Ordermark Revenue, Valuation & Funding (2020)

hello everyone my guest today is alex cantry runs coming called ordermark which simplifies online ordering to help restaurants increase profits and lower expenses through its technology platform and professional services the company enables restaurants to easily add and manage multiple third-party online ordering services to maximize their online ordering potential alex are you ready to take us to the top yeah thanks for having me on the show today you bet so i think when most people think about this kind of thing they think about maybe like uber eats or things like that tell us how you fit into the kind of overall ordering ecosystem sure so rather than competing with any of the online ordering services we actually uncovered something while i was working at my family's restaurant in los angeles called cancers deli we realized that each different online ordering service like ubereats postmates doordash grubhub all had their own customers and so i wanted to create a simple way to connect into all of these different online ordering services through a single device got it okay fundamentally why we built order and did you use this first uh is this a family shop deli you guys run um sort of it's it's a family business it's been in los angeles since 1931. sort of my great grandfather opened it right after the depression and it's been in my family for four generations that's amazing okay so you built this really to solve your own problem what year was that when you launched um well i started uh my first experience with online ordering was really 2008-2009 and over the course of a couple years i kept adding new systems additional hardware into our family business which basically ended up with nine tablets two laptops fax machine for all of these incoming orders it was a total train wreck and i wanted to create a simple simple solution for the staff because they want to kill me so i actually started the company in january of last year 2017. um to basically um build this all-inclusive device that's great so so what is this now is it i mean is it a sas platform or a hardware play how do you make money um so it is a sas uh service we actually provide restaurants with equipment a single dashboard and a single printer um that we ship to them in the mail and they plug it in and it's basically plugging them into every online ordering service that's available and relevant okay got it and help me understand you know your parents or you know the average deli what are they gonna pay per year per month for your tool um well uh typically for mom and pop restaurants we have a pricing that's around 79 a month plus a small fee per order and then we have uh flexible pricing options for chains and larger organizations okay would you would you say that 80 bucks a month is a fair average across your current customer base or is it much higher um as a as a starting point yes okay but sorry not as a starting point but as an average across your current customer base is it still about 80 or higher it's a little higher than that but um yeah it's um close to around 100 to 150 okay great and then help me understand the model so it sounds like you also take a percentage of kind of the transit transaction volume through the service yeah yep okay and if you look at your kind of revenue over the past 12 months how i'm curious how big or small that section of the revenue is um well essentially over time uh it's still a fairly new company we had um our first restaurant signing up towards the end of last year and then this year we really exploded we're now in a thousand restaurants nationwide paying or free and paid all pay that's great yeah how did you do that by the way sorry just to follow that line that part of the story how did you explode that quickly did you do something special or um i think we the problem that we're solving really became relevant recently um you know there weren't a ton of online ordering services five years ago and now a lot of restaurants are faced with this challenge of adopting online ordering into their business and a lot of restaurants aren't prepared for it um ultimately we're giving them a simple way to get the order information directly to the kitchen in a language that they're already used to and understand it's your thermal ticket that needs to go on the bag to go out the door yeah and so and so again if you look at your past 12 months revenue that's called 100 of your revenue what percent came from transaction volume fees versus just the sas model um it's all actually part of the sas model so even though it's broken down in different ways it's pretty much all um coming from the 79 a month was 25 cents an order it's it's it's basically across the board for different restaurants it means something to mom and pops and then for larger organizations that typically and for all of our enterprise clients it's 100 is the sas oh i see i see okay great okay so launched it officially in 2017 up to a thousand customers paying caught a hundred bucks per month on average each i mean that would put you at about a hundred grand per month in revenue is that directionally correct essentially yeah that's great and what's growth look like so a year ago november 2017 where were you at per month um i think in november of last year we were at about 15 restaurants it's about 1500 a month huh maybe even a little less than that at that point but yeah we certainly had an explosive year we really started to understand what it meant to turn a brick and mortar restaurant into an e-commerce friendly restaurant and now that we've gone through the motion so many times we've gotten really good at it attention through conferences media press coverage and i think fundamentally restaurants are searching for solutions so this was growing problem and we are you know one of the the best ones available in the market and alex have you done this bootstrapped or have you raised capital uh we've raised capital oh man i liked you so much and now you're like dark side you've raised capital um you know to be honest at first i was a little skeptical about the bc world and what it would mean to our business and we want someone to come in and tell us how anything needed to be done and over time i realized that um it's important to find vcs that are aligned with what you're what you're looking to accomplish and i cannot be happier with the group of investors that we've ended up with how much have you raised to date we raised uh 12.6 million since we started we just did a series a back in september a couple months ago um that one was 9.5 million yeah so that was really the majority of the capital coming in and it makes sense considering the growth you guys have had um i'm gonna push you harder though on how you went so quickly to a thousand restaurants because um i wanna make sure we're not glossing over any details i mean even with press i mean a lot of people get press coverage a lot of people get mentioned a lot of people have a great product you figured i would actually sign these people up i mean is there anything else unique you're doing to get these sign ups um you know i think we we have a great team that understands exactly what the problem is because we built this first of all my own family family's restaurant um we haven't pivoted since we started the company we knew exactly what we set out to build and we've basically been executing on that since day one and so i think there's a lot of trust that this is something that was built in a high volume restaurant if it's something that a lot of restaurant owners can identify with so you know having the background that i have giving me unique perspective on the industry itself i also think that um our our our team is very effective with digital marketing we've been um very effective um getting our product in front of customer apps yeah what um what's the team look like today how many people um right about 60 people today 6-0 yes 6-0 we have um two offices our headquarters is in los angeles and we have a an additional sale office in denver as well la and denver that's great and then break down the team for me so of the 60 how many are focused on sales and marketing and onboarding um there's only a couple on sales um we have less than about a handful now and most of our resources are technical a lot of software engineers a lot of customer support account management onboarding we have um i don't know we have a really fun team that's very young we have uh what's the average age do you know like to calculate that but i would have to guess it's probably around uh somewhere between 28 and 30. that's funny how old are you i'm 26. i love that that's great all right and um well you know churn is critical in a sas company especially restaurants which tend to go out of business a lot what's your churn today and how do you keep it low um our journey is actually something that's very that i'm mind blown about our churn is lower than the national restaurant average currently less than two percent and i think that's because restaurants were using our platform um are embracing online ordering and realizing that it's something that's a fundamental part of being a successful restaurant so i'm very happy um with the retention on the platform it seems like um every day we're getting love love notes from our restaurant owners some of the people who were faced with the challenge of juggling all these tablets behind the counter um so overall i think um i think just to be clear sorry that two percent number that's logo churn per month um that is that is our total charm percentage for machia okay got it just just wanted to make sure there so so with with that in mind i mean how aggressive are you being in terms of your fully weighted cac to get a new restaurant which starts paying you caught 100 bucks a month um our cac is is pretty effective right now especially with word of mouth and with rollouts of existing logos so often times the money that we spend on marketing or our sales team um we have a lot of scenarios where we'll have like a one-call close or someone who just like you know restaurant we had over a thousand inbound leads through our website last month alone um so our our cac rate is very effective uh right now and we expect what do you mean by that sorry what do you mean your cat rate just our cac like our customer acquisition cost is really low today how low though like are you like sub 100 so you get paid back in less than a month um it's it's a couple of months today okay that's good it's about four months oh that's pretty healthy okay good so if they're paying 100 bucks a month you're saying you're spend up to maybe 400 bucks to get the customer um essentially it's it's uh it could be a little it varies from month to month yeah well what um what has been kind of your most effective channel you met you you mentioned a thousand leads last month alone are most is the most of it again just the press outreach the the the pr stuff like that um well we don't spend any money on pr um but we've actually gotten included in a lot of articles i think our story is very compelling um we have a lot of word of mouth happening we target people um through digital ads on social media on restaurant websites okay how much how much do you spend per month on digital ads would you say total um we we could spend anywhere from 20 to 50 000 a month okay okay so i mean that that's most of your cac then is going there yeah great and so so what comes next i mean are you do you have additional products in the lineup or are you focused on getting you know 10 000 restaurants first before you know introducing new products how do you plan to drive more revenue um next for us we're really expanding our product functionality to integrate with existing restaurant technologies from point of sale systems to back house accounting platforms to last mile delivery logistics companies and we see this as expanding our total addressable market expanding our reach to more major cities and really stepping on the gas yeah last question here before we wrap up um you just went through a raise everyone raises differently in terms of how they think about how much they want to raise when you're thinking about how much you want to raise how much in your brain how much runway were you buying yourself 12 months you know for 9 million or 24 months what were you thinking um the goal is around two two years of runway um and we're seeing now that there's an opportunity to maybe step even further on the gas and move faster so it could be close to 18 miles yeah well again if you can spend the money faster but still drive the growth you can go raise more capital if you need to yeah very cool all right great let's wrap up with the famous five number one what's your favorite business book um i don't like reading books okay no worries number two uh what is it name under the radar ceo they're in la that you like following or studying um oh that's a great question um i would say he's not super under the radar but um i'm always inspired by atom alves and which company um social media social native yeah he's very involved in a lot of companies actually he's an investor he's a ceo um he created um applied semantics which became google adsense yep yep good number three what billing tool do you guys use uh we built our own you built your own billing tool oh my gosh it's crazy okay internal number four how many hours of sleep do you get um pretty good actually i'd say like six to seven a night okay and what's your situation married single kiddos i was single not single um not married um i've actually been with a girlfriend for six and a half years yeah it's good good thing you've clarified that that would not be good if she heard that right so not married is the clarification no kids you mentioned you're 26 years old earlier uh last question what do you wish your 20 year old self knew alex um nothing guys uh again happy with how things are going enough no lessons he'd passed back to his younger self uh again launched the company back a couple years ago because his own family deli needed it 2017 to process multiple order inbound order requests from kind of online ordering really making his deli ecommerce friendly now a thousand restaurants are using the same technology built for himself paying a hundred bucks per month so about 100 000 bucks per month right now in revenue that's up from just fifteen hundred dollars per month a year ago so great growth so fa so far less than two percent logo turn per month raised about 12.6 million dollars has a team of about 60 people between la and denver spending up to 400 bucks to acquire our customer for a four-month payback period alex thanks for taking us to the top thank you thanks for having me