Foodetective Revenue, Valuation & Funding (2024)

[00:00] Hey, folks. My guest today is Andrea Tassistro. He's a Swiss Italian entrepreneur based in Geneva, Switzerland. He specialized in the food and restaurant industry with a very strong technology need to digitize, automate, and optimize the entire value chain from production to consumption. Andrea, are you ready to take us to the top? [00:15] >> Yes, I am. [00:16] Hi, website is foodetective.co. Tell me who's buying the product and what are they using you for? [00:23] >> So there are two types of clients. Either restaurants buy the product directly or we sell our technology to licensing partners such as Uber Eats, Coca Cola, Nestle. [00:36] And when you look at your total revenue over the past twelve months, what percent was through partners versus direct relationships? [00:43] >> So far, it was mostly through direct relationships because we just started to license our technology right now. [00:50] Okay. So a 100% of your revenue past twelve months was direct. You're now starting and turning on the partner ecosystem. Exactly. Yes. Very cool. Okay. And what are people paying you on average per month to use this technology? [01:03] >> So it varies from 89 to 400 per month. [01:07] What would you say a sweet spot is an average? [01:10] >> About $230 [01:13] And describe this person. Is it a restaurant chain? Who's paying you? What are you building? [01:19] >> It's most small and medium restaurants located basically globally. And what we provide them is a unified platform that enables them basically to manage their entire operation, marketing, and management, and tech stack from a single platform and unified API. [01:40] When did you launch the business? [01:43] >> I think it was the business side, it was in April 2019, but foodetective was created in in January 2018. [01:52] And so what were you doing for that full year? [01:56] >> We were mostly researching on the restaurant space and building a consumer facing app that helps us today acquire more restaurants cheaper and faster. [02:08] How were you funding? Like how were you paying your personal expenses? Did you have savings built up? [02:13] >> Initially, yes. And eventually we managed to raise the two rounds of funding that helps basically keep on building the business. [02:23] When was the first round? [02:25] >> The first one was around 2019. [02:29] Okay. And how much did you how much did you raise there? [02:31] >> We raised about 1,000,000. [02:34] Would that would that be your what? Your pre seed round? [02:36] >> Yeah. Pre seed. And then we need an extension of that pre seed. Maybe we can call this this initial money seed in that sense. [02:46] Okay. So so you raised more this year? [02:49] >> We raised more this year. Yeah. We raised another million in March this year. [02:56] And you'd call that sort of your seed round? [02:59] >> Yeah. Let's call it a pre seed. So we're we're sure that we'll be ready for the seed probably. [03:05] So you've raised 2,000,000 over the past three years and you're bundling that altogether calling it your pre seed round? [03:10] >> Exactly. Yes. [03:11] I see. Okay. Tell me how you got your first customer back in 2018, 2019. [03:17] >> That's a good question. First customer was my favorite restaurants here in Geneva, a friend of mine actually. And I just told him like, hey, I need your feedback. I'm building this platform for the restaurant industry and we're trying basically to gather everything into one single platform. And he said, but hey, I'm actually looking for this kind of tool and I'll be happy to be your customer. How much is it? And I was like, it's 59. At [03:44] >> the time it was 59. I said, okay then, let's go, let's do it. I have three restaurants and we deployed basically the solution across three restaurants. [03:52] Very cool. How many customers now today? [03:56] >> Today, I think there are 21,000 restaurants were registered on the platform. [04:00] And how many of them are paying? [04:02] >> That's confidential actually. [04:06] What sort of a range? [04:09] >> Oh, a good a good chunk. Let's put it like this. [04:14] Like like a thousand to 5,000 or more than 5,000? [04:19] >> Like let let's say that that range. [04:21] >> One to 5,000? [04:22] Yeah. When do you think you can break 5,000 paying customers? [04:28] >> Oh, I think [04:30] >> at at the end of q one next year. [04:33] And how were you able to build the waitlist of 21,000? That's a lot of people. [04:38] >> Yeah. So basically, it's it's all our goal right now. It's basically to convert all these registered businesses into Pinkvilein to to offer them TellurMain operating system. [04:48] But Andrea, how [04:49] did you get them signed up? So restaurant owners are busy. How do they find you 21,000 times? [04:55] >> Oh, I think it's through our review platform and we reach out to them through a lot of different kind of ways, either it's online through Instagram, CRM, we call them, we visit them, we do a lot of press through partners, through influencers and so on. [05:14] Okay. And you just told me sort of the range of customers is 1,000 to 2,000. If we assume the minimum there of a thousand times the ARPU you told me earlier of about $230 per month, if I multiply those, it would put you at about $230,000 a month right now in revenue. I think that's probably larger than what you actually are. Is that accurate? [05:32] >> Yeah. It's accurate. [05:33] Okay. And and why is that? Is that because you have less customers or that ARPU is too high? [05:38] >> No. Because we just changed our business model. We were transactional fee since three three weeks ago, and we moved to a full SaaS very recently. [05:48] Oh, wait. Sorry. What were you three weeks ago? [05:51] >> We were doing transactional fees. So basically, we were taking a small transaction, a small percentage of every transaction that was going online, basically. [05:59] I see. What like, a 1%, 2%? [06:02] >> Yeah. Exactly. [06:03] Okay. And and [06:04] >> moved away from that model. And right now, we are solely focused on selling subscriptions based on the number of verticals and integration they wanna use on foodetective. [06:15] So if a pizza shop in Geneva was using you and they sold a $100 pizza through your platform, like, is it a POS system? They pay you a dollar of the [06:23] >> 100? Exactly. [06:26] I see. And why did you move away from that model? That that feels like a great model to me. [06:31] >> Yeah. Actually, the problem is that we had a premium offer and this is why we've managed to acquire a lot of customers very, very fast. But the thing is that converting them into paying, we needed to basically increase dramatically the number of transaction hence the marketing we were doing for them, which was not our business model at all. So we decided to shift into a full SaaS platform and basically telling them, okay, if you want to [06:55] >> basically to manage all your tech stack from foodetective, now you have to pay. [06:59] I see. So how much like GMV was going to the system back in October in that month? [07:07] >> That I cannot disclose neither. [07:10] Why not? [07:11] >> Because we don't disclose this kind of information. [07:14] Well, why? I mean, you shut it down, you're moving on to something else. So it was it was a low number. I'm curious how low it was. [07:20] >> It was very low then. [07:21] Like under 1,000,000 per month? [07:25] >> Yeah. [07:25] Okay. And why was it so low? I mean, 21,000 restaurants, right? If you just if they each only sell, you know I mean, even if they each only sell a thousand dollars a month through your platform, that's $21,000,000 in GMV. Yeah. So why weren't they using you? This is a usage issue. Why weren't they using you? [07:44] >> They weren't using us because we didn't handle the integration ready, actually. [07:49] Which integration? [07:51] >> With all the POS and delivery platforms. [07:54] I see. Would you ever build your own POS system to avoid that? [07:57] >> Never. [07:58] Okay. And so how are you solving that now with the SaaS platform? Do you have all the integrations live? [08:04] >> Yes. [08:07] Okay. So if that was the issue, why don't you stick with the transaction business with the new integrations and increase your GMV? [08:14] >> Because again, we needed to have a lot of marketing going through our own platform to charge the fee, which was not the case. Right now with a unique like model where you pay a monthly subscription fee, we don't need that. [08:32] Well, people are gonna cancel if they're not using you to transact, right? Whether you're charging on percent of GMV or not, if they're not using you to make money, they're gonna cancel a SaaS fee or a transaction fee. So what's the difference? [08:45] >> Because for us, it works better to have a SaaS fee rather than having transaction fee. Transaction fee. [08:52] How do you know that though? You just launched it three weeks ago. [08:55] >> Yeah. But before launching it three weeks ago, we had three years of research with restaurants using the platform. [09:01] But none of them were on a SaaS fee. They were on all on the GM GMV thing. And the issue on the GMV side was that you didn't have integrations, correct? [09:08] >> Exactly. Yeah. [09:09] Why didn't you build integrations? I mean, you had Why didn't you build those integrations? You had three years to build it. [09:15] >> Because we had to finish the platform first. We we we cover over 20 verticals across the entire industry. So imagine the amount of software development that we have prior making even one integration. [09:28] So is that a mistake? I mean, shouldn't you have focused on one vertical and dominate that one vertical first? [09:34] >> No, absolutely not. Because then it's very difficult to expand. Whereas when you come in with a full vertical SaaS, then it's easier to expand. [09:44] Okay. So you're you're Just you're [09:46] >> just to comment on this, entering new kind of verticals, having anything ready makes it much much easier for restaurants not only to use your software, but also for you to increase your ARPU online. [10:02] Yeah. I mean, who cares about increasing your ARPU? You've got get the customer first and get them addicted. And then you can worry about building other products and going to new industries and verticals. I don't understand why you would try and tackle 21 verticals at once right when you start. [10:17] >> Yeah, that's your point of view then. [10:20] But I'm asking you why? Why would you go try and tackle 21 things at once right at the beginning? [10:27] >> Because it creates this kind of mentality within the company that we are able to adapt to basically any solution or to any partner or whatever they have, right? When we go and see a Yeah. [10:42] But if you're built for everyone, Andrea, you're built for no one. That's the problem. You can't be adaptable to everything. [10:49] >> Yeah. Maybe. Maybe. [10:51] So so you're okay. Let's let's move on from this because I think this was a viable conversation, but let's move forward into the SaaS play moving forward. So you you've been testing us out now for three weeks. What have you learned so far? [11:01] >> We've learned that we can enter basically any restaurant by offering them different kind of verticals on the tools that we have to offer. [11:11] Okay. So how many restaurants are now paying a SaaS fee over the past three weeks? [11:17] >> About 226. [11:20] Oh, wow. That's a pretty I mean, that's a lot over just, you know, very, very quick time horizon. And these are folks that are paying again that $203,100 bucks a month, right? [11:29] >> Exactly. [11:29] I see. Okay. This is great. So I can take the two thirty customers or two twenty six times two thirty and you guys are like $50,000 to $60,000 a month in revenue, something like that. [11:39] >> Yes, maybe. [11:40] I see. I see. Okay. And if that's where you were today, where were you exactly a year ago just so we can calculate growth rate? [11:46] >> Oh, we were at a similar rates, just the different models. [11:51] I see. Okay. So you're doing like 40. So you basically are flat year over year, but you expect growth will be big over the next twelve months with your new SaaS model? [11:58] >> Exactly. Yeah. [11:59] I see. Okay. Very cool. Alright. Talk to me about funding. So again, you raised the 2,000,000. Are you planning to raise more capital or no? [12:05] >> Yes, absolutely. [12:07] Are you raising right now? [12:09] >> We're raising right now. [12:10] How much are you looking to raise? [12:12] >> We're looking to raise $7,000,000. [12:15] $7,000,000. Why do need $7,000,000? [12:18] >> To build the sales and marketing team behind the licensing. [12:24] You could barely say that with a straight face. Why are you smiling when I ask the question? [12:28] >> Because you ask a lot of questions. [12:31] What do you think? It's called a podcast interview for a reason, right? What do you want me to call it? Something else? [12:37] >> Yeah, maybe. Maybe call it a questionnaire. [12:40] Interviews. Usually there's questions involved in interviews, buddy. [12:44] >> That's how you But seriously, 7,000,000, mean, that's gonna be very dilutive for you as the founder. [12:51] >> Yeah, we'll be raising over two different rounds. So first we do a chunk of that and then another chunk. And basically now it's to grow the revenue now that we have this kind of product market fit and that we can scale the business globally. [13:05] I [13:08] see. Most people when they're doing their pre seed rounds are selling between 10 to 20% of the business. Is about what you sold when you did the million? [13:15] >> Yeah. [13:16] Okay. Interesting. And are you sort of thinking you have to sell another 10 to 20 on the 7,000,000 round? [13:20] >> Yeah. Exactly. [13:21] Interesting. Okay. You think you can get that valuation? I mean, you'd have to go get a $80,000,000 valuation. You're currently doing $600,000 in ARR. [13:30] >> Yeah. Yeah. Absolutely. [13:31] That's a pretty big that's like a 100 x multiple. [13:34] >> Yeah. It's a 100 x multiple. But the thing is that when you have, let's say, companies who have 600,000 restaurants on their database who will be deploying your technology, it's easier to prove that kind of model, right? [13:47] Fair enough, fair enough. And what's your team size today? How many people? [13:50] >> We're 24. [13:51] How many engineers? [13:54] >> Seven. [13:55] Okay. So heavy engineering. That's good stuff. Good stuff, Andrea. Listen, I love the pivot. I I'm rooting for you. Let's wrap up here with the famous five. Number one, favorite book. [14:04] >> The Lean Startup. [14:05] Number two, is there a CEO you're following or studying? [14:09] >> Yes. Parker Conrad from, Zenefits ex Zenefits. [14:14] Number three, what's your favorite online tool for building out, Foodetective? [14:19] >> I think it's Typeform. [14:21] Number four, how many hours of sleep do you get every night? [14:25] >> I sleep seven hours a night. [14:26] That's pretty darn good. And what's your situation, Andrea? Married? Single? Kids? [14:30] >> I'm single. [14:32] Okay. No. And how old are you? [14:34] >> I'm 30. [14:36] >> 30 years old. [14:37] Last question. Something you wish you knew when you were 20. [14:44] >> That's a good question. [14:47] >> Cannot cannot answer right now. [14:49] No. Do your best. [15:02] Think about what you were doing ten years ago. [15:06] >> To learn to code. [15:07] There you go. Guys, there you have it, foodetective.co. They are pivoting, pivoting a nice pivot here. It used to be a percent of GMV model doing forty, fifty thousand dollars a month in revenue a year ago. Now pivoting into a SaaS model. They've converted 21,000 restaurants sign up for their platform, two thirty are already paying on the SaaS model, about $230 per month. So call it $50,000 to $60,000 a month in revenue right now. 2,000,000 raised, so [15:28] nice scale, looking to raise another 7,000,000 right now. We'll see if we can get it done as they look to scale into more restaurants, more broader verticals under this new SaaS model. Andrea, thanks for taking us to the top. [15:39] >> Thank you, Nathan. [15:42] One more thing before you go. We have a brand new show every Thursday at 1PM Central. It's called Shark Tank for SaaS. We call it deal or bust. One founder comes on, three hungry buyers, they try and do a deal live and the founder shares back end dashboards, their expenses, their revenue, ARPU, CAC, LTV, you name it, they share it and the buyers try and make a deal live. It is fun to watch every Thursday one [16:07] p. M. Central. Additionally, remember these recorded founder interviews go live. We release them here on YouTube every day at two p. M. Central. 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