new era of interoperability, scalability, and usability. The free flow of assets and data between blockchains with bridges to Ethereum and Bitcoin will unleash the potential of DeFi, NFTs, and much more. Dive into Cosmos at cosmos.network/pomp  =======================

What's up, everyone? This is Anthony Pompliano. Most of you know me as Pomp. You're listening to the Pomp Podcast, simply the best podcast out there. Now let's kick this thing off. Nick Sobchak and Roshir Parikh are the co-founders of PopChew, where creators launch their food brands. PopChew has developed a new dropship style of executing the launch and operations of a national food brand. They're also the infrastructure behind Bitcoin Pizza. In this conversation, we discuss Bitcoin pizza, the origin story, how we launched it, the metrics of success, what we are doing next, and why virtual food brands are the future. I really enjoyed this conversation with both Nick and Rushir.

I hope that you enjoy it as well. Before we get into the episode, though, I want to quickly talk about our sponsors. First up is LMAX Digital. They're the number one institutional crypto exchange. They offer clients the deepest pool of crypto liquidity on the planet, underscored by 100% uptime track record through volatility spikes. You can leverage LMAX Group's liquidity relationships and ultra-low latency technology. LMAX Digital is the market-leading solution for institutional crypto trading and custodial services. They feature this central limit order book streaming

spot Bitcoin, Ether, Litecoin, and Bitcoin Cash, and it's all paired with US dollar, euro, and yen. LMAX Digital might not be known by the retail world, but every institution knows who LMAX Digital is. I've had the CEO and founder of LMAX Group on the podcast before. I'm super impressed with the business, and I think that they are going to continue to be a key piece of infrastructure. If you're an institution, you should be using LMAX Digital. They're secure, liquid, and trusted. You can learn more by going to lmaxdigital.com slash POMP. Again, lmaxdigital.com slash POMP. Next up is Near, an open source platform that accelerates the development of decentralized applications overcoming high fees and slow speeds with its fast scalable low cost and climate

neutral blockchain protocol this is why near was recently awarded the climate neutral product label from south pole one transaction on near consumes about 1300x less carbon than a similar transaction on other chains learn why near is the infrastructure for innovation at near.org today n-e-a-r.o-r-g today mere.org go check it out let me know what you think last but not least is cosmos they're building the internet of blockchains marking a new era of interoperability scalability and usability the free flow of assets and data between blockchains with bridges to ethereum and bitcoin will unleash the potential of defy nfts and much much more dive into cosmos at cosmos.network slash pomp again cosmos.network slash pomp internet of blockchains marking a

new era of interoperability, scalability, and usability. Cosmos.network.com. All right, let's get in this episode with Nick and Rushir. I hope that you guys enjoyed this one. Anthony Pompliano runs Pomp Investments. All views of him and the guests on his podcast are solely their opinions and do not reflect the opinions of Pomp Investments. You should not treat any opinion expressed by Pomp or his guests as a specific inducement to make a particular investment or follow a particular strategy, but only as an expression of his personal opinion. This podcast is for informational purposes only. All right, guys. Bang, bang. Very excited about this. I've got the founders of PopChew here. How

are you guys? Doing great, right? Awesome. Let's just jump right into this. You guys are the masterminds behind Bitcoin Pizza with me. Let's just talk about one, what was Bitcoin Pizza? uh and how did it go right out of the gate yeah uh bitcoin pizza was our first launch um for pop shoe it was really our take at can we leverage a community that's super engaged super powerful and build a food brand around it uh that again just like further engages the community and audience in a really deep and really connecting way right like if you think about it food is one of those things that's like super super personal it's like you're literally getting invited to Pomp's dinner table when you're taking a slice of Bitcoin pizza. So yeah, super excited.

Got it. And Nick, how did it go from a statistics standpoint? It was incredible. On launch day, we were turning on Twitter, like 15 million impressions, something like that, like 100,000 people on our website in the first day, almost 100K in sales over the course of the seven-day event. Stove restaurant partners, we raised $15,000 for the Human Rights Foundation, which is incredible. Yeah. And I think part of what people don't realize is, you know, there's all this kind of traffic and eventually Stephen Colbert and folks covered it, but it was only available in 10 cities. Right. And only in the United States. So talk a little bit about kind of operationally when somebody orders a pizza through Bitcoin pizza, what happens in terms of from that order to them actually receiving the pizza? Yeah. So what we're doing at Popshoe is essentially building a network of independent mom and pop restaurants. We're basically aggregating all of these restaurants together,

building a network, and then basically creating a platform for creators to launch brands on top of. And so with Bitcoin Pizza, we built a network of 44 independent mom and pop pizzerias across the country in 10 key cities, from New York to LA to San Francisco to Miami, and a handful of other cities, put them all together, layered the brand. And at the end of the day, they were excited about it for a number of reasons. For one, they get extra demand through their businesses. We're bringing more orders than they would normally get. And then two, they're getting more exposure as a restaurant. They had their logos listed on our landing page. People could go in person and visit these restaurants.

And so it was really compelling for them to be a part of the Pocktree platform. Got it. And so one of the things that I think people didn't understand, but it's important to me and I think important to you guys was we basically would go to these local pizzerias and we'd say, hey, you're going to make the normal pizza that you make. It's going to go into our box. So there's not a ton of like operational complexities that get created for the local business.

But also too, is we're going to bring you orders, but you're going to sell that pizza for the exact same price that you would normally sell it. And so we don't eat into the margin of the local pizzeria either. And so it's kind of this like win-win where we get to use their infrastructure and their years of hard work of building out kind of the operational excellence

that they have as a local pizzeria and obviously great food. And in return, we're gonna bring you a bunch of orders as well. And so I think that was kind of a key piece here was the capital that was being donated was really kind of profit on top of what a small business would normally make. And really that's where you create this kind of unique situation

where the local business wins, the human foundation wins, and then also the customer wins because they're able to get kind of this Bitcoin pizza. And so it's a pretty incredible model when you start to understand how this network that you guys are building at Popchew is able to be leveraged for something like a Bitcoin pizza. Exactly. And I think something that's super impressive, right,

is we were covering about 10% of your audience geographically, right? Like literally 10% and we did a hundred K and top line sales for all these restaurants. Um, and so, you know, when we start adding more and more locations over time, right? Like our goal is to eventually be able to cover, you know, as close to a hundred percent as possible. Um, the business becomes extremely compelling. Um, and you know, again, the other sort of like really powerful thing about it is we're working with

restaurants that like already know how to do this, right? Like we're going to pizzerias and saying like, here's a pizza. Uh, we're going to burger restaurants and being like, here's a burger menu, right? It's like, it's food that they already know how to make. They're already excellent at doing it. And then through Popshoot, through the creators, you know, we're, we're getting these people that are juggernauts literally at customer acquisition, at loyalty, at retention,

and like doing what they do best to bring the demand to these small businesses. Absolutely. Really crazy thing about Bitcoin pizza that was the restaurants that were selling Bitcoin pizzas were making more money selling Bitcoin pizzas than they were selling their own pizza. So we didn't use a third-party marketplace to sell Bitcoin pizzas. All the orders were direct. There's no DoorDash, there's no Uber Eats. Typically, those platforms are taking 30% of the margin away from the restaurant. We charged a low flat fee per order. And typically, the restaurant was making $4, $5, $6, $8 more per order selling a Bitcoin pizza

than they were their own equivalent pizza on DoorDash. Yeah. It's pretty incredible when you start to realize that economically, they were actually incentivized to make the Bitcoin pizzas over other types of orders because they literally just put more money in their pocket at the end of each order, right? Literally, I mean, we had a handful of pizzerias that were telling their customers like on Instagram or Twitter,

like, hey, go order Bitcoin pizza, right? Like they wanted them to go and order from this like third party brand versus their own. Yeah, and Nick, maybe talk a little bit about what's the plan now moving forward with Bitcoin pizza in terms of getting more locations and kind of moving it from more of a one-off type thing to something that'll be persistently available for folks.

Yeah. So obviously the response was insane. A ton of folks reaching out to us in Atlanta and Phoenix and all these different places where we weren't. And so right now we're building that restaurant network. We're expanding into a bunch of new cities all across the US. And we're looking at things like how do we go international? How do we go to Canada? Which obviously Palm's audience is global. But our plan is to bring the brand back shortly and launch in farmer markets for a much more long-term run. Yeah. And one of the things that I didn't understand until afterwards that you guys helped me get educated on, so maybe you can educate the audience here, is just compared to a traditional food brand, being able to go to kind of 40

locations, immediately have national coverage, even though it's only in those 10 cities, we still were in the kind of 10 major cities in the United States, that takes a really long time for kind of a traditional brand to do. So what are some of the comps that we can use to understand, you know, getting to 50 plus locations from a timeline perspective and also like how difficult that is for a traditional mom and pop or brick and mortar type restaurant brand? Yeah, I mean, I think the direct comparison, right?

Like if you take a brand like Sweetgreen, it took them literally like 12 years to get to 100 locations. And you have to think about like there's a lot of these companies out there, whether it's traditional restaurants or even some of these like ghost kitchen companies, they're all building physical infrastructure um and that takes a lot of time it takes a lot of permitting um you know to be able to sell alcohol to sell food um and i think like really what we're doing is it's sort of turning around right and if you look at a traditional restaurant i mean 30 percent of uh of a traditional restaurant's audience um actually comes back

a second time right so pretty pretty low um and you know best in class take someone like shake shop 55 of their customers come back second time repeat purchase um and for us like really flipping that on the head and saying like hey let's go to creators let's go to the folks that know what they're doing on the customer demand side know what they're doing on the loyalty side customer retention um and basically build this like product that you know enables them to bring the demand side to the restaurants uh that are great at doing the food right like if you look at a lot of these restaurants today they're like just now getting into like email marketing right or like an app that displays a menu but you know coming from obviously like tech right like we know that

there's a lot more product experiences that we can build um that are far beyond you know what these like restaurants are just now starting to do and so we're sort of approaching this from the opposite side of traditional restaurants what's crazy to me is take a sweet green as the example there uh it took them 12 years to get to 100 locations um and then they're able to kind of have a bunch of you know sales and throughput but they also spend a bunch of money on marketing and to reach profitability is is pretty difficult for a lot of those types of brands take a company like yum brands right like yum brands has kfc pizza hut taco bell maybe spent literally like hundreds of millions of dollars on marketing and like years and years and years to grow their brands

into like what they are today right um and again with like pops you the entire idea is like let's take these people that have the audience already and like just plug them right in, um, into the restaurant. So I'm not even really that big from an audience perspective compared to some of the people you could go do this with, right? I got a million people on Twitter, uh, but a lot of the other audiences aren't really that big. I mean, 200,000 on YouTube, et cetera. I'm guessing that the plan from a pop shoe perspective is just go get the biggest folks possible, um, that have, you know, much, much larger audiences. You can imagine if somebody with 50, a hundred million followers on a platform did this, uh, it would be absolutely nuts. Yeah, absolutely. And so like

our goal with pop trees, like really to build this as a platform, right. There's the food like works for a wide variety of creators, right. You can be a huge like fitness creator, right. And maybe a salad bowl or, um, you know, a smoothie or something like that makes a ton of sense for you and your audience. Uh, maybe you're a gamer and a burger makes sense, right. There's like a lot of different avenues to get into food for a variety of different types of creators out there. And that's not even touching like all of the food creators that are out there, right? Like if you go on TikTok or YouTube or Instagram, like food is literally everywhere. Right. Like we're talking to a wide variety of creators right now that are in our pipeline

about launching their food brands coming out here. Yeah. And Nick, talk a little bit about the advantages that you have from a pop shoe perspective of like no CapEx and no food costs and just like why this almost like asset light model makes so much more sense today if you want to start a restaurant versus going and actually doing the brick and mortar type strategy. Yeah. So, you know, my thesis today is if you had a million dollars to build a restaurant, the first thing you wouldn't, the last thing you would do is plow it into real estate. The last thing you'd do is go build infrastructure, right? Like you would figure out a way to like build a brand and figure out distribution and get the product to people. Like, why would you put it

into brick and mortar in New York City where I am, for example? And so Popshoe operates with no food costs, no capex, no labor, anything like that. We're leveraging the expertise and the infrastructure that already exists with our restaurant partners, and some of those folks are in ghost kitchens, to create a revenue opportunity for these folks to drive our brands, to grow our brands very, very quickly, which allows us to get to 100 locations. I think this year we'll be at 100 locations by the end of this year, less than 12 months after starting, right? Again, compare that to Sweet Crate, it took them 12 years to do that.

This is just a super capital efficient way to grow a food brand and capitalize on the opportunities. Yeah. Yeah. And it feels like really you can replicate a lot of the same effort, right? In terms of building a brand, marketing, doing a lot of these various components that we know is important for the brick and mortars, but you're able to essentially borrow or rent somebody else's infrastructure without having to pay for it. And they make more money along the way, right? It's such a win-win type model that I think it's kind of a no-brainer as to why

folks are going to flock to this. Yeah. I mean, especially on the restaurant side right like uh we were you know nick has has been the ghost kitchen in virtual brand space for five years and as we were calling up restaurants pitching them on like hey like let's work with pop g let's you know do bitcoin pizza uh we were actually surprised at how easily it was to get them on board um just because the pitch to the restaurant is so so compelling right it's it's purely incremental uh demand network driving right it's you were already paying for the space you already were paying for the staff uh oftentimes you even had some ingredients laying around um and now we're just providing more demand for you to put all that to use and you're able to

do it at a lower cost than you normally would um and so the pitch to the restaurants was was just super compelling and the pitch to the creator is also like really compelling too right like um i mean you know this better than everyone but um you know there's not a ton of effort that goes in from the creator side in order to launch this right input on the brand oftentimes like we're talking to creators now that already have a brand established and we're just like putting that on the packaging. And then it's up to them to go and engage their audience, right? Like literally doing what they do best already every single day, um, to get people to go and eat from their restaurant. Um, and again, like food is one of those things that's just like, so, so personal,

um, in a way that like merch, for example, um, just isn't. Absolutely. And so talk through a little bit, uh, maybe tell a story of like how you guys convinced me to do this. Uh, cause I think that's a pretty good example. And, uh, you know, eventually not only did I enjoy working with you guys and it worked, but I ended up actually investing in pop to the business itself. Um, so I'm a pretty big believer in the model, but just kind of tell that story, uh, to help people understand, um, really, you know, the, the effort level needed from the creator side. Yeah. So I think we like approached you, maybe it was like three or four months ago at this point. Um, and initially approached you as an investor, right. And the goal was like,

Hey, like pump, you know, you know, a handful of creators, like would be great to have you on the that table. Um, and I think he had come back to us and basically said like, Hey, like, this is super exciting. The creators I've talked to are really interested in food, but I think that this might be like too time consuming or too like time intensive for the creators to actually do. Um, and so Nick and I threw together like literally that night, uh, bang, bang pizza, right? So like, obviously like we follow you, we watch your videos and we know that bang, bang is tagline. Um, and so we threw together bang, bang pizza, send it over to you. Um, and you know, that was sort of off the races i think you have something around like uh rewarding hustle right and i think

like that was a perfect example of um you know showing you like here's how easy it can be uh to launch it how about you be our first creator um and so yeah from there right like you you said um let's actually do bitcoin pizza let's make it even bigger let's launch it on bitcoin pizza day um make a splash so uh that's what we did and i think like the great thing was like you know our initial proposition was like let's launch in one city uh and then we ended up launching in 10 cities across the u.s so just again it goes to show like the scale and how fast uh brands like this and can be spun up yeah i think what's so fascinating about it is as you um kind of showed me hey here's what the boxes would look like here's the menu like you start

to understand like oh wait a second the infrastructure provider is really important you guys did a great job with it. But really the kind of responsibility I have in this scenario is to simply promote it, right? And to kind of be the marketing arm, if you will, the distribution arm for a brand that I obviously believe in and helped craft. And then you guys kind of take all that complex operational components and you bring it in the background. And so literally, I don't even know how you call the pizza place and get them signed up. And like all the things that I would have thought would have been really difficult and hard, and I wouldn't personally have done. I think, you know, this model of you guys take care of that. And it's really just

asking the creator to be the kind of marketing arm of a food brand ends up being really interesting. And it goes back to this whole idea of, you know, you can go and try to strike a marketing deal with somebody for a food brand, or you can own the food brand, right? And always owning equity, if it's successful it's going to be much much more lucrative and much more rewarding i think than uh trying to go get you know somebody to sponsor you or sponsor your videos or whatever from there 100 right like if you look at travis scott for example right like he did a deal with mcdonald's um it was a phenomenal deal right like travis scott this like mega star guy uh literally drove so much demand that mcdonald's of all companies was literally running out of burger

meeting when i set the key locations um so sort of like insane um but the thing is he got paid less than two percent of the revenue that he was responsible for generating right and you know you you look at what he's doing now right he's he's sort of like been educated he has his own water line um right he's starting to build his own brands because he he understands now that like hey this is the actual way to build equity um and you know this is this is the future of how brands are going to be established. Absolutely. What, uh, what's next from a pop chew perspective, how are you guys thinking about, um, kind of where you go next and how you continue to grow the business? Yeah. So there's a couple of key things. Um, so, so one key thesis that we have

is that it's not just about what, uh, food is a lot more about the experience that you have. Right. Um, there's restaurants that like I personally go to just cause like the music is good um and no one is like touching this in the food delivery world if you look at door dash or uber eats or any of these players you scroll through a list of restaurants you scroll through them and you place your order and it shows up in a brown paper bag that's for the end of the day right um and so for us we really think about like what what does this experiential component look like um and that's the thing that like we're going to be advancing on the product side and that's looking at things like drops integrating merch integrating content integrating community right

So think about right now, like you have all these kids who, you know, eat dinner, sometimes alone, like in their bedroom, right? With playing video games. What if you could also just like eat with a community that you're in? And this is like this like really powerful sort of example. And so that's what we're going to be focused on the product side. And then on the sort of like launch operation side, we have a slew of creators that we're talking to right now that are in our pipeline that we're working on food brands with. And we'll be launching those across a network of restaurants that were, as Nick mentioned, growing to a hundred by the end of the year. Yeah. It feels like somebody is going to win

this category and going to build the infrastructure and kind of the marketplace. It's just a matter of execution, right? It's very clear that there's a market opportunity. It just comes out of the execution piece. A hundred percent. I think like, you know, being fast is super, super important in this space. I think like that's what Nick and I sort of like specialize in. You know, I've spent the last four or five years working in marketplace operations businesses, dropped out of school and just needed to get going and fired up to start working. Nick has spent, again, the last four or five years working in ghost kitchens and virtual brands, knows that space like the back of his hand.

We just made our first offer to a guy who's been the GM at Speak Green at Chipotle and totally understands sourcing and restaurant acquisition and how to train staff. And so we're all geared up to get going. Nick, before we go to wrap up, what's the one thing that you learned during the virtual kind of brand or ghost kitchen experience? What's like the biggest takeaway that you had or the most surprising thing? I think we kind of talked about it, right? I think this idea that a single brick and mortar location can be a hub, a business with multiple revenue opportunities, a business with multiple brands underneath it, this idea that you don't have to be a business owner who's struggling to get by because you're only selling this one brand. You can leverage the expertise and experience of folks like Rashir and I, folks like Pomp, if you want to take on a pizza brand, and you can create this new economic paradigm for yourself as a restaurant owner by leveraging these different opportunities. And I think for me, as someone who spent a ton of time working with restauranteurs, chefs, owners, things like that, that's what really excites me about this opportunity is that I think we can really create value for restaurant owners. Yeah, I completely agree. I ask everyone the same three questions, so I'm not letting you

two get out of here without asking the same questions. What is the most important book that each one of you have read? Oh, interesting. Nick, I'll let you go first. Why We Sleep by, I don't know the guy's name. Matthew. Matthew. I forget his last name, but yeah, yeah, yeah. That's a great one. The only thing your body needs is to sleep. if you don't sleep, you're going to get all these crazy diseases. Just rest your body and give your body what you need. I'm a complete convert. It's funny that you said this because the next question is usually, what is everyone's sleep schedule? Because the folks over at Eight Sleep, I started sleeping on their thermoregulated bed. And not only do I now sleep

like a baby eight or nine hours a night, but I literally beg them to let me invest in the business afterwards. So I, uh, I am a big, big believer of, uh, of sleep for sure. Rashir, what is, uh, what's your book? Uh, my book, this is probably a bad answer, but, uh, I actually really enjoyed the Steve Jobs book, uh, by Walter Isaacson. And I think like, why would that be a bad answer? I don't know. It's not one of the popular answers, I guess. Uh, but that, but that's okay. Um, I think for me, it was really about like, uh, you know, finding someone who, um is really like dedicated to their craft um you know really like understands or like what they're building and why they're building it and like really understands the customer

um in a in a really deep way right i think that's like one of the things that's really apple differentiated themselves on um i think that really stands out to me yeah that's a great answer uh last question aliens are you guys believers or non-believers 100 real uh 100 the universe is so huge like it's it's stupid to think that we're the only ones here I agree. I absolutely agree. Sorry. The NASA chief. Yeah. The NASA chief, he, uh, he recently came out. He said he thinks that there's going to be intelligent life as well. So I think we're, uh, we're, we're getting more allies on this side of the, uh, the debate. What one question do you guys have for me to, uh, to finish up? Um, interesting. Okay. Uh, what is the most

exciting part of your day every day? Waking up easily. I'm like a big, uh, I think a lot of people forget that, uh, life is finite and, um, just getting to wake up every day is in some crazy way. Like you're very, you know, kind of, uh, further ahead than some other people. Um, and so when that's like the, the bar of quality for the day is like, did I get to wake up today? Then, then, uh, everything else kind of, you know, seems pretty minuscule and not that important. And it's pretty easy to be happy. So easily that that's, uh, that's the thing. Makes sense. Yeah. I, uh, those, uh, those like good morning texts or good morning tweets that you do. Those are great. Did I get, uh, I'm a big believer that like, uh, you, you create the

energy of the day by, uh, but it's bringing the energy. So I don't know. It's just, uh, that's my way of living my life worked out so far and i'll keep doing it nice all right where can we send people uh let's send them two places one uh maybe let's send them to uh follow you guys on twitter uh for popchu and then what's the website for uh bitcoin pizza for uh for them to uh to go check that out before we relaunch it yep so the website for bitcoin pizza is eat bitcoin pizza dot com it's a pretty straightforward alright and then Twitter yep on Twitter you can find us

at eatpopchew dot com or sorry just eatpopchew the handle and then my personal Twitter is Rashid R-U-S-H-I-K-H alright Nick I'm Nicky Sopp N-I-C-K-Y-S-O-P and we're hiring so folks that are

interested shoot us an email that's a great plug they're hiring if you want to go help build Bitcoin pizza go apply. All right, fellows. Thank you guys so much for, uh, for doing this. I'm excited to, uh, to keep going. And, uh, and then it's not only going to be a Bitcoin pizza show. Obviously we got plenty more people to, uh, to onboard and keep building the business. So thanks for so much for coming on and we'll do it again in the future. Sounds good. Thanks for having us.