Resy and Eater: Ben Leventhal

When Ben Leventhal first started blogging about New York City’s restaurant scene in the early 2000s, he was doing it as a hobby. But as the website Eater gained weight and spread to other cities, it became a snarkily influential voice in the dining world. Recognizing that many restaurants struggle to survive, Ben then co-founded Resy, a booking app that squeezed more value into seats by charging diners higher rates for a hot table. When this business model flopped, Resy made a rapid pivot that eventually paid off, with an acquisition by American Express for $200 million in 2019. This episode was researched and produced by Sam Paulson with music composed by Ramtin Arablouei. It was edited by Neva Grant. Our engineers were Robert Rodriguez and James Willetts. You can follow HIBT on Twitter https://twitter.com/HowIBuiltThis & Instagram https://www.instagram.com/howibuiltthis and sign up for Guy's free newsletter at guyraz.com http://guyraz.com/. See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.

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

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• 5:18Speaker 01

  I don't think people understand quite how hard restaurants are.

• 5:21Guy Raz?

  Yeah.

• 5:22Speaker 01

  If you think about the moving parts at the average independent restaurant and how complicated the production and assembly and delivery of food is to the table, and you compare that to any other small business, it's orders of magnitude more difficult. I mean, you don't walk into a store and say, "I need a pair of socks and sneakers," and somebody down in the basement makes you the shoes and socks.

• 5:46Guy Raz?

  Yeah.

• 5:47Speaker 01

  But that's what happens when you walk into a restaurant.

• 5:56Guy Raz?

  Welcome to How I Built This, a show about innovators, entrepreneurs, idealists, and the stories behind the movements they built.

• 6:08Guy Raz?

  I'm Guy Raz, and on the show today, how Ben Leventhal's appreciation of restaurants helped him build Eater, and then Resy, a booking service that, over the past year, has seated 350 million diners.

• 6:26Guy Raz?

  If you ask me to name my favorite restaurant, it's pretty easy. It's a place where they know me. Now, the food happens to be spectacular, but even if it wasn't, the fact that I'm a regular means my experience there is always great. And that's the thing about eating out. Even if the food's just average, but the overall experience is great, you'll probably have a pretty good memory of the place. And that's what mattered and still matters most to Ben Leventhal. All three of the businesses he founded or co-founded are ostensibly about food, but really, they're not just about food, but about the experience of enjoying the place where the food is served.

• 7:10Guy Raz?

  Back in the early days of blogging, Ben started writing about New York City restaurants, and the blog eventually became Eater, which is now owned by Vox. Eater would report on the rise and fall of restaurants, much in the same snarky voice that Gawker used for celebrities. When Ben stepped away from Eater, he wanted to figure out a way to solve a problem he'd often run into: how to snag a table at a hard-to-book restaurant. So in 2014, he partnered with Gary Vaynerchuk and Michael Montero to launch Resy. Today, Resy is one of the big restaurant reservation apps, along with others like Open Table and Tok. The original model for Resy was a little like Uber and surge pricing.

• 7:53Guy Raz?

  If you were willing to pay a premium for, say, a Friday night, you could reserve a table at an in-demand restaurant. Now, eventually, that model didn't work out, and Ben and the team had to make a hard pivot, which you will hear about. Resy was eventually acquired by American Express for around $200 million. And today, it lists around 16,000 restaurants on the app. Ben has also launched a third company. It's called Blackbird, and it's tapping into the world of restaurants, rewards, and virtual currency, but we'll get there a little later. For now, what you need to know about Ben is that he grew up in New York, studied finance at George Washington University.

• 8:37Guy Raz?

  And out of college, his first job was working at VH1 in New York City.

• 8:43Speaker 01

  The first thing I did there was I worked on the big shows, sort of things like Storytellers and VH1 used to have a show called Divas, which was a big concert. I got to meet all kinds of people. I was once, for all of Five Minutes, Madonna's security for one shoot. I had to escort her, get her safely from her car to her dressing room and back.

• 9:05Guy Raz?

  Wow.

• 9:05Speaker 01

  Yeah.

• 9:06Guy Raz?

  Did you see yourself kind of climbing up the ranks and maybe one day being an executive? Or did you always kind of see it as a temporary thing?

• 9:16Speaker 01

  You know, what happened is I didn't see myself making any progress.

• 9:19Guy Raz?

  Yeah.

• 9:20Speaker 01

  I held the executives there in extremely high regard. Those were the days where MTV executives were just epic heroes of, I guess, the sort of early media, cable media environment. I mean, Tom Freston and Judy McGrath and John Sykes. I mean, these guys were huge figures, and I held them in very high regard. And I did want to be one of them. And I spent a bunch of time at VH1 and MTV, and I didn't really make any progress.

• 9:52Guy Raz?

  Isn't it amazing, just to think about it for a moment? There was a time in the early 2000s, even into the 2010s, where New York media executives... Were considered to be such a big deal. They were so highly paid. They had drivers that would drive them to the, to the office, you know? It, it's just so crazy to think about it today because that whole business is just gone.

• 10:17Speaker 01

  Yeah.

• 10:18Guy Raz?

  And in part because they spent all that money in the 2000s, in the 2000s.

• 10:23Speaker 01

  They were spending, you know, on private cars.

• 10:25Guy Raz?

  It's, it's just nuts.

• 10:27Speaker 01

  Yeah.

• 10:28Guy Raz?

  So you saw that, you, you felt like you were not going anywhere. So what did you do when you left?

• 10:34Speaker 01

  Well, one of the things that happened towards the end of my time at VH1 is I, I sort of didn't have very much to do. And the job that I was doing was pretty easy. So I had some time on my hands. And that's when I sort of initially started doing things on the side and started writing about restaurants and, and writing about the city. And those projects.

• 10:57Guy Raz?

  Just on a, on a blog?

• 10:59Speaker 01

  On a blog. It was initially a newsletter called She Loves New York, and that turned into Eater.

• 11:06Guy Raz?

  Who was she?

• 11:07Speaker 01

  She was a, you know, the theoretical she, just a woman in New York who loves the city.

• 11:14Guy Raz?

  All right.

• 11:14Speaker 01

  It was a weekly newsletter. And every week I wrote about 10 or 20 restaurants, somewhere in that range, places of interest. And I categorized them around pop culture themes and moments. So if it was baseball season and you wanted to go watch the Yankee game, it would be, you know, four places with screens. But it developed a kind of cult following and.

• 11:45Guy Raz?

  Like, how many people were, were subscribed to this newsletter?

• 11:48Speaker 01

  I think at its height, it was. 10,000.

• 11:53Guy Raz?

  Wow.

• 11:53Speaker 01

  It was really just commentary and color and observations. She Loves New York initially was anonymous. And I thought that was an interesting kind of hook for it. And there was a sort of curiosity as to who's writing this and what is this? What's really going on here?

• 12:12Guy Raz?

  And was it like snarky?

• 12:14Speaker 01

  It wasn't snarky. The tone of She Loves New York was really, um, it was insider-y. It was awestruck in a way, really sort of a fascination with the city. But it wasn't really snarky as such. It was, um, just kind of quippy and insider-y.

• 12:32Guy Raz?

  All right. So you're, you're writing this and, but, you know, I mean, you're not making any money off of it, right?

• 12:38Speaker 01

  No, not a penny.

• 12:39Guy Raz?

  You're just sending it out. This is just like a thing to do.

• 12:42Speaker 01

  It was a thing to do and it had no commercial value or potential at any point. Although I did think in the broadest possible sense, I said, well, maybe there could be something here. But I had no idea what that might be. And I was simply motivated by the fun of writing it.

• 13:01Guy Raz?

  Meantime, you meet this guy in New York named Lockhart Steele. Who's Lockhart? How did you meet him?

• 13:08Speaker 01

  Lockhart Steele was at the time doing two things that were interesting and relevant to me. One is he was the managing editor of Gawker. And two is that he was writing a blog called Below 14th Street. And Below 14th Street was a very early blog. I mean, he was blogging when I was still sending out this newsletter. But I used it as a source a lot. You know, one of the hooks of She Loves New York was that it was extremely up to date in terms of intelligence, what was opening and where. And so it was Below 14th Street was one of my sources. And we had been introduced through a mutual friend and we hit it off.

• 13:51Guy Raz?

  So he was basically kind of doing a parallel thing. And he's also managing editor of Gawker. Was Gawker in 2005 already a thing? Or was it really just a kind of a New York insider thing?

• 14:04Speaker 01

  Gawker was an insider thing, but Gawker was pretty well read at the time. I mean, anecdotally, I remember that when Gawker would link to one of my She Loves New York newsletters, it would really spike traffic.

• 14:18Guy Raz?

  Right.

• 14:18Speaker 01

  It would really be a big win for me.

• 14:21Guy Raz?

  And Gawker was snarky.

• 14:23Speaker 01

  Gawker was very, very snarky, yeah.

• 14:24Guy Raz?

  Yeah. And so how did, how did that, like, what do you remember about conversations that led one or both of you to say, why don't we join forces and do something together?

• 14:36Speaker 01

  I remember us having two seminal conversations about this. We met at a bar and I said, I think we should do something and it should be about restaurants and it should be called Eater. And I said, we should call it Eater because one is it sounds a little bit like Gawker and two is Eater is the most dressed down way of thinking about people who go to restaurants. They're not foodies, they're not gourmets, they're not connoisseurs, they're just eaters. And I said, we should do this, this blog and, you know, we'll post about restaurants and we'll both do it. And Locke was much farther

• 15:17Speaker 01

  along in terms of his understanding of digital media than I was at the time. And of course, in part because he was already at Gawker and he just generally was way more in the scene and already had a feel for it. And he also was writing at that time, a newsletter called Curbed, about street level, neighborhood level, real estate in the city. And he took to this idea of, of restaurants and he said, well, let's, we can, the easiest thing to do is to launch it off of Curbed and we'll make it eater.curb.com. And that's how, that was the first place that Eater launched was a subdomain of Curbed. And we sort of mapped, sketched it out and essentially drew up a wireframe for it. And we both contributed some ideas as to how it would function.

• 16:02Guy Raz?

  And Eater was going to be much more closer to a restaurant review site.

• 16:10Speaker 01

  Well, Eater was, the idea was, let's put up a couple of posts a day and then it turned into six and then it turned into 12 posts and it was a regular feed of content about restaurants. Now, we did say, we're not going to write reviews and we also said, we're not going to post photos of food. And we said, we're really not interested in adding to the noise with more photos of food and we're really not interested in writing reviews because we're actually not going to be any good at that. Because, as I still do, at that time, we held the big time food critics in extremely high regard and had a ton of respect for what they do. And we just said, we can't compete against those guys. But what we did have

• 16:55Speaker 01

  was, we had the cadence of blogging, which was certainly a competitive advantage. We could post things whenever we wanted to. And we had, you know, our take on restaurants. We had our take, which was that these places are these incredible, wonderful, magical places and the chefs and the operators of restaurants were heroes and villains to be talked about.

• 17:21Guy Raz?

  So what was, presumably you had to get a, you had to get paid. So how was it going to work? Were you going to become an employee of Curb to get a paycheck?

• 17:28Speaker 01

  Yes.

• 17:29Guy Raz?

  And, I mean, were, 2005, were advertisers spending a bunch of money on these sites? Like, could, was it possible? Because hosting a webpage was very expensive at the time.

• 17:40Speaker 01

  Yeah.

• 17:40Guy Raz?

  Was the business model, I don't know, was it sustainable?

• 17:45Speaker 01

  Well, we had a couple of advertisers and credit to Locke, he had attracted several advertisers through Curb. And so there were companies like, my recollection is, The New York Times was a company that advertised with Curb. And when I left, what we decided to do was, we decided to raise some money. And we raised an angel round of funding for the enterprise, the Curb Eater enterprise. And that's how we funded it. And we grew into it being a sustainable advertiser-supported content business.

• 18:22Guy Raz?

  All right. So you now, and you became sort of the editor of Eater?

• 18:26Speaker 01

  Yeah, that's right.

• 18:28Guy Raz?

  And you were the main writer? You were posting two or three pieces a day? Or you had one or two people working with you?

• 18:36Speaker 01

  We started by both contributing, Locke and I. My recollection is three or four posts a day. We didn't have any other contributors for the first years too. But we just sort of went about posting. I mean, that's the thing about those days in digital media. The key to getting one of these things stood up is you just, in some ways, you just have to start posting. You have to start producing content.

• 19:01Guy Raz?

  From what I've read, there was definitely an edge of snark to some of the reporting.

• 19:11Speaker 01

  Yeah.

• 19:11Guy Raz?

  You guys had like a section called Death Watch, where you would like count the days before you felt like a restaurant would die.

• 19:20Speaker 01

  We did. You know, it was a lot of our energy and our just unbridled enthusiasm for restaurants that was coming out. And it often showed up as snark. The idea of Eater was that we loved restaurants. We were obsessed with restaurants. I think about my career as a hype man for restaurants. And Eater was the start of that. And, and we were just so, we were just so, it was just all energy. And that often showed up as snark. And, you know, knowing what I know now, I wouldn't do things like Death Watch, which

• 20:01Speaker 01

  in hindsight were harsh and, and cruel to the restaurants that became its subjects. But we were outsiders and we didn't know any better. And we didn't know what we didn't know. We just knew how much we loved the scene and how fun and fascinating and exhilarating it all was.

• 20:23Guy Raz?

  Let me, let me ask you about just the business side for a second. Cause I would imagine you're, you're in your sort of mid to late twenties. When you and Lockhart start talking about this idea, and then it became part of Curbed, you probably didn't think of yourself as an entrepreneur. You probably didn't think like, I'm starting a business, did you?

• 20:42Speaker 01

  No.

• 20:42Guy Raz?

  No.

• 20:43Speaker 01

  It didn't even occur to me. We had a joint venture on Eater and Locke did more of the work of building the business and I did more of the work of building the editorial.

• 20:56Speaker 01

  But I was close to it and sort of understood more or less what was going on. You know, it wasn't just sort of a naive, creative writing content.

• 21:06Guy Raz?

  Yeah.

• 21:06Speaker 01

  But the passion for me was around the content, no question about it.

• 21:12Guy Raz?

  And all right, so you, so this becomes your thing and Eater's growing. It's mainly in New York at the time.

• 21:19Speaker 01

  Yeah, we had San Francisco, we had LA, but the, the gravity of the company was, you know, New York was the center of gravity of the company.

• 21:28Guy Raz?

  And, and was it profitable or at least sustainable? Or was it, you know, did it require like constant fundraising? Like, how was it keeping the lights on?

• 21:37Speaker 01

  It was more or less sustainable. We didn't raise more money for quite a while after the initial angel round. It was a lean, small, lean company, you know? We, we ran it modestly and we didn't have that many employees and a lot of the writers were freelancers and it was lean. We ran it lean.

• 22:00Guy Raz?

  From what I've read, publicists hated Eater because people said, well, they're not professional food critics and they can really have a huge negative impact on a restaurant, but they don't know what they're doing. So when you would see stuff like that, did you just think that was funny? Did you laugh? Did you, did it bother you? What do you, what do you remember about that?

• 22:21Speaker 01

  Yeah, we loved it. You know, I think one of the important things about being an entrepreneur is that you have to be willing to break the rules and sometimes you don't realize the rules you're breaking until after the fact. And sometimes you don't realize that it matters until after the fact. But, you know, at the time that we started Eater, there were rules about food content and there were rules about embargoes and there was an unspoken understanding that if, as a publicist, you gave Florence Fabricant a story, she was, she continues to be writer at the Times, writes the sort of news columns.

• 23:01Guy Raz?

  She got the exclusive.

• 23:02Speaker 01

  If she had the exclusive, she had the exclusive and so. We often ran into these things where we had the story because we walked down the street and we saw a construction project and we poked our head in and it turned out that we got to see a restaurant before it was officially photographed and before it was officially announced. And we put those things on the website.

• 23:24Guy Raz?

  Were you guys ever sued? I mean, you must have been or threatened with lawsuits?

• 23:28Speaker 01

  I think we got some letters over the years. Nothing that ever brought us down or became existential. We always corrected the posts when we needed to. A lot of the current, I think, style and conventions around online media, I think it's fair to say were, the rules were being developed in that time. And there was not the same journalistic standard that exists for old school legacy media. The priority was pace and speed. And certainly that took precedence over, I would say, accuracy in some cases. But, you know,

• 24:11Speaker 01

  if we posted a story about a restaurant and we said, this is opening next week, and the chef wrote us and said, you're wrong, it's opening in two weeks, we would update the story and say, it's opening in two weeks.

• 24:24Guy Raz?

  Yeah.

• 24:25Speaker 01

  And sometimes publicists, because they were playing by the old rules, would send us a press release and it would say on the top, on embargo until. But we didn't ask for the press release and we got these things unsolicited. And so we kind of said, these are not our rules and we're gonna post it now. And we drove people crazy with that stuff. We just, the publicists especially, just couldn't wrap their heads around what we were doing. And certainly that changed. And they started to figure it all out and we started to figure out how to play nicely with them. But, yeah, we just started by saying, these are not our rules, so screw it.

• 25:06Guy Raz?

  When we come back in just a moment, how Ben moves on from Eater to start Resy, and why its first business model falls flat. Stay with us. I'm Guy Raz and you're listening to How I Built This.

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• 29:05Guy Raz?

  Hey, welcome back to How I Built This. I'm Guy Raz. So it's around 2009, and Ben decides to step away from the website he co-founded, Eater, and move on to new things. He works for a while at NBC doing digital food content, and then he leaves that job for a startup. He worked for a startup called Kitchen Surfing. It was like a private chef company, and like you could book.

• 29:31Speaker 01

  Yeah, you could kind of book a chef like you could an Uber. If you had a dinner party on Friday and you need a chef, you could go on Kitchen Surfing and make a request and get a chef.

• 29:41Guy Raz?

  Yeah.

• 29:42Speaker 01

  Didn't work that well.

• 29:43Guy Raz?

  It didn't work that well. In the meantime, Curbed gets acquired by Vox. I think they reportedly, for between $20 and $30 million, they get sold. I'm assuming out of that, you get a check, too. Probably not enough to finance the rest of your life, where you could just sit on a beach and drink pina coladas. But probably enough to maybe help you start something.

• 30:05Speaker 01

  Absolutely. Yeah.

• 30:08Guy Raz?

  So you had briefly worked at this startup Kitchen Surfing. I have to imagine that that experience gave you some ideas or kind of got your the gears in your head turning about food and a business.

• 30:23Speaker 01

  Definitely, that was a period of time where I I learned a lot about startups in sort of a formal way. Like, I learned about how Kitchen Surfing went about raising venture money and how venture backed companies have board meetings and think about roadmaps and growth and things like that. And out of Kitchen Surfing, I really didn't know what was going to come next. And I didn't have any strong ideas about what that might be. And there's two ways for me that ideas mature. One is when I write about them, and the other is when I talk about them. So I like to talk about things that I'm thinking about with

• 31:04Speaker 01

  people that I trust and that I that I think have good, strong opinions on things, because it helps me figure things out. And so somebody I had gotten to know over the years was Gary Vaynerchuk.

• 31:18Guy Raz?

  So, okay, so Gary Vaynerchuk, we had him on the show several years ago. He's kind of a social media entrepreneur, and he's done a bunch of different things. You guys are just batting ideas back and forth at the time. This is 2013. Uber's starting out, or it's starting to gain traction.

• 31:38Speaker 01

  Yeah.

• 31:39Guy Raz?

  iPhone apps are exploding. What were you thinking about in terms of what opportunities there were around restaurants and smartphones?

• 31:50Speaker 01

  Yeah, Gary, in the years that I got to know him, I was doing Eater. He was developing Wine Library, which is the thing in many ways that started to put him on the map.

• 32:00Guy Raz?

  Yeah.

• 32:01Speaker 01

  And we were both at a point in our careers in the late 2013 where we had the headspace to think about doing something together. And we were sitting down at a restaurant on the Upper East Side. And the chef comes over and he says, you know, it's this is I'm I've got some amount of notoriety in the restaurant industry because it's this is post eater, of course. And and the chef comes over and is happy to say hello and is excited to meet Gary. And we've had a great meal and we chatted for a bit and he was just talking about how hard the restaurant was, how it really wasn't working very well and wasn't very profitable.

• 32:44Speaker 01

  And we that was a real provocation for me to say, you know, there's something, there's something that's off here, that these restaurants shouldn't be so hard, that making people so happy. But if none of these restaurants are working, what's that about? Why is that the case? And that's how we sort of started to dig into it.

• 33:08Guy Raz?

  And and did and I think, I guess, at the time, Gary had had mentioned that he was starting a fund, like he had raised some money to make investments.

• 33:17Speaker 01

  That's right. And so Gary had some money to play around with and was looking for ideas. And so that's how these sort of two things came together.

• 33:25Guy Raz?

  It's interesting, in 2013, you're hearing chefs talk about how hard the the industry is. I can't imagine a good, even a very successful restaurant doing more than 10% in profit.

• 33:37Speaker 01

  No, that's you're if you're running a 10% as an independent restaurant, you're crushing it.

• 33:44Guy Raz?

  Yeah.

• 33:45Speaker 01

  I don't think people understand quite how hard restaurants are. And that's always been something that, to me, is is part of the fascination and part of the reason to fight for them and to partner with them is these businesses are 10 out of 10 difficulty.

• 33:59Guy Raz?

  Yeah.

• 34:00Speaker 01

  If you think about the moving parts at the average independent restaurant and how complicated the production and assembly and delivery of food is to the table, and you compare that to any other small business, it's orders of magnitude more difficult. I mean, you don't walk into a store and say, I need a pair of socks and sneakers and somebody down in the basement makes you the shoes and socks.

• 34:24Guy Raz?

  Yeah.

• 34:25Speaker 01

  But that's what happens when you walk into a restaurant. You say that you're hungry and they go down and they put a bunch of stuff together and they make you dinner. And you know, you also can't go from storefront to storefront browsing for things that you like, you know, you go and you sit down for two or three hours, you have a meal, that's you got one shot at it.

• 34:44Guy Raz?

  Yeah.

• 34:44Speaker 01

  And I think as we started talking about resi, it was, it started to come into focus. This is just, this is impossible, what these guys are doing and let's understand why and see where the opportunities are.

• 34:57Guy Raz?

  Yeah.

• 34:59Guy Raz?

  I mean, restaurants, I think it's like a third, a third, a third, right? A third for rent, a third for food, and then a third for your employees and hopefully can squeeze those down a little bit so then wherever's left.

• 35:09Speaker 01

  Yeah.

• 35:09Guy Raz?

  As the owner, you can pay yourself.

• 35:12Speaker 01

  But the reality is it winds up being more like, well, you know, it's like, you want it to be 30%, 30%, 30%, and then 10% profit.

• 35:21Guy Raz?

  Yeah.

• 35:21Speaker 01

  But it's sort of the reality is it winds up being more like 33, 33, 33.

• 35:25Guy Raz?

  Yeah, I mean, every day I read articles about really great restaurants in San Francisco that closed down because the owners cannot, it's unsustainable. They're, they're literally not making a salary and they're busting their butts.

• 35:40Speaker 01

  That's right.

• 35:41Guy Raz?

  All right, so you, you start to think, well, what's the opportunity here? How can, how can I maybe build something that will benefit restaurants and then that we can turn into a business? So what was the, what was the kind of the choke point, you know, the bottleneck that you discovered that could be exploited?

• 36:01Speaker 01

  Well, we thought that the choke point was that there was no variable pricing in restaurants. And we were just talking generally, why is the price of the seat the same every day, no matter what the demand is?

• 36:16Guy Raz?

  Right, because Friday night at, at 7:30 is going to be a higher demand than Tuesday night at 5:00.

• 36:23Speaker 01

  Yeah, but it's 150 bucks either way.

• 36:26Guy Raz?

  Yeah.

• 36:26Speaker 01

  And we were saying, how is it possible that restaurants haven't figured this out? The margins are so thin and it's so hard to generate revenue. How is it possible that restaurants haven't figured this out?

• 36:38Guy Raz?

  Right.

• 36:38Speaker 01

  And so we thought that was our wedge, surge pricing. And what we did was we, the first version of resi was just paid reservations, $10, $20, $50, $100 for reservation.

• 36:57Guy Raz?

  So when Gary agreed, the two of you agreed to work together, did he have an office? Did you sort of, you know, set up shop in his office and start to just dig into this stuff?

• 37:07Speaker 01

  He did. He gave us a little group of 10 desks out in the middle of the floor, and we started banging away.

• 37:14Guy Raz?

  And who's "we"?

• 37:16Speaker 01

  We had, at the time, it was me, Gary, and Mike Montero, who would become the CTO of Rezzy. Gary had known Mike and had talked to him about a couple of different projects. Because Mike's a really talented engineer and was looking for his next chapter.

• 37:34Guy Raz?

  So the idea you started to develop was, hey, why don't we sell seats at restaurants?

• 37:40Speaker 01

  Yeah.

• 37:41Guy Raz?

  Like, you know, you paid a premium for a certain time of the day?

• 37:44Speaker 01

  Exactly, exactly.

• 37:46Guy Raz?

  And how was that going to work? You, I mean, just to get it off the ground, you had to get restaurants presumably to agree to give you an allocation of seats, right?

• 37:56Speaker 01

  Precisely what we did. We went to restaurants. I went around the city and went to restaurants where I knew the chefs.

• 38:05Guy Raz?

  And presumably, you had some credibility from your time at Eater?

• 38:09Speaker 01

  Yes. I brought to Rezzy the credibility and the Rolodex that I developed at Eater. And I think it's fair to say that as Rezzy grew, you know, I used my product instincts and my content experience and started to round the thing out. But really, I went door to door to restaurants. And I started with the restaurants that I knew and really asked them to take a leap of faith and try this out.

• 38:38Guy Raz?

  And what was your pitch to them? Like, you come into a restaurant, you say, hey, we're going to do this thing. And I would say, well, what's in it for us? Like, I mean, we're just going to give you our seats? I mean, we're already selling these out.

• 38:48Speaker 01

  The pitch was airlines have first class and business class and premium economy and economy. And when you go to a concert, there's front row and floor seats and second deck and third deck. But for restaurants, you have nothing. You have one price, it's one size fits all. Everyone gets the same seat at the same price. And what if you could charge more for 7:30 on Friday night? It's only 50 bucks. If you wanted, it's yours.

• 39:20Guy Raz?

  50 bucks for the, for the right to have the seat? But then obviously you'd have to pay for the meal.

• 39:24Speaker 01

  Yeah.

• 39:25Guy Raz?

  Okay.

• 39:25Speaker 01

  And that was the pitch. You can generate revenue, you could make customers happy. And all you have to do is you have to charge for your primetime inventory.

• 39:35Guy Raz?

  So maybe like Tuesday night, you could book it for 10 bucks for the reservation. But on a Friday night, it might be 50 or more if it's a hot restaurant.

• 39:43Speaker 01

  That's right.

• 39:44Guy Raz?

  And the restaurant will get a cut of that?

• 39:46Speaker 01

  The restaurant got most of that revenue.

• 39:49Guy Raz?

  Most of it?

• 39:50Speaker 01

  Most of it.

• 39:51Guy Raz?

  Oh, wow. Okay.

• 39:52Speaker 01

  My recollection is that we took 20% as a vig and the restaurant kept the rest.

• 39:59Guy Raz?

  And were you getting traction? Were you getting restaurants saying, I'm in, I'm up for trying this out?

• 40:05Speaker 01

  It was really hard. We got restaurants to say yes.

• 40:08Guy Raz?

  Okay.

• 40:08Speaker 01

  I remember the restaurants that said yes to us first because, you know, when you're starting a business, the first five yeses are the ones that matter the most and, and are the ones that require a tremendous amount of leap of faith. But there were lots of no's too.

• 40:24Guy Raz?

  So it would be a mobile app?

• 40:26Speaker 01

  Yes.

• 40:27Guy Raz?

  And people could basically buy this? I mean, it's a great idea. And particularly, and I know there are people listening and I know that you guys got knocked for it because people are like, oh, they're like ticket scalpers. But at the end of the day, like, that is for better or worse, how capitalism works, right? Is that there's an opportunity. And if you can, if you can make money off of it, that's reasonable and legal and ethical, you know, then it's going to happen, right? I mean, I just went and saw Taylor Swift. Most of those people in that arena probably bought from the secondary markets for better or worse.

• 41:02Speaker 01

  Yeah, but there's something about hospitality that forces consumers into a different mental model than they are using for other entertainment categories. And I think it's the intimacy of it. I think it's the legacy and the history of hospitality. Restaurants in people's minds are first come, first served democratic places. When you start pricing them.

• 41:33Speaker 01

  Everyone gets a little uncomfortable. When you say to a customer, you can have this table, but you have to pay a hundred dollars more for it than the person sitting next to you. That really, really bothers people.

• 41:47Guy Raz?

  Even though that might be the case at an NBA game, or any concert they go to.

• 41:53Speaker 01

  Yes.

• 41:54Guy Raz?

  For some reason, when it's at a restaurant, people just psychologically, they just, they cannot accept it.

• 42:01Speaker 01

  Yeah, I think it's about how bespoke it all is. I think it's about how intimate restaurants really are at the end of the day. I also think as time's gone on, I mean, this is the number one question that people ask me as the founder of Resy. Like, why isn't there more variable pricing in restaurants? And I think one answer is because hospitality is not capitalism in a pure, pure sense. The other is that it's actually happening, but it's a little bit behind the scenes. You know, when you have credit cards who get, who get paid allocations of tables, and you have VIPs, and you have concierges. All those are entities that are benefiting the restaurant economically. And all those are entities that essentially help make sure

• 42:43Speaker 01

  that higher spending people are going to be in more valuable seats. So it's happening. It just turns out that something as sort of raw as Resy 1.0 is not the right, it's just not the right product for it. And so a lot of places told us, there's no way we're doing this. This is crazy.

• 43:02Guy Raz?

  Because they thought people would hate them. They were worried about that, yeah. But you got Manetta Tavern, you got Balthazar. I mean, you got some very hot restaurants, still a hot restaurant, still a hot table to this day.

• 43:15Speaker 01

  One thing we did to make it more palatable is we said, well, look, even if you don't want to take the money, on the consumer side, this is beneficial. So charge for the table, and we'll take your cut of it, and we'll donate it to a charity of your choice.

• 43:32Guy Raz?

  I see. So you would, you could advertise that.

• 43:35Speaker 01

  That's right. It sort of was a way, it was a landing zone for restaurants.

• 43:40Guy Raz?

  To be able to do it without worrying that they looked like they were greedy.

• 43:44Speaker 01

  That's right. So I think Balthazar was donating to Food Bank, and...

• 43:50Speaker 01

  It was easier for restaurants to say yes if they could wrap their head around the fact that, okay, well, if it's going to charity, it can't be that bad.

• 43:58Guy Raz?

  Yep. All right. To get this off the ground, you had some financing from Gary's Fund. And did that finance the whole thing? I know you raised, you guys raised $2 million. Did it come entirely from the venture fund that Gary was starting?

• 44:12Speaker 01

  Yeah, that's right.

• 44:14Guy Raz?

  All right. So you have this money and you've got to build an app, develop a team, and get the restaurants on board. So first of all, just from the technology perspective, building out a good piece of software, that must have eaten up a lot of your cash.

• 44:33Speaker 01

  Yeah, well, we had Mike, who, as I said, is a world-class engineer, and he'd coded the first couple of versions of it. But we had raised this $2 million seed round. So our first two hires were engineers, one for iOS, one for web. And Mike was doing backend work, and that was the team.

• 44:54Guy Raz?

  And at the time, I mean, this was not a restaurant reservation site. The OpenTable had been around since 1998 already.

• 45:02Speaker 01

  Yeah.

• 45:02Guy Raz?

  Even, I think even Yelp, you could, by that point, reserve a table at a restaurant. So you were definitively not in the business of competing with those brands.

• 45:12Speaker 01

  Yeah. And even in those days when we were starting Resy, a lot of people were saying to us, oh, this is an OpenTable competitor. You know, you guys are going after reservations.

• 45:23Guy Raz?

  Yeah.

• 45:24Speaker 01

  But we still sort of said, no, no, this is different. This is not, we don't want to be OpenTable. This is Uber for restaurants. This is different.

• 45:32Guy Raz?

  So, but, but like, how big did you see the opportunity for what you were doing? I mean, did you think, oh, this could be, you know, a billion-dollar business?

• 45:43Speaker 01

  Yeah. Well, the thing is, when you're starting something out, and you need to see it through to it being a big business, you can often kind of squint and see it. I mean, that's one of the superpowers of entrepreneurs.

• 45:55Guy Raz?

  You were really squinting there.

• 45:57Speaker 01

  One of the superpowers of entrepreneurs is you can convince yourself of anything.

• 46:02Guy Raz?

  Yeah.

• 46:02Speaker 01

  And so we had to squint a little bit, but we could see this being a big business. And the idea was... Basically, we're gonna roll this out and there's gonna be this idea of variable price tables all over the world.

• 46:17Guy Raz?

  Right.

• 46:17Speaker 01

  And sometimes it might be a dollar and sometimes it might be 200. But there's always gonna be a clearing price for reservation. And we were gonna be that service that determined that price and made it happen.

• 46:30Guy Raz?

  Except the big, bad 800-pound gorilla, I shouldn't say big and bad, but just a big, you know, player, OpenTable could have easily replicated that if it took off.

• 46:39Speaker 01

  I think that's true. I mean, I think the idea that, you know, your competitors can just rip off your products when they get big, I think that's true, but also it's just not the nature of how big companies work. I think you often find that they're focusing on other things and they're too busy to worry about, you know, a little sort of fruit fly buzzing in their ear. But you're right, if OpenTable had seen what we were doing and said, oh, this is interesting, they easily could have stood it up themselves. The fact of the matter is, OpenTable saw that we were doing a couple of things and entirely passed on doing them. They saw that we were pricing tables and we were also distinguishing tables. We said, you know, not all restaurant tables are created equal.

• 47:21Speaker 01

  There's bar seats and there's outdoor seats and there's dining room seats. And when you go on OpenTable and you make a reservation, you don't know what you're booking.

• 47:30Guy Raz?

  Yeah.

• 47:30Speaker 01

  And we had brought Resy to market in the summer of 2014. And so we, as really a hack to get the thing going, one of the things we did was we said to restaurants, well, look, we'll take care of your outdoor seats when they're available and people will know they're booking outside. And in the middle of the summer in New York City, the idea that you could have a guaranteed table outside certainly was something that you could sell for a premium, which a lot of places did. But we did a bunch of things like that. But if at the end of the day, all of that didn't amount to a real business, we couldn't, other than, you know, spreadsheets that had no basis in reality, we couldn't see it through

• 48:15Speaker 01

  to the other side and build a big business around that.

• 48:18Guy Raz?

  How long did it take you before you realized, you know, making 10 bucks here and 5 bucks there is not gonna work?

• 48:25Speaker 01

  I would say by the end of 2014.

• 48:27Guy Raz?

  Okay. So that was the, that was the only model for, for the first like five months?

• 48:32Speaker 01

  Yeah, that was the model.

• 48:34Guy Raz?

  And it became clear that this was not gonna work?

• 48:37Speaker 01

  It became clear that this was not going to be as big as we thought. And yet, we had the attention of the restaurant industry, and we had their engagement, and we had their urgings for us to build something else.

• 48:56Guy Raz?

  When we come back in just a moment, how Ben and his business partners ditched their first business model and come up with a better one. Stay with us. I'm Guy Raz, and you're listening to How I Built This.

• 49:23Guy Raz?

  Hey, welcome back to How I Built This. I'm Guy Raz. So it's late 2014, and Ben and his partners have realized that their initial business model for Resy is not going to fly. Meanwhile, the restaurants they're working with start to give them some well-meaning advice.

• 49:40Speaker 01

  We got over and over again this same feedback in different ways, but the feedback was always, you just should build out reservations. Like, this is cool, but we want table management, and we want booking widgets. And if you can do those things, then we don't have to pay open table $1 per seat, and then you'd really help us. And that's how we crossed the chasm into what would become Resy, is we heard from restaurants, look, this is cool, but this is not what we really need.

• 50:12Guy Raz?

  Right. So I guess at this point, you respond to this feedback that you're getting from restaurants, and you start to build out your reservation system, right?

• 50:22Speaker 01

  That's right. And we went really fast to the widget. So now, we had Resy with a widget deployed to restaurants, native website.

• 50:34Speaker 01

  Meaning when you click reserve on a restaurant's website, that popped up a resi-powered interface.

• 50:41Guy Raz?

  Right.

• 50:42Speaker 01

  That was the first really big unlock for us. That was where we started to see traction.

• 50:47Guy Raz?

  And that was because the restaurants were asking for that?

• 50:50Speaker 01

  The restaurants were asking for it and it made sense. It's part of our core thesis. A restaurant should be in more control and should be able to book their own customers without having to pay a dollar per cover. And so if you're on a restaurant's website and you want to visit the restaurant, of course you should be able to make a reservation. And for the restaurant, of course, that reservation should be free.

• 51:13Guy Raz?

  You weren't going to charge a per booking fee. It was just going to be a flat fee to use the resi backend software?

• 51:20Speaker 01

  That's right. We said, we're not going to charge per cover. We're going to charge you either 99 or $399 a month. I think there was another tier in the early days that was sort of the enterprise tier where we would do some custom stuff for you. And that's it. You could do one cover or you could do 10,000 covers. It's the same price.

• 51:43Guy Raz?

  Wouldn't matter.

• 51:44Speaker 01

  Doesn't matter. You're not going to be metered for demand. The idea that more successful restaurants pay more is insane. You pay us a flat fee, use the software as much as you want it.

• 51:55Guy Raz?

  But the success of that model depends on getting a lot of restaurants to sign up. You need to convert a lot of restaurants from OpenTable or whoever else they're using to you guys because if you've got fewer restaurants, but you're getting a per cover charge, you know, you don't actually need as many. But if it's just a monthly flat fee, the business depends on having a good sales force out there.

• 52:20Speaker 01

  Yeah.

• 52:21Guy Raz?

  And so, I mean, we were mainly in New York initially, right?

• 52:25Speaker 01

  Yeah.

• 52:26Guy Raz?

  But to really make this work, you had to be, you had to expand out. Where was the next place you went to?

• 52:32Speaker 01

  We went to LA. We had restaurants coming to us because the offering. Was attractive, whether or not there was resi marketing behind it. So we had restaurants starting to pop up around the country. But the next market that we went into from a sort of go to market perspective was LA.

• 52:51Guy Raz?

  And I know, obviously, in the first few months with the original business model, you could see that it wasn't going to work. Did you start to see it turn around?

• 53:02Speaker 01

  I did, yes. You know, in the first 12 months, we went from being resi, the paid reservation service, to resi, the reservations and table management service.

• 53:14Guy Raz?

  And, and one of the things that you guys did pretty early on was you partner, you decided to partner with Airbnb. You get them to, you approach them and you say, hey, let's see if we can integrate this app into Airbnb to for restaurants?

• 53:28Speaker 01

  Yeah. So Airbnb was thinking about, how do we incorporate restaurants into our offering? Because Airbnb at the time was really focusing on going deep in every market from an experiences perspective, wanting to be, you know, sort of a one stop shop when you visit New York, for example. And so they were looking for a partner here. And they came to us and said, what would you guys be able to do for us from an integration standpoint? They went to some of our competitors, too. They had a pretty considered approach and we won that business, basically. We convinced them that we were the right partner for them. At some point in that conversation, we said, you know, we'd like this to be both an investment and a commercial partnership.

• 54:13Speaker 01

  And they agreed.

• 54:16Guy Raz?

  One of the things that presumably, you know, I know this was happening at the time is like a CRM for restaurants, right? Where they could know a lot about a customer. Because there are a lot of restaurants that I go to, maybe you go to, where you go a lot.

• 54:30Speaker 01

  Yeah.

• 54:30Guy Raz?

  And, and then you'll go the six or seven time. And then you have a bad experience and then you don't go back. And you're like, I've been there seven times. They don't even, I've seen the same people there, order the same food and they don't. Recognize me, which is fine, but if that happens and you have a bad experience, that's a big loss for a restaurant. But if they know that you're there and you're fifth or sixth time, that could be a huge advantage, right? And this was something that I guess you were, that restaurants wanted, that they wanted something like that.

• 55:00Speaker 01

  Yeah, for sure. I mean, again, if you look at the history of this, it really comes down to us shipping features that our competitors didn't have. And on that basis, convincing larger and larger restaurant groups to sign up with us. And one of those features was the universal guest database. Before Resy came along, every individual restaurant unit had its own customer database. It was essentially a customer database on a local server. And from the start, we said, you're, you know, if you have four restaurants, it's all one database. It's one customer profile against four restaurants. So now you can start to track them across your group.

• 55:43Speaker 01

  And you don't have to worry about missing a VIP if they're always going to your uptown location and then they come, they come to visit downtown. You don't have to worry about missing them. That was a big unlock for us. That was a big unlock. And restaurant, it really, it mattered a ton to restaurants. It's so obvious now that that was the right, that's the right way to think about the guest database, but that's not how the systems had been architected before us.

• 56:09Guy Raz?

  So did you at any, at a certain point hit profitability?

• 56:14Speaker 01

  Um, we were inside of it when we sold it to Amex. We were not profitable.

• 56:19Guy Raz?

  Yeah. May 2019, American Express announces that it's acquiring Resy reportedly for $200 million. The timing couldn't have been in some ways better because it was a little less than a year. Before the whole industry would collapse temporarily, but obviously with COVID, you stayed on as CEO after the acquisition and now it's part of American Express's portfolio of companies.

• 56:49Speaker 01

  Yep, I stayed on for a year and a half.

• 56:52Guy Raz?

  So and you were there for the first six months of COVID.

• 56:55Speaker 01

  For sure.

• 56:56Guy Raz?

  So what did that do to the, I mean, I mean, I have to imagine a part of you was relieved that you were part of a bigger company.

• 57:03Speaker 01

  Oh, yeah, I mean, better to be lucky than good, as they say, I think we in hindsight timed the exit perfectly. It meant that we could do some things for the restaurant industry that we would not have been able to do as an independent company. We did two things and we did them very fast and then the industry followed. One is we cut fees to zero. We thought it was really important symbolically to say, we are not in a position to be collecting money from restaurants right now. And a lot of the industry, other tech companies followed that, and I think it was important that we did that. And the other thing we did is that we said to restaurants where we had relationships, ones where we had marketing relationships or we were gonna, we had signed up to, you know, maybe later in the year sponsor something.

• 57:47Speaker 01

  We said, well, we'll just advance you the money. You know, we're going to do this event with you all anyway. If we can advance you those funds and that can help you with payroll while the restaurants close, great. So let us know what you need. And I'm certainly proud of having been able to do those things and getting them done while I was still at Amex.

• 58:06Guy Raz?

  When you stepped down in November of 2020, what did you do? I mean, did you just take some time off for a while?

• 58:13Speaker 01

  I wish I had taken more time off completely, but being that I, you know, I'm a curious, ideas driven person, I started talking to people about what to do next. And one of the things that I started talking about was the idea of a restaurant currency. You know, the thing that's happening in this 2020, 2021 is obviously there's a lot of interest and excitement around blockchain tech and NFTs and cryptocurrency. And I started to talk about just this idea of what about a currency for restaurants? There's a lot of restaurants, it's a trillion dollar industry.

• 58:57Speaker 01

  They pay a lot of money in fees to move money from point A to point B, from consumers to the restaurant units and back and forth. Maybe there's a currency here. Maybe this should exist. And that's how we started to slowly paint the strokes of Blackbird.

• 59:13Guy Raz?

  And Blackbird, Blackbird Labs, which is your newest venture, which you launched in 2023, it's basically like a reward program for diners, right? And so from a consumer's perspective, how does it work?

• 59:28Speaker 01

  Blackbird is a loyalty company for restaurants. So you go into a restaurant, you earn points by using Blackbird, and then you can take those points and you can spend them like currency at any of the restaurants on our platform. It takes all of the restaurants in the world and turns them into one big giant coalition loyalty program that sort of feels like something you get in the airlines.

• 59:53Guy Raz?

  And so when you go to the restaurant, you basically pay through the app?

• 59:57Speaker 01

  Correct.

• 59:58Guy Raz?

  And so if I go and I spend money at a restaurant in San Francisco and I gain points, and then I'm in New York and I'm like, oh, I've got enough points for a free meal at this restaurant. How is that restaurant benefiting from that?

• 1:00:13Speaker 01

  We backstop all of the points with USD. So restaurants know at any time they can sell us their points for USD.

• 1:00:22Guy Raz?

  Got it.

• 1:00:23Speaker 01

  And it's priced essentially as a really cheap transaction. It's cheaper than the price that they pay for a credit card swipe. And so what they know is it's good as cash. And over time, what we hope is that they will hold it as points and use those points for future rewards. So effectively, we're giving the restaurant industry a currency they can use to acquire and retain new customers.

• 1:00:50Guy Raz?

  And the currency is a cryptocurrency?

• 1:00:55Speaker 01

  It's really just points. When I say currency, I mean, in the way that you go to an arcade and you buy arcade credits and then you go spend them in video game machines. That's the idea here.

• 1:01:07Guy Raz?

  So it's like a bunch of airlines are part of whatever United's called, Mileage Plus, I can't remember what it's called.

• 1:01:14Speaker 01

  Yeah, the Star Alliance.

• 1:01:15Guy Raz?

  Star Alliance, forgive me, yeah. It's kind of like that.

• 1:01:18Speaker 01

  Yep, exactly. And so the idea here is that there is a spread. And we make money on points going in and out of the system. Every time a consumer is rewarded points, some of those are funded by Blackbird. Some of those are funded by restaurants. We take a vague on that outbound flow of points. And when they come back to the restaurants and come out of the system, we charge restaurants a processing fee for those points as well.

• 1:01:47Guy Raz?

  And so how many restaurants are participating?

• 1:01:49Speaker 01

  We have about 500 signed up across the platform.

• 1:01:53Guy Raz?

  Wow. How big of an opportunity you see here?

• 1:01:56Speaker 01

  Oh, I think this is, this is a massive opportunity. I mean, we want to create a global currency for restaurants. You know, I come at this from the perspective that restaurants are magic. Restaurants are places that make people happy, that create memorable hospitality experiences. So we want with Blackbird, we want consumers to feel our enthusiasm for restaurants. And we want to harness that magic and we want to make the app as thrilling as the restaurants themselves. So we want every restaurant on the planet to be wired with Blackbird and to in that way, create a whole new restaurant economy.

• 1:02:35Guy Raz?

  When you think about what happened with the two brands that you started and now you've got a third, how much of their success do you attribute to the work you put in? How much do you think had to do with the luck and the timing and environment, et cetera?

• 1:02:48Speaker 01

  I think luck and timing matter a ton. I mean, I think what you have to believe when you're starting these things out is that you have unique insights and that you have superpowers. And so I do think that there are some things that I've brought to each of these businesses and will continue to bring to the things that I do that create market opportunities and advantages. But I mean, these businesses are really tough. It's so hard to bring something like this to market. So with each of these businesses, we got a combination of timing and brand and strategy and execution right, and those things have led to success.

• 1:03:28Guy Raz?

  That's Ben Leventhal, founder of Blackbird Labs and co-founder of Eater and Resy. And according to Resy's website, in the 10 years since it was founded, it's made a total of 600 million restaurant reservations. Hey, thanks so much for listening to the show this week. Please make sure to click the follow button on your podcast app so you never miss a new episode of the show. And if you're interested in insights, ideas, and lessons from some of the world's greatest entrepreneurs, please sign up for my newsletter at guyraz.com or on Substack. This episode was researched and produced by Sam Paulson, with music composed by Ramtin Arablouei. It was edited by Neva Grant. Our

• 1:04:09Guy Raz?

  engineers were Robert Rodriguez and James Willetts. Our production staff also includes Alex Chung, J.C. Howard, Carla Estevez, Devin Schwartz, Catherine Seifer, Chris Messina, Kerry Thompson, John Isabella, and Elaine Coats. I'm Guy Raz, and you've been listening to How I Built This.