SaaS Interviews with CEOs, Startups, Founders
Restaurant SaaS Pivots From Marketplace, Hits $50k in MRR, Raising $7m Now
03 Feb 2022
Chapter 1: What is the main topic discussed in this episode?
If I multiply those, it would put you at about $230,000 a month right now in revenue. I think that's probably larger than what you actually are. Is that accurate? Yeah, it's accurate. You are listening to Conversations with Nathan Latka, where I sit down and interview the top SaaS founders, like Eric Wan from Zoom. If you'd like to subscribe, go to getlatka.com.
We've published thousands of these interviews, and if you want to sort through them quickly by revenue or churn, CAC, valuation, or other metrics, the easiest way to do that is to go to getlatka.com and use our filtering tool. It's like a big Excel sheet for all of these podcast interviews. Check it out right now at getlatka.com. Hey folks, my guest today is Andrea Tassistro.
He's a Swiss-Italian entrepreneur based in Geneva, Switzerland. He's specialized in the food and restaurant industry with a very strong technology need to digitize, automate, and optimize the entire value chain from production to consumption. Andrea, are you ready to take us to the top? Yeah, Sam. The website is fooddetective.co. Tell me who's buying the product and what are they using you for?
So there are two types of clients, either restaurants buy the product directly, or we sell our technology to licensing partners such as Uber Eats, Coca-Cola, or Nestle. And when you look at your total revenue over the past 12 months, what percent was through partners versus direct relationships?
Um, so far it was mostly through their relationships because we just started to license our technology right now. Okay. So a hundred percent of your revenue past 12 months was direct. You're now starting and turning on the partner ecosystem. Exactly. Yes. Very cool. Okay. And what are people paying you on average front to use this technology? So it varies from 89 to 400 per month.
What would you say a sweet spot is an average? About $230. And describe this person. Is it a restaurant chain? Who's paying you? What are you building? It's most small and medium restaurants located basically globally.
And what we provide them is a unified platform that enables them basically to manage their entire operation, marketing and management and tech stack from a single platform and unified API. When did you launch the business? I think it was... The business side, it was in April 2019. But Food Detective was created in January 2018. And so what were you doing for that full year?
We were mostly researching on the restaurant space and building a consumer-facing app that helps us today acquire more restaurants cheaper and faster. How were you funding? How were you paying your personal expenses? Did you have savings built up? Initially, yes. And eventually we managed to raise the two rounds of funding that helps us basically keep on building the business.
When was the first round? The first one was around 2019. Okay. And how much did you raise there? We raised about a million. Would that be your pre-seed round? Yeah, pre-seed. And then we need an extension of that pre-seed. Maybe we can call this initial money seed in that sense. Okay, so you raised more this year? We raised more this year, yeah. We raised another million in March this year.
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Chapter 2: What is the revenue model of Food Detective?
I see. Okay. Tell me how you got your first customer back in 2018, 2019. That's a good question.
Chapter 3: Who are the primary customers of Food Detective?
First customer was my favorite restaurant here in Geneva, a friend of mine actually. And I just told him like, hey, I need your feedback. I'm building this platform for the restaurant industry. And we're trying basically to gather everything into one single platform. And he said, but hey, I'm actually looking for this kind of tool and I'd be happy to be your customer. How much is it?
I was like, it's 59. At the time, it was 59. I said, okay, let's go. Let's do it. I have three restaurants and we deployed basically the solution across three restaurants. Very cool. How many customers now today? Today, I think there are 21,000 restaurants were registered on the platform. And how many of them are paying? that's confidential, actually. What's sort of a range? Oh, a good chunk.
Let's put it like this. Like 1,000 to 5,000 or more than 5,000? Let's say that range. 1 to 5,000? Yeah. When do you think you can break 5,000 paying customers? Oh, I think at the end of Q1 next year. And how were you able to build the waitlist of 21,000? That's a lot of people. Yeah, so basically, it's all our goal right now.
It's basically to convert all these registered businesses into a client to offer them a tele-operating system. But Andrea, how did you get them signed up? So restaurant owners are busy. How did they find you 21,000 times? Oh, I think it's through our review platform. And we reach out to them through a lot of different platforms.
kind of ways, either it's online through Instagram, CRM, we call them, we visit them. We do a lot of press through partners, through influencers and so on. Okay. And you just told me sort of the range of customers is 1000 to 2000.
If we assume the minimum there of a thousand times the ARPU you told me earlier of about $230 per month, if I multiply those, it would put you at about $230,000 a month right now in revenue. I think that's probably larger than what you actually are. Is that accurate? Yeah, it's accurate. Okay. And why is that? Is that because you have less customers or that ARPU is too high?
No, because we just changed our business model. We were transactional fees since three weeks ago, and we moved to a full SaaS very recently. Oh, wait, sorry. What were you three weeks ago? We were doing transactional fees. So basically we were taking a small transaction. A small percentage of every transaction that was going online, basically. I see. Like 1%, 2%? Yeah, exactly. Okay.
And we moved away from that model. And right now, we are solely focused on selling subscriptions based on the number of verticals and integration they want to use on Food Detective. So if a pizza shop in Geneva was using you and they sold $100 pizza through your platform, is it a POS system? They pay you $1 of the $100? Exactly. I see. And why did you move away from that model?
That feels like a great model to me. Yeah, actually the problem is that we had a freemium offer and this is why we've managed to acquire a lot of customers very, very fast. But the thing is that converting them into paying, we needed to basically increase dramatically the number of transaction and the marketing we were doing for them, which was not our business model at all.
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Chapter 4: What challenges did Food Detective face in its early days?
If you just, if they each only sell, you know, I mean, even, even if they each only sell a thousand dollars a month through your platform, that's $21 million in GMV. Yeah. So why weren't they using you? This is a usage issue. Why weren't they using you? They weren't using us because we didn't handle the integration ready actually. Which integration? with all the POS and delivery platforms. I see.
Would you ever build your own POS system to avoid that? Never. Okay. And so how are you solving that now with the SaaS platform? Do you have all the integrations live? Yes. Okay. So if that was the issue, why don't you stick with the transaction business with the new integrations and increase your GMV?
Because again, we needed to have a lot of marketing going through our own platform to charge the fee, which was not the case. Right now, with a unique model where you pay a monthly subscription fee, we don't need that. Well, people are going to cancel if they're not using you to transact, right?
Whether you're charging on percent of GMB or not, if they're not using you to make money, they're going to cancel a SaaS fee or a transaction fee. So what's the difference? Because for us, it works better to have a SaaS fee rather than having a transaction fee. How do you know that though? You just launched it three weeks ago.
Yeah, but before launching it three weeks ago, we had three years of research with restaurants using the platform. But none of them were on a SaaS fee. They were all on the GMV thing. And the issue on the GMV side was that you didn't have integrations, correct? Exactly, yeah. So why didn't you build integrations? I mean, why didn't you build those integrations? You had three years to build it.
because we had to finish the platform first. We cover over 20 verticals across the entire industry. So imagine the amount of software development that we have prior to making even one integration. So is that a mistake? I mean, shouldn't you have focused on one vertical and dominate that one vertical first? No, absolutely not. Because then it's very difficult to expand.
Whereas when you come in with a full vertical SaaS, then it's easier to expand. Just to comment on this, entering new kind of verticals, having anything ready makes it much, much easier for restaurants not only to use your software, but also for you to increase your RPU online. Who cares about increasing your RPU?
You've got to get the customer first and get them addicted, and then you can worry about building other products and going to new industries and verticals. I don't understand why you would try and tackle 21 verticals at once right when you start. Yeah, that's your point of view then.
but i'm asking you why why would you go try and tackle 21 things at once right at the beginning because it um it creates this kind of um mentality within the company that we are able to adapt to basically any solution or to any partner or whatever they have right when we go and see a yeah but if you're built for everyone andrea you're built for no one that's the problem you can't be adaptable to everything
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