#531: Michael Lastoria on Pizza and Workplace Innovation

Michael Lastoria is the co-founder and ceo at &pizza. In this conversation, we discuss mobile kitchens, pizza cubes, sharing the CEO’s cell phone number, balance between innovation and product, and how to be a good employer. ======================= Polymarket is the world’s leading information markets platform where you can trade on the most pressing global questions. Choose from a variety of markets to trade: Will Trump launch a new social media platform? Will NFT trading volume continue to skyrocket? With over 100 million dollars traded in the last 6 months, Polymarket is the go-to platform to trade on the odds of future events. Think you know more than the market? Trade on your beliefs and earn a return if you’re right. Want tomorrow’s news today? Use Polymarket to see real-time data on what the market thinks will happen. No fake news, no pundits without skin in the game. So, head over to polymarket.com and make an account today with the referral code “Pomp.” Every Monday until May 10th, you can win $500 by participating in the #PolyWhale Twitter giveaway. Click on the link for more info: polymarket.co/PolyWhale ======================= Gemini is a regulated cryptocurrency exchange, wallet, and custodian that makes it simple and secure to buy bitcoin, ether, and other cryptocurrencies: https://www.gemini.com/ ======================= Pomp writes a daily letter to over 150,000 investors about business, technology, and finance. He breaks down complex topics into easy to understand language, while sharing opinions on various aspects of each industry. You can subscribe at https://www.pompletter.com

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:02Anthony Pompliano?

  What's up everyone, this is Anthony Pompliano. Most of you know me as Pomp. You're listening to the Pomp Podcast, simply the best podcast out there. Let's kick this thing off. Michael Listoria is the co-founder and CEO at And Pizza. In this conversation, we discuss mobile kitchens, pizza cubes, sharing the CEO's cellphone number, the balance between innovation and product, and how to be a good employer. I really enjoyed this conversation with Michael, and I hope you do as well. Before we get into this episode, though, I want to quickly talk about our sponsors. First up is Polymarket, the world's leading information markets platform, where you can trade on the most pressing global questions. You can choose from a variety of markets to trade. Will Trump launch a new social media platform?

• 0:45Anthony Pompliano?

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• 1:27Anthony Pompliano?

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• 2:10Anthony Pompliano?

  Again, Gemini.com. If Cameron and Tyler are going to be early and they're going to bet their reputations and put skin in the game, you should use their product. Go to Gemini.com, a regulated cryptocurrency exchange, wallet and custodian that I use and you'll enjoy using as well. Go to Gemini.com. Lastly, don't forget that I write a daily letter to over 150,000 investors about business technology and finance. I break down complex topics into easy to understand language while sharing my personal opinion on various aspects of each industry. You can subscribe at pompletter.com. Again, pompletter.com. All right, let's get in this episode with Michael. I hope you enjoy this one.

• 2:51Speaker 01

  Anthony Pompliano is a partner at Morgan Creek Digital. All opinions expressed by Pomp or his guests on this podcast are solely their opinions and do not reflect the opinions of Morgan Creek Digital or Morgan Creek Capital Management. You should not treat any opinion expressed by Pomp as a specific inducement to make a particular investment or follow a particular strategy, but only as an expression of his opinion. This podcast is for informational purposes only.

• 3:21Anthony Pompliano?

  All right, guys. Bang, bang. I've got Michael here with me. Thank you so much for doing this, sir.

• 3:26Speaker 02

  Thanks for having me, brother.

• 3:28Anthony Pompliano?

  Absolutely. I want to start off, I saw a article and it described you as a pizza mogul, which we're going to get to in a second. But any pizza mogul who's got this specific phrase is on one of the walls of the locations of And Pizza. It says, where it all takes shape, where decisions are made, where pioneers walk and walls talk. Why is that on the wall of one of your locations?

• 3:52Speaker 02

  Yeah, that's some, that's some of our weirdness shining through. So for every shop that we design, prior to getting into the actual like physical space or architecture and interiors, we start off with inspiration. And so we kind of go through the history books and find out like what made that particular location, whether it was a piece of land, whether it was a building like exist in the first place. And we write some like off the wall copy around it. And that kind of leads us through the process of eventually getting the architecture and design work itself. But every Pizza shops designed differently. So it's part of the fun process of, you know, flexing, you know, what creative muscle we have and making sure that we're not thinking about this as, you know, just multi-unit, that every single thing that we build has purpose and has intention,

• 4:33Speaker 02

  and that we're paying homage to what was there before, but also doing our best to bring something of value to that neighborhood or community that's a little bit different and that hopefully can, you know, last a fairly long time.

• 4:45Anthony Pompliano?

  And so when you think about the way you're approaching this, everything seems to be different in literally kind of thinking of it from a first principle standpoint. The pizza industry is cutthroat. Many people are trying to find the most efficiency. They're trying to figure out how they can systematize things, how they can almost make it clinical to some degree. You seem to be doing the exact opposite. Why?

• 5:08Speaker 02

  Yeah, I mean, for two reasons. I think the first is that if you kind of go back to the origin story, right, this was much more about a greater purpose. We always talk about the and, and and pizza coming before the actual pizza, right? And that was about promoting unity, uniting the working class, et cetera, et cetera, around fair wages, living wages. But on the pizza front, I've always felt like if you're going to do something, right, new and you're going to enter into an industry that you have no experience or track record of building or innovating or doing anything inside of that, you need to really bring a strong point of view. And that point of view, you know, has to be, you know, cross-functional, meaning rethinking every aspect of what it means to make and serve and sell pizza ultimately. And, you know, kind of going through

• 5:50Speaker 02

  the exercise of, well, it's, you know, at the time, it was 2010, 2011 as we were ideating, but, you know, what would a modern version of this look like? But then, most importantly, where do you want this to be 10, 20 years down the road? And so even when you think about like a ventless and electric cooking platform, I remember I got laughed out of the room. I was on the rooftop of a hotel and Sweet Grain has a Sweet Life, or they used to have a Sweet Life Festival every year, which is kind of cool for like, you know, a multi-unit salad, you know, brand. Of course, they were much more lifestyle. But I remember they introduced me, the three founders introduced me to a reporter that was, you know, or journalist working at Eater. And her first question was, what oven are you using?

• 6:30Speaker 02

  Because this is a time and a place where it's the neo neapolitan craze. And so if you didn't like source that brick from that oven at the bottom of Mount Vesuvius, like, how dare you make pizza? And I'm sitting here, actually, it's a, you know, hybrid, like, electric, you know, conveyor belt oven, right? That's, um, people haven't necessarily seen before, but it was very functional. And the reason that we did that is we knew that we wanted to operate non-traditional spaces and be able to make pizza from anywhere. It's relatively plug and play. And so even something like that, that's sort of wildly unpopular, but incredibly functional. Like, we doubled down on that. And it was a thing that we had to work through, which is, do people think you can actually make a decent pizza off of a conveyor belt? And so we just kind of rethought every aspect, willing to fail, right?

• 7:14Speaker 02

  And put it all on the line, including coming to New York and operating the toughest pizza marketplace in the world, where most fast food entrants never come or multi-unit never exist here because you get slaughtered really quickly. And if it worked, great. And if it didn't work, we were cool with that as well.

• 7:29Anthony Pompliano?

  What was your background? Uh, it doesn't sound like you grew up in a family full of pizza makers. So what did you do before this?

• 7:36Speaker 02

  Well, I, I am half Italian, so my dad loves the fact that the story loves the fact that I am in the pizza business. But before this, two things, I, I moved to New York at 22. I grew up in a small country town. It was actually a hamlet, one flashing light, one bar, 500 people. I actually went to the same building from kindergarten through 12th grade, like literally the same, there was one building and rode the bus. And it's always funny because when you're in kindergarten, you ride the front of the bus. And when you're a senior, you're at the back of the bus and every year you move like one seat back. And fine. And then that's just like, that's a small town rural America. So maybe I went to New York at 22, started up an ad tech company. That was my first startup because, you know, I got a job basically in a boiler room, making 350 call and calls a day.

• 8:17Speaker 02

  And realized that that wasn't going to be it. I didn't have a resume or a network that was going to get me any type of a corporate job that was interesting. And so it was basically start your own thing or, you know, remain in sales, doing that. And so I started my own thing very early on, got lucky, timed the sort of ad tech market, right? I was able to exit in four short years to a private equity group, stayed on board to run that. CEO for three years, went through two acquisitions and a merger. And then, you know, when my three-year contract was up, you know, needless to say, I was I was out the door. I reported into private equity was not not my thing. Uh, but then started up a a an ad agency, you know, with my best friend and partner Doug Jacob. Who, you know, we've been in business for a long time together.

• 9:01Speaker 02

  Uh, now he's doing some really interesting things with Anvest and in the SPAC world. But, uh, you know, it was it was a creative itch that we wanted to scratch and see. You know, how do we actually make cool stuff for founders and for executives? Make them fall deeper in love with the very brands that they were running or that they created. And had a hell of a run there. We sold our agency in 2017 to a large Japanese beauty glamour, Shiseido. And along the way, it was always looking for, um. Basically looking to create a company that was about something more meaningful to me personally. Right? We that took sort of, you know, how and where I was raised and applying that to. Having lived, you know, in New York and really wanted to quote unquote, change the world. So this notion of can we create a company that's really focused on?

• 9:47Speaker 02

  High-quality jobs. I think that's one thing in America that's really hard to come by right now. There's too few of high-quality jobs. And high-quality food under a socially conscious umbrella, and that was sort of the big mission. And I think that's extremely important. And we don't talk about this notion of what does it mean? To be a responsible employer or even entrepreneur around like, what are you doing? And I think great job creation is extremely important since we've shifted from. A manufacturing country to one of food service. Food service industry employs 10% of America's workforce today. Which is crazy. And those jobs on average went from $26, $27 an hour. To now $10, $11 an hour. And that's been one of the greatest shifts that's not talked about in terms of like income inequality. Is just that there's been a structural shift in terms of where the jobs are being created.

• 10:31Speaker 02

  And food service jobs are not doing, uh, as good of a job as they ultimately should. Right? By paying higher wages and taking care of the workforce. There's a responsibility as the largest employer. Uh, to do that. And the restaurant industry is the second largest private employer outside the federal government. So we've got to do better. And I think part of doing better is building a company by example and proving that your hypothesis around. Paying people more and being able to produce type of profit that has people excited. Right? To invest in the concept and that it can grow. Uh, leading by example and then taking that and being an open book and trying to shove it. You know, down every single fast food executive's throat around like what you actually can do if you approach it with a different set of eyes.

• 11:10Anthony Pompliano?

  How do you guys solve that problem?

• 11:13Speaker 02

  So it's it's tough. I mean, every single day, you know, we're talking about, you know, what does it mean to be, you know, a a good employer and provide high quality jobs, right? It started with wages. I think wages is the easiest solve, right? Because that's just transactional. That means that tomorrow you make a little bit less because you're paying more. But over time, actually, the opposite happens. We've seen massive margin uh tailwinds, right? Our profitability on a per shop basis has increased year over year since 2017. Where most in the industry is going the opposite direction because we see such exceptional productivity, right? With respect to labor and people care deeply when they walk into the four walls of a pizza shop, right? They treat it like it's their own, mainly because they respect and trust the company, its leadership, that we actually have their back.

• 11:57Speaker 02

  And every time that we've been challenged, right? We do step up on their behalf. But then, that's the starting point, right? Now we've taken it as far as providing paid time off for activism, right? This summer, we give three full uh days of paid time off for that, so people can, you know, get out there and allow their kind of voice to be heard. Um so that they can meet other people that are like minded and get around the causes that they ultimately want to support. Like, that's that's as far as it's going. And I think there's much further we can go as an employer, but you got to constantly be finger on the pulse, communicating with your workforce and thinking about, you know, what would you want ultimately? And then listening to what they would want in terms of that relationship. And you start treating the people as like friends with shared interests versus the employer employee thing. And it starts to work. But look, it's taken.

• 12:44Speaker 02

  We're, I mean, we're coming on uh coming up on a decade here, right? And it's taken every hour of every single day of those 10 years um for us to get directionally correct around what does it mean? And how can we be uh, you know, a better employer across the board? So it's like you got to just constantly chop wood every single day. And you'll get the breakthroughs in terms of the progressive policies that actually stick. Right? We're 80% of the workforce is using them and they talk about that stuff as the reason why they're working for the organization.

• 13:14Anthony Pompliano?

  You've raised over a hundred million dollars at this point from some very, very well-known investors. I don't know if you want to share who some of them are or not, but why are they interested in this? It's not every day that you see some of these folks investing in not only a pizza and kind of fast, casual, if you will, type experience, but on top of that, you've got this like non-economic mission as well. And so what's driving that investment interest?

• 13:42Speaker 02

  Yeah, I think, I think they see the vision in terms of, you know, what something like this can be at scale. And when you think about like, especially in our industry, go back and look at like legacy fast food, like who wouldn't want to own In-N-Out's balance sheet, right? In-N-Out Burger right now is thriving, but you know, they were the OGs of paying living wages, right? That was one of the best jobs that you could get in California, right? They were paying up, taking care of their workforce. I mean, they have a religious bent to them, right? Which is sort of where their values originate from. And it's work. Starbucks is the same thing, right? Progressive policies across the board, taking care of their workforce, the first to offer beanstalk to every single employee. So it's like, when you, when you go back and look at companies that were built the right way,

• 14:27Speaker 02

  and if you have time to hold on to that investment, you believe that the person is authentic, that has a differentiated brand and product, and you believe it can change an industry, like that's a good place to park capital. But again, we've targeted family office money, right? We've stayed away from traditional private equity because the returns have to happen too soon, right? Three to five years is too short a time period to invest in a business like this because, you know, we're in year 10 and we're just getting started with it all kind of coming together and that hyper-growth really coming to fruition. Because when you're building something, you know, the right way, it isn't only, only so fast you can ultimately go.

• 15:07Anthony Pompliano?

  So when I think about the pitch, right, kind of the the story as to why you're doing this and how it's playing out, I think some people get confused. They say, oh, this is a social impact thing, right? This is, this is not a for-profit type endeavor. They couldn't be further from the truth, from what I understand. What metrics can you share with us just in terms of how big the business is? Whatever you're you're kind of comfortable sharing to really just prove that, hey, look, this isn't just about the social impact. There's a real attractive business that's driving all of this.

• 15:42Speaker 02

  Yeah, it's, I guess you could call a little bit more conscious capitalism. There's a lot out there, you know, different versions of fill in the blank capitalism that that sort of describes this. You know, I think it's, it is important to note that, you know, for us to make an impact, we have to show proof that, you know, our hypotheses are actually coming to fruition. And you can't go to, you know, an advocacy group, you can't go to McDonald's CEO, you know, with numbers that are upside down, because anybody can spend money and lose money. It's a pretty easy thing to do. And we've seen it in many tech companies. Not hard, right, to take a bunch of money and burn it. So you, you actually have to be very disciplined with the economic model that you're building. And

• 16:23Speaker 02

  for us, you know, we're coming up on 25% four-wall margins, you know, 50% cash on cash returns, which basically means that we're paying back, you know, our pizza shops within two years, which is best in class. 25% margins. The last time that we saw that was Chipotle, right, and Shake Shack kind of at the peak. I mean, we're doing 20% margins, north 20% margin intra-COVID right now. And so the business is very profitable. And, you know, I give a lot of that to, of course, like the technology and the operating system that we built, but the labor productivity in our family and workforce coming together and showing up. We have 50 locations now. And, you know, we are opening 27 this year. We actually opened 11 locations intra-COVID, which was really cool, right, agreed to pay,

• 17:07Speaker 02

  you know, play offense really early on, make big investments in our people, get back to swinging hammers and opening up pizza shops. And, you know, we will triple in size in the next three years. That's what we are capitalized for. And that's the direction that we're ultimately going, primarily on the eastern seaboard. So think from Boston all the way down through Atlanta, and filling aggressively in those markets to make sure that we're clustering, right, the way Domino's, that we're saturated, and making it really easy to get our pizza, and getting closer and closer and closer to our customers.

• 17:36Anthony Pompliano?

  Yeah, it's absolutely amazing. And I think a lot of what's driving the the interest and also the growth of the business is this very kind of innovative approach that you're taking to various aspects of the business. I kind of think of it as a first principles thought process or a systems thinking. And those are playing out in a whole bunch of different kind of mechanisms. I'm going to throw a couple of those out there. And if you can just riff on where the idea come from, how did you implement it? And how's it going? The first being the mobile kitchens. So maybe describe what is a mobile kitchen? And where that idea come from?

• 18:10Speaker 02

  Yeah, you think about it like a, you know, a larger food truck that looks a little bit more like a hybrid food truck slash semi. And the notion was, you know, can we produce the same quantity of pies that we do in a pizza shop in something on wheels where we're taking less overall real estate exposure? And we can scale faster, right? Because of the mobility aspect of it, and we can do it infinitely for far less capital, right? We're fully outfitting a mobile kitchen. It's a $200,000 capital outlay, right? A pizza shop is a, you know, call it between 650 and $700,000 cash outlay. And so if you can do more of them faster with less risk and exposure and get closer to your customers,

• 18:53Speaker 02

  that could be a really interesting thing. Part of the challenge with it is, you know, that was very innovative. But now intra COVID, as a lot of markets and real estate are getting repriced, right? It's actually easier for us to just go build pizza shops. We've kind of pulled back a little bit on the mobility, pressed forward on the pizza shop, you know, suburban expansion, which has been in our in our plan. But we find ways to use them to basically extend now the pizza shops themselves. So I'll look at a pizza shop and say it's doing, you know, $2 million of revenue, but also recognizing that between a 10 minute and 15 minute drive, right? There's half a million dollars of revenue there. And yet I know that I really don't want to be exceeding a 10 minute drive time, right?

• 19:36Speaker 02

  Because the quality of the pizza starts to deteriorate, right? Once it's sitting right outside of a hot box, or, you know, the further and further away it goes from the oven itself. And so you can put, you know, a mobile Kitchen there, it doesn't have to necessarily be main and main. And all of a sudden now you're serving higher quality pies faster to that customer base. And you can extend the radius further out from there. So you've picked up incremental revenue and providing higher quality revenue. We talk about that a lot because I think one of the biggest challenges that the food industry has is that there's been a lot of low quality revenue. There's been a lot of mediocre delivery, even from great branded restaurants. That now that kind of sizzle of what made them special, which was the four wall experience, they don't have the muscle.

• 20:20Speaker 02

  And they don't have like the, the actual off premise or delivery in the DNA of the organization. And so it's not playing to their strengths and that's a real big challenge. Like most restaurant brands are e-commerce companies. And if you look at, you know, the executives and you look at the resumes of those executives, like that's not what you would hire if you're building an e-commerce company. Right? It's, it's about production. It's about logistics, right? It's about uh customer acquisition, like real. Omni-channel customer acquisition, like things that we talk about in other industries. But you'll never find an intelligent conversation around like true customer acquisition. Right? In the restaurant business because it's very foreign to many of the operators and entrepreneurs. And so that's one of the things that's going to be.

• 21:03Speaker 02

  I think some of the biggest challenges is that the structural shift, it's a different business. And if you don't have that. Skill set or capability organization, it's going to be painful and people are going to be more particular. Like people are going to care as there are more options as restaurants reopen. They're going to want better quality food and they're going to expect that food that's supposed to be hot shows up at your doorstep hot. And if you can't deliver on that, like they're going to go elsewhere.

• 21:26Anthony Pompliano?

  It's fascinating to hear you think about uh kind of that four-wall experience uh and the mobile experience as really just kitchens. One is mobile, one is not, uh but it's what is the proximity to geography and drive distance? And it almost feels like you're talking about the mobile and static uh experience in kitchen as uh very comparable, actually. Uh it's more so just one has a unique feature that I can move and the other doesn't. And so you can uh kind of mix and match as you see fit to serve the customer.

• 21:58Speaker 02

  And look, whether you're Domino's, Amazon, Walmart, like it's about, you know, fulfillment. And the fulfillment centers, you ultimately want to get closer to your customers so you can execute. Right? If we're talking about like bigger box, like they want, you know, sub one hour execution of on-demand ordering to get whatever you want. In food, like the intra-COVID experience of this kind of like thirty to forty-five minutes, candidly, it's bullshit. Like, that's a terrible amount of time to wait when you can get probably something from Amazon in the same amount of timeframe. So like, we need to get in food down to these, you know, sub fifteen and I think ten-minute, you know, times from the time that you press, you know, that on your phone, something showing up at your doorstep.

• 22:41Speaker 02

  And that's going to be, I think, one of the biggest hurdles is that, you know, the competition expectation for what on-demand ordering actually looks like and the fulfillment of that. Like, the bar is raising and the bar is not necessarily being raised by, you know, food servers or even the marketplaces like the Ubers and the DoorDash love them. Right? But they've got a lot of kinks to work through in terms of being a hell of a lot faster. And on top of that, like actually setting up like fleets and courier networks that are capable of and have the resources to handle hot food. And part of the reason why food shows up in all different types of forms is that you could have, you know, pizza, right, being delivered. And there's a cold item that's going to someone else, right, after your visit and your pizza's been sitting on top of something cold.

• 23:24Speaker 02

  It's just sucking the life out of it. Like, that's a real issue and something that needs to be addressed. But yes, I agree with you. It's all about production. It's all about logistics, all about fulfillment centers. And how do we get closer to our customers to meet that on-demand, off-premise ask, right? That needs to get faster. It needs to get better and it needs to happen really quickly. Or else you're going to lose, I think, a lot of what you potentially gained intra-COVID from, you know, a new digital customer because they have a ton of optionality.

• 23:52Anthony Pompliano?

  Another one of the innovations that you guys have driven is this pizza cube. What is that?

• 23:57Speaker 02

  It's the same thing. You know, think just like a kiosk. So it's just a lighter CapEx way to build a pizza shop. That in theory, you know, can be stood up, right? In, you know, call it half of the actual like construction time and can be broken down and transported. So, you know, no different than a shipping container. It's just, you know, small box production. With the key that we can make and produce pies in 300 square feet, no different than we make and produce in 1500 or 2000 square feet. And that just brings costs down and allows for that incremental scale. And I think that's an incredibly important thing. Plus, again, when we talk about this notion of getting closer to the customer, you can't be spending the same amount of cash every single time.

• 24:41Speaker 02

  I mean, if my limiting factor is that I need to hit the cash on cash returns for a 750,000 square foot pizza box. You know, I'm not going to be able to do that, right, across a city. And make it work. I'll be missing big pockets where, you know, there's revenue there, but maybe not the revenue that pays back the $750,000 investment. There's revenue that will pay back a $400,000 investment or a $200,000 investment. And so when you look at like cash and cash returns, we don't need to do $2 million per box. If I spend half the amount of money, I can do a million dollars in a particular pizza shop and that will work just as well. Right? Because you're generating the same cash and cash returns.

• 25:21Anthony Pompliano?

  Yeah. When you think about this, uh, people might hear, oh, he wants to get the pizzas to them in 10 minutes. Uh, how do I keep my margins? How do I do this in 300 square feet rather than 1500 square feet? What they're not hearing is, uh, I want to make the best pizza in the world. Uh, but I think that again, a misconception may be that you are willing to uh, kind of give up some of the quality of the product itself in pursuit of this innovation or these efficiencies. Talk a little bit how you think about balancing, uh, the innovation and the technology and, and some of the more um, kind of, you know, forward thinking stuff with just the key being the pizza's got to taste good.

• 25:59Speaker 02

  Yeah, I mean, that's, we don't talk about that often, mainly because to some extent it's a commodity. And what people like in terms of what their best pizza is is often very subjective. And oftentimes has to do with where they grew up and the pizza they consumed as a child, because you have the psychological connection to this product that you loved. And that's your version of what pizza should taste like. You know, people that live in New York for extended period of time, it's hard for them to eat pizza elsewhere because that's their version of really good pizza. I don't disagree. I think New York makes some of the best pizza in the world, right? I'm biased to that. But I, I think the key is for us is that, you know, part of the downside to fast food is that it's incredibly chemical laden.

• 26:43Speaker 02

  Right? The, the manufacturing, the production process of big pizza and fast food at scale. Right? Is, is not actually what you want to put in your body. If you look at a more recent video that was posted, it's like fifty-four ingredients go into making a Big Mac. Right? You know, of, of which like the first one, you can literally like, it can like corrode and erode metal. So it's just like, it's, so, so part of getting closer to customers is that. Clean food, right? Which our supply chain is incredibly clean. It gets colder faster. Right? It doesn't actually have the stain power that unclean and chemical laden food ultimately does. And so that's a big part of it. Yes, I know the demand is going to be there because people are going to want us to get to the doorstep faster.

• 27:26Speaker 02

  But for us, it's actually solving for the high quality food because the stuff that we source and the stuff that we put on a pizza. Isn't going to taste as good thirty minutes versus right out of the oven. Right? Because we're not doing the big pizza hacks in terms of the things that they do to keep the food hotter. And to, and to make the food ultimately travel longer. Because we actually care deeply about what people are consuming and what they're putting into their bodies. We won't compromise on that. We spend a lot of time. On the R and D specifically around that, which is. How do you make clean, healthier, right? Because it's still pizza. Ingredients travel and still taste delicious. And the honest answer is get there faster.

• 28:07Speaker 02

  And reduce the delivery times because it's a really hard thing to do. It's a very slippery slope. Once you start compromising, which we won't, we never have, right? The actual quality of the ingredients, because you can make things that taste really good, that are really bad for you, and we're trying to avoid that. Yes, we're in the pizza category, but we still think that, you know, 10, 20 years from now, people are going to be consuming healthier versions of it. It's just pizza as an industry is so far behind. It's fascinating, like the last to get on the vegan train. There's one large national pizza chain that now is buying product from beyond. And I was talking to the executive chairman the other day, and they're just not calling. And meanwhile, I'm banging down the door, being like, where's my vegan pepperoni? That's the number one product innovation request that we don't have right now.

• 28:52Speaker 02

  It's just because it's a very dated and tired industry as it relates to quality of food. Uh, when you have someone like White Castle, right? White Castle has, you know, a vegan product, and they had it years before anyone in pizza, which is just baffling. So we're trying to stay, you know, finger on the pulse of, you know, globalization, of making indulgent food taste really good, and, and making sure that, you know, the quality of the supply chain is, you know, as a 10 out of 10, and is as clean as humanly possible, because we don't want to make you feel like you have to take a nap. And that's what you'll feel if you have lower quality ingredients in pizza. That's why people go to Italy. They're blown away at how they eat and consume and yet feel great, right? Like it's a, you know, there's a way to make it happen where you're not clogging up,

• 29:36Speaker 02

  you know, your gut and, and wanting to take a nap every day.

• 29:40Anthony Pompliano?

  A lot of the innovations we've talked about are what I'll consider technology innovations or platform innovations. Uh, another thing is just the way that you interact with your employees. Uh, you've given your cell phone number, as far as I understand, to everyone, literally from the cashier to the store manager, to people in the back office, uh, vendors, the whole nine yards. Why are you doing that? And then what's been, uh, kind of the impact of it? Do people call you all day long and text you and, and they're complaining or cheering you on? Or what, what, what's happened since you've done that?

• 30:12Speaker 02

  It's been, it's been, um, yes, it's a bit of an experiment, but for me, it's, you know, part of the reason why I got into the business in the first place. But you can't say, you know, we're focused on high quality jobs, high quality pizza under a socially conscious umbrella, and then not be focused on those three things. And so for me, Providing high-quality jobs means that I need to be very close to the workforce. I need to be there and accessible, day in and day out, hour in and hour out, or as a leader, so that I'm getting all of the data, right, that I can around what's working, what's not working, how can be a better employer. I think on top of that, though, it's also the part of the business that I love the most, right?

• 30:57Speaker 02

  That's where a lot of my inspiration comes from, which is, yeah, sure, you have to deal with from time to time, you know, some of the negativity if someone had, you know, as an employee, a bad experience or was frustrated, you know, or their manager or their boss, you know, did X, Y, and Z. Helpful data points, but then oftentimes it's, you know, them thanking or reaching out with product innovation, with inspiration, with, hey, I came across this, what do you think? And that's the type of stuff that makes me feel more connected. And that connection, I think, is deeply human, deeply personal, uh, gives me more empathy, right, as a leader. And, and I think, like, helps me get through some of the toughest days when you're balancing, you know, a very dynamic business in the middle of a pandemic, right?

• 31:39Speaker 02

  It's the, the people side of the business, the most human side of it, that is the most rewarding. And the text message platform, like, we have that for all communication now. So you can't call an Aunt Pizza as a customer, you can't email us, it's all done via text. And, you know, our SLA, in terms of getting back to people now, is right around 90 seconds. And we do it with actual human beings, not chatbots or automation. You get a live person on the other end of that text, uh, which I think is really cool, and we use that for our workforce as well. So everyone has my number, they also have, um, you know, the, the number, right, that goes to the same group of people, so employees can talk to me or they can talk to any of our family members that are working, you know, the text line, day in and day out, and get access to anyone. I make sure that's an important thing.

• 32:22Speaker 02

  Every executive needs to be wildly accessible. Like, I am incessant on, if you write me an email, you will get an email back, right? If you track me down on LinkedIn, as annoying as that platform can be, right, with all the pre-canned messages that you get, like, I respond to every single one, and I try to make sure every single person that comes to work for Aunt Pizza does the same. Cause I know what it was like in sales, right, reaching out to people. I know what it was like on the other end, and I just try to make, you know, whether it's employee or customer communication, to be there, be available, and, and be very quick with rapid response.

• 32:53Anthony Pompliano?

  Yeah, it's fantastic. We've talked about the mobile kitchens, the pizza cube, this kind of cellphone experiment, which all seem to be positive outcomes for innovative thinking and first principles thinking. What are some examples of things that you guys have tried in the past that haven't worked? And then at what point did you realize, hey, this isn't working and we should kind of give up on it and move on to other ideas that we have?

• 33:18Speaker 02

  Well, I think that the mobility, I think, was a big one, right? It didn't get the scale that we initially intended largely because, as I mentioned, you know, sort of the pandemic shifted, right, the focus, but the other side of it was actually too early on from an innovation standpoint jurisdictions, right, like cities and counties, they didn't know what to do with this thing. They didn't know what to classify it as. And so it was really hard to get permits. I mean, you have a lot of experience, right, in that, meaning like they just didn't know, like, what do I do with this thing? It's not a food truck. It's too long to be a food truck. It's not. And so we literally are in like multiple counties, like waiting on permits now all over, right, Pennsylvania, Maryland, Virginia, et cetera.

• 34:01Speaker 02

  And there are still to this day, like they're stuck on desks because people don't know what to do with them. So like, there's issues there where sometimes being a little bit further ahead on certain things. And there's a solve for that. It's just wildly expensive. We don't have the capital to go really solve for that, right, to go to beat down the doors the right way. And so like, that would be a good example of like, probably too early. And there's probably another way to go do it, which we've solved for in, you know, smaller footprint. And now kind of our version of ghost kitchens, which I think a lot of that business is, I don't want to use the word garbage, but I think it's, it's pretty lowbrow. Like, there's a lot there that doesn't work for me. That I think is a lot of hype and not a lot of sizzle or substance. And it's like Domino's has been doing basically

• 34:46Speaker 02

  a ghost kitchen for decades now, right? When you find a Domino's, it's like you took two wrong left-hand turns, right, in a neighborhood that you were unfamiliar with and there's a Domino's because the real estate costs nothing. They're hoping that people don't actually drive up to it. They're just using it as a delivery hub. So. Been around for a long time, but that's a good example. I would also say that we made a lot of software investments, like we built our own software stack and operating system that, you know, was very early on and we were kind of building alongside some of the third-party software systems that were out there. We didn't want to cobble together. We wanted to be able to own it because we thought it was going to be a differentiator and it is, it's expensive.

• 35:27Speaker 02

  If I go back saying, maybe we could have gotten away earlier in the life cycle of just using what was out there, focusing elsewhere and not spending the type of capital. But then a pandemic hits and you have a platform and it works and you go from two thirds in shop to a hundred percent digital overnight and all of a sudden, you know, shareholders are cheering you on because you made those big investments and it worked and that's what kept your doors open. So it's like those little things where it's like you asked me two years ago, yeah, we probably spent too much on tech, too early on mobility and we work a hell of a lot harder than we should. Like that's, I would say like working for Anne Peets is a very difficult job, right? You're going to be asked to fly at 50,000 feet and be in the weeds, right? You're going to be asked to be innovating

• 36:09Speaker 02

  while you're also operating and that could put a lot of stress and strain on the business. Like the things that we do are unproven often. You don't know if they're going to work and you're working twice as hard for in many cases, the same results because you don't know what that breakthrough thing is ultimately going to be. So we could make it a heck of a lot easier on ourselves by not doing a lot of this stuff and probably would have seen a similar amount of success. We didn't need to do 30 things. We just needed to do three things, but that's just not, you know, my personality or perspective on like how I think we need to win, which is change everything to the point you made earlier, which is a little, it is a little crazy. It's a little batshit crazy, but it's the type of company I feel like if we can get to the other side and we're starting to get there, that, you know, there'll be a good, you know, multi-decade run

• 36:54Speaker 02

  based on the engine and the way it was built, right? Where there's going to be a lot of relevance 10, 20, 30 years from now because of how hard we worked at trying to get it right and get every aspect of it right. And not just differentiation or innovation for innovation's sake, because that's purposeless, but where there's actually a reason for everything to be different and it all Makes sense, right, in a world that is now shifting dramatically from analog to digital. And every restaurant brand now needs to have a lot of the stuff that we built. And needs to have this type of thinking because who wants to pay for 3,000 square feet when you can do it? And 500 square feet and far fewer people actually want to sit right inside of your Shake Shack or your Sweet Green or your Anne Pizza.

• 37:34Anthony Pompliano?

  Very true. One of the ideas I'm really fascinated with lately is this idea of entrepreneurs as investors. And what I mean by that is you've got capital, both financial and intellectual capital that you manage. And you have to choose when and where to make those investments and measure what is the return on the investment. How do you think about that as the founder and CEO of a business? And are there things that you've learned over the years that other founders or CEOs can learn from? In terms of those investments of both the intellectual and financial capital?

• 38:08Speaker 02

  Yeah, I mean, it's we have a bit of a luxury in that the cash on cash return metric in our business is is so obvious, right, and so straightforward. So if we're going to make a non pizza shop investment in something potentially non traditional, whether that's investing in an interesting product that we're going to put right on the pizza. And we're going to kind of blow it out. A good example, I personally invested in Mike's Hot Honey and we pushed that brand very hard. It's done incredibly well. I mean, kudos to the team there, Mike and Matt. And we share investors and that business is literally like a 10 out of 10 right now. But a lot of it just comes back to we're actually looking at making some non traditional investments right now.

• 38:51Speaker 02

  It comes back to, you know, can we beat the cash on cash returns that we typically would invest in building out a pizza shop? And that's sort of the guiding light that we look through all of this. And so there is some. There's real math that goes into it, but we've been, we've been very, I think, conservative around that because at the end of the day, you know, the fastest path for us to get scale to be able to really do that is by opening up more pizza shops and driving the, you know, truck straight down the middle of the field. And so just making sure that we're not getting overly distracted. But look, like there's days I would love to park our balance sheet into Bitcoin, right? And be one of those guys, right? Because of course, then you're heroic and you don't need to raise capital because you just raised all the capital that you needed, right? Going from 10,000 up to 60,000, like that's, there are days you want to do that stuff, but that's, you know,

• 39:36Speaker 02

  that's a bit risky. And, you know, the investors and shareholders didn't sign up for that type of thinking. So we'll be crazy, but we won't be as crazy there.

• 39:44Anthony Pompliano?

  It feels like it's easy to sell people on making an investment in Mike's Hot Honey, or another pizza shop. The whole Bitcoin conversation is a whole different ballgame.

• 39:54Speaker 02

  Absolutely.

• 39:55Anthony Pompliano?

  But, but I can appreciate that you've thought about it. That is, that might be the most important part. Before I get into the rapid fire questions to wrap us up here, what's your favorite memory over the last decade of building Aunt Pizza?

• 40:08Speaker 02

  My favorite memory, two of them. One was when the mayor of Washington DC, signed legislation to increase the wage in DC to $15 an hour. And she did it outside of an Aunt Pizza. And we were a big part of it since we've been championing that movement for a long time. And to do it, you know, there with, you know, a whole bunch of Aunt Pizza family members, like that was a really special moment. And then introducing the first Raise the Wage Act on Capitol Hill with Senator Sanders, Senator Pelosi, and Senator Schumer. We've gone through, obviously, as you know, multiple iterations. And I'm super bummed that, you know, minimum wage got pulled out of, you know, the most recent legislation and really hoping that we can do everything in our power to wind that back up. But that was a pretty proud moment because the

• 40:53Speaker 02

  only reason I was there is because, you know, we built that into the business model and the business model worked. And so we're a part of a lot of, you know, councils around how you can make this work, right? And you can profit from it. And so, you know, with a vision to a piece of legislation that of course ultimately went nowhere. But just to know that, you know, anyone can kind of dream big as it relates to wanting to actually change the way people think and change federal policy and be there and to be a part of it because of a cool pizza business that you built. Um, you know, I'll never forget that. And, you know, we're going to keep fighting that good fight and hopefully we'll get that minimum wage to where it needs to be.

• 41:32Speaker 02

  But I look back at that and I say, damn, if it wasn't for the amazing people like and, and, and to be able to have this platform to do stuff like that. I can't imagine doing anything else in this world, like for a job, right? Cause as an entrepreneur, you're building a company to go work for. Like I, I think it's fantastic.

• 41:47Anthony Pompliano?

  I love that answer. It's a fantastic answer. Uh, I got three questions for rapid fire and then you guys asked me one to finish this up. Uh, first is what is the most important book you've ever read?

• 41:56Speaker 02

  Hmm.

• 42:00Speaker 02

  It's tough because I, there, there are so many, like I never had a traditional mentor growing up because I grew up in such a small rural. Town. And so it was the books that got me through. I, I want to say probably the first one. That. Made me think about the employer employee relationship a little bit different was let my people go surfing.

• 42:24Speaker 02

  And it's, it's the, it's the founder of Patagonia. He's an odd bird. Uh, but it's, it's, uh, it was just really interesting to kind of get the perspective, you know, he's a man that built product around a real need. And, you know, had a really different approach to, you know, what it meant to be an employer and that really helped open my eyes to it.

• 42:43Anthony Pompliano?

  What, what was the takeaway you had from the book? Like, was there one thing that you were like, just, hey, it's different or was it something more specific?

• 42:51Speaker 02

  The takeaway was you can march to the beat of your own drummer. And you can build a company successfully that gets better, you know, over decades by, you know, having a different type of a culture. And, you know, setting up policies to be progressive and to support, you know, ultimately what the workforce, all about some of the, I mean, some of the best companies culturally are those where. You know, the people working there are, are actually living ambassadors of the brand. You think about the Patagonia as the REIs, like there's not a day that you don't walk into. Or at least pre-COVID, you know, those retail stores, those people reek of that, like they are working there to get the gear at a discount.

• 43:29Speaker 02

  And they have their next three trips planned, right? Where they're going to be out there like literally living the brand, whether it's snowboarding or skiing or, you know, mountain climbing, like that's it. And like that, that, but that can be applied to every industry, right? It just, it's not just about like, um, you know, those types of company, you can, we, we apply it to pizza. And that's like what paid time offer activism is to us, right? It's, it doesn't have to be about the trip that you planned. It can simply be about, I want to go work for a company that supports my activism and that gives me paid time to go do it.

• 44:03Speaker 02

  Why not? And we're Washington DC headquartered. Like what a great idea for a Washington DC company to lean into activism. So that's one of the cities, right? Across America, one of the most popular cities for movements, right? And for marches. And so I think it's a great benefit. So that to us is like, you know, our, our version of that where it's not like 50% discount because you can get all the free pizza you want and you come work at a pizza, but it's this notion of, you know, expressing who you are and your beliefs out there in the public and letting the backing of the company and the resources that we have to help, you know, promote that and support you, you know, whatever that may be.

• 44:39Anthony Pompliano?

  Yeah, that's a, a, a great answer. Second question is about your sleep schedule comes from our friends over at Eight Sleep. Uh, they've got this thermo regulated bed that I sleep on, which, uh, today I sleep super cold. My wife sleeps super hot and I sleep like a little baby, but I used to only sleep five or six hours. What's your sleep schedule been over the years? Are you, uh, gotta get your eight hours? You don't sleep a lot? And how's that changed?

• 45:05Speaker 02

  Yeah. So I, so what is the product again? I'm, I'm actually, I may need to get this.

• 45:11Anthony Pompliano?

  It's a thermo regulated bed. So basically, uh, you can get a mattress or like a cover to go over an existing mattress and then you essentially can, uh, at four different points through the night, the temperature can be set. So you can start, you know, kind of neutral and then get colder and colder through the night. And then right before you wake up, it, it'll kind of warm up. Uh, but basically the, the thought process is especially for men, I think, uh, sleeping in a colder environment actually gets you more REM, gets you kind of that deeper. Sleep, you wake up feeling more refreshed. And so the the founders over there literally convinced me to become like this convert of the sleep religion. I gotta get my eight hours now. And I started sleeping on this thing. I called him up and I was like, dude, I gotta invest in this. Like, this is amazing.

• 45:54Anthony Pompliano?

  And so I'm I'm full on convert now for sure.

• 45:58Speaker 02

  And what was the brand?

• 45:59Anthony Pompliano?

  Eight Sleep.

• 46:01Speaker 02

  Oh, yeah. Okay, I've heard. I actually, I've been, I'm gonna do this right now. I'm gonna buy one. No, it's I'm telling you, everyone that has this has been telling me about it. And it's exactly that. Like, I used to sleep, you know, growing up in Buffalo with the windows open dead of, you know, winter. And like, I crave that. I needed to be freezing. My my sleep is not great. Like, if I want to get six hours of sleep, I have to be in bed for eight and a half hours. Like, I'm constantly moving. I wear an Oura ring that tracks it, that like, just gives me anxiety now in the morning. When I'm opening the app and it's gonna tell me I didn't do my body ultimately wanted to do, right? It's like that. I've got like, it is mental torture. But sleep has always been difficult for me. And the main reason for it is that I don't sleep well. And when my head hits the pillow, it's just this onslaught of like ideation

• 46:47Speaker 02

  that like comes out of left field and nowhere. Actually, my my best ideas are when I'm like half awake. When just it all comes together and I could get up and write it down. But it's sleep has never been my friend. But I'm gonna, I'm gonna get this eight. So I'm gonna get the the mattress cover.

• 47:02Anthony Pompliano?

  Pod.

• 47:03Speaker 02

  And, yeah, the pod. Yeah, I'm gonna get the pod.

• 47:06Anthony Pompliano?

  I listen, I've told a lot of people, but I've never had someone buy it on the spot. So you

• 47:10Speaker 02

  I'm all in. Eight Sleep. Let's go.

• 47:13Anthony Pompliano?

  Love it. Third question for you is a little bit more fun. Aliens, are you a believer or a non believer?

• 47:22Speaker 02

  This one gets you in trouble. I I I would like to believe in aliens. And I like the idea, right, that there's life outside because I think it creates a lot more empathy. And it's humbling, or anytime you can remove yourself and look at something bigger, like you're a microcosm of the universe. I think that's a really good thing. Like, look, like, all we can do is be the best version of ourselves. Like, things are going to happen. So I love the idea of aliens because it makes me feel less relevant. It makes, you know, our species feel less relevant. And there are times over the past 12 months where I think that's been a good thing. But I think it just reminds us that, you know, we are a small part of something much bigger than ourselves. And it's a really healthy reminder of it. So

• 48:06Speaker 02

  I'm on the pro alien side.

• 48:08Anthony Pompliano?

  I'm right there with you. I think that probabilistically, they're real. They're somewhere. I don't know if they're green men, but uh, but there's something out there. So we'll see. You get to ask me one question and finish up. What you got for me?

• 48:20Speaker 02

  All right. So what would you do? I guess the question would be pizza and FTS, right? You're me right now. Do you do anything with it or do you let it go?

• 48:33Anthony Pompliano?

  I, I think that there's, uh, there's a balance, right? And I think of it less as like pizza. I think of it more as community. And really what you're trying to do, um, is you either want to create really, really unique experiences, or you want to essentially look at it almost like merchandise, right? So I say, what's the difference between taking, let's say, an image, uh, putting it on a T-shirt and selling it? Putting that same image on a poster or putting that same image in a digital, uh, kind of environment. And so, uh, I, I think that you've got to almost think of it from like the value to the audience, right? And, and one of the mistakes I see, uh, brands or individuals make is they're just like, oh, I can make money. And, you know, I think that the way that you guys have built the end pizza brand is like, that's as

• 49:11Anthony Pompliano?

  far away from, uh, kind of the values and, and the approach that you've taken. So you want to just really be really, really thoughtful about like, okay, what is this? And so, uh, one of the things that could be really interesting for you guys specifically is imagine if you basically tied the, uh, NFTs into some sort of, uh, experience, right? So if you said, hey, we're gonna, you know, auction off five or 10 of these, uh, and whoever buys them, we're gonna fly them in for a private dinner with you and the team. And they get to meet the investors or, uh, see kind of behind the scenes or shadow, you know, for a day, or, or you, you'd have to kind of, you know, think through like, what is, uh, actually like a really, really valuable experience?

• 49:51Anthony Pompliano?

  But that's something where all of a sudden, is there really a difference between like selling tickets on Eventbrite versus the NFTs? No, not necessarily, but I do think that there's a ton of people specifically that have, uh, cryptocurrencies, right? They want to buy other digital goods. And so you're just showing up and, and kind of selling something in a new environment rather than the old environment. Um, but you can get really creative, right? So I think like that stuff's super interesting. The other thing that I haven't seen people do yet is everyone so Been thinking about like, how do I sell the NFT? But what happens if all of a sudden you were to say, hey, you know what we're gonna do? Whoever is the number one customer at each one of our locations, we're gonna give it to you. So rather than give you like a trophy, what if we give you this like digital good, right? And maybe there's some cool thing that you can do kind of with that.

• 50:36Anthony Pompliano?

  So I think that people are kind of just scratching the surface with kind of what's possible. They're starting to understand the technology and kind of all the different iterations. Five years from now, I think you and I are gonna be blown away by what people figure out and kind of how creative they are. But I think that's what makes it fun right now, right? It's like, let's see what people do and you guys have a great brand, a great community that's highly engaged. So there's probably something to do. You just gotta be smart about how to do it.

• 51:00Speaker 02

  Amazing. I love it. Helpful.

• 51:03Anthony Pompliano?

  I just trying to to share the good word as always. Where can we send people to find you on the internet, Michael?

• 51:12Speaker 02

  So you can find me Twitter or Instagram. It's just at underscore Lastoria and you can follow and pizza. It's the ampersand is not registered, right? So it was a letter at one point, but it's A N D pizza. And we're across kind of every social platform, but at underscore Lastoria and A N D P I Z Z A.

• 51:34Anthony Pompliano?

  Amazing, man. Listen, thank you so much for doing this. You have taken a whole new approach to pizza and my favorite part is that it's working. So keep going. I'm a big fan and I'll do it again in the future.

• 51:45Speaker 02

  Thank you, brother. Appreciate it. Thank you for help spreading the word.