During the first few weeks, I spent most of my time speaking with restaurants about the idea of dynamic pricing. Had they thought about it? Did they think it was a good idea? Was it even technically possible? What kind of lift in revenue would make it interesting enough for them to consider? Would they participate in a pilot once we had a product built out?
I also reached out to some of the major technology players in the space. We spoke to Toast, OLO, and started a broad outreach to all of the other POS (Point of Sale) and Digital Ordering systems out there, starting with the US market. While other markets are actually more mature in terms of the seamless technology around digital ordering, delivery and even payments, the US market is the one we were most familiar with. It's also a huge market and given where we would most likely find investors in our network, the US market would make it most attractive from an investment perspective.
Of course we also started to look for any competition that might exist in the market, and it wasn't long before we discovered Sauce Pricing based in Los Angeles. At the time there wasn't much information available about the company beyond what was on their website. They did have 3 customers listed as case studies, so I reached out to those restaurants to get a sense of how Sauce was working for them. I was very transparent and indicated that we were a young startup considering a similar business, and wanted to know what their experience was thus far.
The feedback I received was unanimously positive. Restaurants were seeing an increase in revenue to their delivery revenue, their demand patterns were less volatile, and they were learning more about their consumers' behavior. One of the restaurants (who also made an investment in Sauce) shared with me that she couldn't believe the prices that consumers were actually willing to pay for some of their items during periods of high demand. Sauce was started by two friends from MIT and I estimate that they had been in business about 1 year when we discovered them. A few days after my outreach to their customers, Sauce issued a press release announcing a $3M series A round of funding. From the Forbes article about Sauce's funding round:
"The Los Angeles-based startup has raised $3 million from Harlem Capital, Red Sea Ventures, and Global Founders Capital; leading hospitality experts such as Nicolas Jammet, founder of Sweetgreen, Sam Nazarian, founder of SBE and Umami Burger, Saul Cooperstein, CDO of C3 by SBE, Pieter-Jan van Depitte, COO of Delivery Hero, Daniel Wolfson, manager of Oldslip Ferry and investor in Toast, Chopt/Dos Toros, and Mendocino farms; and the leading data experts, former heads of data science from Uber (Kevin Novak with Rackhouse Ventures) and Airbnb (Riley Newman with Wave Capital)."
Wow! Those are some big names. I spoke with Drew about how we should take this. He and I both agreed that this was a VERY good thing.
1. Another company helping convince the restaurant industry that dynamic pricing is a good thing for their business and that there's nothing to fear.
2. The feedback from Sauce's customers was that they're good to work with. That's important so that they don't leave their customers with a sour taste and potentially tarnish the idea for the industry.
3. From a fundraising perspective, it's fantastic to see another company with well-known, credible investors backing it. That should give our potential investors a good feeling about our project.
I was quite sure that by now, the people over at Sauce had at least heard of us from their customers. We could certainly just ignore them, stay in stealth mode and not speak with them. But that's not my style. At Regatta Travel Solutions I developed very healthy relationships with our competitors. There was one had adopted some shady sales practices, trying to poach customers or win deals with fabrications and badmouthing. So I kept my distance from them. There were others though that we became quite friendly with. We would share knowledge and experiences when we met up at conferences, and even go out to dinner together. Sometimes where it made sense we would even refer business to them. Life's too short for bullshit. I would much rather have a respectful and professional relationship with everyone in the industry, including the competition.
I extended an invitation to the 2 founders of Sauce Pricing but sadly didn't hear back. It's early days though. I'm sure we will meet up somewhere and have the opportunity to show that we come in peace. I believe that we can help each other more by cooperating, as we both try to allay the fears of an industry that desperately needs our help.