This Week in Startups - E1134: Deep dive on the food delivery wars with ChowNow CEO Chris Webb | Rising Stars of SaaS 4

Episode Date: November 5, 2020

Check out ChowNow: https://chownow.com FOLLOW Chris: https://twitter.com/chrischownow FOLLOW Jason: https://linktr.ee/calacanis

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Your first app is free forever, and right now Odo is offering $1,000 off your first implementation pack at Odo.com slash twist. That's ODOO dot com slash twist. Hey, everybody. Hey, everybody. Welcome to this week in startups. We've been doing a series as we are apt to do on this podcast when we want to drill in and go deep on a topic. We know you, founders, investors, and fans of technology who listen to this program want to hear about. And one of those to SaaS. What is SaaS? It's software as a service. So we decided to do rising stars of SaaS because this is a booming space. And people paying for software as a subscription has become a bit of a juggernaut in the technology industry and just in the wider business world. Subscriptions are here.

And it's a better way to pay for software. This is pretty obvious. You might have in the past paid for the Adobe suite of Photoshop and other products illustrator by spending $900. or $1,500 once every three years and gotten a bunch of DVDs and before that floppy disks and then traded them. It's a big giant waste of time. It was a ton of upfront cost and it limited the people who would embrace a piece of software. What if people could pay a low reasonable price every month for their software and maybe even on a per sepriced basis?

Well, that's what's happened. Slack charging, you know, $7,8 bucks a month up to $15. Salesforce charging $2 or $300 a month. depends on which piece of software you're using and the value that it creates. And this creates a massive competition. That massive competition is the free market at work. And SaaS companies have to be super confident that they're providing value because they bill every month.

Sometimes they bill quarterly or yearly and get a discount if somebody is really interested in doing that. And that would be a sign of additional commitment that a user wanted to spend that money, right? but at the end of the day, capitalism is working. Now, another place where the free market and capitalism is working, but people, let's face it, the virtue signaling, socialist slash communist party seems to think that food delivery is being controlled by three players. This is a false narrative. I wouldn't say fake news because I don't want to give Trump credit for that moniker, but this is a

false narrative. There is a tremendous amount of competition in delivering foods. It is not owned by DoorDash, Postmates, Grubhub, Uber Eats, and the like. In fact, those delivery services are a fraction of the overall delivery. There are companies like Amazon hold foods, dominoes that deliver directly, and there are the majority of restaurants who simply hire somebody out of the back of the kitchen to run food to their customers, and they pick up the phone. or they increasingly have SaaS software to do this. Today on the program, Chris Webb will be with us. And we're going to have a frank discussion about just how disingenuous in my mind.

I'm not speaking for Chris, this debate has been because being an investor in one of these companies, Uber, which is buying Postmates, I know the numbers. And I've known them for a long time. Companies are losing money on every delivery. And it's not like one company is running away with this, not even close. Chris started a company called Chow Now. You can go check it out at chownow.com. He launched it in 2012, started in 2011.

He's raised a bunch of money. Welcome to The Rising Stars of SAS, our fifth episode, Christopher Webb. How are you doing? I'm doing well. Thanks, Jason. All right. You heard my bit passionate rant there. Which parts of that am I spot on?

And then which part of that do you take exception with or think I'm wrong about? Let's just put it right out there from the get-go. Yeah, it'd be more fun if I disagreed with more of it because it's more of a debate. But I actually agree with just about everything you said there. I read the same thing you do. I see the same kind of headlines around the market and the restaurant delivery dominated by these three or four main players. In reality, they make up a decent chunk, but far from the majority of orders.

Because as you said, Domino's, Papa John's, Panera. They all do delivery. They all do online ordering. There's us who's often not talked about. This year, we'll do about $2.5 billion in orders on our platform. We have 18 million diners that will use our platform. To put that in comparison to Grubhub, we just reported earnings this week.

They have about $30 million. So Grubhub spends a tremendous amount, hundreds of millions of dollars every year on marketing, getting the brand out there, getting kind of consumer awareness. We don't have one person full time on our staff doing consumer marketing. It's just not our game. It's not what we do. And despite that, we still have $18 million. diners using our platform to order at their local restaurant.

And so I agree we are one of a number of other players that make up the pie. And so that pie has a ton of players, ton of slices. So I completely agree with what you said around that. And slice.com is another one we had on the program recently doing delivery of independent mom and pop pizza stores. So there you have a competitor who has just picked one vertical pizza and local pizzerias to try to own that. This is an incredibly competitive space, correct?

It is competitive. Yeah, absolutely. And so, so A Lear, who I believe you spoke with, the founder of Slice is a friend of mine. He's great. They're what we consider kind of the good guys and the bad guys with our space. I consider Slice and O'Lear a good guy. There's another company called Olo. Most people don't know Olo. They've been around for 15 plus year. It's run by a guy named Noah Glass. He's a great guy himself. OLO. OLO. And Olo does it for enterprise, right? So Shake Shack and Applebee's and others are clients of Olo. we are the other spectrum. We work with independent restaurants up to operators that have 40 or 50 locations, but the majority of our time is spent working with independent restaurants and very small regional groups. So in your mind, the good guys are people who empower restaurants to do sales, not disintermediate them from the customer. So in your world, do you consider the bad guys, postmates, Uber eats, and the like. Why are they bad guys in your mind? So, am I correct in that? Yeah.

And I think the poster child there is Grubhub. I think Grubbhub does the, and they've been called out in recent years. It took a while to get attention to some of their business practices. Some of it now is in various kind of cities and states is becoming illegal. So this practice of non-partner restaurants where you take any restaurant that you choose, you grab their menu online, you throw it on, you take their IP, and all of a sudden that it's listed. And so before COVID hit, right before COVID hit, Grubhubhub actually had more non-partner restaurants

on Grubhub.com and on their app, then they had actually partner restaurants, right? So they had, I think that they were claiming 300,000 restaurants on their platform. The majority of those restaurants didn't know they were on and didn't want to be on. And at some point in their life, and everyone knows Grubbub at this point.

They've been around for 15 or 20 years. Those restaurants had chosen not to want to be on Grubhub, pay their fees, and everything else. And Grub says, you know, frankly, we don't care. We're going to take your information. We're going to list you. We're going to take your menu. We're going to mark it up.

We're going to add all these fees. And we, and they've actually set on earnings call. We know this isn't good for the consumer and we know this isn't good for the restaurant, but this is good for us and this is a game that we're playing with these other players out there, and we need to compete with the others out there. And so we're going to follow the path. To really make this clear to people who are listening who might not understand the inside baseball of this, Grubhub, instead of going through the process of getting permission from a local, let's just use a pizzeria, instead of going to Gino's or,

Bay Ridge Pizza in my hometown of Brooklyn. Instead of going to Bay Ridge Pizza and saying, hey, would you like to be on our platform? We'll sign some documents and having that onboarding cost. They just walk in. They take the menu or they find the menu on the person's website. They put it onto their website. You call it IP, intellectual property. And then they say, we're going to market that to customers. And what they do is on the slide, I'm assuming on a technical basis. They call in and pretend they are a customer. Correct. Sometimes what we've witnessed is I'm actually placing orders through our platform as well. So they'll take the order off their website from the customer and they either call it in as you just described or they'll

just place it through ours. And sometimes they've tried to scrape various systems to submit it. Grubhub's not alone in this. There's a few other what we consider bad actors that do this. A DoorDash did this as well, right? This was an early door. Dordash technique would be to just put all the restaurants online. You call that. And Postmates did this as well. Postmates was originally as conceived a personal assistant who would do anything for you. And one of those things could be as a personal assistant, go run and get your food, correct?

Absolutely. And so those two companies really kind of invented this practice. They scaled very quickly because of it, I think in kind of tech terms, kind of get growth hack type maneuver. And Grubhubb hub never did that. And ironically, Doordash and others have been moving away from this practice. And Grubhub is now playing catch up because that's kind of what they do. They tend to be beyond the ball. Okay.

So a cynical person or just a person who worked at those would say, hey, this is increasing customer choice. And if a rich person has an assistant and they send their assistant out to get food for them, why can't a middle class person hire a postmate for $20 an hour to go do this for them when we get back from this quick break, I want you to answer why that seems so. What do you think of that defense of the practice of end running restaurants and putting them on their platforms? Let me get back on this weekend startups. This week in startups is brought to you by our friends at Silicon Valley Bank. What's next? What if? Are you ready? Now what? These are the questions that can keep founders up at tight. And no one understands this quite like Silicon Valley Bank

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our friends at SVB. Will your business be next? Learn more at SVB.com slash next. Silicon Valley Bank built for what. next. Welcome back to this week in startups. What a great guest we have already. Chris Webb is from Chow Now. They help restaurants with enterprise software, deliver food, and we'll get into their offering in a moment. But we're sort of painting the picture here, at least pre-pandemic, of this dog fight for getting food from restaurants into people's homes. And what Grubhubbhub

DoorDash initially. Maybe they've gone back on this practice. And certainly something like Postmates, which was designed to be an assistant, right? You could send a Postmate to any store to do anything. In fact, I remember one time I wanted to go crabbing. I was crabbing with my daughter and one of the ropes broke. And we couldn't go crabbing.

So I just ordered a postmate. I said, go get me 50 yards of rope from anywhere and let me know. And they got it. And it was delightful. And they brought it out to Chrissy Field for me. So is there a... what's your reaction to that defense, which is what I heard from those type of companies, I wouldn't say which ones, when they pitched me on investing.

Yep. Yeah, yep. So I want to break it down on both the diner side, the guest side, the consumer side, your experience on it, and then from the angle from the restaurant. So on the consumer side, you know your restaurant. You talked about Bay Ridge Pizza, right? You know it from there. You know the menu probably inside it out, at least at some point in your life you did.

And, you know, the prices. I don't know it, man. That rice ball. That's a great rice ball. You may go on on classmates or grub or one of the others. And you're like, man, they just raise their prices. Like, why are the prices so much? This is not what I remember, right?

So the prices get raised. Maybe they ran out of pizza. Maybe they change the pizzas up, right? Maybe they've suddenly become predatory and they hate their customers. Yeah. And they're charging eight bucks for a rice bowl instead of a buck 50. But a lot of times, it's at. actually not the restaurant that has changed the prices or the menus or have out of,

out of date menus, it is because you went on to this marketplace and you saw them listed and you're like, up, that's where I want to order and you're like, oh, that seems a little bit weird. Sometimes you place that order and it's not what shows up because they swap it out. On the restaurant side, they don't have control, right? They want to control how far that food is traveling many of the times, right? What happens if you're on the upper west side and you're saying, you know what, I really feel like by Bay Ridge Pizza, oh, look at Postmates's, do it. Well, it shows up soggy and cold and just kind of lame and you're like, that pizza's not very good anymore. And clearly it traveled a far distance. I'm doing it to make an example.

But even if it's not that extreme of a distance, you would, you would kind of question, huh, maybe that pizza's not that good. There's one other thing that that gets layered in, which I think is worth calling out, where, you know, something like Bay Ridge Pizza, right, local hero within the community, been around for years. Postmates or Grubhubb knows that. Right. And so in New York, it's seamless, which is obviously owned by Grubhub. They go, let's leverage that local brand. It's not a nationally known brand. It's a local brand. And we're going to list them. And we know that it's not the greater experience. We're going to make less money at Seamless or at Grubhub. But let's see if we can use them to get that consumer off. We're going to run a bunch of ads on Google using Bay Ridge Pizza. So when you're on Google and you're putting Bay Ridge Pizza and you see that ads saying, okay, that seems legit. You land on that page. And they say, you know what? They're not currently accepting orders. Why don't you order from the pizza rate on the street? And so they've totally taken hostage that brand. They've leveraged that brand that's known in that community within that neighborhood. And then they've taken you to another pizzeria.

And so Bay Ridge Pizzeries. The other pizzeria then has to pay very high commissions to seamless to get that order. And so the only one that actually really wins is seamless grub in this scenario. And this has been going on for decades now. So I would, it's reasonable to say the majority of restaurants don't care. They just want to get more orders in. But some do care. and it feels like it's being done

in a underhanded, unfair kind of way, especially to the people who are doing it right. Perhaps not illegal. Perhaps it is illegal. We'll see if this, there is actually Grubhub, which just hit with a lawsuit

for this, a class action lawsuit from the farmer's wife in Sebastopol, California, and Antonia's restaurant in the Hillsborough, North Carolina. So we'll see if those lawsuits

make a difference. But yeah, it does make sense that the restaurant should have control. Many probably don't care. On a technical basis, how do they go about doing this? They literally just have banks of people calling in orders? They do. In many cases, they do. What if the person says, is this grubhub or is this an ordering service or is this an actual person? Are they trained to deceive people or are they trained to be clear? Like, yeah, there's a grubhub order. We have an order from a customer. Do they volunteer that? I don't believe so. I don't know that for a fact, but my understanding is I call and say, hey, this is Jason, I'm placing my order.

I'll come pick it up in 20 minutes or whatever you tell me to come pick it up in. So my understanding is they try not to share that information. Got it. They pretend that they're the average customer calling it. I remember DoorDash kept putting In-N-Out Burger, in-and-out burger specifically does not want delivery. And they also don't want to be not in the Southwest. I mean, people have been trying to bring in and out to the Northeast. And I think actually the story is five guys was a reaction to in and out not being willing to be across the country.

And they're just like, okay, screw it. We're going to make a competitive brand called Five Guys and put it across the country. In the DoorDash case with those kind of businesses, that's super unfair. But let's take Postmates for a second, the virtual assistant model, a virtual assistant's doing this without there being a menu online. That seems reasonable, right? to some degree as long it's very clear that postmates does not have a relationship with that merchant and is not representing that restaurant as a partner. And so it's very clear that when something goes wrong, that it's postmates fault. And postmates are the fault and the restaurant has nothing to do with it.

You may or may not be paying the correct price for that food. That sadly is not the way it's done today though. The way it's done today is it's you log on and you open up the GrubHub app and it all looks like, like the exact same restaurants, right? Okay, so the pandemic hits. You're providing this enterprise software. Things go absolutely bonkers. Let's start out, as we set the table here, how do you charge restaurants?

Do you charge them a percentage of their revenue? Do you charge them a flat fee? Do you charge them per order? What's the business model at your company? Yeah, flat fee per month. So it's a SaaS business model. It's been that day since day one. We launched, as you said, in 2012.

What we heard from restaurants back then and continue to hear from them, today is we just need software to strengthen the relationship with our customers, right? Our customers want to order online. The era of calling up on a Friday night and trying to order that pizza and being put on hold for five minutes is behind us. That never happens anymore, right? You're just going to hang up the phone. And so we need convenient ways for our customers to order and for us to receive the orders. And so what we launched in 2012 and still the core of what we do today is a white label platform that allows any restaurant to get up or running and get what we consider their front of house online. And so that's order on their website. We

build them brand and mobile apps, both a native iPhone app, native Android app, there's a customer database, there's loyalty, there's kind of everything to, many ways that we think about it is, is everything the national players are doing in-house. So you mentioned Dominoes, Sweet Green, Panera, Starbucks, you can name kind of any national brand. They've built very, you know, in many cases, great apps. We want your local independent pizzeria, taco shop, and any other kind of restaurant to have the exact same tools. And so we offer all that for a flat monthly fee that's anywhere from $99 a month to $149 a month. Yeah, I'm looking at the website right now.

If they buy it for two years, it's $99 a month. Correct. And there's maybe a $100 to $400 setup fee. So if the person were to do but, you know, or, you know, a couple of orders a month, the 30% at my cost to use one of these other delivery service pays for itself, correct? That's correct. That's correct. So you're greatly underpricing it.

And you've also started to do this. contactless ordering, I noticed. And I initially thought, because the layout is so clean and focused, it looked a lot like Uber Eats, the design. And I thought I was using Uber Eats. And I was like, well, wait a second. This is on their website. And a bunch of the websites in Sam, a bunch of the restaurants, San Mateo,

are now putting QR codes or in the Bay Area. That's your software. When you scan a QR code and you can order very easily through a website while you're sitting at a table, that's your software. Chow now? In some cases, not always. I wish it was always, but it's not always us. And it's something when we launched a few months ago, kind of midsummer, and it was obviously

a response to COVID and trying to keep everyone safe and at a distance. And then the other thing that we launched is curbside pickup. That launched earlier in COVID. How did that curbside pickup? I know it was pretty amazing because nobody does curbside pickup. Like that seems to be like a dead area. You had delivery. you want total convenience or you go to the restaurant, you want the experience.

But COVID created this new thing, which was, hey, you know, these fees for delivery are expensive. I need to pick stuff up. I'm going to go pick it up myself and save 20 bucks. I've done it myself and I'm not really price sensitive. But I was also kind of pizza sensitive where like my local pizzeria, the delivery service took too long and it's right down the block. I'd rather just order it and pick it up and not have to wait. It's faster and the pizza comes hot.

So when we get back from this quick break, I want to know. how that changed and how consumer behavior has changed in the pandemic generally. In other words, a restaurant you had that was doing, call it 100 orders, three a day, 100 a month. What did that look like during the pandemic? And is that starting to go back to normal? And in which cities and states and regions is it going back to normal when we get back on this week in startups? SaaS companies with reoccurring revenue used to have only really two ways to grow. They could sell equity or they could get down. Now there's a brand new third way to grow without debt or dilution of your cap table.

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Pipe is really confident that you'll love trading your SaaS subscription, so they will let you sign up at Pipe.com slash twist and eliminate your trading fees for a full year. Pipe.com slash twist. That's right, P-I-P-E-C-com slash twist. Welcome back to this week in startups are a guest. is Chris Webb. Chris Webb runs a company called Chow Now.com, as you've heard, they charge a reasonable price. Yeah, call it low couple of thousand dollars a year for a restaurant to do delivery.

Now, you don't take a percentage of the $2.5 billion in orders you're going to do this year, correct? That is correct. There's one small exception is something that we built over the years is restaurants kept coming to us early on. I said, this is great for my existing customer base, right? In your case, coming back to the Bay Ridge Pizza example, people that know us, but I want to grow my business.

How can you help generate demands? And so what we decided to do is take a different path. And instead of trying to build our own marketplace overnight and compete with Grubhub and raise hundreds of millions of dollars, just not more, we said, well, why don't we partner with people who already have that traffic? And so we first partnered with Yelp. We've since added Google, Instagram, TripAdvisor, Open Table, Rezi, and others. And so we created this demand network that if our restaurants want, they can tap into,

We have roughly 80% of our restaurants that use it. And today, I don't think I mentioned it, but we have 20,000 restaurants that use our software today and it's grown pretty quickly every month. And so 80% of those 20,000 restaurants use this demand network to drive orders. Those orders, depending on the partner, sometimes have a very small commission, way lower than when you'll find on all the delivery apps. But there is a small commission associated with those. That makes up roughly 16% of the $2.5 billion will come from that demand network.

The other call it 84, 85% of the orders. of the two and a half billion will come directly from the restaurant through their map apps that we built for them through the website or another direct channel. So that seems reasonable. That's like lead gen. Do I get to own the customer from that point forward or do I have to pay commission on that customer forever? So it varies partner by partner.

In many cases, you own the customer. In the majority of the channels that I just listed, you own the customer. It's not true of every single one, but we're working to try to make that true for every single one. Got it. So in the majority of cases, if I were to give Bay Ridge Pizza got this new person who We just moved into, you know, Bay Ridge, Brooklyn, and they lived on 8th Street and Fifth Avenue, and they'd find out about it through Yelp or something, and they clicked the order button

or whatever it is. They would own them for that second and third and fourth order. How many orders to a restaurant are repeat customers versus new ones? I guess it depends on how new the restaurant is, but you must have some of that data. Is it half? Is it a third? Yeah, you really do have to look at a cohort basis to really kind of see it because we have restaurants have been with us six, seven years, and the majority of their client base has been with them for many, many years. One thing that I do know is true is that when a restaurant has a branded mobile app and people don't understand why individual restaurants or small

groups of two, three, four locations need their own app. And what we find is the customers that download those apps order three times as often as any other customer. Sure. And it's, so you're never going to get 100% of your client base or your customer base to download an app. But the percent that you do, It's a little bit of that 80-20 rule, that 20% will contribute to 80% of your takeout revenue. It definitely is sticky. I recently downloaded the Shake Shack app because I would take my daughters to this mall in the Bay Area, the Hillsdale Mall. And it's a Shake Shack there, and they like the ice cream there. And the line can get crazy.

And I just got the app because I didn't want to wait in line. So when we're having dinner at another restaurant, I'll put the order in for the ice cream, wait until I get the thing. And then I walk over and get the ice cream and let them play outside. And now it really is compelling once you get that app on your phone to do that. I'm curious, just in general, what you're seeing with restaurants in Los Angeles, I think, is your biggest market, am I correct? L.A., Chicago, New York are tied for, they're all within 100 or 100 restaurants. So let's take that cohort of the three leading places, three leading GEOs, as it were.

What did you see during the pandemic in terms of the change in orders? and then has in those three cities, has it started to change back in some way? So things are still changing every single day. So you may have noticed this week, Chicago just put a ban back in place with numbers starting to tick back up. So that's changing. Cold weather is now taking impact. So laws of change. So New York City passed a law that made outdoor dining legal year-round.

So the kind of outdoor patios that have all been propped up, you can keep it year-round. You can, you know, if someone wants to sit outside in the cold in December, you can do it. That doesn't mean anyone wants to sit out or everyone wants to sit out in 40-degree weather under a heat, a heat lamp to, to dine outside. So, so it does constantly change. It does change by cities. Where we actually saw the initial impact, which isn't surprised, was Seattle in early March. Because if you remember, Seattle actually was the city that was hit the hardest. And that's where you start to see this kind of ripple effect take hold of something that's going on here with ordering patterns.

Obviously, the news was talking about it, the city was starting to shut down. And then you saw this kind of ripple effect through the country as you saw these kind of hotspots come and go. May where the entire country was shut down, that was the highest month that we've ever done in orders. And then it still has been very, very elevated all summer long, all the way through the fall. But nothing like May where the entire country was basically shut down.

You can go out to any restaurant. And that brings us to today where you have all these factors, cold weather taking place, the restrictions like in Chicago and other cities taking place. So it really changes day by day week by week. So it's really hard to kind of get a grasp of it. Got it. So DoorDash takes 20% commission from a restaurant when somebody orders food. So on a $50 order, they make $10, right?

That's the basic fee that they take from the restaurant. 20% is for a good restaurant that's negotiated a good rate. you will find in New York City, which is a competitive market on these delivery apps, some restaurants paying up to 40%. And that's not specifically with DoorDash. That is just the broad spectrum. Now, to make sure that this is, yeah,

because DoorDash is 10 to 20%, they're pretty clear about that. So sticking with the DoorDash example, they're taking 20%. So if a restaurant wants to be on that platform, and they have a, you know, let's call it a $50 average food bill. They're given $10.

to DoorDash without privilege, and then there are some delivery fees that are given to the customer on top of that. So they're making roughly 15 or 20 bucks on that $50 order? That's correct. I actually think your 20% is probably a little low.

When these platforms first launched in 2014 or whenever DoorDash and Postmates came onto the scene, that 10 to 20% was their pitch. And I think on average, the restaurant was paying, call it 14%. And so it was a very easy pitch to go into a restaurant and say, hey, you know that delivery apparatus that you have here, the kind of what you described, the guys going out of the back of the kitchen, the insurance you have to pay, the constantly trying to find staff

because people come and go. Yeah, it's a pain in the neck. It's a huge pain. And so we will lift that off of you, that pain, and we will do it all for 14%. And so you had a lot of restaurants say, that's a sweet deal. I'll take you up on it. Pretty great deal, yeah. What has happened over the last call it six years is that 14% has gone to 15, 18, 20, 25, 30%,

and sometimes higher depending on the market. And so that's why restaurants have really woken up. And things that we've been saying internally at Chanow and trying to kind of get out and get the press aware, no one frankly kind of cared. It was other than restaurants. The restaurant industry cared. It's why we've been successful over the last six or seven years. That's why we frankly exist.

It's only been in the last year or two that you've actually seen the year. You press get a hold of it. And then now with COVID hitting, where the cities have jumped on, you talked about kind of the delivery caps or kind of alluded to the delivery caps that are taking place in various cities in the intro, that's a lot of times a reaction to the every year that commission going up and up and up. When we first launched and I lived in New York for a while, I would talk to my local restaurants on my block and they would constantly compare it seamless to the local mafia.

It's like, they come in every year and they're like, you want those orders? It's going to be 10% this year. You want those orders? It's 12% and it just goes up and up and up. Now, do you believe that local governments should put caps on these fees? I do not, no. I think, you know, I'm in it for the free market. A lot of these restaurants have signed up for it.

They've agreed to it. It's two private companies agreeing to do business, agreeing to the fees. Okay. So in that case, I'm with you. I don't think there should be caps. What I do think is illegal or should be illegal and is becoming illegal is what we talked about earlier, the non-partner. That and that now.

So here in California, the governor a couple of weeks ago signed into law making that practice of non-partner restaurants being able to scrape restaurants and just throw them onto your app, your website, illegal. Denver just made it illegal a couple weeks ago. We're starting to see kind of city by city, state by state, that practice become illegal and that I agree with. And of the, and I think this is where the rubber hits the road, this is because, coming an incredibly, incredibly competitive environment where DoorDash was losing two or three

dollars per delivery. I think Uber was losing a buck 50 per order. So these companies, even with this fee structure, were losing money on every order. And then you have competitors like yourself, Olo, Bento. I mean, I've been pitched on a bunch of these. You're not the only person doing enterprise software for this. You may be one of the leaders. And you certainly got there before everybody, or almost everybody, but this has become wildly competitive when we get back from this final break, I want you to tell me how many of your restaurants are actually participating in both. And is that a sign that the free market is working when we get back on this week in startups? One of the toughest parts of building a company is choosing which tools and providers

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scrub hub and all these companies that charge a percentage, a percentage that might go up as they try desperately, I might add, to hit break even because they're all losing money since it's become an arms race. And if they're all losing money, that means the restaurants are the beneficiary. The restaurants are, and I see this all the time when I order food and anybody who's listening to see this, they're on every platform now. They're on three, four, five platforms. In fact, I just got pitched on a company that consolidates all the orders into one iPad because they showed me a picture of restaurants where they have six different iPads and that the big opportunity would be to consolidate these so there would only be one device.

I don't think that's necessarily a great business, but that was indicative of just how crazily competitive this is. Of your restaurants, how many are using a DoorDash Postman, so one of those, grub hubs and using your system for direct orders? Yep. So as best we can track it, because, again, things are shifting around pretty quickly. it's 50-50. So 50 will only use us, and they will tell the customers, if you want to order online

from us, order off our website, order off our app, or order off of Chownow. There is a Chow app. It's kind of what we consider our collective, kind of our farmer's market that all our restaurants are located in there if you don't want to order to direct to the restaurant. So use any one of those channels. So that's half of our restaurants. That say that. Half of them, and that half is comprised of restaurants that have a lot of power because

they are that local hero in their neighborhood. Everyone knows them. They can, in normal times, have lines out the door. And so people will follow what they tell them to do to get that food. Or they are located in very small towns and cities across the U.S. and Canada. And there's just not a marketplace option, right? So you are in a tiny town in South Dakota. You run a pizzeria there.

You compete with the local Papa John's, Domino's and Pizza Hut. They all make it very easy, convenient to order. Their pizza may not be nearly as good as your kind of local pizza that you've spent the last 20 years developing and making, but it's a pain to order from you. And so you need tools and software to make it easier to be competitive. And that's why we have restaurants all over. We have restaurants technically in four or five thousand cities. Now, that mean this one restaurant in this one small town in South Dakota, but there's a lot of those examples. And so that's why you have half that just use us. The other half are take more of the kind of what we consider like the Delta Airlines

or the American Airlines approach, which is, hey, if you want to go buy that ticket on Expedia, a price line, booking, whatever, you can do that. You may not get the best price. You can do that. Come to us, you were guaranteed the lowest price, in this case for a ticket, in our case obviously for the food. You'll get the best experience and you'll have that direct relationship. And so we have half a restaurant's kind of taking that approach as well. So in other words, there is a vibrant, competitive, dog eat dog, dogged, dogfight in this space currently.

and that nobody, including the restaurants, needs to be worried about here. They all have all of these incredible options, and it would be worse for them to have less options. And I think this is one thing I heard from, again, a founder pitching me. I wouldn't say which one. They said the new art is to use a service like yours, which is a flat rate. And then what you do is you turn on the door dashes, etc. and then you get those people's information.

You put little flyers in it, order direct in the bag, which they don't know if you're doing or not, or you give them a coupon, and you build that loyalty, and then you turn them off at peak times. We're not taking orders from DoorDash, you know, on Friday and Saturday nights. You have to come direct. And so then what you do is you train people to order direct. You get better service. Order through those other systems.

You get penalized where it may not be available. maybe we won't even put certain things on those menus. Is that a real trend? Absolutely. How are the door dashes and postmates of the world responding to that? Well, obviously, they don't like it, right? They're spending all this marketing money to get consumers. Now, it's very ineffective or maybe it is effective, but it's not productive. So you know your local restaurant, right? You tend to crave grubhub. You don't tend to crave Grubhub. You don't kind of on a Friday night at 6 o'clock be like, I'm craving Grubub, but you're craving Thai food, Indian food, whatever you're feeling, you know, you talked about crabs earlier, whatever you're

in the mood for, right? And so you, in many cases, are trying to find that restaurant online, usually through Google, but not always, and you get hit with ads. Those ads cost a lot of money because it is a open bet, and they are bidding and bidding and bidding. And so you ultimately click on an ad. That costs that service. So let's stick with Grububbub, grab up a lot of money.

And so they need, so their customer acquisition cost is high, roughly in the space. And again, we don't compete in the consumer marketing space, but we know a lot of people that do. It's $80, $90, easy to get a new consumer, right? So you need that consumer, you need that customer to order many times to recoup that. And that's just to get the order back to the restaurant that that customer wanted to order from in the first place. So you're layering in all this fat and all this money just to get the customer back to where they wanted to go in the first place, which is causing all these fees to stack on top

of each other, right? And so despite that, as you said, they're all losing money, right? Everyone you named is losing a buck or order, two bucks in order. It's because of all these fees to get the consumer over and kind of that constant battle. And then you have that restaurant to say, okay, well, I'm just going to drop a flyer in the bag, and they're going to stick with me. And I may just give them the guaranteed lowest prices for my menu. And I'm going to cut out all these crazy fees that they get layered on. Do those platforms force the restaurants to charge the same price when they're ordering direct as are on the platform?

in other words, do they ask for most favored nation in their contracts now? And do they demand that they provide service 100% of the time? Are they hip to this, you know, trend? They used to be. And technically their contracts may in some cases have those terms still left in there. In reality, it's so competitive that once one platform kind of gives in, the other platforms have to get it. So capitalism working again, the free market working again.

So to all of the dipshits on Twitter who were, you know, printing, like they took one, they cherry picked one receipt and it was like 80% taken by Rub Hub or whoever it was. I can't remember. And then I looked at it and it was like there was an item on there that was the majority of it was like a third of the bill. That was a return. So they were showing the return of a previous order on this bill. So there's a bunch of fud for uncertainty and doubt in the marketplace.

But let me ask you about another deep inside. baseball, which is what we do here on this weekend startups. And again, it might be a little dark, but we're going to be candid here. I was told that the big social benefit of the door dashes and postmates of the world is that they're being forced to use Americans or people with green cards and to pay taxes. So even though those people are a gig economy, they're not the underground economy, the gray market, the non-taxed market. And that restaurants, and I know this having come from a restaurant family, I think you were in restaurants as well, were universally when I was growing up in the 80s and 90s

and when I lived in New York in the 90s and 2000s, 100% of the time, it was an illegal alien. It was an undocumented worker doing these deliveries. And I know from back in the day, the way they got paid was they got paid like 20, 20 bucks to just do a shift, $2 an hour plus tips. They lived off the tips. So maybe they made in the 80s, 90s, five, six bucks an hour off the books, which, you know, on the books would have been at $2 to that, you know, whatever it is, seven to nine. And that, the minimum wage at the time was 350. So it was double minimum wage. And it was, I guess, a pretty good deal for people who wanted off the books work. In your system, the restaurants pick who the workers are, correct? They're

responsible to delivery. You don't do the delivery. You're correct. We are just software. The majority of our restaurants do their own delivery still today. Despite kind of the press that DoorDash, Uber Eats, and everyone else gets, the vast majority of the restaurants on our platform still do their own delivery. Right. And you can't be assured that they're not using illegal aliens or the underground economy and many of them are, right? So that is one societal thing that, you know, the other services, that the postmates or the DoorDash can say, hey, listen, we're taking these jobs and legitimizing them.

Correct. In some cases. Yeah. But if you break down the math and the kind of the way it works, the one example that you talked about with that $50 order on DoorDash, you kind of broke down the math and you said the 20%, right, it was $10 and then the service fees. So to fill that $50 order, you know, let's round, use around numbers, that's $15. Let's say that delivery takes at max 30 minutes, probably not going that far.

Well, if you do two orders per hour, that person could have made 30 bucks if it was just there, right? So if you'd start to do the math, and this is where originally when they first launched, and they said, we're just going to charge 14%, there's no crazy fees. And this is when they were losing tremendous amounts of money. And they were building a business. Exactly. And so they're undercutting and they're just trying to get their foot in the door.

And so that's where the math made sense for the restaurant. Now with what the math you just described, where it is that, that 15 bucks of that $50 order went to actually fulfill the delivery and it went a mile or two from the house. Well, now you can justify actually paying market rates if you're saying kind of $30. And so that's what we're seeing more of. And we're actually seeing a lot of restaurants because of COVID, do both things, go with all the marketplaces, but also repurpose their own staff, right? Yes, this is a big trend.

Bartenders are running orders now. Totally. We see that on our platform all day long. And that actually creates a more consistent experience. Are there third parties now that just do the delivery piece? I know I had been pitched on businesses like this that were just, you know, they had unbundled from Uber. Yes.

The logistics piece. So they were like, you can just tell us, pick up this, drop this off, put it in, drop it into an API and we'll do it for you for, you know, Xbox a mile or Xbox an hour. Does that still exist? Did that ever work? It works all the time. It's worked for years. There's a company here in L.A.

that I would be shocked if you knew called Jolt delivery. I have heard of it, yeah. That might have been the one that pitched me. Oh, interesting. It's been around for a while, yeah? It has been well over a decade. No one knows them. I'm shocked you knew him.

That's impressive. But all they do is pick up food at a restaurant and they drop it off at a home or office and they get paid five, six, seven bucks to do that. And they do that thousands and thousands of times a day here in L.A. There's one in New York called Relay. Relay's been around for a number of years. They're very successful. Restaurants love them.

You can talk to them as well. I mean, Maria's Kitchen. which was a local chain in L.A. That was by my house in Brentwood. We would order from there. That pretty good Ziti. They used it and a bunch of other people used it. You can't order directly from Jolt.

Joltz just empowers restaurants. They charge them on a per fee and you can become a jolter as it were. Exactly. It's sort of like Postmates without the marketplace, right? That's exactly what it is. And that's what most restaurants need is actually the fulfillment of the order, the logistics piece, not the demand generation. So demand generation amounts for it.

They often get sold on, hey, we're going to send you all new customers, right? Grubhub will walk in. We will send you new customers. And when you look at the names coming in off that Grubhub tablet, it's the same person every single week ordering the exact same food. And so you at the restaurant are paying way too much when in reality, all you need is that that food delivered. And so what we've never really understood is if you take an $80 delivery and a $40 delivery,

both fill up one bag, just have different prices of the value of the food, why does the restaurant have to pay double the price for $80 to be delivered the exact same distance to the exact same person. It's no brainer. Yeah, you want all those people, and this is where a loyalty program comes in, when you have the loyalty program, if people are ordering, you know, from the same pizzeria every week because the kids love it and you put the same order in, yeah, you just start a loyalty program.

You give them free dessert or a free appetizer or whatever it is. You can then start converting them over. There's no reason to be paying for them and acquiring the customers. Okay, you've gotten a lot of softballs today, Chris. And now I'm going to throw the heater. Because we're in minute 40, 45 minutes in. It comes to fastball. Okay.

It's going to be coming tight and inside right now. So this could, just, you know, don't lean into this one. Be careful. My good friend who paid for the house I'm in, Travis, started a little company called Cloud Kitchens, which hopes to take the entire entirety of what we discussed about on this podcast and take it all. How are local restaurants going to compete? against 30 food brands being in a space, that's the size of, you know, let's face it, one restaurant sharing one commissary, one set of salt, one walk-in box, and having all the

drivers go to one central location. How on earth will the industry look in 10 years when Cloud Kitchens is everywhere? And how are restaurants responding to that? That's the horrible? I think so. It's coming down. Yeah. I mean, I know for me, I'm ordering Bell Campo when I'm at the office, and then there's some other house brands, and it's for Cloud Kitchens. I don't think Belkampo needs to have all these expensive restaurants everywhere. I mean, they might, but I think it's going to be a race to the bottom with all of these places in one.

Are you going to launch a competitor to that? Because you're providing software to people. We're not. And we actually have a very good relationship with the folks over Cloud Kitchens. A very good friend of mine has been there for a number of years. I was talking to him last night. He also runs some really great restaurants. They're very secretive. They don't list themselves on LinkedIn working there.

So I'm not going to mention his name because they, it's kind of very much. But you said they might make cauliflower pizza? I think I know who you're talking about with the cauliflower pizza. I know who you're talking about. You know who I'm talking about too. Okay. Different person. Okay.

But the, and so a lot of the restaurants in all these kind of Cloud Kitchen facilities actually use Chow Now. So in many ways we actually work really well with them. I will say it works really well for some models. and we have a lot of very successful restaurant clients here in L.A., I may get in trouble for mention this, but you mentioned living in Brentwood. Do you know Queryl Tree Cafe? Of course. Yeah.

Really well-known, a very successful group. They pulled out of all their cloud kitchens, right? None of them work. The numbers didn't work. So you have this local brand that is loved known, as you said, of course you know them, because everyone in Brentwood knows them. Yeah, Samva sat down the corner, yeah. Exactly, exactly.

And yet they tried multiple facilities. in cloud kitchens and the numbers just did not work despite that local brands. There's a number of examples where it does not work like that. You know, Sweet Green, which is really well known, very young digital forward platform. They've closed a number of their cloud kitchen locations. They still have one or two running. So it doesn't work as advertised. It sounds great on paper.

And there's some examples. The one that they always flip back to is chick-fil-a, right? Chick-fil-A-Rour. Starbird chicken is incredible. Yeah. By the way, that's the higher end one with the non, you know, hormone-injected chickens. You want that one. And in some cases, it works really well.

I'm friends with Michael the CEO of Kitchen United, another kind of one of these that's backed by Google. And I know they're doing very well in some cases. And in some cases, some restaurant concepts don't work. So I don't think I'm not the campaign. How does it compete against? I mean, let's forget about your business because I agree, your business will always be there.

But for a restaurant that has to go up against, you know, Starbird, chicken or something or a house brand that's there. That house brand is going to have a massively lower cost structure. So I think the consumers are going to be the huge winners here. But if these, how does a restaurant with all of that space actually compete? That's what I'm trying to figure out when this all becomes consolidated and all the drivers are sitting out there. So, you know, the time for the driver is cut in a third or half because the drivers just

immediately go back to the cloud kitchens and sit there. as opposed to going to Maria's kitchen or coral or whatever. You understand what I'm saying? I do. So I have a couple thoughts on it. One, I'm like you. I believe the free market will make this work.

And also as more things move online, more of that main street type setup, there are more shops that are going to be closing. I actually think that kind of commercial real estate is going to have a lot of pricing pressure. So I actually think from a pricing standpoint, I'm hoping and maybe I'm overly optimistic, that actually some of this rental space will go down.

You can get a lot online. Food, you can obviously order online, but it has to be hyperlocal. It has to be coming someplace very close to you, obviously, within miles. Most things that you buy online, whether it's Amazon or a Shopify store or wherever you're buying something online, it can be shipped from a warehouse many, many miles away. And so I think I am fairly bearish on those local stores, sadly, surviving what I think actually will survive at restaurants. And I think that will just lower the price of rents across board over the next decade.

I think I'm, I hope that's a good counter argument. And I agree. What I saw in New York in like the 80s and into the 90s was all that storefront space that was vacant became offices and live work offices and then creative people would use it for an art gallery or an event space. So you'll have this creative destruction that occurs where I remember on Montana when I lived in Brentwood and Montana in Santa Monica. Man like I don't know if it was one out of five stores were empty because the rents, people have bought those buildings at such high prices. they all thought they were going to have a Starbucks or a, you know, sweet rose creamery or whatever it was. There just aren't enough of those to go around on every block so they couldn't keep up with the rent. So now all this stuff collapses, all that rent's going to be there.

It might turn out that instead of having a $5,000 storefront, you got a $1,500 storefront and the economics suddenly work again, right? That's sort of the argument here. I also am a big believer of out of sight, out of mind. And I think when you are within this facility with 30 other locations, restaurants you describe, I think there's something about driving past. Coral Tree Cafe, I've named it, and you said it's on the corner of here and here, right? And there's something in the back of your mind that remembers exactly where that location

and it makes it relevant to you. And I think when you don't have that and that drive in the past the restaurant, even if you're not going to order there for a week or go there or whatever, there's that constant reminder and you lose that. And I think that's one of the challenges of the Cloud Citchens. And so to make up for it, you have to spend on digital marketing. And that will then raise costs in another area that you're currently. not spending money on.

You think, listen, I'm not an investor in Travis's and Diego's latest company, Cloud Kitchens, unfortunately, but obviously rooting for them. Do you think they eventually aggregate the drivers and become a platform themselves? Well, they clearly have the capital if they want to do that. That's true. They used to have 500 million bucks or so, yeah. That we know of. I mean, who knows what else has occurred since then.

Yeah. Yeah, I mean, they don't like to share much. Well, I mean, after the last time being high profile, it's exactly. I mean, it wound up getting Travis ousted. He was so high profile. And now nobody knows what's happening at Cloud Kitchens. They don't even list their names on LinkedIn, according to a story I read. And they've been shielding all their purchases with LLCs on LLCs on LLC. So smart move. I don't think they want to educate people. Do you think that they just at some point decide heads up against Postmates? and DoorDash heads up against Uber and Lyft in terms of driving stuff?

I think so. Yeah. The drivers like Lyft and Uber, they're not loyal to any one of the companies, right? They will go where the work is. They will go where the jobs. So a lot of these drivers. Currently, we'll see what happens with Prop 22 passes. Yeah, we'll see what happens next on Tuesday.

And so I tend to think that if they wanted to prop that up overnight, they could get a lot of these drivers driving for them and fulfilling it. So I actually think it's a pretty easy move. Clearly, Travis knows a little bit about this. And so I think- A little information about that business works. So I don't think it's a stretch to see them do it at some point in the future or buy like a relay or buy a jolt or someone like that. Because this is essentially what that is.

It's just kind of bolting on a delivery-only logistics-only platform. What are you things going to happen with Amazon and they're sort of, they had done some restaurant ordering kind of experiments. Are they anywhere circling around? this. I know I saw Uber Eats now is putting in, you know, like various sundries and, you know, groceries into the Uber Eats app so you can order them, which was part of Travis's original plan. But I haven't seen, they did have restaurants on Amazon, right? Didn't Amazon have Amazon restaurants? For years. They had kind of one foot in, one foot out. It was, it was very bizarre

how they read it, which is unlike Amazon. Amazon tends to do things pretty darn well. Yeah, or shut them down. Yeah. Yeah, this, they did neither. They just kind of let sit out there for a couple of years. Every six months, I'd be like, did you hear Amazon enter the space? I'm like, yeah, they've been here for years. That says how much, like, how lame this approach has been. I had a friend that actually worked for Amazon restaurants and got kind of look kind of under the hood.

And it was like they were okay burning 50 to 100 million a year, but they didn't want anything to come out of it. And then ultimately kind of one day they said, you know what, we're out. Somebody had told me, and I've never verified this, but it makes sense to me that actually because the experience was so poor, because it took so long for you to get your food on Amazon that they were doing surveys, and they found it actually hurt the Amazon core brands. And so people would stop buying less things on Amazon because their experience with ordering food from their local restaurant was so poor that they just bundled it with the Amazon brand of their mind.

And they said, you know, screw it, I'm not using Amazon. I'm going to go Walmart or whatever. And so for whatever reason, that was one reason I heard. I never understood why they went all in. I do think they're very interested clearly with Whole Foods, clearly with this massive, massive delivery driver network, you know, what they call flex, their flex driver network, I think they'll enter it again.

I'm pretty positive. I think they're waiting for the dust to settle. I think they're waiting for a few of the players, the big players to go away. It feels like that's not going to happen now, right? With Uber buying postmates, Grubhub now being... Solidation is what's going to happen, right?

I mean, you'll have two or three players. But now we have three players, and I don't see those three players. DoorDash is going to go public at some point here. They're very successful. They're very well run. they're very smart over there. You have Uber and Postmates, who I honestly think is a little bit lost to the two of them.

I think they're trying to kind of figure it out. Clearly, it was very public that Uber wanted to buy Grubhub. That didn't work out. They kind of turned around bought Postmates. And some European company bought it? Yeah, a company called Takeaway. I agree. But either way, there's now...

Stupid move on the Grubhub people's part. Well, as I look forward over the next year, and hopefully over the next year, COVID starts to kind of move behind us, the vaccine treatments and other things. and at some point this will end and life will return. I think restaurants will be, have a lot more leverage in the conversation.

Right now, they're just trying to stay alive. They're trying to keep the lights on. Yes. And it orders wherever. And that's one reason that they went to everything and that the description you described of five tablets in a restaurant. I think it's very much the case today.

That's why I said half our restaurants will use anything because they want orders where everything get, whatever the commission may be. Coming out of this, when dine in returns, when their core business starts to return, they will be in a place to be a little pickier, and they will be able to turn away some of those high commissions.

And so that will be very interesting on kind of how that dynamic plays, and they start turning off some marketplaces. And at that point, laws are now in place where Grubhub can't just list the restaurant, even if they turn it off. And so I think you'll start to see inventory coming off, restaurant inventory, off of these apps in the next 12 months or so, and that'll be a very interesting dynamic to kind of watch.

Yeah, I think that's directionally correct, is when we come out of the pandemic, which I would put, you know, sometime in the first second quarter. Hopefully of next year, we will see some amount of restaurants. There'll be, what, a third less restaurants? I think David, what was it, David Chang was saying he thinks half the restaurants in L.A. are going to go away. That seems a little crazy.

It's pretty dire. So I will say from our perspective, Q3 of this year, so the quarter that just obviously wrapped up was the lowest quarter for churn on our platform in years. So if you would have shut down, you would have shut down already. So this was like an extinction event, the bottom 25% of restaurants go away, but the rest make it? Correct. Or it just happens that our group of restaurants were well positioned. Not that they were very well run, but that they already had a takeout business to begin with.

It's how people thought about them going into COVID. Now that takeout is massive and people are spending a lot of money on, you as a restaurant are well positioned. You also had online ordering set up. You did it the right way. We like to think it's through us. But as you mentioned, there's other options out there. And so you had all the pieces in place to take advantage. of this massive boom in takeout, pickup, pickup,

and curbside pickup. And so you are well positioned, and you are surviving this right now. It's the fine dining restaurants that we typically don't work with. They're the ones that aren't able to pivot quick enough. Dining's gone away, and those are the ones.

Yeah, they just can't. I mean, they have huge rants. They've got this incredible, opulent Taj Mahal destination with vaulted ceilings and, you know, gold leaf. They can't survive. And Danny Meyer has been pretty clear about that. If they don't do a second stimulus, which is the most bizarre thing in the world, I can't understand why.

And we're taping this, by the way, right before the election in case it comes out after that. I mean, it's just so insane to think that Trump didn't do a stimulus before the election and get credit for that. And then all these poor restaurants and retail and, you know, small businesses, I mean, they're all good. I mean, this is going to be a massive shock of job loss. Right as we're apparently, if you believe. believe Trump and if you believe, you know, some of the, you know, experts, we're going to have a

vaccine and we're going to, we have treatments and the death rate is kind of staying low while the case count goes highly. Like, it feels like we're in the end game here and maybe a six-month stimulus would be wise, but I don't know, maybe they're just taking this like nihilistic approach of let everything die so that the things that do survive will be that much stronger, you know, and the boom-bust cycle. of competitive capitalism, but man, there's going to be some carnage. From a political angle, I agree. I don't understand why they didn't push this through.

One out of every 10 people in the U.S. worked for a restaurant somehow, either in a restaurant. I mean, it's a massive, massive. Or part of the supply chain, etc. Correct. I mean, it is massive. And so, retail too. Yeah, and so I don't, I'm with you.

I don't understand. To me, it was an easy win right ahead of the election. Yeah, to lay up. Yeah. The free throw. You got to hit your free throws. I mean, it's just too easy free throws. The first stimulus they do, everybody loves Trump, do the next one, everybody loves Trump

every more. You're dumping money from a helicopter, do it. I can't tell you how many startups I know who we're going to go under and then we're pitching me this summer and into the fall and said, you know, we got a 100K, we got a 200K stimulus check. We didn't have to lay anybody off, you know, and we're going to make it through. And now people are not going to make it through. It's crazy.

Listen, you've been a great guest, Chris Webb. Congratulations on your success. congratulations on getting there early. Congratulations on the SPAC. No, you're not SPAC. How many of these SPAC people, be honest, are circling, knocking on the door? There are hundreds of them. Yes, I'd say it's cooled in the last week, but won a week up to this week.

It's unbelievable, right? It's like, we were sitting here and everybody's like, yeah, you got to get to whatever it is, you know, 500 million is the new bogey for going public, 250 minimum. And now people are like, you got 50 million in revenue. Let's roll. And you're in that window, right? So you could be public. You could be public. How do you think about that as a founder?

You know, you got all these great investors in your company. You could stay private longer. SPL, stay private longer. Yeah. Or you could spack it out. You could do a SPAC attack. SPAC. Where are you leaning?

Definitely not SPAC. IPO maybe one day. Yeah. Yeah. Yeah. So you're SPL. Your SPL. Your SPL.

I, in my 20s, I worked in finance in New York. And so, um, Spack's always had a bad name back then, and I always view them as relatively desperate way of going. And so that's how I still view them. And now it's not. It's considered the opposite. It's considered a more elegant way of going. Yeah.

Or as elegant. It's what the bankers are telling me. So, you know, it's like, it's, but. Yeah. You got pressure from the investors who want you to like get liquid? No, I would be telling you, if I was an investor, I'd be telling you, do it. Get public and start acquiring stuff. And I mean, people, your story's good for the public markets right now.

Retail investors, I mean, not to make a pun here, but they would eat it up. Yeah. So we may be raising around the funding, maybe, maybe not. Maybe, maybe not. And so we think coming out of this, we will be in a position to start requiring companies. We've already started having conversations. At this point, we don't have an LOI signed, but we are having conversations. Given the size and the scale of the business and the fact that we've been very fortunate, we've grown a ton this year, we've hired a ton this year. We think coming out of this and going into next year, we're in a position to start acquiring some companies and building that muscle as a company. What did you learn at Lehman Brothers during the crash? I know you were on Wall Street. Lehman. What did you learn? And how does that sit with you? How does that scar tissue, you know,

when you, when you rub your arm and you feel that scar, or maybe it's in your side, what do you think about? Yeah, so I wish I was at my desk. I'm clearly not at my desk right now. I have a cube that sits on my desk, and it's from Lehman Brothers, and it's what they gave you as the first week that you're there, come you employ each way. It was one of these cubes that's not a Rubik's cube, but kind of like you flips open and says different sayings on different surfaces, you kind of flip this cube around. And it was the operating. principles of it. And so one of them of these many that elist is smart risk management, which is just so ironic, given that it ended up being the largest bankruptcy in the history of the

U.S. Spot risk management. Smart, smart. Smart risk management. Yeah, was one of the operating principle. So among all the lessons I learned, the fact of just talking about these principles and not actually living them is one. The other thing that I remember very distinctly is when I lived in New York and you work in these very tall buildings in New York. All the employees are in, call it 18 different floors. And then the senior execs are in their own floors with their own dining rooms and their own elevators and there's no interaction. And I remember this very, very well, they keep you walled off. There is no interaction, no physical interaction. And so it's private bathroom, private lunchroom. Yeah. And as someone who's in my, was in my kind of early to

mid-20s and, you know, given commands and all these things to do, it's like, these don't make any sense. Like, do they not understand like what's going on? What's going on here? And so as as we've built this business, I am very approachable. I'm intentionally very approachable. We're all at home now, but my desk in the office is on one of the rows with a lot of people. I tell every new class, slack me anytime. I'm approachable because I want, I do not want that where I and other other executives at the company are walled off and have no idea what's going on in the trenches, out in the fields, talking to clients. So that was probably the biggest takeaway from for one time, All right. So the culture thing, making yourself accessible, since you're such an outspoken and

candid great guest, by the way. We might have to have Chris back for a news round table, Nick. You're in the candid bucket, like one out of every six or seven guests. I get somebody just candid. You must have watched Brian over at Coin. Coinbase. And then Expensify. Two polar extremes here. Yes. Expensify CEO emails 10 million people. says you have to vote for Biden. This is an existential moment in time. Trump is Hitler, basically. And if you don't vote, and I don't care if I lose a third of my customers.

And then you have Brian saying, hey, listen, come to work and work. And we're not going to have work become a place where we're talking about religions, social movements, or anything. We're just, we're here to focus on this movement. When you watch those two things and you talk to your management team, you're bored, your investors, and you just, you know, sit there. in your own space and you meditate on it. What's the right answer here?

Because both of those, you know, no discussion slash I'm going to force my will on the customer base, both of those, most people I've talked to say, we're too extreme. Where do you come down on this? Yeah, so I agree. They're both too extreme. When I saw that blog post like everyone did on Twitter all of a sudden because it got shared very, very quickly, the first thing I did is I went to our head of recruiting and said, start calling everyone at Coinbase because I'm sure there's some people that don't

agree and I'm sure we can get. And I'm sure they have some great engineers over there that disagree with this. So let's see if I didn't even want to join. We're hiring like crazy. And so that was my first thought based off of reading that. It's not what we believe at Chownau. I also disagree with sending out that expensive I email that I also received and read and shared with a couple people that everyone kind of got it. And everyone's like, is this real? Like this is kind of extreme as well. And so the way I view it is we live right now in a place where there's a lot of instability and people are very concerned. And so what I want to do at Chownau in terms of kind of the culture, the people we work with is provide some level of security. And so I think you actually have to

talk about a lot of this stuff. I think you have to be fairly balanced in many ways because we have people from all over the political spectrum. We have a lot of people here. We're based in Los Angeles. We have a lot of people that you would assume are young and liberal and progressive because just the age range and the location here. We also have a very big office in Missouri and Kansas City brings different political views. And then we have people all over the country. We have people up and down the East Coast. We have people in the Midwest. And with that brings a lot of different views and perspectives. And you'd be hypocritical if you're saying everyone has to be included unless I disagree with you. And so we are making sure that we want to

have a place where we're not having a political battle, but you can feel safe and that Chow now is a place that you can at least get some type of comfort in your life because the amount of stress and anxiety that's in society today is through the roof. The number of, I was just three friends in the last two weeks who had premature babies. Apparently, that's a massive thing because the amount of stress that we are going through and women are going through are causing premature baby. So we are just living in a very stressful time. And so I want to do whatever we can at Channel to try to reduce that and give you some type of thing. And so that means actually talking about a lot of this. So we address it. We talk about it. We encourage people to vote.

We're doing a lot of things on Tuesday. We're not taking the day off, but we're doing a number of other things. We're letting people go and work at the polls and we'll pay for your day to go. There's a whole bunch of things. I'm sure if somebody asks you, like, can I leave work at four clock to go vote or coming at 10, you'd be like, cool. Yeah. I don't think you have to take the whole day off, but I do think people should be allowed to take a couple of hours to go vote and make it easy for people. Absolutely.

And you have hours of PTO to take off. If you have to vote the entire day because you're standing in a line somewhere where hard to vote, take off the entire day. We also, one thing that we did weeks ago is we announced that there was zero meetings that day. So you cannot be stuck into a meeting. So you don't have to worry about missing a meeting or being late or being early. Yep.

So, you know what I think a lot of this is. You mentioned Slack before is on top of everybody being so stressed out because of the pandemic, the recession, and our divided politics in the election and this bitterness, you know, you put that into what's the worst possible medium to talk about a charged issue? Chat, whether it's I message or Slack. And this is no dick to Slack. I love Slack. We use it every day. It's our. operating system. But I got to tell you that goddamn random channel, I suggest everybody go right now and delete it because somebody's going to put a random joke in there or a random cause and you don't want to be like, you're not a Scientologist by chance. Are you, Chris? I'm going to go off on Scientology, even though I've got a lot of friends who are Scientologist, but I'm not going to go off. You can go, you can be a Scientologist. I don't care. But I don't know if you know the story, but Tom Cruise, when he was making World of Worlds, put a Scientology recruitment tent famously on the set.

And Mr. Spielberg, who is infinitely more important and desiring of respect than Tom Cruise in my mind, just in the hierarchy of the film industry, like some respect here, you're working for Mr. Spielberg, like Jaws, E.T. Raiders, Spielberg. don't set up a religious tent. Like, I'm not setting up a Catholicism tent or a Greek diner. Like, chill out.

And that's what people are doing at work. And that's where I think Brian's got a point. And I just said to my team, if we're on a Zoom call or we want to have talk about a discussion, let's set up a Zoom call, let's set up a lunch, let's set up a dinner. We'll have a lunch and learn or whatever. And we can talk about any issue that's charged in person, looking each other in the eyes, with patience and respect, not in a Slack room, not on an email server. That's where people flame each other and there's no empathy.

So if you hear my voice, that's my common sense solution. Just ban these discussions on social, ban the discussions on internal electronic communications and insist they occur in person. Very simple. Which is what I do with important people in my life. If I'm having a dispute with somebody who I'm friends with, I'm like, let's talk about it in person, right? Yeah, or at least over the phone, even voice helps.

Oh, yes. The phone is fine too. Yeah, yeah. Yeah. When you hear the pros, right, listen, Chris, continued success. Thanks for taking the time

out of your busy schedule. If you know somebody who's got a restaurant, just go to chownau.com and spend $100 bucks a month and start owning some of those customers. Listen, I'm still heavily invested in Uber, but Viva, the competition. I want to see competition in the space because that's in the best interest of the restaurants,

the winners of that competition and the consumers. Let's go capitalism. Congratulations on your great success with Chow Now, Chris. And we'll see you all next time on this weekend start of it. Bye-bye.