[MUSIC] >> Welcome to Category Visionaries, the show dedicated to exploring exciting visions for the future from the founders or in the front lines building it. In each episode, we'll speak with a visionary founder who's building a new category or reimagining an existing one. We'll learn about the problem they solve, how their technology works, and unpack their vision for the future. I'm your host, Brett Stapper, CEO of Frontlines Media. Now, let's dive right into today's episode. [MUSIC] >> Hey everyone, and welcome back to Category Visionaries. Today, we're speaking with Meredith Sandland, CEO of Empowered Delivery, a restaurant company that's raised 6 million in funding. Meredith, how's it going? >> So good, I'm really excited to be talking with you. >> I'm super excited as well, and I'd love to just begin with a quick summary of who you are and a bit more about your background. >> Yeah, absolutely, so my name is Meredith Sandland, and I am the CEO and co-founder of Empowered Delivery, a software company in restaurant technology. My background is primarily in restaurant, I was the Chief Development Officer of Taco Bell, so I built lots and lots of Taco Bells. You're welcome, everyone, and prior to that, how long history and private equity and investing. >> What's your favorite item on the Taco Bell menu? Not to put you on the spot, you're going to ask a question to kick off the conversation. >> That is probably the hardest question you're going to ask me. So I like to customize, and I would say it's probably the crunch wrap, but with no Nacho cheese sauce and instead putting on three cheese blend, or maybe the cheesy bean and rice, again, no Nacho cheese sauce instead of the three cheese blend, and also grilled. Did you know you can ask for anything grilled? >> Ooh, I didn't know that, often try that. Next time my wife leaves, I always order Taco Bell because she doesn't really allow me to eat it when she's here, so next time she's gone, that's my go-to. I'll give that recommendation to the shot. >> Not really, I need to talk to her. I'm a huge chocolate ball fan. >> [LAUGH] Well, I'll bring her in after the call. You can preach to her and it helped me get some more Taco Bell mules. Let's talk a little bit about everything that you're building at Empower Delivery. So can you just tell us at a high level what the company does, what the product does? >> Yeah, absolutely. So we are a restaurant order to fulfillment platform. Restaurant is an interesting category because it's a bit late to the digitization journey. It really accelerated during the pandemic and many things that are very common in other verticals like travel and retail are just starting to happen in restaurant. And because they're sort of late to the party, they've taken a very interesting approach of offering lots and lots of different features that they've seen in other categories that they think are cool, but then trying to stitch them together on the back end, which maybe isn't the best efficient way to do things. Our software instead follows the order all the way from the start of the consumer journey through to the fulfillment on the end. And as a result, it allows an entirely digital native experience. >> Why is the restaurant industry behind you think? >> Well, I think first and foremost, the little units out there are kind of sub-scale compared to other categories, right? So most restaurants do a million, maybe $2 million a year in sales. And so trying to put tech out there with these tiny little restaurants, that's pretty tough to do until the cost of technology came down substantially. So that's probably the very most important thing. And then second, they've always just culturally been very place driven. It tends to be that people go to food, or at least historically, that's what happened. People went to food, not that food came to people. Pizza being the big exception, they were the first ones to become more like e-commerce companies. >> And tell us a little bit about the founding story, because I understand it's not a typical startup founding story. >> It is certainly not, it is certainly not. So Empower Delivery is a spin-out of the largest and most profitable delivery kitchen in the U.S. It's a company called Cluster Truck. They're based in Indianapolis. And they do some really remarkable things that no other restaurant really has figured out how to do. So out of a single location, they do 800 to 1,000 deliveries a day, which is a huge amount of volume moving out of a single location. All of it is 100% what we call in the restaurant industry first party ordering, meaning it's not going through DoorDash or Uber. It's coming directly to the Cluster Truck website. And then all of it, 100% of it, is what we call first party delivery, meaning it is Cluster Truck related parties who are doing the actual deliveries to the consumer instead of, again, using a third party like DoorDash or Uber or Relay or Lyft or any of the other folks out there. So it's a very unusual business and we're the software that enables them to do that amazing magic. >> And what was the reason to spit it out? >> Yeah, so I have talked to a lot of companies who think that they have built something neat and that they should spin it out and sell it to other companies. I think that is pretty common thing among corporations who have a significant internal tech team and often they have built something very neat. And in this particular case, it was neat. It was totally unique and took a different approach to the industry than anyone else could do. And so there's kind of two main drivers there. One is we have something other people want. And two is it turns out that restaurants and technology have fundamentally different economics and they have fundamentally different funding sources, fundamentally different ways to scale. And so trying to combine them becomes pretty tricky when you go out to the financial markets. I think it was very trendy for a little bit. You saw a lot of prop tech, retail tech, restaurant tech, kind of combo businesses that were both a physical place and a software together right before. And then during the pandemic, its delivery really took off. But they are so different speaking from an investor's perspective. It's just very difficult to scale both of them together. So when you put those two things together and you say, hmm, not sure financially they belong together. And hmm, seems like there's a market for this product, we should spin it out. I think that's the reason to do it. But the hard thing, and when I look at a lot of other businesses who think they've made something they should spin it out, is that having an internal tech tool is extraordinarily different from having a tech company on every dimension. So you really have to be thoughtful about whether or not the juice is worth the squeeze, so to speak. So you spin it out in summer 2022. What do the first three months look like for you? Yeah, so when we spin it out and this gets directly to like, is the juice worth the squeeze? The squeeze was pretty hard, right? You have to take a tool that you're used to having a bunch of internal engineers operating who are fully invested, know how it was made, know how to work around in it, know how to do it, and have direct control over the operating business as well, right? Because these engineers literally sat upstairs from the kitchen and if they wanted to try something, they could go downstairs and ask the kitchen to do it differently. And meanwhile, if the kitchen wanted something different, the software, they could go upstairs and ask engineers to do it differently. So the first three months were really about, well, what does it mean to be servicing other customers? What kind of admin panels are they going to need? What kind of reporting are they going to need? How do you make it configurable? How do you make it multi-tenant? Just a lot of questions that were not relevant to have an internal software tool. What types of restaurants are you selling this to? Is it mom and pop shops? Is it chains? What does that look like? Yeah, so we cut the industry differently from everyone else. I think most people are either think of toast. They sell to SMBs, which are primarily independent restaurants, or a big company like OLO. They primarily sell to enterprise, which is a chain. And that's normally how the restaurant industry is cut up. We slice it differently. We are selling to any restaurant who does a significant delivery volume out of a single location. And so that might be an independent restaurant. It might be a small chain. Think of a pizza chain that has 30 units. Or it might be a large enterprise chain that has thousands of units, some set of which do hundreds of orders a day out of a single location. This show is brought to you by Frontlines Media, a podcast production studio that helps B2B founders launch, manage, and grow their own podcast. Now, if you're a founder, you may be thinking, "I don't have time to host a podcast. I've got a company to build." Well, that's exactly what we built our service to do. You show up and host and we handle literally everything else. To set up a call to discuss launching your own podcast, visit frontlines.io/podcast. Now, back to today's episode. And is that hard speaking to that wide of a range? Because I'd imagine that speaking to a restaurant owner, compared to speaking to maybe the CTO or whoever's buying for an enterprise, I would think that's a different pitch. Is that wrong? Yeah, I think that's very well said. They are different people that they have the same concerns, which is if you cut it more psychographically, like what problems are they trying to solve? They have a lot in common. So that's been one of our go-to-market learnings, is instead of trying to address a specific prototype of buyer, we're really looking at someone who has a similar kind of problem. And how do we talk to those problems, solutions, and opportunities, instead of talking to the mindset of this buyer prototype? What about the go-to-market motion then? On that side, I would imagine that reaching those folks is also pretty different. How do you approach communication and getting the message out there to your target customers? Yeah, they are, in a way, a needle and a haystack, right? There are 600,000 restaurant locations in America, and I would estimate that maybe 10 to 20% of them have the kind of volume that we're talking about. And really, the folks who are going to be most interested in us are not 5 to 10% of general restaurants. So you are looking for someone who is quite unique. We are not for everybody. And there are a couple of ways to think about finding those people. One is brute forcing it, doing a bunch of research and cold calling out to them. And certainly, we have folks who do that. But the other way is having them come to you. And I am very fortunate to be somewhat well-known at my tiny pond, which is I have written two books on restaurant delivery and hosted a podcast of my own also on restaurant delivery and restaurant technology. And because of that, I can talk about and talk directly to the kinds of folks that make sense for our software, which is, I think, probably pretty unique from software CEOs and founders. Yeah, I can see that, definitely. Given all the people I talk to, I think that's very unique. Now, this is a random question, but what are the top three categories for food delivery? I would guess pizza, Chinese, and a third one, or is that wrong? That's pretty funny. I mean, I think historically, you are absolutely right. It was pizza. I will call it broadly Asian. So Chinese, Indian, Thai, that sort of cluster of food. And then what has happened in the last five years with the rise of Dordash and Uber, is that restaurant delivery has grown to look very similar to restaurants. And so now, if you were to look at the top selling items, it would be burgers, Mexican, like all the same things you see when you drive down the street. And part of that is because that's just what Americans eat. And part of that is because of the structure of those marketplaces. They really are truly marketplaces. Like they have some logistics capability on the back end, but primarily what they are is a digital food court and people go there when they're hungry. And so all of these big chains, they advertising dollars to be featured on the websites, which then in turn causes the same big chains that you see when you drive down the street, to be the same big chains that you see when you open your Dordash or Uber app. Now, you didn't call yourself this. So I'll call you this. You are an industry thought leader. So being an industry thought leader, talk to us about that journey. How did you build your thought leadership? Oh, goodness. Well, first of all, I'm a nerd, which I think is a prerequisite to thought leadership. You have to have something interesting to say. And it's far easier to have something interesting to say if you're thinking about really arcane topics all the time. And it happened as an accident to be honest. I was working at another startup and my head of operations said to me, "Oh, I wish there was a book we could just give to our customers to explain everything that's changing." And I said, "Yeah, great idea. Go find one and send it to our customers." And he looked on Amazon, of course, there was nothing. So as often happens when there is something that does not exist that you wish did, you have to be the one to make it. So he and I wrote the first book, which is delivering the digital restaurant, to try to answer some of the questions that we were frequently getting from our customers at that time. And then it just sort of took off and went from there. How long did the book take you? Yeah, we wrote the first book in just under a year. It turns out the publishing part takes longer than the writing part, I think. And now we had the pandemic on our side. So both of us spent a lot of time. We wrote over Zoom together and we had more time than I think would be normal to sit at our desks and think big thoughts. How do you think about the value that you've received from being an industry thought leader? I work with a lot of founders and the goal is to establish thought leadership. Well, when it comes to actually describing the value and the benefits, it's always very difficult. So in your own words, how would you describe the benefits that you've seen from being established and positioned as an industry thought leader? Well, certainly customers come to us without a great deal of marketing investment, right? You'd said at the beginning, we've raised $6 million, which sounds like a fantastic amount of money, but it turns out is not enough to do sales and marketing for software, right? That is typically where software startups end up spending a lot of money as they scale, right? And so we've been in a very fortunate position to have interested restaurants come to us and seek us out. And that is absolutely our reflection of all the writing that we do and the things that we put out on the podcasts and the conferences that we get to go to, which I think would not be possible if not for the thought leadership. So that is a very tangible piece that comes back to us. The second is I get a tremendous amount of access to other restaurants and other restaurant tech companies in order to just learn what's going on, which I think is fantastic. Like I love my own podcasts, having guests up and learning about how they see the world, even if it's only tangentially related to our own software. It teaches a lot about how restaurants are thinking about the various problems that they're trying to solve, one of which is the problem that we solve. How many episodes do you do in a month? We do typically two, but sometimes four. What do you think is like a good size audience? For a podcast? Yeah, for your podcast, if you get a thousand restaurants listening in, are you happy or is that a failure? Do you need a hundred thousand? Like, how do you think about audience size? I would like to ask you that question. I don't know, that's interesting. I find it very difficult to measure because there's so many different platforms. And it's hard to tell exactly how many downloads you're getting in different places. I guess we tend to measure it more by we get a report that tells us we're a top 100 podcast in business in the U.S., which business seems like a pretty broad category. So that's cool, apparently they don't have restaurants. And then just going out to conferences, so many people will come up to us and say, "Oh my gosh, I listened to you on the podcast, or do I know you from somewhere?" Which is great. This show is brought to you by the Global Talent Co, a marketing leader's best friend in these times of budget cuts and efficient growth. We help marketing leaders find, hire, vet, and manage amazing marketing talent for 50 to 70 percent less than their U.S. and European counterparts. To book a free consultation, visit globaltalent.co. That's what a lot of our clients have told us. The real value of podcasting is exactly that. People know that you exist before you've ever had a conversation with them. And it can be tricky to say there's, you know, what the value is to that. But they just say it's very, very valuable. I think so. Yeah, and it just opens doors, right? Like say you cold email someone and they have no idea who you are. The odds that they reply is pretty low. But if they've heard of you, the odds that they reply is quite a bit higher. Totally agree. Let's talk a little bit about the competitive landscape. So do you view the door dashes and the oop breeds of the world? Are those the primary competitors that you're trying to take market share away from? Or are you trying to go after the blue ocean and get more restaurants to go on delivery that aren't already doing delivery? Yeah, I would say blue ocean. And here's why. I think that restaurant delivery today has reached a bit of a plateau, right? It accelerated massively during the pandemic. And it's kind of plateaued over the course of the last year. It's actually a negative in the UK delivery reported negative growth in their order count. And I would not be surprised if we did not see that here in the US soon as well. And I think the only way that you can keep growing that number is if you fundamentally change how delivery is done. It has to be better, cheaper, faster. And until you figure out how to make it better, cheaper, faster, it's going to kind of be at a plateau. I think it should be better, cheaper, and faster. I think it should continue to grow because consumers really value convenience. They value having prepared meals. They're very busy. I think that the shorter we can make the distance between farm to table deliveries included in that, the healthier the food will be and the less preservatives will be in it. So I think, you know, if you imagine it time 10 years from now, you can imagine that maybe happier males would come delivered to you in some form or fashion, either via the mail or via delivery, as we know it today. And I really believe that that will happen. You already see in other countries, delivery penetration is much, much higher. In the Middle East tends to be 50 to 70 percent of sales are in the form of delivery. And you also see it starting to affect in other countries the size of kitchens in their architecture, where they are allocating less space to kitchens. I think that all makes sense. And when you look at the restaurant infrastructure in the U.S., now I'm saying this as a developer who built restaurants, right? It doesn't make a lot of sense. You've got a 6,000 single-story square foot restaurant in a sea of parking that can only be accessed by car. That doesn't make any sense. And as we become a more populated country, you will see that real estate, I think fundamentally turnover and start to look more like what you have in China, which is a much more fulfillment center-type delivery environment. What about the packaging side of getting this more widely adopted? So whenever I order from dominoes, I'm always very impressed with the packaging, the food's hot, the food's fresh. And then you order from a local pizza joint, and it's not the same. Like it doesn't seem like they've invested. They just don't have the packaging technology. I guess I would say that a dominoes does. I see the same thing whenever I'm in LA, I love to order a sugarfish. Only sushi place I've ever seen that can somehow package it and make it taste good by the time it gets done. You think that's a big piece of this too? Or that technology has to be more evenly distributed to smaller restaurants? Yeah, I mean, I think it's an attitude, right? I mean, the reason why the sugarfish packaging is so amazing is because they've thought about it as an unboxing experience. And in fact, you can go online on YouTube and find unboxing videos of sugarfish. Well, it's more an attitude, right? So dominoes thinks of themselves as a delivery company, first and foremost. And therefore, everything they've done and from their technology to their packaging, to their cars, to their drivers, to everything they do, their process and restaurant, all of it is optimized for delivery, right? And same thing with sugarfish. They do have fancy dining places, but then they also have the delivery business, and they actually have separate facilities for them. And the delivery, everything is designed for delivery. And I think as we go forward, I don't know that you'll necessarily see packaging that was only available previously to dominoes who, by the way, I think had a patent on the hot bag for a long time. It's not so much that that technology will suddenly become available to other restaurants. I think that we will start to see more specialization. The last five years has been very much an omnichannel world. I need every facility to be all things to all people. It turns out when you're all things to all people, you don't do anything very well. And I think going forward, we will see more separation. We'll see the emergence of more types of restaurants that are truly dedicated to delivery. As you think, dominoes is a great example of that. Or even within a brand where they have some locations that are very delivery-centric and designed for that and other locations that are more dynamic than nature. On the consumer side, I see a lot of complaints about the cost of using DoorDash, UberEats, and I also hear that from friends I know who own restaurants is that the fees that they charge are just extremely high. What's the difference in the cost if they go with Empower versus if they go with someone like DoorDash? Yeah, absolutely. I mean, it is something that consumers and restaurants alike are complaining about. And then strangely, the other likes of the stool are drivers who complain they're not making off money. And DoorDash, who actually is unprofitable. So it's hard to see who in this ecosystem is doing well. And you know when there's something that nobody likes, but everybody does, right? I mean, DoorDash is a huge big company and there's tons of consumers ordering all the time, right? Your friends complain about it, but they're still using it. When you see that, that's when you see something that's ripe for disruption. A restaurant who's doing 100 deliveries a day, if they're operating on our software, they could save $150,000 a year. But it's a huge amount of money for someone who probably cash-blowing is making $150,000 a year, right? Very big deal. And the company we spent out of, ClusterTruck, and part of the reason why we knew we really had something here is they do not charge any delivery fees to their consumer. They do not charge any service fees. They do not charge any menu markets. So it's a great value. Yet their drivers actually make more money and they're profitable. How is that possible, right? You need great software is the answer, right? You need software that can eliminate the slack from the system. Slack is waste, waste is cost. Get that out of there. And then you're going to be able to accomplish the magic of having the consumer pay less, the drivers make more, and the restaurant make more. What about your market category? Is it a delivery OS or operating system or how do you think about the market category that you're in? Yeah, that's a tricky one. You know, we've really wrestled with that. I think we, in many ways, are a category of one, right? Because we do everything from order through to fulfillment. In a restaurant, there tend to be people who they're delivery management platforms or they are online ordering platforms or they sit in the restaurant and do on restaurant, POS, KDS, that's the point of sale and a kitchen display system. But nobody really thinks about it the way we do going end to end. So we think we're very unique, but maybe that also means that we have more competitors because we have competitors at each step in the value chain. What about fundraising lessons? So as I mentioned there in the intro and you touched on a few minutes ago, $6 million has been raised to date. What have you learned about fundraising throughout this journey? Yeah, well, I also mentioned a long time ago in my youth, I worked in private equity doing LBO buyouts. And I think the same lesson from there applies to here. If you're on the funding side, if you have the money, you're always thinking about deal flow. And it turns out even today in this terrible environment, there is more money out there than good ideas. And so if you believe strongly that you have the right idea, you will find the right money if you're willing to work for it and talk to people. The other thing I would say is it's a little bit like dating. You don't want just anybody's money, you want the right partner. And when you were going through the dating phase in your life, you weren't trying to find 10 wives, right? It wasn't like, I hope I can find 10 people that are pretty good, and then I'll pick one of them, right? Like, you were trying to find one wife. And in fact, it would have been a disaster if you had found 10 that were all pretty good. You would have been very confused and you wouldn't be sure what to do. And I think fundraising is a lot like that. If you know what it is that you're looking for and what would make a good partner, and then you're willing to talk to lots of different people until you find it, and you have a good idea, you will eventually find the right person. Let's imagine that you have coffee with a startup founder who's building in the restaurant technology space. Based on everything you know about this world of restaurants and this whole world of restaurant technology, what's the number one piece of advice that you'd have to give them? Well, I think the words of the letters MVP always ring true. And even for us who had a complete system ready to go end to end, spinning out of another company, what is the small version of that that you can start with? It's so important. It's okay. I know everyone talks about it all of the time, but get it out there, get feedback from customers as soon as you possibly can, rather than trying to build the perfect thing and then find someone who wants to buy it. Final question for you. Let's zoom out three to five years into the future. What's the big picture vision look like? I think we will have a lot more delivery in the US. I think a lot of it is going to come as you think about where Americans are spending their food. A lot more of it will come from grocery more so than restaurant. I think that it is possible that delivery will enable what I'll call the next-gen type of restaurant to leapfrog the existing legacy players and therefore bring pressure and healthier in addition to faster and hotter food to the people. Amazing. I love it. All right. We are up on time, so we're going to have to wrap here. Before we do, if there's any founders that are listening in that want to fall on with your journey, where should they go? Yeah. Well, I am on LinkedIn, Meredith Samblend. You can also find our podcast, The Digital Restaurant and two books delivering the digital restaurant. Those would be great places for me personally. Then for the company, it is called Empower Delivery and the website is Empower.delivery. Also can be found on LinkedIn. Amazing. Well, thank you for the time. I'm officially hungry now after all this talk about food. But this has been a really fun conversation. I really enjoyed it. I learned a lot and the audience is going to as well. So thanks so much. Thank you. This episode of Category Visionaries is brought to you by Frontlines Media, Silicon Valley's leading podcast production studio. If you're a B2B founder looking for help launching and growing your own podcast, visit frontlines.io/podcast. And for the latest episode, search for Category Visionaries on your podcast platform of choice. Thanks for listening and we'll catch you on the next episode. (upbeat music)
