Pod Insights The Pomp Podcast #460: Ilir Sela on Empowering Local Pizzerias About this episode Ilir Sela is the founder and CEO of Slice, the easiest way to order your favorite local pizza. In this conversation, we discuss small business challenges, biggest learning from Dominos, why Slice has been so successful, how they scaled nationally, and what the growth plan is moving forward. ======================= OKCoin.com is the leading crypto exchange for both beginners and experienced users. You can fund your account in under 2 minutes, and get access to the most advanced trading engine, all while paying the lowest trading fees in the industry (0.1%). Visit www.okcoin.com/pomp and open your account today. ======================= The Rodman Law Group is dedicated to helping entrepreneurs realize their vision by helping them operate defensibly in sectors where laws and regulations haven’t caught up to the realities of the industry. The Rodman Law Group’s legal expertise combined with its understanding of blockchain technology makes it the ideal legal service provider for the industry. http://www.therodmanlawgroup.com/pomp ======================= Harvested Financial makes options incredibly simple. They’re the first options robo advisor, where you can build and customize a personalized trading plan that gets automatically executed. Options help you speculate in capital efficient ways, diversify your holdings with market neutral strategies, and generate passive income by selling premium. https://www.harvestedfinancial.com/pomp =======================
Transcript Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.
0:00 Anthony 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. Elia Sella is the founder and CEO of Slice, the easiest way to order your favorite local pizza. In this conversation, we discuss small business challenges in today's environment, the biggest learnings they've had from Domino's, why Slice has been so successful, how they scaled nationally, and what the growth plan for Slice is moving forward. I really, really enjoyed this conversation with Elia, and I think you will as well. Before we get into this episode, though, I want to quickly talk about our sponsors. First up is OKCoin. There's lots of crypto exchanges for us to choose from. Whether you're new to crypto,
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2:51 Anthony Pompliano? for the industry. The RodmanLawGroup.com/pomp will get you 50% off a one-hour consultation. Again, TheRodmanLawGroup.com/pomp will get you 50% off a one-hour consultation and 5% off your first year of service with them. TheRodmanLawGroup.com/pomp. Go see what it's all about. Lastly, is Harvested Financial. Markets have had an absolutely wild year, and there's no better way to tame that beast than with options. Harvested Financial has strategies that work for your portfolio. Whether the VIX is at an 8 or 80, you can capture opportunity and manage risk with systematically executed strategies. When you have conviction, there's no more capital efficient way than options to profit from
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4:17 Speaker 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.
4:43 Anthony Pompliano? All right, guys. Bang, bang. I've got a leader here. Thank you so much for doing this, sir.
4:47 Speaker 02 Thank you so much for having me. It's been a while. We've been talking about this for what feels like a whole year. And we've got a lot that we've got a lot to talk about.
4:56 Anthony Pompliano? Absolutely. I think our original idea was we were gonna like get together and order pizza from like every pizzeria in New York City and try to do it in person. But COVID had other plans, but here we are. Let's just start with your background and kind of where you grew up and what you did before you started Slice.
5:13 Speaker 02 Yeah, of course. I come from three generations of small business owners predominantly in the pizza industry. My parents lived in New York in the 70s. My older brother was born here and they owned a pizza shop called Charlie's Pizza on 75th and 3rd. And then they moved back to what was then called Yugoslavia. I was born, I have a twin brother. And then in 1990, we decided to all move back again, back to New York. My uncle went back into into the pizza business. Today, I've got about 30 family members that own small business pizzerias as far out as Arizona and Alaska. And I personally went down the tech path.
5:55 Speaker 02 I have a computer science and a math degree and right out of school, I launched the tech support business. And we were one of the pioneers in the whole onsite tech support movement around brands like Geek Squad and our brand was Nerd Force and there was another one called Nerds On Site.
6:13 Speaker 02 And I franchised the model. So decided to franchise the business in 2005. This was about three years in. And by 2008, we had 124 franchise locations and I sold the company to a publicly traded MSP provider, managed service provider. And I share all this, all of this background because it'll actually be really relevant when I go into the Slice story and why it's important.
6:42 Anthony Pompliano? Absolutely. It sounds like you just merged your two, two parts of your past for a slice. So explain kind of what was the impetus for the idea for slice? Um, it kind of, how did you guys get started?
6:51 Speaker 02 Yeah. So, uh, operating nerd force. One of the things we did was we were the onsite tech support, uh, department for small business, uh, for small businesses who could not afford to have a full-time technology staff. And, um, as part of that mandate, we would manage websites for some small businesses. And so after selling that company, a lot of friends and family members that own pizza shops wanted me to help them with websites. Um, and this was also around the time when online ordering was becoming really common, especially for the big brands like Domino's and Pizza Hut and Papa John's. And so, um, you know, trying to figure out what, what should I do next? Um, I had just sold a business. Um, I'm an
7:33 Speaker 02 entrepreneur at heart. And so I realized that there could be an opportunity to power the technology for this one vertical. I just didn't know how, how big the opportunity was. So studied the industry and I was blown away by a couple of things. One, the, the industry is just massive. It's a $47 billion industry. This is the pizza industry in the U.S. That doesn't include DiGiorno. It doesn't include, you know, pizza sold at 7-Eleven. That's revenue that passes through about 77,000 pizza restaurants in the U.S. And so that was like, holy shit, massive. Can I, can I say shit?
8:15 Anthony Pompliano? Of course.
8:16 Speaker 02 Now I can. Um, number two, it was, I was operating under the assumption that Domino's, Pizza Hut, Papa John's, Little Caesar's, that they were the majority of this category. And what I learned was that they were the, but the minority combined. In fact, 75% of all pizza locations in the U.S. are non-big chain locations. They're small businesses. And so the way it's broken down is about 43,000 are independent out of the 77. You have another 12,000 that are small chains that have similar needs. And then you've got about 20 to 22,000 locations that are what I call big pizza. And so-
8:58 Speaker 02 The moment I learned that was the moment that I realized that we can actually create what I call a reverse franchise model. And what that is, is how do we unite local pizza, empower them with the same value add services that franchise companies realize, but without the franchise element, without that downside. Because entrepreneurs want their creative freedom, as I say. And so the idea was to launch the world's largest pizza chain, composed of small business and entrepreneurs who are in business for themselves, not by themselves.
9:34 Anthony Pompliano? Yeah, and so one of the things, obviously, is people see delivery associated with anything you guys do, and immediately they compare you to Seamless, Grubhub, DoorDash, name your kind of food delivery service. I think that you and I both look at the business very, very differently. It's much more of kind of a Shopify type, arming the rebels with a suite of products and a platform. Talk through the difference between those two models, like just being food delivery versus being more of like Shopify for small business pizzerias and kind of why you chose the latter.
10:08 Speaker 02 Absolutely. And look, when I launched the business, DoorDash and Uber Eats and some of these players, they didn't even exist. I launched the business in order to, you know what, I don't like using the word disrupt, so what's another word for disrupt? But in order to give entrepreneurs another option to the franchise model. You know, if somebody wants to launch a small business pizza shop, or really a pizzeria in general, because they're passionate about the craft, they have two options. They can go and buy a Domino's location, invest over a million dollars, and they get economies of scale, they get a known brand, technology, and all of these investments
10:51 Speaker 02 that the corporate office kind of provides. However, they've got to completely give up their creative freedom. It is not their location, it's a Domino's location. And so thousands of entrepreneurs went and launched 42,000 independent pizzerias, literally reinventing the wheel from step one, simply because they didn't want to give up their creative freedom and they were passionate about the craft. And look, as a result, you've got all these different varieties of pizza. Chicago deep dish, New York thin crust, Detroit style, which is amazing if you haven't tried it. Now, they are fundamentally at a disadvantage.
11:32 Speaker 02 And so when I launched the business, it was about helping these independents come together and empowering them first with technology, and we'll get into why that's important. Two, with a brand that champions their authenticity. And three, economies of scale. And so how do we come together to realize things like buying power, leveraging data to make better decisions, and so on and so forth? Now, I think that's a much more important model because our goal isn't to simply utilize small business in order to serve the customer in a unilateral way. Like, we're not just about the consumer.
12:15 Speaker 02 We're about making sure that the small business succeeds, realizes better economies, and then we can pass that back to the customer. So for me, the comp was Domino's. And how do we create a Domino's version for local? And digitize these businesses so that we can go from, you know, zero orders online to 70% of their orders online? And there are so many benefits that come with that.
12:41 Anthony Pompliano? So, so real quick, before you go into that, let's talk about Domino's specifically. Because I don't think people outside of maybe technology and investing really understand the Domino's story. And we'll talk about my affinity or non-affinity for Domino's in a little bit. But in terms of kind of that technology story, I think Starbucks kind of is similar, but Domino's is pizza, obviously. Walk us through, what did they do over the last, you know, five, seven, eight years that has led to this like meteoric rise in their stock price? And just the interest in tech story that they have?
13:13 Speaker 02 Domino's is incredible, absolutely. A lot of people associate our brand voice as an anti-Dominos. And I wouldn't say we're so anti-Dominos. I would say I look up to what they've done. And I think many, many other categories need to learn from that. Starbucks, as you mentioned, is another. More recently, Chipotle is doing a great job. And so what Domino's has done is realized that
13:44 Speaker 02 A digital customer, and in fact now I have the data, is worth four times more than an offline customer. And an offline customer thinks someone who's calling in to place the order. Okay, why is that important? And why, why is that value there? An online customer is ordering on average, 30% more food each time they order. You now also have the customer record. So you can influence their behavior. I can push notify you, text message, email. I don't have to have five people answering the phone. And I'll give you a data point. We measured the phone channel for hundreds of locations on our network.
14:28 Speaker 02 And what we learned was that 22% of all phone calls go unattended to. Either because the line is busy, or the customer was put on hold and, and then they hung up, or nobody answered. And 75% of all phone calls are orders. So, I mean, that's a huge chunk of revenue being left off the table for anyone who's a phone-based business. So, once Domino's learned these things, they decided that they're going to be all about digital. And they have gone from, in 2010, I believe there were about 5% of their volume was digital. Fast forward to today, they're at 75% digital.
15:10 Speaker 02 And that's created some amazing efficiencies in their model. Primarily, better pricing for the consumer. So, because it's more efficient to now operate a Domino's location because of the digital aspect, I can now afford to give the consumer better pricing. So, Domino's hasn't raised their prices in 12 years. And that's just plain, you know, economics. And we're playing in a category that is very value-centric. Yes, you and I can debate the best pizza in New York, but for most of the country, household income is about $48,000 a year. Pizza is their night out in. That's the way they feed their family. And Domino's is a very affordable option.
15:58 Speaker 02 Compare that to small businesses who have now flocked to the DoorDash and Uber Eats and GrubHubs of the world in order to solve for this digital gap. Well, they have 30%, 35% take rates. What do small businesses do? What are these platforms known for? Higher prices. And so Domino's realized this as well. So this is the second leg of their growth. They realized that local businesses are raising their prices in order to make up for that digital push. And so Domino's really started to focus on quality. So they knew that they had value locked down. And then for the last five years, they made a massive push towards
16:41 Speaker 02 quality and making the consumer feel better about the end product. It's a combination of that plus price and really all led by digital is why Domino's has outperformed Google in terms of the public markets in the last 10 years.
17:00 Anthony Pompliano? And so on this, there's a whole bunch of very intuitive things. So if everyone's calling and they're not getting through and you give them an online portal, it increases your throughput, it increases kind of your brand affinity, all that makes sense. What is the part about like the tracker, right? And being able to get information almost passively? Because to me, that feels almost like a nice to have. But when I talk to people about Domino's and online ordering and all this stuff, they actually bring it up way more than I would think, right? The ability to see like, where is it in the process? Has it actually left yet? Or has it not? And you're starting to see this in like the actual food delivery apps now. So is that something that maybe is counterintuitive? Like the level of information that is available even
17:42 Anthony Pompliano? after you've placed the order is important? Or is that just, I'm talking to some weird friends and actually doesn't resonate as much?
17:49 Speaker 02 No, it's definitely really important. And look, I would say we're a little bit behind in this area and we're investing heavily to make sure that we create the tracker version for local. And you'll see that from Slice in the early parts of 2021. So I'm excited by that. I think the reason why that's super important for Domino's and it has been a massive unlock is because we've learned that pizza as a behavior nationwide is a last minute decision. And it's the safest Most consistent last minute decision that families make or individuals make when they place an order. And because it's a last minute decision, there's usually some chaos
18:28 Speaker 02 in the background. By chaos, I mean, kids crying, guests are waiting for the food. It's a very event-based industry. So sporting events, the Oscars, I don't know, the Bachelorette premiere. And so the tracker has become really, really important because it gives the consumer trust about, you know, where the product is because it's a last minute decision.
18:55 Anthony Pompliano? Got it. And so let's talk about Slice in terms of you saw all of this playing out over the last decade or so. What are the parts of the Domino's kind of technology story that you feel like really align with what you guys are doing for small businesses? And then maybe where are the differences in the model they've pursued versus what you're pursuing?
19:15 Speaker 02 Yeah, look, I would say what really drove the Domino's flywheel was their CEO at the time, and this didn't feel like a valuable initiative, but their CEO was the first one out of all major brands to make the call and say that the point of sale system has to be consistent in every single location. So Domino's launched something they call Pulse. Pulse is their operating system inside the stores and also connected with their centralized call centers and their operating team. And so the moment that they plugged in the same and consistent point of sale solution across all of their locations, they
19:59 Speaker 02 can now build on top of that network-wide, consumer-facing initiatives. So think Domino's Rewards? Well, it's honored regardless of which Domino's you shop in, right? And it's rewarding you for behavior regardless of which location inside Domino's network that you that you buy from. That's not, you cannot deliver on a promise like that, on that kind of value, if all those locations aren't on the same tech stack. And so for Slice, one of our big initiatives is plugging in a consistent tech stack across all of our partner restaurants in order to provide the consumer with a consistent experience regardless of which local pizza shop they buy from.
20:44 Speaker 02 Now, the end product is going to be authentic and unique and different and we can still debate who's got the best pizza, but I no longer have to have anxiety about what experience I'm going to get if I'm ordering from Joe's or John's of Bleecker or any other pizzeria. And so I would say that's a, that's a, that's just a massive investment, but it's an important one. The areas where I think we're obviously not going to invest in is trying to commoditize the product. You know, a lot of people ask, well, why is, why would Slice be this reverse franchise if you can't control the end product? I think we should celebrate that. I don't want to control the end product.
21:29 Speaker 02 That's why entrepreneurs go in business. And I want to make sure that we can have those debates about who's got the best pizza for a long time. It would be a pretty sad world if the only pizza we ever had was Domino's, with all due respect. So, you know, a good analogy for me is Airbnb in terms of what they've done with the hospitality industry. They celebrate the unique aspect of all of the hosts, but the experience is pretty consistent. So I would say that's a, that's another model that I, that I look up to, but again, the area we're not going to touch is, is the end product, the food.
22:06 Anthony Pompliano? Got it. Talk to me about how it's going so far. So you've got this like grand vision, we're going to create the largest retail chain of pizzerias, but we're going to do it with local, small business pizzerias. We're going to build this tech stack and kind of start to standardize stuff and learn from each other and, and really kind of Shopify is like arm the rebels. You're basically going to do this against the chains. How so far have you seen adoption from the local, small business pizzerias? And then also in terms of transaction volumes or any metrics that you can share?
22:33 Speaker 02 Yeah. So we work with 14,000 locations nationwide. Now, these locations are on At a different part in the journey because we think of this as a journey that we have to guide them towards in order to realize that full vision. The reality is that small businesses have no reason to trust us from day one. So we've got a network of 14,000 locations. Some are just listed on our marketplace where they're getting order volume and sort of that light version of technology. And then some are now graduating to what we call direct where we're managing all of their online presence. And then the last tier, which I'm most excited about is project by slice. I think you've seen some of these things in on Twitter.
23:17 Speaker 02 This is where we take on all of the responsibility of the pizzerias brand, both physically and digitally, bring in co-branded boxes, realize the vision of the entrepreneur in terms of their own brand, plug in a point of sale solution, and we get this this location to really operate within our principles and it accelerates their performance both online and then ultimately offline. So those are the three buckets. We just crossed a billion dollars in GMV. That's top line volume in in lifetime volume. And that's took that took us 10 years. And in 2021, we'll do over a billion dollars alone.
24:01 Speaker 02 And so our growth rate has really accelerated. Part of that has, you know, to do with with COVID and just the acceleration and adoption from the consumer side in terms of ordering digitally. But a lot of it also has to do with just our team's execution. They're doing a great job and and I'm excited by that. So, yeah, we'll do over a billion dollars in GMV in 2021. We'll probably end the year with about 18,000 locations. And then about 500 of those locations are going to be project by slice locations where you're going to see the slice brand very prominently in the experience, but it's going to live side by side with the with the with the local brand.
24:44 Anthony Pompliano? And I'm assuming that you would never go start sliced locations? Or is that in the cards as well?
24:51 Speaker 02 No, we would never start sliced locations where we own the location outright and it's like sliced branded. No, but what we are doing is helping entrepreneurs launch their own business. I fundamentally believe that post COVID, we're going to see one of the greatest renaissance in in local business that we've ever seen. And one of my partners in my business, our investor Jeff Richards, who's been on your, on your show, shares this sentiment. And so what we really want to do is we want to have a program that allows anyone who wants to go into this business with, with an opportunity to do that, even if they don't have access to capital. So we're going to be launching new locations with new founders.
25:33 Speaker 02 And then we'll also launch new locations from existing operators who have always aspired to launch multiple shops. So I'll give you an example. One of our best partners is Billy's Pizzeria in Crown Heights, Brooklyn. They would love to have a second location. We're going to, we're going to help them realize that vision.
25:53 Anthony Pompliano? And what does that exactly entail in terms of somebody who's already in business? They've got one location, they say, hey, we want to start a second. How do you help them?
26:01 Speaker 02 We're going to come in with a full program where if they have no access to capital, we'll provide that. We're going to plug in a digital first operating system where we're giving them a point of sale solution. We're setting them up with a website, e-commerce, omni-channel presence. We're partners with Google food ordering, Instagram shopping, Nextdoor, TripAdvisor. I can keep going, going down that list.
26:27 Speaker 02 We can help them realize their vision for their brand if they want to refresh it. Buying power on pizza boxes and cups and menus and all those things. And so all they really need to do is bring their operation, operating experience.
26:40 Speaker 02 And, and, and off we go. And we have so much confidence that with that kind of a collaboration, that the pizzeria is going to be set up for success from day one. And we've got all the data to be able to, to be selective about where the location can be and how to drive consumer adoption to, to these small businesses.
27:02 Anthony Pompliano? Are these locations where there's walk-in traffic as well as online? Or are these almost like pseudo ghost kitchens, but just like pseudo pizza kitchens?
27:11 Speaker 02 Yeah, these are definitely retail storefronts. I personally do not believe in ghost kitchens, at least as it pertains to the pizza industry.
27:19 Anthony Pompliano? Okay, explain why.
27:21 Speaker 02 So I'll get to that in one second.
27:24 Speaker 02 We're talking about small footprint, pickup and delivery first, digital first pizzerias. We're not talking about restaurants with big dining rooms. So I don't believe in that either, especially for this category. And so the reason why I don't believe in ghost kitchens for this space is because there is already enough kitchens. In fact, every single month, we see about 100 to 200 locations just going out of business on slice. And these are already built kitchens that somebody can access. There's also, again, 42,000 independent kitchens, pizzeria kitchens in the U.S. I wouldn't say kitchen capacity is the issue.
28:06 Speaker 02 Or, and I wouldn't say that a pizzeria is not accessible to the consumer. There's actually a pizzeria in basically every neighborhood in the country. And so going and investing in kitchens is, I think, just the wrong approach.
28:24 Speaker 02 Going to why I don't believe in ghost kitchens in general. I think that's a proposition that's been really communicated well by third-party delivery aggregators in order to justify 30% take rates. So here's the argument. Oh, your business can't sustain the 30% take rate? Cool, how about you open a ghost kitchen so that you don't have to spend as much on real estate? And therefore you can afford 30% take rate. Where the third party is not giving anything and the local entrepreneur is giving up everything. In fact, they're just in essence, at that point buying a job. And so I believe that the value that's being left off the table from a real estate store,
29:09 Speaker 02 a real estate storefront where hyper locally, the consumer is going to be aware of your brand. They can walk in, pickup is a big deal. Like just because delivery is available, doesn't mean every consumer wants delivery. A lot of consumers prefer pickup.
29:27 Speaker 02 And, and sort of that, the brand equity that can be built with a retail storefront. It's just that value is much greater than going into a ghost kitchen. Now, again, it may make sense for some big restaurant brand that just wants to be pickup and delivery first and wants to test out a new territory by all means. But if you're in the pizzeria business and you're going into the ghost kitchen, you know, sort of side of, of the industry, I believe you're leaving way too much value on the table and you're selling yourself short.
30:04 Anthony Pompliano? Got it. And so obviously a lot of these operators of small businesses, both industry agnostic and in the pizzeria space have really struggled this year, right? We've got kind of a public health crisis. We've got an economic crisis. We've got governments who can't seem to make up their mind in terms of you can open, you can do outdoor dining, you can do indoor dining. Now you can't do indoor dining. Literally, I couldn't tell you what majority of major cities, what their rules are right now, because it's just been changed so many times. How are entrepreneurs surviving, right? Like, well, let's just start there with just survival. So not thriving, not, you know, going to make enough money this year to go on vacation. Just literally, how are they preventing the fact that they could possibly shut down?
30:48 Speaker 02 Man, it's uh, well, look, most, most are not. When I look at outside of the pizza space, even within our network, we've got a bunch of partners who aren't your traditional pizzeria. They're more of a restaurant. I mean, it's, it's impossible. It's impossible to survive.
31:07 Speaker 02 What I'm seeing is these locations being super creative. Look, I'll summarize it as just pure grit. This is just people who refuse to give up. And they're inviting family members to show up and work. Because, you know, staff doesn't want to show up and risk their, their health to come in and answer the phone.
31:30 Speaker 02 I've seen pizzerias start selling pizza making kits just to, just to make, you know, some additional capital.
31:40 Speaker 02 You know, I've seen them set up, obviously, outdoor spots for, for, for sit down. But it's bleak. It's bleak because the suddenness of decisions that are being made by, you know, government and city officials is really, really short sighted and lacks empathy. And I think it lacks, you know, knowledge of what it takes to even launch or restart a business. I would, I would argue, we did more damage by, in New York, by allowing restaurants to open for indoor dining partially, only to close them as of today,
32:22 Speaker 02 than just letting them not open at all until things were in the clear. Why? Because the investment of bringing things back and being able to open partially is massive. It's, it's no different than opening fully. And so to do that and then only go back and say, okay, now you have to close. Well, what happens to, and by the way, not even giving. You know, some some leeway, not even giving a warning, just kind of like five days before saying, "Okay, you're closed." What happens to all the inventory that they bought? What about all the staff that they hired with the promise that things are only going to get better?
33:05 Speaker 02 What about rent? And it's just, it's wild.
33:10 Speaker 02 You know, in some cases, again, with with Slice, we feel a little bit fortunate because takeout and delivery first pizza restaurants have done pretty well. And they've put themselves at risk, but they have succeeded in a lot of ways. But I mean, I would say that's the minority in the in the space. It's just, it's it's wild.
33:31 Anthony Pompliano? And in New York City, it feels like pizzerias, for the most part, there's some exceptions, but for the most part, didn't really participate in what I'll call like outdoor dining only, right? Many of these places are kind of walk-in pickup or delivery. And so was that a positive or a negative aspect? Because many restaurants, they felt, hey, at least we can get some revenue in the door. We can serve people outside, especially when it was a little bit warmer. Since pizzerias didn't have that, was it maybe the business was unchanged because they were doing, you know, okay with the delivery and pickup? Or how did that kind of play out?
34:03 Speaker 02 Yeah, I would say the demand and pickup and delivery definitely outweighed the loss in just random walk-in traffic. And and a lot of that was really subsidized by by pickup and curbside pickup. So what we saw was a massive lift in pickup volume. In a really cool way, we also saw a huge bump up in tipping for pickup orders, which traditionally doesn't happen. In fact, there was a point, moment in time where tips for pickup orders were greater than delivery orders, which was fascinating. And then also much higher AOVs. So by AOV, I mean average order volume.
34:47 Speaker 02 I have to remember, I'm not speaking internally. And so as consumers shifted to digital, they ordered a lot more food. And then they also ordered a lot more for pickup and curbside. And it was interesting, a lot of consumers chose pickup. In in some ways as an excuse to just leave the house for five minutes. I'm just, you know, speaking the truth here. So
35:12 Anthony Pompliano? Of course.
35:13 Speaker 02 So they've done, they've done fairly well as long as they were smaller footprint. Were they were a pickup and delivery restaurant before COVID. And I would say those locations post COVID has done have have done very well. The restaurants have not.
35:29 Anthony Pompliano? And so as you kind of think through this, is this a situation where you had a lot of small business owners who were saying, hey, look, I'm not having people walk in. I know that I can get orders online. I know I can get delivery and they kind of are sitting around saying, I need to improve at this. And so slice, slice becomes a great option. It's kind of like people sitting at home. And all of a sudden, you know, restoring homes and improving homes exploded because everyone was just looking around saying like, oh, I need to fix that door. I need to, you know, paint that wall. It feels like maybe in this situation, restaurants had to go from digital kind of being a secondary thought to like digital as the default and that probably served as a tailwind for you guys.
36:06 Speaker 02 Exactly. Absolutely. This is the first time ever in the last 10 years that I've operated this business where the number one priority for most small businesses is digital. And then secondary is the telephone. It's usually it's been the other way around. Now, the phone still drives the majority of of the volume in the space across all categories, not just pizza. But the adoption and the sense of urgency around digital has never been greater. And you can see this also with companies like Chao Now, my good friend Chris, who's the, he's the CEO there. They do more of a, you know, online ordering tools for all restaurants. And they've seen a very similar breakout in terms of adoption from restaurants. So
36:51 Speaker 02 it's not limited to pizza. This is across the board. The sense of urgency for digital is is massive. Now, I will say for some restaurants, unfortunately, it's it's a false promise. Because digital isn't going to subsidize $10,000 in rent. If you have a big footprint, if you've got a big dining room. Or if your restaurant was in like corporate heavy locations, let's call it Midtown Manhattan. Well, it's a ghost town because Most of the volume they are doing during the week is people who live outside of, outside
37:30 Speaker 02 of Manhattan that are commuting in. So anyway, um, digital has been, has been a huge unlock for, for restaurants.
37:38 Anthony Pompliano? All right. I asked a bunch of people for questions for you and they did not disappoint. So I'm going to rattle some of these off and you just fire back with, with what you got. What is the biggest order that you guys have ever seen on Slice?
37:51 Speaker 02 Oh, man. Um, I think there was one that was like $12,000. Uh, it was, it was, I would have to go back and check, but I'm pretty sure it was in that vicinity. It was a $12,000 order. Um, and it was just like hundreds of pies. Um, and what's cool about that is we still only charge $2 for it, uh, which is, which is our, our revenue model. And so for $12,000, um, that one pizza shop received in business, um, they paid us two bucks. Um, but I would say that was, I think the largest order.
38:25 Anthony Pompliano? Why a flat, uh, kind of per order fee?
38:29 Speaker 02 I think that, that our revenue model, that our, our fee model is the most, um, merchant friendly while also putting the, the responsibility of success on Slice as well. By that, I mean, it's a win-win model. Um, it's a per order fee and what that does is incentivizes us to continue to drive more volume. And it's a flat fee because it passes the upside of digital to the merchant. And so because we know that online orders go from, you know, from a telephone of $20 orders to an online order that is on Slice, our, our orders are about $34 on average. You're passing that big upside to the, to the merchant. Now, if
39:14 Speaker 02 it was a, if it was a percentage based, um, fee, then with higher order values, we're also getting more revenue. Uh, but I, I wanted to cap it so that they can realize that digital is their most valuable channel and Slice is in a tax on that.
39:33 Anthony Pompliano? Yeah, that makes a lot of sense. Who's the most frequent user?
39:39 Speaker 02 I hope it's one of our board members. Now, I would say, aside from Jeff Richards, who places orders for his family, he's got four kids, the most frequent, you know, board member in terms of users. I think the last time I checked is there's a person in Boston who has ordered a large pie and chicken fingers every single day for the last four years. I mean, every day. I'm not even making that up. To the point where someone internally was just like, can we send, can we send a paramedic just to like, make sure they're okay? But literally, every day, a large pie and chicken fingers. For four years.
40:21 Anthony Pompliano? That is incredible. Have you talked to them? Have you sent them a thank you, anything?
40:27 Speaker 02 We definitely send out thank yous. I haven't personally spoken to them. I'll be honest, like, part of me is just like, I don't want to cross that privacy issue, but, or, or line, but yeah. You've got, look, we're in a business where it's a highly repetitive, highly frequent category. I mean, 94% of Americans have pizza once a month, and it's usually a habit. It's usually like, once a week. And so, you see that in the, in the usage. But yeah.
41:01 Anthony Pompliano? I love it. Probably the most popular question you get is, where's the best pizza? Don't pick one, give us a couple of, of your favorites.
41:10 Speaker 02 So I know this from operating 10 years, what I know is that the best pizza is the one closest to you. It's very simple. It's the one closest to you. Because it doesn't matter who's got the best, who doesn't. The reality is, we call that your home slice. The one that you grew up with, the one that's like, in the corner of your street, that's, that's the best pizza. I can't tell you which one that is, you know that, you know that yourself.
41:39 Anthony Pompliano? Which one is your favorite?
41:41 Speaker 02 My favorite is Pizzeria Giove, which is right, right by me here on Staten Island. It's incredible. Thin crust, it's one of the best pizzas you'll, you'll ever have. I also love Lee's Tavern, which is nearby. It's an institution on Staten Island. It's like a bar pie. So there's, there's some really good, really good pizza on Staten Island.
42:02 Anthony Pompliano? Are you throwing pineapples on there?
42:05 Speaker 02 You know, not, not for me.
42:07 Anthony Pompliano? Okay, thank you, thank you.
42:09 Speaker 02 There's a whole debate about, you know, pineapple, is it, does it belong on a pizza? And the beauty of, of, of the pizza debate is that it works for somebody. And that's special, right? That's awesome. It's the one place where you can have it. You know, however you like it. And so if you like pineapples on your pizza, by all means, but you know, don't expect me to try it.
42:34 Anthony Pompliano? I'm there with you, I'll refrain. I thought this question was really thoughtful. Who's your customer? So you've got obviously people who are ordering and kind of using the slice technology, but you also have the pizzerias. And so how do you guys think about who the customer is?
42:47 Speaker 02 The, the consumers are our customer, but we are merchant centric. And I know that sounds very schizophrenic, but it's, it's real. Our job and our mandate is to empower small business pizza shops to serve consumers in a way that is rewarding, easy, accessible.
43:09 Speaker 02 And, and that's the only way we're going to keep local thriving and that's our mission. If we don't make the consumer experience better and more rewarding, then they're not going to buy from local places.
43:21 Speaker 02 And so unless it has to do with the consumer experience, Slice will probably not necessarily get involved in terms of solving a pain point for, for the pizzeria. Now, fortunately, most pain points actually are reflected in the consumer experience. Even if like a pizza shop is paying too much for flour, well, that's being reflected in the price of the pie. And so we want to reduce the cost of flour. But like, whether the chef is wearing a blue apron or a red apron, like that doesn't impact consumer experience. And that, that's, those are not problems we think about, but we're a consumer, we're a consumer business.
44:02 Anthony Pompliano? Got it. How important is the water?
44:07 Speaker 02 You know, it depends on who you ask, but I would say the water is much less important. I would say the craft is really important. And if you study the pizza industry and just the history of it, you had immigrants moving predominantly to the Northeast, mostly in the New York area, migrating from places like Italy and, you know, Europe in general. And this is where that craft originally landed from, from Europe. And, and so as a result, regionally, I would say the Northeast has the best pizza. But you have great pizza in Connecticut, you have great pizza in Vermont, you have great pizza in New Jersey.
44:50 Speaker 02 So it's clearly not the New York water. And now you're starting to see some great pizza in like New York transplant locations like South Florida, Phoenix, Arizona, a little bit now in LA. But really, the reason why, you know, a lot of places around the country, you don't find the great pizza that exists in New York is simply that the craft hasn't really transplanted to those locations. We want to do something about that. My vision is to launch Slice University and to really use and leverage technology and digital to help entrepreneurs learn how to make better pizza, no matter where they are in the country.
45:35 Anthony Pompliano? So are you Albanian, Yugoslavian? How do you think of yourself? And now I basically ask people, how do they think of themselves? Because I realize that sometimes the truth and what they identify with is completely different. But which one, which direction do you go?
45:51 Speaker 02 You're welcome to the Balkans. So I'm Albanian. So my name, Ilir, is probably the most Albanian name, you know, anyone will ever read. It's like, If your name is Vito, like you're Italian, there's no question. So that's, that's kind of what my name, you know, is like in Albanian. But I was born in what was then called Yugoslavia. Um, so ethnic Albanian from Yugoslavia. And then since I was born, Yugoslavia broke up into a number of different countries and Macedonia was the southernmost, call it state. Uh, and so my family was from Macedonia. But it's literally on the border of Macedonia and Albania.
46:31 Anthony Pompliano? Okay. So you threw me off earlier when you said Yugoslavia, but everyone online was saying that, uh, you are obviously Albanian. Look at your name. So that makes sense.
46:39 Speaker 02 Exactly.
46:40 Anthony Pompliano? Uh, one of the questions was, what's the most Albanian thing about you? So you can't use your name, but what is the next most Albanian thing about you?
46:47 Speaker 02 Uh, it's my name. Um, and the fact that I'm in the pizza industry. Um, I think it's a really, maybe for some people, it's a known fact, but Albanians are incredibly well represented in the pizza industry. Um, and so aside from my name, the fact that I'm in the pizza industry is, makes me incredibly Albanian.
47:09 Anthony Pompliano? And so I want to finish up where we started, which is you said 30 family members are in the small business pizzeria, uh, kind of industry. What do they think about Slice and what you're doing? Is this like a family affair? Is this something where they get to test some of the features first? Like, it just seems very unique that, uh, there's a founder going after a market that you're uniquely positioned to go after. Uh, and it's not like, oh, you just were in the pizza business or your father was in the pizza business. Literally your entire family, it seems like. It's to kind of talk through a little bit about like building a technology company in a space that has such a material impact on, uh, your extended family and, and kind of the lineage that you come from.
47:53 Speaker 02 Yeah, look, it's, it's all of the above. I would say, uh, it's a blessing and a curse. Um, it's a blessing for all the reasons you just mentioned. Um, industry knowledge, the ability to work really closely with these operators because they're family, they're brutally honest. Um, so I'll give you an example. Our pricing model was a result of conversations with family members that operate pizzerias. Cause we tried, you know, a percentage based model. We tried a flat fee per month. And neither really worked well. And then finally, one of them was like, look, what about just flat fee per order? Make it super simple. And for a long time, it was just $2 per order.
48:34 Speaker 02 So some amazing advantages because of the relationships that that I have with family members that own pizzerias. I would say also difficult. So when something breaks, or when something goes wrong, they also don't hold back. They'll show up to my office when when our office was open randomly. They'll come into the office and, you know, it's time to spend, you know, now you've got to spend some time with them. They will be the first to, you know, to be critical. They'll be the first to celebrate the successes. And I would say the last thing, the most important one is just being surrounded by these operators who have gone through so many
49:17 Speaker 02 different struggles in the world of COVID has given a lot of inspiration to myself and everyone at Slice and these stories that we share on a daily basis. It was an inspiration for Pizza vs. Pandemic, which is a massive initiative that we launched in partnership with Slice Out Hunger, where we raised over $600,000 to feed frontline workers with with free pizza. But then that was in the form of fully priced orders placed for small businesses, small business pizzerias in the dead middle of pandemic. So just really inspired is and
49:59 Speaker 02 that passion and that mission first culture that we have at Slice is derived from from these from these operators, ultimately, family members.
50:08 Anthony Pompliano? Yeah. And then before we get into the rapid fire to finish up, what's your favorite memory of Slice? Like, what's the moment where there something happened and you were just like, this is why I want to build this company? Anything that sticks out in your mind there?
50:23 Speaker 02 Yeah, look, I we can stay here all night with stories of bootstrapping. So I've operated the business both in a bootstrapped way and then hyper growth, VC funded. For the first six years, I bootstrapped the company with a very small team, zero pennies raised. In 2015, we did 40 million in sales, 4 million in net revenue, and 3 million in profit.
50:51 Speaker 02 And I was running the business from different pizza shops or Starbucks nearby. No office, no overhead. We had one engineer and I would say one of the most memory, one of the most important memories that I have is February of 2015. I was kind of going through my Excel sheet. I didn't have an accounting system. It was Excel. I didn't even have QuickBooks. So we're, we're, we're running 40 million in GMV through, through like Excel. And I realized that for the month of February 2015, we had done about 2 million in GMV, a little bit more,
51:33 Speaker 02 and about $200,000 in revenue. And 175,000 of that was profit. And I'm just like sitting there at a Starbucks. And that was the first time that I ever felt like, okay, this, this is going to work. And that was five years in, literally five years in. I had a chance and an opportunity to sell the company. So I, I got an offer for $18 million, which I turned down. Because I felt like if they treated my bootstrap company as a new venture, that we could make it something much more special. And that's when I exited bootstrap mode,
52:16 Speaker 02 raised my first round, which was only a million dollars in late 2015. And it was off to the races since then. But that moment of like, the million was from founders of Seamless Web, Seamless ultimately, Jason Finger, Paul Applebaum. They, they were incredible. Wiley Surilly, who founded Single Platform and sold to Constant Contact. Ben Son from Primary Ventures. He's still on my board, one of my closest partners. By the way, if you're a New York based company, startup, and you're looking to raise money, reach out to Ben. You, you won't, you won't regret it if you're early stage. And then a fund called Contour Ventures, also New York based.
53:01 Speaker 02 So that was a million dollars. It was my way of getting them connected to the business because the last thing I needed at that moment was money. Like money was just like flowing in. It was more about networking and helping me build out the team.
53:16 Anthony Pompliano? Got it. I asked the same two questions, everyone, before I let them go and then you'll get to ask me when to finish up. The first is, what's the most important book that you've ever read?
53:26 Speaker 02 There's a book called Elements of Style. It's like tiny, tiny book. And it's a very mechanical sort of utility, utility based book, but it ultimately what it does is it teaches you the right aesthetics of writing and communicating. It was my English professor in college showed up to class when everybody else was giving us textbooks like this thick. He came in with this paper thin book and it changed, it changed the way I communicated.
54:00 Anthony Pompliano? That's a great answer.
54:00 Speaker 02 Elements of Style.
54:02 Anthony Pompliano? Aliens, believer or non believer?
54:05 Speaker 02 Believer.
54:06 Anthony Pompliano? Why?
54:07 Speaker 02 Oh, it's math. It's math. I mean, when you look up in the sky and there's millions of galaxies with millions of solar, billions of solar systems and the likelihood that the same conditions don't exist, that they exist around planet earth. I mean, that's just impossible. So, yeah, it's just, it's yes. It's not even a question. Maybe I'm crazy, but that's statistics tell me yes.
54:38 Anthony Pompliano? I, I'm a believer as well. So I don't think you're crazy. You could ask me one question to finish up. What, what do you got for me?
54:45 Speaker 02 I mean, the big question is, what's up with Domino's? Come on, you're like,
54:49 Anthony Pompliano? I knew it was coming. All right. I don't even like Domino's that much. That's the crazy part. Here's the craziest part of this whole thing. So I will finally admit this because everyone's going to listen to it. I used to order Domino's, not because of the pizza, because they had the cheesy bread. Cheesy bread was really good and you knew what you were going to get. Super unhealthy, right? It's like, basically you're like giving yourself a heart attack by eating it. And so I ordered it one time, I tweeted it, ordered it a second time, tweeted it, and then I didn't do it the next weekend. And somebody tweeted at me and was like, dude, where's the Domino's? And so I was like, oh, well, I've got to get Domino's. I did a third time, a fourth time. And then after like four or five times, it just became this thing. And I almost felt guilty like not doing it because everyone was like waiting for the Domino's picture. And so
55:33 Anthony Pompliano? obviously I live in New York City. There's a way better pizza than Domino's. I still think Domino's is underrated for what people think it is.
55:41 Speaker 02 Right?
55:41 Anthony Pompliano? I agree. Like having like a, like a chain, you think that it's just cardboard, whatever. Like it is actually pretty good pizza for a chain. But when you've got, you know, Joe's or Bleecker Street and like all these kind of world famous pizzerias, it's pretty hard to compare those to, to Domino's. So I've, I, I, I've been thinking like, maybe I should just wean myself off the requirement for Domino's and instead just say, hey, look, every Saturday we'll get pizza. But there's
56:07 Speaker 02 Slice Saturdays.
56:08 Anthony Pompliano? Dude, there was people for a long time who thought like I was just loaded up on like Domino's stock or something. And they kept asking me like, how much Domino's stock do you own? I don't own any Domino's stock. But at some point I was just like, yeah, this is getting, getting out of hand here. Maybe I should start ordering other stuff.
56:28 Speaker 02 I will say on Twitter, I don't know if it's Domino's related, but I, I will say that if anyone tweets about pizza, Bitcoin or politics, just expect a massive audience. And so you combine two out of those three. And, and that's what you get.
56:48 Anthony Pompliano? Yeah. Well, do you guys accept Bitcoin? That's the other thing people want me to ask you.
56:52 Speaker 02 No, we, we actually just had a hackathon and one of our engineers built the capability. And so we'll be able to accept Bitcoin for pizza. I mean, come on, Bitcoin was invented for pizza. So we'll be able to do that. I think we're going to launch that at some point in 2021. I, I forget what they use to, to like,
57:14 Anthony Pompliano? Do it.
57:14 Speaker 02 You know, integrate it. But yeah, you'll be able to use Bitcoin for pizza. I'll gladly accept it.
57:20 Anthony Pompliano? Whoever the engineer is, you should give them a raise. They're, they're obviously the genius of the group.
57:25 Speaker 02 In Bitcoin, you know, in, in 2014, I want, I want to say, I bought a butterfly labs machine in my bootstrapped office and, you know, at home and
57:38 Speaker 02 we, we mined seven Bitcoin.
57:41 Anthony Pompliano? Wow.
57:42 Speaker 02 This was way back in 2013, 2014. I think it was, I think it was around $180 or something like that.
57:49 Anthony Pompliano? Yeah.
57:49 Speaker 02 Hey. So I still have it.
57:51 Anthony Pompliano? Hopefully you held on.
57:52 Speaker 02 Seven Bitcoin. Yeah.
57:52 Anthony Pompliano? All right. Hopefully you held on to them.
57:54 Speaker 02 Yeah.
57:55 Anthony Pompliano? I love it. All right. Listen, Ilir, thank you so much for doing this. Obviously, I'm a huge fan of what you guys are doing. Anyone who's helping small businesses, you know, just kudos to you. They need all the help they can get right now. And you guys have built a, an amazing business. So highly suggest people go check out Slice, download the app. Where do you want to send them to find out more about Slice or find you on the internet?
58:15 Speaker 02 Yeah, just download the Slice app. Just go, go on the App Store and search Slice. We're there online at slice life.com. And for me, it's Ilir Sela, I L I R S E L A on both Twitter, Instagram, LinkedIn. And we're hiring, we're hiring a bunch. So.
58:32 Anthony Pompliano? Awesome. All right, man. Thank you so much. We'll have to do it again in the future.
58:34 Speaker 02 Thank you. Thank you so much for having me.
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