How Foodetective Got 226 Restaurants Paying a SaaS Fee Three Weeks After Dropping Transaction Fees (Interview with Founder Andrea Tassistro)

Introduction and Company Overview

Nathan Latka

00:00Hey, 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?

Andrea Tassistro

00:15>> Yes, I am.

Nathan Latka

00:16Hi, website is foodetective.co. Tell me who's buying the product and what are they using you for?

Who Buys Foodetective and Why

Andrea Tassistro

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.

Nathan Latka

00:36And when you look at your total revenue over the past twelve months, what percent was through partners versus direct relationships?

Andrea Tassistro

00:43>> So far, it was mostly through direct relationships because we just started to license our technology right now.

Nathan Latka

00:50Okay. 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?

Andrea Tassistro

01:03>> So it varies from 89 to 400 per month.

Nathan Latka

01:07What would you say a sweet spot is an average?

Andrea Tassistro

01:10>> About $230

Nathan Latka

01:13And describe this person. Is it a restaurant chain? Who's paying you? What are you building?

Andrea Tassistro

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.

Founding Story and Early Research Phase

Nathan Latka

01:40When did you launch the business?

Andrea Tassistro

01:43>> I think it was the business side, it was in April 2019, but foodetective was created in in January 2018.

Nathan Latka

01:52And so what were you doing for that full year?

Andrea Tassistro

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.

Funding History and Pre-Seed Rounds

Nathan Latka

02:08How were you funding? Like how were you paying your personal expenses? Did you have savings built up?

Andrea Tassistro

02:13>> Initially, yes. And eventually we managed to raise the two rounds of funding that helps basically keep on building the business.

Nathan Latka

02:23When was the first round?

Andrea Tassistro

02:25>> The first one was around 2019.

Nathan Latka

02:29Okay. And how much did you how much did you raise there?

Andrea Tassistro

02:31>> We raised about 1,000,000.

Nathan Latka

02:34Would that would that be your what? Your pre seed round?

Andrea Tassistro

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.

Nathan Latka

02:46Okay. So so you raised more this year?

Andrea Tassistro

02:49>> We raised more this year. Yeah. We raised another million in March this year.

Nathan Latka

02:56And you'd call that sort of your seed round?

Andrea Tassistro

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.

Nathan Latka

03:05So you've raised 2,000,000 over the past three years and you're bundling that altogether calling it your pre seed round?

Andrea Tassistro

03:10>> Exactly. Yes.

First Customer and Early Pricing

Nathan Latka

03:11I see. Okay. Tell me how you got your first customer back in 2018, 2019.

Andrea Tassistro

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.

21,000 Registered Restaurants and How They Signed Up

Nathan Latka

03:52Very cool. How many customers now today?

Andrea Tassistro

03:56>> Today, I think there are 21,000 restaurants were registered on the platform.

Nathan Latka

04:00And how many of them are paying?

Andrea Tassistro

04:02>> That's confidential actually.

Nathan Latka

04:06What sort of a range?

Andrea Tassistro

04:09>> Oh, a good a good chunk. Let's put it like this.

Nathan Latka

04:14Like like a thousand to 5,000 or more than 5,000?

Andrea Tassistro

04:19>> Like let let's say that that range.

04:21>> One to 5,000?

Nathan Latka

04:22Yeah. When do you think you can break 5,000 paying customers?

Andrea Tassistro

04:28>> Oh, I think

04:30>> at at the end of q one next year.

Nathan Latka

04:33And how were you able to build the waitlist of 21,000? That's a lot of people.

Andrea Tassistro

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.

Nathan Latka

04:48But Andrea, how

04:49did you get them signed up? So restaurant owners are busy. How do they find you 21,000 times?

Andrea Tassistro

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.

Nathan Latka

05:14Okay. 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?

Andrea Tassistro

05:32>> Yeah. It's accurate.

Nathan Latka

05:33Okay. And and why is that? Is that because you have less customers or that ARPU is too high?

The Pivot: From Transaction Fees to SaaS

Andrea Tassistro

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.

Nathan Latka

05:48Oh, wait. Sorry. What were you three weeks ago?

Andrea Tassistro

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.

Nathan Latka

05:59I see. What like, a 1%, 2%?

Andrea Tassistro

06:02>> Yeah. Exactly.

Nathan Latka

06:03Okay. And and

Andrea Tassistro

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.

Nathan Latka

06:15So 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

Andrea Tassistro

06:23>> 100? Exactly.

Nathan Latka

06:26I see. And why did you move away from that model? That that feels like a great model to me.

Why the Free Users Weren't Converting

Andrea Tassistro

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.

Nathan Latka

06:59I see. So how much like GMV was going to the system back in October in that month?

Andrea Tassistro

07:07>> That I cannot disclose neither.

Nathan Latka

07:10Why not?

Andrea Tassistro

07:11>> Because we don't disclose this kind of information.

Nathan Latka

07:14Well, 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.

Andrea Tassistro

07:20>> It was very low then.

Nathan Latka

07:21Like under 1,000,000 per month?

07:25>> Yeah.

07:25Okay. 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?

Andrea Tassistro

07:44>> They weren't using us because we didn't handle the integration ready, actually.

Nathan Latka

07:49Which integration?

Andrea Tassistro

07:51>> With all the POS and delivery platforms.

Nathan Latka

07:54I see. Would you ever build your own POS system to avoid that?

Andrea Tassistro

07:57>> Never.

Nathan Latka

07:58Okay. And so how are you solving that now with the SaaS platform? Do you have all the integrations live?

Andrea Tassistro

08:04>> Yes.

Nathan Latka

08:07Okay. So if that was the issue, why don't you stick with the transaction business with the new integrations and increase your GMV?

Andrea Tassistro

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.

Nathan Latka

08:32Well, 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?

Andrea Tassistro

08:45>> Because for us, it works better to have a SaaS fee rather than having transaction fee. Transaction fee.

Nathan Latka

08:52How do you know that though? You just launched it three weeks ago.

Andrea Tassistro

08:55>> Yeah. But before launching it three weeks ago, we had three years of research with restaurants using the platform.

Nathan Latka

09:01But 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?

Andrea Tassistro

09:08>> Exactly. Yeah.

Platform Verticals and Integration Strategy

Nathan Latka

09:09Why didn't you build integrations? I mean, you had Why didn't you build those integrations? You had three years to build it.

Andrea Tassistro

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.

Nathan Latka

09:28So is that a mistake? I mean, shouldn't you have focused on one vertical and dominate that one vertical first?

Andrea Tassistro

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.

Nathan Latka

09:44Okay. So you're you're Just you're

Andrea Tassistro

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.

Nathan Latka

10:02Yeah. 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.

Andrea Tassistro

10:17>> Yeah, that's your point of view then.

Nathan Latka

10:20But I'm asking you why? Why would you go try and tackle 21 things at once right at the beginning?

Andrea Tassistro

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.

Nathan Latka

10:42But if you're built for everyone, Andrea, you're built for no one. That's the problem. You can't be adaptable to everything.

Andrea Tassistro

10:49>> Yeah. Maybe. Maybe.

Nathan Latka

10:51So 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?

Andrea Tassistro

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.

226 Paying SaaS Customers After Three Weeks

Nathan Latka

11:11Okay. So how many restaurants are now paying a SaaS fee over the past three weeks?

Andrea Tassistro

11:17>> About 226.

Nathan Latka

11:20Oh, 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.

11:29I 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.

Andrea Tassistro

11:39>> Yes, maybe.

Nathan Latka

11:40I 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?

Andrea Tassistro

11:46>> Oh, we were at a similar rates, just the different models.

Nathan Latka

11:51I 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?

Andrea Tassistro

11:58>> Exactly. Yeah.

Raising $7M and Future Plans

Nathan Latka

11:59I 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?

Andrea Tassistro

12:05>> Yes, absolutely.

Nathan Latka

12:07Are you raising right now?

Andrea Tassistro

12:09>> We're raising right now.

Nathan Latka

12:10How much are you looking to raise?

Andrea Tassistro

12:12>> We're looking to raise $7,000,000.

Nathan Latka

12:15$7,000,000. Why do need $7,000,000?

Andrea Tassistro

12:18>> To build the sales and marketing team behind the licensing.

Nathan Latka

12:24You could barely say that with a straight face. Why are you smiling when I ask the question?

Andrea Tassistro

12:28>> Because you ask a lot of questions.

Nathan Latka

12:31What do you think? It's called a podcast interview for a reason, right? What do you want me to call it? Something else?

Andrea Tassistro

12:37>> Yeah, maybe. Maybe call it a questionnaire.

Nathan Latka

12:40Interviews. Usually there's questions involved in interviews, buddy.

Andrea Tassistro

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.

Nathan Latka

13:05I

Valuation Discussion and Growth Ambitions

Nathan Latka

13:08see. 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?

Andrea Tassistro

13:15>> Yeah.

Nathan Latka

13:16Okay. Interesting. And are you sort of thinking you have to sell another 10 to 20 on the 7,000,000 round?

Andrea Tassistro

13:20>> Yeah. Exactly.

Nathan Latka

13:21Interesting. 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.

Andrea Tassistro

13:30>> Yeah. Yeah. Absolutely.

Nathan Latka

13:31That's a pretty big that's like a 100 x multiple.

Andrea Tassistro

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?

Team Size and Engineering Headcount

Nathan Latka

13:47Fair enough, fair enough. And what's your team size today? How many people?

Andrea Tassistro

13:50>> We're 24.

Nathan Latka

13:51How many engineers?

Andrea Tassistro

13:54>> Seven.

Nathan Latka

13:55Okay. 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.

Famous Five Rapid-Fire Questions

Andrea Tassistro

14:04>> The Lean Startup.

Nathan Latka

14:05Number two, is there a CEO you're following or studying?

Andrea Tassistro

14:09>> Yes. Parker Conrad from, Zenefits ex Zenefits.

Nathan Latka

14:14Number three, what's your favorite online tool for building out, Foodetective?

Andrea Tassistro

14:19>> I think it's Typeform.

Nathan Latka

14:21Number four, how many hours of sleep do you get every night?

Andrea Tassistro

14:25>> I sleep seven hours a night.

Nathan Latka

14:26That's pretty darn good. And what's your situation, Andrea? Married? Single? Kids?

Andrea Tassistro

14:30>> I'm single.

Nathan Latka

14:32Okay. No. And how old are you?

Andrea Tassistro

14:34>> I'm 30.

14:36>> 30 years old.

Nathan Latka

14:37Last question. Something you wish you knew when you were 20.

Andrea Tassistro

14:44>> That's a good question.

14:47>> Cannot cannot answer right now.

Nathan Latka

14:49No. Do your best.

15:02Think about what you were doing ten years ago.

Andrea Tassistro

15:06>> To learn to code.

Nathan Latka

15:07There 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

15:28nice 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.

Andrea Tassistro

15:39>> Thank you, Nathan.

Nathan Latka

15:42One 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

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