The failure of Sprig
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Good relationships with your vendors are how you earn pricing to support good margins even at "low" scale (compared to say Kroger) and unlock doors that will take you to 10x and higher. Good relationships with your employees is how you make people in the industry want to see you succeed -- no one wants to see yet another player show up in their industry driving down wages (allegedly in the name of efficiency while wasting orders of magnitude more food than your typical corner market with approximately the same revenue). And while none of this will get you all the way there when it comes to city government, it certainly doesn't hurt.
What waste: taking $2 worth of food across the city then trying to squeak out $10 -- after paying for the drivers time, the cooking staffs time, marketing, lawyers, the inventory staff, SF Rent -- there is nothing left but nursing home level food and bad reviews. Did anyone at this company know excel? One employee car accident your insurance drops you. One blown industrial food fridge your profits are gone for the month. One bad meal you lost a customer. My mind blows that experienced board members went along with this circus. Uber for cats just didn't cut it?
1. Instead of getting millions in VC funding off the get go, they started small as essentially a family business.
2. Chinese delivery is already super familiar to most people, so they just took it a step further: just a kitchen, no sit-down restaurant, developed their tech to improve delivery efficiencies.
3. They kind of got "lucky", if you could call it that, with Covid, in that most traditional restaurants were killed but a takeout-only business thrived. They also got a ton of goodwill for giving away free meals during the shutdown in TX.
4. I saw news that they recently got VC funding to expand their business.
I.e. they started small, proved their model, then used capital to expand, instead of getting millions thrown at them with hope that they'd eventually improve on a "lose money on every sale but make it up in volume" business model.
It was essentially a decent restaurant with convenient delivery, and no eat-in option. There's no magical hockey-stick growth curve to be had in the restaurant business. The marginal cost to delivery another meal or add a new customer is pretty similar at N as it is at N+1 or N+1000.
How did they get investment with that (lack of a) business model?
Honestly I'm not quite sure why the economics were unfavorable. It should have been cheaper and faster than any other kind of delivery food.
With having to predict the demand, there was the issue (also coming back to me now) that they would often not have a lot of choices left after a short time. The food was sometimes very good, but it was often so-so and too much the same. Or conversely, something that was really good the last time you ordered was no longer available. All of that added up to a certainly level of frustration.
What innovations did they make that the health department didn't like?
But I'd bet you're exactly right, and it's just "we're betting there's not going to be a major food poisoning incident before we find an exit and make it someone else's problem".
Doordash, UberEats, et. al have certainly (glactically) widened the variety of food I could order, but I always find myself suffering from choice anxiety when I open those up. Sprig gave me a protein and veggie I could order without thinking too hard.
I get why the food delivery model doesn't work well in the US for anyone, and I did notice Sprig's decline in food quality, but I am still sad the company is gone.
I realize that's a different use-case than occasionally wanting a relatively healthy meal, but wanted to add my experience.
This whole analysis-paralysis trend seems to be a thing not just in food delivery, but Netflix et al as well. I've lost count of the number of times I've kept scrolling through Netflix with a bunch of "okay" options at the back of my head, but searching for something better. Ditto for DoorDash.
I wonder how well an "I'm feeling lucky" button would do on a food delivery platform.
I hate push technology, clear back to Pointcast.
The other thing that I hate about Netflix is that even when you search for a specific title, and they don't have it, they won't simply tell you that they don't have it. What they will do is bury you in listings of all their shows that have the most vague correlation to the title you actually searched for, even using just parts of random keywords.
Example: I just searched for "Dresden files". It proudly displayed "The Dresden Files" title, followed by mostly unrelated crap. Roswell? Wynonna Earp? The Greatest Events of World War II? Are you kidding me?
Solution: Pot noodles Solution: Learn to cook Solution: Granola bars Solution: Walk around the corner to your local taco store
Anything but "vc funded disruption of something humans have been successfully managing for thousands of years".
That's not really a good reason to not innovate though. People have been harvesting crops manually for thousand of years, but we've improved.
> Less money in, worse food out.
I tried Sprig a few times and really found the food quality so underwhelming that I never became a repeat customer. Maybe I caught them during this period.
What an odd thing to start with. People talk a lot about failure in Silicon Valley, to the point that it's a stereotype.
On the other hand, very few people with truly detailed internal knowledge talk about the why's and how's, especially avoiding 20-20 hindsight. It's a difficult enough thing to do objectively for yourself, and sharing it takes that up a notch. Especially when you're all but guaranteed to have a bunch of people tell you how you were obviously idiots; many of them having never so much as tried to build something new.
I know retrospectives are always easy to do and criticize, but these types of ultra-fast reckless growth companies do not pause for a second and think about their risks. They're smoking that drug of % growth and VC funds pouring in. I live in SV and this type of thinking is everywhere. Flail without foundation. Why not think about building something that no one can just easily come in and render you completely useless? That means that the business idea wasn't strong enough and it was mostly scaffolding - there was no foundation. IP was thin ice. This is pretty common with these delivery businesses.
Build something that no one can easily replicate or compete with you. Build it so good that even if a competitor emerges, they have a lot of catch up to do. Build it slow, methodically and strategically. Unfortunately, growth hacking and bullshit pitches to the investors take precedence in SV from what I've seen. Not all companies are like that, but a lot of these hot bottle rocket companies die because of many aspects that were not thought out. Risk taking is great, reckless risk taking is not. A solid business is like a diesel engine than a hot bottle rocket. It is unstoppable once it picks up.
I love companies like Boston Dynamics. Took forever to grow. They spun off from the MIT Leg Laboratory in the 90's, built real IP, not some VC backed presentation with fancy graphics. Zero expenditures on marketing, all in on R&D and engineering until now. They're unstoppable and they haven't even started yet. I know a delivery business is very different from BD, just trying to make a general point about building IP. Any amount of money that Microsoft + Apple + Google all combined can throw billions and billions on this but they won't be able to compete with BD immediately. It takes time and throwing money at it doesn't help at all. That's the best hedge you can have!
It's a well written, extremely well summarized postmortem. Of course it's obvious after the fact what they did wrong. You're shooting at an empty goal and, frankly, it's not very interesting.
It feels like this is repeating pattern for delivery businesses, and it deserves harsh criticism. Anything with Uber for _____.
Would you give a pass to Juicero which raised $118M? Doesn't it deserve harsh criticism? Or we want to learn from Juicero's insanely delusional value proposition and may be inspire others to try again? What about Theranos?
I don't give Sprig the same footing for a postmortem than say, Gumroad: https://marker.medium.com/reflecting-on-my-failure-to-build-...
I hate to burst your bubble, but BD was OWNED by Google for years, until they sold it to SoftBank because they couldn't figure out how to make money on it.
Compare and contrast: individuals suing large corporations. Even if the individual is in the right (i.e. has the "competitive advantage"), the corporation will still often "win" because it can just afford to keep delaying the trial longer and longer, until you run out of funds to keep the suit going.
Or, to put that another way: you can't run a siege without a supply train. The city will always have more food than your army brought with it. Unless more capital is flowing in to match the rate of replacement, they're eventually going to win.
It doesn't sound like at any point they made a profit on any meal they sold, so in fact they weren't running a business but were just wasting investors' money. (I'm sure they had great plans on paper to turn a profit). I'd go further and say it's good that they failed so they can no longer distort the market for those companies who aren't highly capitalized and can turn a profit. Although unfortunately the competition in this space turned out to be another money losing "business" with even deeper pockets.
>> We were running a restaurant doing $6M in revenue but paying real estate for a place that needed $20M in revenue to be profitable.
Low interest rates. They drive real estate prices way up. Had they been able to buy vs rent or simply pay less, they would have been in better shape.
IMO low interest rates are actually causing problems for the economy.
San Francisco's population leans quite left, but they seem to really hate change over there. I've never lived in a place so hellbent on ensuring that nothing changes. In fact--the entire bay seems to hate change, and the peninsula may arguably be worse.
There's that old saying: "you couldn't get elected as dogcatcher," that makes fun of the sheer number of elected positions in the US. It feels so true at the local level, with a bunch of domain specific politicians trying to exert their tiny slice of power. San Francisco seemed quite bad while I lived there, but they're hardly alone.
> We had epic revenue growth w/ burn rate growth. Soon we were burning $1.5-2M/mo!
> We were always “1-2 months away” from managing the burn.
I dont understand, how in good faith, he can bring up SF-regulations as issue #1. When issue #2 is the crux of all their issues. They lost money on every sale! Food industry is notorious for thin margins, and then had negative margins and growth. SF regulations dont matter compared to that.
Or a number of meals all made of the same 5-to-7 ingredients arranged differently, i.e. the McDonalds / Taco Bell model.
But as the below commenter said, if you can use same ingredients across multiple dishes, it reduces waste and can reduce COGS. A small restaurant can do it, the issue there is establishing a brand, but if all your orders are coming via 3rd party apps. not sure how much brand awareness you actually need
That is as assumption that has been made time and time again and it always failed. The most important part of a successful kitchen is a near zero dwell time. The smallest dwell time is achieved by having a kitchen be colocated with the customer.
It seems from the initial glance that dwell time is irrelevant because a kitchen can just go to the next order but that's not actually the case because without yes/no from a customer the kitchen can continue to make the same errors without adjusting. In the world of ghost kitchens dwell time is terrible because in reality the only feedback the kitchen gets is an asynchronous negative review that will be received a day or two later at best. That's the reason why pretty much all ghost kitchen based restaurants rapidly flame out.
Every hour you're open, money goes out. You need to have continuous sales to even have the opportunity to make ends meet. Even if you're losing money each hour but still making a few sales, you have some flexibility with tweaking your formula to reduce the losses or turn it into a net even. If you're just sitting idly, you're just burning money without anything to do about it.
Labelling an entire city as "left-leaning" is a perfectly reasonable and quotidian practice. For instance, if over a period of time, City A generally voted for left-leaning politicians and passed left-leaning referenda, while City B generally voted for right-leaning politicians and passed right-leaning referenda, most people would think it was fair to characterize City A as "left-leaning" and City B as "right-leaning".
I'm guessing by the including of "entire" you are confused about the meaning of "leaning"? It means that on average, compared to some larger (e.g. national) mean, the population of a city has views that are to the left of that mean. It doesn't mean every single person has left views on every single issue.
It's a very widely shared perception that San Francisco was left-leaning for the latter half of the 20th century into the beginning of the current. Early San Francisco was dominated by a relatively conservative patrician elite but over time it earned its "Baghdad-By-The-Bay" (https://www.amazon.com/Baghdad-Bay-Herb-Caen/dp/0891740473) reputation from things like electing the first openly-gay man to political office in America (https://en.wikipedia.org/wiki/Harvey_Milk) to being the epicenter of the sociocultural phenomenon known as "The Summer of Love" (https://en.wikipedia.org/wiki/Summer_of_Love).
To be pedantic, this phrase actually refers to the quality of the person rather than the number of positions. The meaning is essentially "you're so unpopular you couldn't get elected to the most trivial/inconsequential position imaginable"
More on your point I frequently observe that administration expands until it becomes the purpose of the organisation. You start out with something serving users (eg Education, or Government) which as it grows in size requires more coordination. However past a certain point the administrators require help themselves, starting the inevitable growth outside of user pressure. Eventually you reach a tipping point where there are more people working on improving administration than those working on improving user experience.
Failed because of Uber which has significantly larger pockets and is constantly losing money.
Why are all these called "a business"? These are all price dumping ventures relying on external coffers.
He doesn't mention it specifically, but UberEATS was 15-minute delivery at the time, IIRC
Competitor SpoonRocket closed just 1 month later: https://www.inc.com/kenny-kline/how-spoonrocket-blew-135-mil...
Although, Postmates got into the game the month after that, in NYC: https://techcrunch.com/2016/04/19/postmates-launching-15-min...
I had it a few times, it wasn’t bad food.
The restaurant industry is brutal.
Also Twitter is amazing, you always see stuff only from the people you follow, so he knows his audience is people who want to listen to him.
Why use Twitter for the whole post, rather than using it for a summary or above-the-fold section of the post, with the actual post hosted somewhere else and linked to from that summary tweet?
It's not as if any of the individual tweets, other than the first one, were formatted usefully as soundbites worth an individual retweet. The only thing people were sharing/responding to was the first tweet. So, AFAICT, that's the only part that needed to be a tweet, right?
Articles on the other hand are written for an audience that usually likes more background etc. because that audience will complain if the background is absent.
If it's just a matter of journalistic style, I assume there are people out there who write articles the same content-dense way people write tweetstorms; you could just decide to only follow such people.
In other words: maintain a blog on Twitter, where the tweets serve as the blog’s chronological index / human-readable RSS-feed and interactive comments section; and floating text pages hosted in arbitrary other places serve as the blog’s content. This idea is what “microblogging” was supposed to mean, before the media re-interpreted it as being equivalent to “really enjoying this poop I’m taking”-style life-logging.
I’ve always been surprised that Twitter itself doesn’t have a built-in first-party workflow for this. Tumblr, the other 20-year-old microblogging platform, does: you can publish a post with an embedded “Read More” break, that will hide everything below it in your feed but show it when the static-HTML version of the page is viewed, with the “Read More” link at the bottom of the post in the feed, linked to said static-HTML page. It would make a ton of sense to me for Twitter to have something that’s half this, and half Reddit’s approach to text posts: giving you the ability to create a tweet that, instead of having a linked URL to go with the tweet, has a longform text body to go with the tweet.
Think about the fact that you can “attach” a multi-minute-long video to a tweet as a first-party workflow, and Twitter will host the video for you — but you can’t “attach” a multi-minute-long blob of rich prose text, where Twitter will host the text for you. Seems silly when I say it that way, doesn’t it?
Apart from the spelling, where do I even begin with this last tweet? I'm sure that most right thinking folks know what I mean.
Edit: just to clarify, I'm looking at the optics of walking away from a failed business that was a glorified takeaway (that thought it didn't have to obey food health rules - that's yer disruption there eh?) and still having enough money in the bank to "travel the world" and expecting us to feel sorry for the poster. Most normal business owners would never be in that advantageous financial position.