🎧🍌 Arming the Pizza Rebels | Ilir Sela (Founder and CEO, Slice)
Why MrBeast Burger failed, bootstrapping to $3 million in profits, how to pitch investors on a unique business model, turning down a nine figure acquisition, and the benefits of a multi-product model
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Ilir Sela is the Founder & CEO of Slice, the online ordering and all-in-one software platform that helps independent pizzeria’s manage and grow their business. Ilir started the company in 2010 as MyPizza, rebranded to Slice in 2015, and now serves over 20,000 independent pizza shops. Slice has since raised over $125 million and is supported by investors like GGV, KKR, 01 Advisors, Primary Ventures, FJ Labs, and RiverPark Ventures.
Find Ilir on Twitter and LinkedIn.
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In this episode, we discuss:
The three reasons small pizza shops are growing 24x faster than big chains
How franchising and "reverse franchising" works
Ilir's biggest mistakes building a franchise business before starting Slice
How to explain a new business model to investors
The customer acquisition benefits of a multi-product model
Bootstrapping Slice to $3 million in profit
Turning down two acquisition offers, one that would have made him nine figures personally
Why MrBeast Burger failed
Why we don't need more cloud kitchens
Empowering entrepreneurs to open their own local pizza shops
Building a strong board
Advice for founders selling to small businesses
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Thanks to Zac and Xavier at Supermix for the help with production and distribution!
Transcript
Find transcripts of all prior episodes here.
Turner: How's it going?
Ilir: Oh, living the dream.
Turner: We're here in your office.You guys make software for independent pizzerias and we are currently in a podcast studio that looks like a pizza shop.
Ilir: The one and only where you'll record in an actual pizza booth.
Turner: Yeah. I thought we could start it off with: can you talk about what the most interesting thing in pizza or the pizza market is?
Ilir: Pizza is incredibly fascinating, especially in the US. What I've learned is that pizza is a staple. It is a massive industry. It's probably the most overlooked aspect and why Slice exists.
There are 80,000 pizza shops in the US that collectively manage about $48 billion in sales, and that doesn't include Costco Pizza. It doesn't include frozen pizza. These are pizzerias of which about 25% are the big chains combined. I call that Big Pizza: Pizza Hut, Domino's, Papa John's, Little Caesars.
It's about $47 or $48 billion in sales. Of that, about $30 billion is independent. That's like Joe's Pizza or Maria's Pizza Shop in every town in the country. Pizza basically represents almost half of all takeout delivery shops in the country.
Turner: Why are there so many independent pizza shops? Because when I think of some markets where there’s a lot of consolidation, there are a couple big players and small businesses don't exist.
Why is it still so fragmented despite the success of Domino's Pizza, a publicly traded company, one of the best performing stocks in the public stock market over the last two decades? What's the structure that's going on?
(Domino’s had a higher return to investors than Google since their 2004 IPOs. Source.)
Ilir: Yeah. One of my biggest mistakes in my career was to not parallel path my Slice journey with an investment in Domino’s in 2010. I should have put $50,000 in Domino’s and then also started Slice because much of Slice’s vision was inspired by the success of Domino’s in terms of their focus on digital and how they've made their franchisees very successful.
In terms of why there is continued growth in independents – in fact, in 2022, it was a record year for independent shops in the space: 4,800 net new locations opened up in just one year, an all time record. Compare that to about net 200 new big chain locations, there are definitely more independents opening up than the chains. Why? I think there are probably three reasons.
One, it has to do with pizza. Pizza is an American staple. It is a food that is incredibly affordable. It travels very, very well. In some cases, it's probably better delivered than eating it at the shop.
(Pizza is a ~$50b industry in the US. Source.)
And then it's a social product. It's probably one of, if not the only food product that is social that you can order when there are friends over or it’s family pizza night. Maybe there's an event. So for those reasons, it has become a staple.
The second reason I think is because the cost of pizza is actually relatively inexpensive in terms of making it. A large cheese pizza still costs less than $3 to make. The average retail price of a pizza in the US is about $17. So you have some really good margins. It's a very good business if you know how to operate it.
And I think the third part is that a lot of people, I call them makers, want to bring something unique to the world. It’s sort of synonymous with baking, right? People are very passionate about this product.
They want to try out different styles, and they want to turn that passion into a business. Big chains take that creative freedom away. So the only other option is to be independent.
Turner: Yeah. I didn't think about that creativity aspect. With most food, of course it all tastes different, but it all kind of looks the same. If you get a sub, it just looks like a sub no matter what's in it. Same with a burger. They maybe taste different – some are way better – but with pizza, you can do some very interesting things, not even just with the taste, but also how they look.
Ilir: Yeah, you've got the type of bake, the types of toppings, you can do a lot of things with it fermented dough or a different kind of ovens, and it's a fascinating category. I think it tends to attract some of the most creative makers in the food space.
Turner: Your family has a deep history of pizza. Could you kind of talk through that and maybe that will translate more into what you're doing?
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Ilir: Yeah. It started with my grandfather, my parents, and my uncle – they had a pizza shop in Manhattan on 75th Street and 3rd Avenue in the seventies called Charlie's Pizza. So Charlie's Pizza was a small format, takeout delivery shop, a 24-hour operation. My family worked there day and night, and they became very successful as a result.
There was one location – they never expanded. And actually they moved back to Europe. Then in the nineties, they moved back to New York and my uncle once again opened up a pizza shop called Johnny Anthony's Pizza in Brooklyn. And so that was another shop that was sort of directly in our family.
My uncles from my mom's side had a pizza shop in Long Island. My relatives have a ton of pizza shops today. Friends have a ton of pizza shops. I would say over 30. I'm Albanian by background, so especially in the New York area, the Albanian community is really involved in the space, I think because of the natural migration from Albania.
The first stop was Italy. They would work in hospitality jobs, primarily in Italian restaurants or pizza shops. And then when they made it to New York, they brought that craft over.
The reason why I started was one was my uncle actually became sick at the pizza shop that he owned in Brooklyn. He actually had a stroke and lost his speech, lost the use of the right side of his body.
Much of that really, I would say, was a result of the stresses that exist in running a very small business. This isn't like some company with 30 employees. We're talking about owner-operated.
These owners are inheriting every business problem. They start off by wanting to make pizza and, and support their family but pretty quickly, they're inheriting financial jobs. They've gotta be the marketer, the technology person, HR, the whole thing. And it's incredibly lonely and it is incredibly difficult and challenging.
This is where I think the franchise model has solved a lot of these problems, right? So when you look at Papa John's franchisee, They don't have to deal with the same challenges. Much of those challenges are solved by Papa John's corporate or Domino's Corporate, but the tradeoff is you can't be yourself. You can't be Turner's Pizza Shop and your grandmother's recipe doesn't matter.
Slice was very important because I thought there could be a third way for people to operate in the industry. One way would be the franchise model. The second way would be purely independent, kind of what my uncle did. Third way would be working together as a team – having the support that is franchise-like, but remaining independent. So as we say in business, “for yourself, but not by yourself.” And that was really the spirit of why I started Slice.
Turner: So essentially, this was your insight online – it's essentially a reverse franchise model correct?
Ilir: For better or worse, that's the term I've used. The term franchise in the independent space doesn't have the most positive connotation. That's why people chose to be independent.
I definitely don't want people to think that we’re franchising these locations, but the reason why I use that term is just as an analogy in order to educate the market that Slice brings forward the economies of scale and the capabilities that benefit the Domino's franchisees without having to trade off the independence.
Turner: What are some of those benefits?
Ilir: The first benefit that I learned that was really driving up Domino's performance was the shift of the consumer behavior from offline to digital. How do you enable independence with online commerce? This was a channel that was absolutely not enabled for the category, and still today you'd be shocked at how many small businesses have no website or a non-working website, or no online ordering.
It's still a very much a long-tail, fragmented world, but commerce enablement is the first thing that we really needed to solve so that we could bring the benefits of that channel to a small business.
So what are the benefits? When a consumer goes from ordering by phone to ordering digital, they order more food. We have a direct relationship with that customer so we can help them order more frequently. And then it costs the pizzeria a lot less to serve that customer
Turner: Because there's no staff?
Ilir: You don’t have to answer the phone, you don't have to make mistakes, everything's very transparent. Everything's very streamlined. So that was step one.
Step two was a point-of-sale product, basically we call it an operating system. It's Slice Register, and this is a workflow tool for inside the shop to help the owner make sense of all their channels because now you have online, you have the phone, you have people walking in.
(Slice Register is the point-of-sale offering from Slice. Source.)
How do we make sure that all of that information lives in one place so we can create feedback loops for the operator?
Turner: I think you mentioned earlier that every single independent restaurant kind of benefits from the other insights and data that's flowing across the city, the country, etc. right?
Ilir: Yeah. The theme for Slice is economies of scale. How do you help operators not feel alone in their journey? And how do you bring the benefits of scale to the individual location?
The goal is to hopefully have as many independent shops on the same system so that they can communicate. And not communicate like in terms of words, but communicate in terms of data and insights. We can share some of those network-wide insights back with the individual shop – things like trends of menu pricing, trends of who's open when, trends of cost – so that's the second product.
And then most recently we launched what we call The Goods. And that is the buying power initially around packaging, pizza boxes, bags, plates, cups, napkins, things like that.
Turner: And then do you help them with customizing or is it down the road?
Ilir: That's something that we're working on today and in the near future. For now, it's mostly replacing the generic pizza box. The pizza box that you get that usually says “Hot Pizza” now says “The Local Favorite.”
It has a consumer play in it. There's a QR code that consumers can scan. It sort of shifts that consumer behavior over to the digital channels.
Turner: So what's usually the initial hook then? Like if I'm a pizza shop owner, when your BDRs are talking to the customers, what's the thing that gets them to convert usually?
Ilir: It depends. I think the cool thing about companies, especially as they go multi-product, is that each product can be an on-ramp for the customer, in this case, the pizza shop. So what we learned is that over time you have all these different pizza shops that are at different points in their life cycle.
Say you have a shop that just opened yesterday. Their need is probably demand because they just opened. No one really knows that they exist. So they really need demand.
And then you have like Joe's Pizza here in New York. If I go to Joe's Pizza and say, “Hey, I'm going to bring you more customers,” they're going to say, “I don't need more customers. I need efficiency. I need maybe cost savings.”
So that's the spectrum and it depends on where the shop is on the spectrum. That'll determine what product will resonate most with that merchant. And then the goal is to attach more and more products over time.
Turner: I know you did a different business before Slice – do you remember what that moment was when you just were like, “Oh my God, this is, this is what I'm going to do. I think it's going to work.” Do you remember how it all played out?
Ilir: So Slice started as a bootstrapped company. It was under the brand mypizza.com. Why was that the brand? That was the domain name I could get. At the time this was 2009, and apps were still not ever-present. It was very much an online web-based business.
And yeah, mypizza.com was the domain I could get. And so the idea was to create a fourth brand to compete with the big chains. Consumers had the options of Domino's or Pizza Hut, and we wanted to create a brand at the time - MyPizza to represent all the independents.
Turner: So did you kind of go to family and get a couple of them onboarded?
Ilir: Yeah so the first few were all family and then we started to talk to other pizza shops. And in 2010, no pizzerias thought that they needed online. And this is a message I would say that I share with our team and I would share externally: be careful about following the customer.
You want to use the customer's feedback as a data point. You shouldn't be doing what they're telling you to do because sometimes they don't know what they need because they're not spending their time assessing and understanding where the market is moving.
I knew for a fact that at some point, pizza orders would move online but they didn't know that.
Turner: What did they think they wanted?
Ilir: They wanted more sales. And for me, in the early days, I would go and talk to owners about online, and it was intimidating for them. They were already embedded in their habits. Changing those habits was very difficult. They were just set in their own ways of operating the business.
It was a real-time business, it was operating as I was going and showing up. But what I figured out was that at that time they all had fax machines. They all had a fax number on the physical menu that they would distribute, mostly aimed at companies so that some admin at a company would fax an order to a pizza shop.
Turner: And those were high margin because they were $200-$300?
Ilir: Correct. And once I saw that, we figured out how to convert an online order into a fax order through an API. And so in the first 200 or 300 locations, it stopped being about online ordering.
I would just go in and say, “How many times does that fax machine print in a week?”. And they would say two times. And then I would say, “Well, do you want that to print multiple times a day?”. And they were like, “That'd be great”. And so that's the way that we got them on board in the early days.
The pizza industry is a bit of a community, so word kind of spread. It was a peer-to-peer sort of effect. And then I had to figure out, okay, how do I scale this thing?
Turner: And it was bootstrapped right? And you had not raised any money?
Ilir: Correct.
Turner: But you had previously built and sold a previous company?
Ilir: Yeah, so before MyPizza, now Slice, I had another company right out of school. I launched a tech support company called Nerd Force, and I got this inspiration from a company in Canada called Nerds on Site. They were doing such a great job in Canada in empowering these independent contractors to have a brand. It was sort of the same theme: independent but not alone.
(Ilir with the Nerd Force team in 2009. The company was acquired by Nexus Management. Source)
And so with Nerd Force, we replicated that model in the US. Geek Squad and Best Buy became incredibly popular in 2005. People wanted to get into that business. That was not a franchise model so we started getting a bunch of calls for people who were like, “How do I own a Nerd Force franchise?”.
I had no idea what that meant. I was like 23 or 24 years old. Like what is a franchise?
Turner: So how'd you figure that out?
Ilir: Well, we started getting so many calls so that I locked myself in my office for a weekend and I was like, what is a franchise and how do I franchise this thing? Because if people want one, I should sell it.
Within the next couple of weeks, I figured out how to trademark my own brand. I did that cause I couldn't afford hiring lawyers and all these things. So I trademarked the brand and filled out something that at the time was called a uniform franchise offering circular, which is like a standardized document that, if you were operating on a franchise model, you have to give to the prospective franchisee.
The buyer got those things done within a couple of weeks and then all of a sudden, we went from being Nerd Force, the tech support company to the Nerd Force franchise company, which is a company that enables tech support companies.
Turner: Okay. Can you really quick explain how the franchise system works for people who aren't familiar?
Ilir: Yeah. The franchise system is is pretty straightforward. You have a company that figured out a successful business model and put processes in place to a point where anyone can come in and replicate that same business model in some different geography, and then in exchange they get royalties.
Turner: And so people usually pay to kind of get the right to use that brand in their process.
Ilir: Exactly. In our space, for example, someone can apply to become a franchisee of Domino's. Domino's gives them the right to open up a Domino's location in a specific geography that's exclusive to them. They follow all of Domino's systems and processes, and they take advantage of Domino's brand marketing and buying power and community. And in exchange, they have to pay Domino's.
(How the franchise model works. Source)
I don't know if this is the exact number, but let's call it 5% or 6% of gross sales now. Some other things that can be in play is Domino's forces their franchisees to buy all of their supplies from Domino's. So 60% of Domino's revenue is the supplies they sell to their franchisees.
It's a very powerful model. It's probably one of the most powerful marketing slash business innovations in history. And why is it so powerful? Because you can, as a parent company, as a franchisor, you can scale very quickly with very little capital.
Turner: You use other people's capital because they usually have to pay to do it.
Ilir: Right. Not only are they paying for the right to open up the brand, but they also have to pay for the cost of setting up that location in the geography. So all of the capital risk, is on the franchisee side. And then as a franchisor you are aggregating these franchisees and with scale, you're getting leverage. And then you can apply that scale in a number of ways.
Turner: So you're basically just trying to find people who are really ambitious, talented, wealthy, or at least wealthy enough to be able launch their own business.
Ilir: And then these models become so predictable that it also becomes easier to then take a loan against them, and so you can open up more locations. So the more scale you get and the more proven you are, the easier it is to scale further so it becomes like a snowball effect.
Turner: I don't want to minimize what Domino’s does, but it's not like they're really doing that much if you're Domino’s. You're like, “Oh, cool, we have 10,000 people who applied for a license will pick the a hundred that look the best, and they'll make us a bunch of money.” It's why it's a good business.
Ilir: Yeah. I would say there are some brands that are well-known that I think do a very good job. I think Domino's does a lot of work in terms of their investment in technology, their investment in marketing. You have to be really thoughtful about who you select as franchisees. You have to help them build their store, even though it may not be the Domino's capital.
But then there are franchise models who I would say more prey on predominantly immigrant, aspiring entrepreneurs who want to control their own destiny, want some predictability and performance, and then typically they're let down so you've got both sides of the spectrum.
Turner: So you decided you were going to do it with Nerd Force, and then how did it go? Like were you in New York at the time?
Ilir: I was in New York. Nerd Force was my MBA in franchises. I learned everything.
Turner: Did you mess up like any big things? Any big mistakes?
Ilir: Yeah, I messed up a lot. You know, one of my first mistakes with that business was not understanding that as we created leads for the franchisees, they can then off-board from the franchise system and tell the customer, “Hey, call me directly next time so that I don't have to give a portion of what I'm making to the parent company.”
Turner: How big of a problem did that end up being for you?
Ilir: It became a decent problem because we were spending money on marketing, but then capturing very little of the long tail LTV of the customer. So I changed the model to a flat model, meaning every franchisee was paying a flat fee per week regardless of volume. And then that kind of really helped the business scale. We ended up scaling to about 124 franchisees and then sold it in 2008.
Turner: That was probably good timing to get out.
Ilir: I was approached to sell. I’m trying to remember why I said yes. It had managed services capabilities we don't have. I stayed on board for another a year and a half, but that was June of 2008. November of 2008, the financial world collapsed.
Turner: Had the deal closed?
Ilir: It had closed thankfully. But a big chunk of my deal was in equity because this was a public company in the UK. So I would say the equity aspect of the deal kind of went to nothing, but I did have enough cash from the deal that helped me ultimately launch Slice.
Turner: So it was November 2008. When did you start kind of getting this idea for Slice?
Ilir: With the franchise model, what I learned was that it is really powerful, but I didn't feel that good about forcing a single brand on everybody. There were a lot of people who were like, “Hey, I want to do my own thing, or I want to have my own flavor in terms of how I serve customers.” You could see that people wanted some independence.
I also saw the benefits scale in markets where we launched for the individual or independent player in the space. So Nerd Force launches in Tulsa, Oklahoma – in Tulsa, there's ABC Computer Repair. ABC Computer Repair had no shot because we brought scale and the cost of our supplies was lower. We had a knowledge base.
So you know, a Nerd Force franchisee can solve a problem in five minutes because if they're tapping into a knowledge base of 500 other technicians across a hundred locations, whereas an individual ABC Computer Repair only had their own experience to depend on.
Those were like really powerful lessons that I ultimately started to think about, where else can they be applied? One thing that helped me was that during that Nerd Force journey, a lot of my family members that own pizza shops wanted us to build websites for them. That was one of our products.
We built a few websites and then someone said, “Hey, what about online ordering? I'm watching TV and all I see is Domino's advertising, online ordering. How do I do that?”. So I spent some time figuring out how real this thing was.
Turner: Was this the fax machine setup?
Ilir: This was before the fax machine issue. This was like late 2008, early 2009. So I learned everything there is to learn about the pizza industry. I learned about that scale, learned about the sort of the fragmentation of the independent market, learned about the fact that they were all lacking the scale and the tools.
I was like, you know what? I think I can build a hybrid instead of building the next franchise. I think I can build a hybrid, reverse franchise starting with the pizza industry. So I remember getting the domain, mypizza.com.
The other industry I wanted to do – and this was pre-Uber – I wanted to do the same thing for black car limousine drivers. So I bought a domain called limolot.com and then I bought a domain called mystylist.com, and that was for beauty parlors. And so the idea was to create these vertical reverse franchises in multiple categories, but really what my passion was and what I knew best was pizza.
And so as soon as we launched the MyPizza business and the way that took off, I immediately turned off the other things. I didn’t want to distract myself. And so I was doing both – I was actually working with Nerd Force and then I was doing this sort of MyPizza thing on the side.
The turning point when I decided to go all in on MyPizza was, I was at a board meeting for Nerd Force with the parent company and I was supposed to email the board some information about Nerd Force. I sent out the email and I sent it from my mypizza.com email address.
For me that was like, “Okay, this is the last day”. Not that they said this is your last day, but I was like, once I'm starting to send emails to this other company with my mypizza.com email address – time to move on.
Turner: What was your position and power or leverage in the company? Like were you a CEO of a business unit?
Ilir: Yeah. I was the head of the Nerd Force business that was one of three businesses, and we were like the new darling. They had just acquired us. I'm in this board meeting. We were talking about how do we scale franchisees?
Turner: Oh it was in the board meeting?
Ilir: Yeah. I had my Dell laptop open and like an idiot, I wrote another email. I was like, please disregard the last email. And then the new email was from nerdforce.com. So that was fun.
Turner: So was that the last day?
Ilir: It wasn't the last day. The next day is when I said, “Hey, I think it's time for me to move on.”
Turner: Yeah. That's fair. And do you think you did that because you were just so excited about MyPizza? Like you were just in that mindset, or was it just kind of mistake?
Ilir: It was probably because I had started to spend so much time on MyPizza that it became sort of more of the default email I was using. It was just sort of a signal. It was a representation of where my mindshare was. I wouldn't say it was like a complete accident. I was just all into MyPizza.
Turner: Then what happened after that? Did you step down from Nerd Force?
Ilir: Yeah, so I stepped down from Nerd Force and I had some money from this acquisition and I was like, “Okay, time to really start scaling this.”
Turner: Was it just you or did you have a couple people already?
Ilir: No, it was just me. I built a prototype through a partnership with an India-based, outsourced developer.
Turner: And that worked pretty well?
Ilir: Yeah, I was just like, who can build this thing for me? I designed it myself in like Adobe or something like that. I designed sort of what I wanted the website to look like and then I was like, can you build this? And they built it.
And I remember partnering with our first shop was this place called Pizza Club in Edgewater, New Jersey, owned by my relative. We turned on this website, Pizza Club advertises the fact that they have online ordering, and in a day or two, the first order flows in from some guy named Justin. He ordered a large pizza, a chicken roll and a salad, and I was like, “Holy shit. It works.”
That was an amazing moment. I called the pizzeria owner. I was like, “Billy, this is crazy. Like, how did this happen?” He's like, “I know. Oh my God, how do we do more of this?”. So that was that moment.
We started to bring on some other shops and then through peer-to-peer and word of mouth, there was a pizzeria called Emilio’s Pizza in Phoenix, Arizona even though this first one was in New York. We got a bunch on board that were relatives and whatnot. We were ramping up decently and then some pizza shop in Phoenix, Arizona wanted to join.
Turner: Did you have anyone in between or was it literally just New York and then Phoenix?
Ilir: It was just 30 shops in New York and then Phoenix. In fact, his ID number was 51 on Slice. So it was the 51st shop. I still remember it. They're still on the platform. They're one of our success stories.
They jump on board and the operator there calls me one day and goes, customers are telling me that my website is saying that I'm closed every day, three hours early. And I was like, that's not good for business. You don't want to say you're closed at 7:00 PM when you're still open. And I couldn't figure it out.
So I put a post on Craigslist to find a developer locally because the person who built the website couldn't figure out the problem. So I put a post on Craigslist to find a developer locally. And this guy, Sam Kennedy responds.
He was in Queens, I was in Staten Island. We were like “Where should we meet up?”. And he's like, “Brooklyn.” Okay, halfway, let's do it. We meet up, he opens up his computer to do the code. He's like, “What are you doing with this thing? Like, what is this?”
So I explained to him what we're trying to do and he's like, "Well that's interesting. All the transactions I can see here, including credit card numbers and everything – whoever built this is just aggregating all of this sensitive data on their own spreadsheet.”
And the problem that he found in terms of why the shop was showing up as closing was because the entire website had been built on Eastern time. It was just like, you're either Eastern Time or you're not.
Turner: Was this because the developers that you were working with just didn't do that, or did you not realize that that was happening?
Ilir: I think it was both. I think the developer was just taking literal directions, and then I didn't think of West Coast time zones.
Turner: Yeah, and this was your first non-New York customer.
Ilir: Exactly. So those were some of the early challenges, but it was almost a six-year bootstrapped journey where we did things like converting orders to faxes.
There were a number of shops where I had to phone in the order myself. You would order on MyPizza and I would then call the pizzeria and read out your order. I did that for like two years.
Turner: You personally? You didn't hire someone to do that?
Ilir: I ended up hiring someone two years in.
Turner: Was it because of you didn't have enough margin to play with to hire someone?
Ilir: margin, and I wouldn't say the volume was there yet. We were doing maybe 30, 40 orders a day. We weren't doing volume.
Turner: So when an order would come in, you would just immediately pick up the phone and call?
Ilir: Yeah. No matter where I was. All my friends and family members got used to this ringtone on my Blackberry at the time and then eventually the iPhone. But soon as people heard the ringtone, if we were in the car, music dialed down and then I would call as if I'm like in some office.
Turner: I know you've mentioned this publicly before, but you had built the business to a point of, I think you said $40 million in revenue, $3 million in profits, so pretty profitable.
Ilir: Yeah, I remember this moment. February of 2015, I'm sitting at a Starbucks. This is five years in. And we're just heads down hiring a couple people here and there. Mostly in Macedonia where I'm from, adding more and more shops.
Turner: How many people were on the team?
Ilir: Less than 10.
Turner: Wow! $40 million revenue with like eight employees.
Ilir: We had one engineer, which was Sam Kennedy, who I ended up hiring full time. We had handful of people in Macedonia and we're just bringing on locations every single day.
Turner: Mostly New York?
Ilir: It was pretty distributed. In February of 2015, I don't even have an accounting system. I'm tracking my sales on an Excel sheet. I look at our performance that month, and for the month we had $300,000 in revenue, $40 million run-rate GMV top line sales. Revenue for the month was $300,000 or maybe $400,000 because it was 10% out of that.
Straight bottom line profit was like $300,000 or $250,000 for the month. I was like, “Holy shit. This is a real business”. So I took one month of profit, $250,000, I went to Manhattan Motor Cars in the city here, and I bought a Bentley. You know, next month we'll have another $250,000. It's fine.
Turner: After five years of working for Starbucks, I guess that’s fair. (laughs)
Ilir: I just didn't know what to do with the money. I ended up doing like a campaign with Z100 here in New York, the radio station, where we gave them like $60 grand and they were just promoting MyPizza with a jingle.
It was still MyPizza in 2015. but then I want to say a couple months after that is when I realized, wait, I'm doing a real disservice here. There's a very big opportunity. This was around the time that I got an acquisition offer for $18 million.
Turner: That's a lot of Bentleys.
Ilir: A lot of Bentleys. But when I got that acquisition offer and I decided to turn it down, that's when I reached out to some of the founders of Seamless who, um, really opened their sort of doors to me. And I would say that became the beginning of the second version of Slice.
Turner: This is a good time to transition to that, but I'm also curious, why did you turn down an 18 million offer?
Ilir: Yeah, it would've been life changing. I mean, all cash, 18 million sole owner, no investors. I was inclined to do it. And then I asked myself, okay, what will I do after this? And my answer was that I would want to build a company very similar to what MyPizza was or Slice. And so I was like, okay, well then maybe five years later I'll build another company that’s $20 million.
But then I asked myself, what if I treat this business as that new company? So what if I don't sell but I come in tomorrow and say, okay, MyPizza is this new company and now I'm going to go heads down again for another five years. What will that look like?
And so once I asked myself that and answered that question, the first thing I did was went on Twitter where I'm active, and I tagged some of the leaders in the food tech space. Wiley Cerilli, who was the Seamless exec and had founded a company called Single Platform – he responded and that began the journey of the second phase of the company.
Turner: So you literally connected with him over Twitter?
Ilir: Yeah I tagged him on Twitter and I was like, Hey Wiley do you have some time to talk?
Turner: Did you say anything like, “Here's what I'm building?” or was that all you said?
Ilir: That's all I said. And for folks who may know Wiley, he is very popular for a good reason. He's incredibly helpful in the ecosystem here in New York. He responded and he was like, sure, DM me. And I was like, well I can't because you're not following me on Twitter. So then he follows me. I send him a message and he's like, call me. We jump on a call.
He's like, “What's going on?”. I said, “Well, I have this company mypizza.com. You know, it's this reverse franchise model for pizza shops.” And he's like, “Sure, call me when you have like a hundred shops and we can talk.” And I was like, “Well, I have 3000.” And he's like, come to my office tomorrow.
At the time he was working at First Round Capital. And so I go to his office and he introduced me to Josh Kopelman and some of these amazing investors like Chris Fralic and I end up meeting a bunch of them. They realized that, okay, the best next step is to really introduce Ilir and this company to some real seasoned leaders who can help scale the company from this point forward. And so that was the start of phase two.
Turner: Was that technically a seed round? I mean, you probably were a lot further than most.
Ilir: Yeah. So folks were like, what do we do? They were like, “We have to raise a round.” And I was like, I don't need money. I have $3 million in the bank account and very little expenses. I need a team. But in order for folks to really get involved and exchange equity, I have to take some capital. So we ended up raising a million dollars at a $15 or $20 million post money valuation.
Turner: Wow. That's a pretty good deal for the investors. Well I guess it wasn't that dilutive for you though, also.
Ilir: Correct. And so we wound down the bootstrap company. We actually just reincorporated and relaunched the whole company in October or November of 2015.
Turner: Is that when Slice was born? Like did you rebrand?
Ilir: Not yet. Part of that new journey was hiring a marketing lead. We brought on this really brilliant marketing leader Nick Karrat who was the marketing leader at Plated. At the time, Plated was doing food delivery, kind of like a Blue Apron alternative.
Anyway, he came on board and he's like, “Ilir, how married are you to MyPizza as a brand?”. And I was like, I just want to do what's best for the business. One of our employees at the time was like, “We should call it Slice.” And everyone was like, “No, I don't think you should do that because it's a common term, it's impossible to own.” But when people say that to me, I’m just more drawn to it.
And the marketing leader said, look, whether Slice becomes synonymous with this business or not will be solely dependent on how successful Slice is as a business. If we succeed, we'll own Slice. If we don't succeed, we're not going to own the brand.
Turner: Yeah. It wouldn't even matter anyways.
Ilir: Exactly. So we rebranded to Slice in October of 2016.
Turner: And then there was another point. Jeff Richards specifically said I have to ask this. You had an offer to buy the company at magnitudes higher than that offer. At what point did this happen?
Ilir: That was in 2019, March of 2019. We rebranded to Slice. We had just launched the consumer app. By the way, up until 2017, we didn't even have a consumer app by that point. We were doing a $100 million in GMV all through like web properties.
I'm at the International Pizza Expo in Vegas, which is this huge deal.
Turner: I never heard of it.
Ilir: Everyone's gotta go there. Everyone has to go to the international. Everyone has a booth – international pizza companies, cheese, dough, sauce, point-of-sale companies, like you name it, everyone's there. It's a moment in time when 10,000 plus pizzeria owners come together.
Turner: Wow. So that's like 30% of all the independents.
Ilir: Yeah. It's a huge deal. Everyone waits for that moment in time. It's in March every year, and I'm at the pizza expo and one of Jeff's other portfolio companies was trying to recruit our CMO. And our CMO was turning them down and Jeff was reaching out to them.
Jeff was like, “What is this company Slice? Why don't you want to join my other company? I've never heard of this thing.” And at the time we were at the pizza expo and so was the marketing leader. And so the marketing leader's like, “We're here and this is what the company is.”
And we were in the process of doing a real round so we were about to raise $15 million round and Jeff was like, oh my God, I have to meet Ilir. And so we jump on a phone call, I want to say six or eight hours later. Jeff is in Vegas with Robin Lee, who's also amazing at GGV Capital. They're both in Vegas.
They how up to the pizza expo and we spend a day together. And that's how I met Jeff and ultimately decided that GGV and Jeff were the right partners.
Turner: Wow, that's a pretty quick turnaround.
Ilir: Yeah, that was 2017.
Turner: So with that $15 million, which was a huge infusion of capital at the time, what did the balance sheet look like at that point? How much cash did you have?
Ilir: We did a smaller round in 2016, so we had raised a total of $4 million and so suddenly you're getting $15 million.
Turner: But you were profitable-ish?
Ilir: Yeah profitable-ish. After 2015 we were operating mostly at a breakeven point because we started to really hire like a dev team, product team. We didn't even have an accounting team, so we started to really put investments in the company. That $15 million, I think led to a step change in performance for sure.
Turner: So how big were you at that point?
Ilir: At that point we were doing about $100 million in GMV.
Turner: What are you guys at now?
Ilir: Over a billion, I want to say. This year we'll probably do $1.3 billion in GMV.
Turner: Okay. That's from January 1st to December 31st of 2023.
Ilir: Yep. And that's online GMV. We have offline GMV through our point-of-sale system, but I tend to count that because it's not monetized the same.
Turner: Interesting. Do you monetize that similar to how Toast would or Square would?
Ilir: Yeah, it's like a small payment processing and SaaS fee. So the big offer that was in 2019. That was tough to say no to that one.
Turner: What was the context of it? Was it a big strategic? Was it a financial firm that wanted to acquire?
Ilir: No, it was a company in the point-of-sale game that was very horizontal in nature that I think wanted to really get into the e-commerce game because e-commerce players were starting to get into the point-of-sale game.
I think for them it was a real opportunity to potentially create more of a formidable option to Shopify, for example, but in the restaurant space. And so came together pretty quickly. Huge number.
Grateful for having a great board around the room who helped me think about the opportunity. I would say if the number was a little bit higher, the history may be different, but it was still a very big number.
Turner: So was it a similar thought process then where you're like, “It's a big number, but what's going to happen? I'm just going to do the same thing again.”?
Ilir: That was it. I mean, I'm looking at our growth rate at the time. We're close to a hundred percent growth. No sign of slowing down. We're nowhere near saturation, nowhere near solving the problem we set out to solve. And I just love what we do.
And so there were moments where we were like I was like, “Should I say yeah? Maybe I should.” I remember calling Jeff. I was like, “Hey, I think we should say yes.”
But I think when you talk to people who have been in those positions or situations and can bring a set of data points in terms of like other companies or founders who faced similar decision trees, it’s really helpful in getting to a point where it was just like, “Okay, let's, let's keep going.”
Turner: Yeah. What were some of those data points or decision trees in this case? Do you remember?
Ilir: I think the first one was a big number. It’s a big number, but that's just about scale. Right? And so put the number aside.
Imagine it's $3 million in instead of like $18 or $30 or whatever it may be. Imagine the number's very low and you're at much lower scale. Would you do the, would you do this deal? Would you sell the company for $10 million if you're growing at a hundred percent and you're doing all these other things? And I was like, no.
And so the question is like, why would you make the same decision just because you're at greater scale? And so that was probably the biggest point of feedback, which was like: the company's growing, TAM is massive, the only players really tackling it this way.
And I mean, unless you are tired and you don't want to do this anymore, you're not having fun – that's a different topic. So I would say those were sort of the center points of the conversation.
Turner: Yeah, I was going to say that that's probably like a common rationale that I hear is just, “I was just kind of done. I wasn't energized anymore.” Which that does make sense. That's a totally fine reason.
Ilir: Absolutely. But I would say I'm very far away from that point.
Turner: So at this point you kind of have three different business lines. Is it online ordering, hardware, point-of-sale, and then inventory supplies? Do you do any back office software, like helping them with their payroll, things like that? Or is that a roadmap thing?
Ilir: That's a roadmap thing. So part of our job is to, again, keep going down the value chain, keep going down the problem set and tackle the biggest problems first. So, point-of-sale is less about point-of-sale nowadays, it's more about workflow because what happens is restaurants are now faced with an omni-channel situation, owner-operated place.
The phone is ringing, somebody's ordering online from your core channel. There's an order coming from Uber Eats and a person just walked in. Fax machine is going sometimes. What do you do with all these things happening at the same time on a Friday night?
So the point-of-sale is really more of a reconciliation, a consolidation tool that then makes sense of all these orders in the same way. That was very important.
And then closely connected to that. We'll now look at, who are the employees that are clocking in and out? How do we process that payroll? I am excited about potentially solving the access to capital problems. So those unforeseen events – oven breaks down, pizzeria is closed for a week – small businesses don't get that money back. And that's huge.
Turner: If you're Domino is, or if you own a hundred stores, you're like, “Whatever, we'll fix it. It's not a big deal.”
Ilir: Right. But if you are a small business, that could mean the difference between staying open and just shutting down. So those are definitely challenges in financial services that we’ll tackle, I would say, in the next 12 to 18 months.
Turner: So then if I wanted to open up my own store, I could open up one or multiple Turner's Pizza locations powered by slice? That's essentially it? And I would probably apply for financing of some kind?
Ilir: Yeah. So we're not quite there yet, but the goal is for you to be able to not only apply for financing, but what I would like to do is create an education platform, Slice Edu or Slice University. So if you're really passionate about this business or you're passionate about the craft and you want to turn it into a business, what is the first place you go to?
We want to create an on-ramp, a platform so people can learn about what it's like to run a business, and then we want to be able to help them launch their new business. We have helped four or five locations launch in the last, I want to say 12 months.
Turner: And this is probably like pretty white glove manual.
Ilir: Yeah. We have a team that helped them build out the space, negotiate equipment pricing. Terrance, who's right there, helps them with their brand, plugs in all of our technology, and then helps them run their shop.
Turner: You're taking a lot of the elements that you'd get from Domino's, but you're doing it in like a Shopify way, where you're like arming the, the pizza rebels.
Ilir: Exactly. Shopify's a very good comp. I think the major difference here is that probably for Shopify customers, they're more sophisticated. They're e-commerce businesses, primarily in our space.
These are offline businesses. I would say that's the most challenging aspect – reconciling the offline business with the online opportunity and bringing those to the world together.
Turner: Yeah, I feel like there's this perception of restaurants that they are not good businesses. That they're very difficult or the margins aren't very high.
Ilir: For the most part, yes. But pizza shops are probably a little bit unique. Their margin profile is different than your traditional restaurant.
Turner: Well, yeah, like we talked about your gross margins which are pretty high.
Ilir: Exactly.
Turner: And is that why there's so many? Just because they tend to be more durable or they have higher margins?
Ilir: Definitely more durable. I think also it's about balancing supply and demand and so the consumer appetite is very strong for pizza. It's the last-minute fallback. If you had a busy day and you show up home and the kids are crying and you forgot to shop for groceries, what do you do? You order pizza. It's the safe, fast, delicious, social way to feed a family.
Turner: I mean, we did that last week.
Ilir: Yeah, it's the solution. And to be quite honest, it's like a solid meal. One day I need to go on a tour to talk about the fact that pizza is actually not junk food, at least local pizza.
I think it's a solid meal made with real ingredients. It's doughy base, which is like thin crust, high quality flour, real cheese, crushed tomatoes. It's a well-balanced meal. A slice of pizza is about 250 calories. There's nothing bad about that. Now I'm talking about local pizza.
Turner: Yeah, like real pizza that's not made in a factory.
Ilir: Yeah.
Turner: Remember Michelle Obama's whole vegetables pizza thing? (chuckles) That was a little bit ridiculous. But maybe there some truth to that?
Ilir: I don't know. I just think if a family's had a tough day or maybe they had a really great win at the soccer game or something like that, pizza is just a great solid option. It's not this terrible thing for anyone.
Turner: And so you had this really interesting take that I'd never heard anyone pitch or bring it up this way. After you said, I was like, “Oh, it's kind of true.” You were pretty against cloud kitchens. And then also we were DMing about this with Mr. Beast's burger restaurant. What's your thinking around cloud kitchens and what happened or what do you think happened with Mr. Beast's burger restaurant concept?
(Mr. Beast launched his first physical location for Mr. Beast Burger in September 2022. It first operated as a cloud kitchen starting in November 2020. Source.)
Ilir: Yeah. On cloud kitchens, I think creating some density around kitchen space in urban environments that may prove to be somewhat valuable. But I think the question for me: is why are we building more kitchens? Is kitchen capacity the problem, or do we have a different problem in the space?
Turner: Yeah, I think 200 people per restaurant or something is the ratio. It’s pretty insane. We have a lot of kitchens.
Ilir: Very often these restaurants, their kitchen space is sitting idle aside from like these steep demand curves on a Friday night or something like that.
Turner: Isn't that sort of the pitch of cloud kitchens? That irrespective of how many already exist, these cloud kitchens are really efficient? We will run them, we'll get a lot of throughput?
Ilir: That's the pitch. But then that efficiency is pulled right off the table when the only way to get demand is by partnering with DoorDash, Uber Eats, and GrubHub, because these are cloud kitchens that have no storefronts. They don't have direct channels.
And so if you are Turner's Chicken Wings and you're operating at a cloud kitchen, the only way for you to get customers is by plugging into Uber Eats, DoorDash, GrubHub, and they're charging you 20, 25, 30% per order, because that's the tradeoff, you're trading off the cost of rent for higher commissions with DoorDash, Uber, or GrubHub, and you're giving up, for the most part, the pickup channel.
Turner: That's right. And pickup is probably the highest margin. Is that correct? Yeah.
Ilir: Correct. Like online order to pick up? Absolutely.
Turner: And that's, is that a pretty high percentage of pizza, or is most pizza delivered pizza?
Ilir: It's about 50/50 split. Half of the orders are pickup, half of the orders are delivered.
Turner: Interesting. Okay. So I remember when the Mr. Beast thing launched, I was like, seems cool. It seems like fast food. I'm always like a little skeptical of fast food. I'm like, we should be eating or encouraging healthy as much as we can.
I thought it would probably work just because of the scale that he has. I don't know if that was a good view or not, but what do you think happened?
Ilir: I think consistency is tough, right? Like Mr. Beast first off has like this amazing following and you know, when he talks about Mr. Beast Burger, everyone in in the country wants to try it. But it wasn't available everywhere, so that was one.
And you do have a lot of inefficiency in terms of his brand relative to the opportunity. People had to order it and in the geographies where they were ordering it, it's incredibly difficult to create a consistent product. Like you can't just build a McDonald's overnight.
Turner: Yeah. McDonald's has spent decades putting in processes in place in order to get a consistent product.
Ilir: And I think it's not to say that the product was probably bad, I think it was just really inconsistent. And I think Mr. Beast has a very high bar for when he continues to do something versus not. And I think he decided that the lack of consistency was too much to overcome for him to continue to focus on it.
Turner: Yeah. I kind of thought it would make more sense if he partnered with McDonald's or or something like that. Like a scaled platform. We've seen that with the Travis Scott Meal. Like that makes sense.
(Travis Scott’s McDonald’s partnership promotional material. Source)
McDonald's can say, all right, we have 10,000 locations, whatever it is, we're going to serve this one thing.We're just tweaking the burger a little bit. We're putting a certain sauce on it. Now it's the celebrity’s or the influencer's Burger.
Ilir: Completely agree. And, and so what are we talking about then? It’s not cloud kitchens but cloud brands and they are really just a marketing tool. Because if that same Mr. Beast brand can bring demand to a specific brand, then really it’s a marketing play.
Turner: Are there opportunities to leverage some of that across the Slice network or are you really just not interested in that or don't think it will work?
Ilir: We haven't gotten involved in it because basically what's happening with cloud brands, these celebrity cloud brands – they take a category that already exists with the shop.
Let's take a pizza shop as an example. They sell pizza, but they also sell wings. And so what they want to do is they want to take the wings category and brand it as another restaurant.
So what's happening is Pizza Mia, their menu is shrinking and their menu is now just pizza. And now there's a second brand called Turner's Chicken Wings, and now that's the wings restaurant. So they're basically taking a menu category and turning it into multiple restaurants.
And I think that that is a short-term win for restaurants, but a long-term loss. I think restaurants should create products that people love, and I don't know that I should have to brand it as Cardi B's Chicken in order for me to sell really delicious chicken wings, which should be actually under the name Pizza Mia.
I'm very passionate about bringing independent brands to the market, not homogenizing or consolidating independent brands under umbrella brands. I don't think we need to create more chains. I think we need more local businesses.
Turner: Yeah. And you just look at what the internet has enabled. The internet has enabled a lot of independent, smaller brands to thrive. It's also very good for the large brands too.
Ilir: Absolutely. But the last thing I would want to do is take all the independent brands and give them a master or umbrella brand that they should work under.,
Turner: Well, talking about the benefits of the internet, I think one time you mentioned online customers are worth about four times more than offline. Is that because of order frequency? Do they order more? Are margins generally better?
Ilir: Yeah. So it costs less to serve them. They order more food. AOV, average order value, online is – on Slice, it's about $41 now, whereas the phone order is about $22.
Turner: Whoa. What's causing the markup?
Ilir: I think it's just not having to order from memory. So when they're calling, you can upsell and sort menus based on data. If somebody's coming in for the pizza, but you show them side orders first, it's very likely they'll add more to the cart. So you can do a lot of things to to sell more food.
And then now you have the direct information of that customer. When somebody phones in the order for a pizza shop, their best way to retarget that customer is to mail them a physical menu. So how many people have gotten menus at the door? Do you still get that?
Turner: I have actually, yeah. Now that you mentioned that. They have coupons on them a lot of the time.
Ilir: Yeah. Now that's a very expensive, slow way to connect with your existing customers. But if you have those customers online, you can send them a text, email, or push notification with the latest items, deals, discounts, whatever it may be.
That improves the frequency and the ease of use also improves the frequency. And so a combination of those things means that an online digital customer is worth four times more than an offline customer.
Turner: Yeah. And if you think about what the fixed costs are for a restaurant, they don't change a whole lot. If somebody comes in twice a week or once a week, whatever the gross margins are, that's the profit essentially for that second orde because you're just adding to the fixed costs.
Ilir: Exactly.
Turner: It's a really interesting business. But you mentioned that some investors, it was hard to pitch this like reverse franchise model. How did you do it or what did people not quite get?
Ilir: Humans are very analogous. Like it's easy for us to form analogies in order to understand something. It's very difficult to try and understand something from the ground up.
And so very quickly when I was raising capital, it was really important for investors to form an opinion quickly. So initially we got this sort of label that we're basically a GrubHub for pizza restaurants.
Turner: That sounds bad. If I'm you, I don't want people calling me that.
Ilir: I don't want that. And then I'm like, “We're not that.” And then you're starting to be compared with like Square or Toast or a point-of-sale company. And I'm like, that's fine but we're not that either.
I think because Slice, we've taken this approach of being multi-product very early on in our lifecycle and multi-product is part of our strategy, vertical integration, the comp I have is Domino's, but made up of all these independents and there's no other company that has really done that.
It has been a very challenging, maybe I wouldn’t say challenging, but it's been interesting to try and explain to people what Slice is and who Slice competes with and how many other companies are like it. That part has been pretty interesting.
Turner: Yeah. So is it more about trying to convince and educate people or is it more about just finding the ones who sort of get it or are open to getting it?
Ilir: The lesson I've learned is it is a thousand times better to find the people who get it. But also as a founder, if you're raising capital, it's up to you to educate the audience.
And Joseph Ansanelli, who's the founder of a company called Gladly, but was also an investor at Greylock – incredible person – I met him when I was raising capital in 2019, and I was like, “Hey, I'm, I'm trying to overcome this problem. Everyone's like, but what about DoorDash? What about GrubHub? What about Uber Eats?”
And he's like, “But Ilir, your company's not like that. That's not what you guys do.” I said, “Well, how do I get people away from that?”.
And he coined this term “drive-by aggregators” because he was like, “That's all they do, right? Like somebody places an order, they drive by, they pick it up and they leave. You don't drive by, pick up and leave. You are integrated and you're helping them run their business. You're like their core channel.”
And so I've used that term to distance ourselves from drive-by aggregators. You've gotta leverage smart people around the room to help you think about ways that you can tell your story in a way that is understandable easily.
Turner: Was vertical SaaS, vertical software, a category or a thing?
Ilir: It was. Jeff had this philosophy, he actually wrote a LinkedIn post that I'm sureis still active about vertical SaaS meets marketplace.
They were one of the first to understand that marketplace companies would have to turn on SaaS features, or SaaS companies would have to turn on marketplace features. And we had both, and we had just launched the marketplace.
Turner: Oh wait, what’s the marketplace?
Ilir: That's the Slice app.
Turner: Oh, just the app. Okay. Yeah. Is it a marketplace though?
Ilir: A marketplace is a product that has multiple options. It's a product with many to many connections.
Turner: Okay. So if I'm a consumer, I open Slice, I can find pizzerias to order from, but do you not take a cut? Like is that the difference between you and DoorDash?
Ilir: We take a cut, but it's a flat fee per order.
Turner: Okay. It's not like 30%. Got it. Okay. So do your pizzerias actually say, “Hey Turner order from Slice, use the app!”? Do they push it for you?
Ilir: Yeah, I mean that is our primary way of acquiring consumers is because pizza shops tell their customers that Slice is the best way to order – through the Slice app.
Turner: Okay. And then do you give any kind of capabilities to the restaurants to push through Slice and try to reacquire?
Ilir: Yeah, so it's franchise-like. I remember with Nerd Force, what we did was we created a platform where you had all these like Nerd Force assets, marketing assets, that franchisees could tap into and then use them in their local market.
We're creating a very similar model where you have all these assets that any independent shop that's part of Slice can use. And they are very often leading with their own brand. And so Slice is sort of the “Powered by Slice” element because again, I don't want to hide the local brand. I want to shine a light on those. I want Slice to be the frame, but the local brand to be the masterpiece.
Turner: Yeah, that's a good way to think about it. It really reminds me of “Powered by Shopify.” Like whatever the brand is, the e-commerce brand is powered by Shopify, but Shopify doesn't actually build the product or sell you the product. They just help deliver it to you.
You had an another really interesting point there where you said surround yourself with the right people. So another thing Jeff told me, he said that you built a really good board and some founders just don't think that's worth it or they think it's pointless like who cares who's on your board? But why do you think it's important and how did you go about doing that?
Ilir: I mean, it's really important. That's a team around the room that you can leverage. When you get feedback that is really important and you focus on it, there's this like virtuous cycle.
So whether it's Ben Sun who was one of my first board members, who's one of the people behind the success of Coupang as an example on the Midas List, he was one of our earliest investors in 2015. Or Jeff, or people that I met along the way like Kat Cole who is incredible. She's amazing. She's the president of Athletic Greens. Previously she was the head of Focus brands, like Cinnabon, Carvel, Jamba, all these brands. So she's been awesome. Deirdre Bigley, who was a marketing leader at Bloomberg, and I can go on and on, Jason Harinstein, who was at Groupon.
Turner: And these are people that are not investors? These are independents?
Ilir: Half are investors, half are independent. And that kind of balance, and that feedback and that diversity of experience is incredibly powerful, not only in terms of like the actual data they have run into as a company, but in guiding me as a leader, providing feedback to management teams, things like that.
Turner: So what do you get from your board? Do you like ask them questions or do you expect things from them?
Ilir: My advice to anyone is you get from your board, whatever you ask from your board. And by the way, if you're not getting what you're asking for, then they shouldn't be on your board.
So the board is as valuable as a founder or CEO wants them to be. I think if you're hands-off and you're not engaging them, then they’ll kind of do the fiduciary aspect of it.
But if you want to engage with them, then that's different. With my board, I've got a group chat on iMessage and if something exciting happens, I'll message my friends and then I'll message the board in a similar fashion.
Turner: So is that board group chat one of the most active on your phone?
Ilir: Yeah pretty active, yeah.
Turner: Yeah. That's good. I know some people don't like their board members.
Ilir: Well, they chose them. It's kind of bizarre, right? How do you not like your board members? Because these are your board members, you have to spend time with these people before you add them to your board.
I find it very interesting when people say, “I don't like my board” because that's not a reflection on the board, that's a reflection on the person who just says, “I don't like my board.” To me, I would ask that founder or CEO, “Are you the right person to select board members? Beause you're the one who put them there.”
Turner: Yeah, that's true. I think part of that is just rushing through the whole venture ecosystem. Sometimes if you have to really quickly raise capital, it's the momentum. It's a FOMO thing. So you maybe don't get as much time to get to know those board members. I don't know how, how big of it that is, but I've always kind of wondered. It's one of the things I don't like about how some of the startup financing works.
Ilir: Yeah. I'm not a fan of that kind of FOMO type of process. These are long-term relationships that'll determine whether your company is going to be successful or not. I definitely wouldn't rush into that decision for sure.
Turner: Do you have any advice for founders specifically focused on serving small businesses?
Ilir: I would say the biggest mistake founders make is it's very easy, and we fell into this trap as well, to become a sales-led organization, not a product-led organization, because it's a very fragmented world, and sales team members speak to very different customers at very different points in their life cycle. And so it becomes very noisy.
One salesperson says, we need to build X. The other one says, we need to build Y. Based on feedback, because I can't sell it because this owner wants X, the other owner wants Y, the other owner wants Z. And all of a sudden the roadmap is full with roadmap items that aren’t necessarily very strategic, just very reactive.
And so my advice to our team is we can't follow owners. We have to use it as a data point, but we have to lead owners. So gather feedback, but we really need to set our own roadmap. We really need to be deliberate with what we're building and why.
And by the way, that means that maybe a segment of our TAM is not addressable today, but we'll earn that when the new feature comes on in two months. A perfect example is today we have a point-of-sales system. It is specifically built for cash register shops moving from cash register to a point-of-sale.
Turner: Oh, interesting. And then you have another one that's for people with their own point-of-sale already?
Ilir: No, it's the same one. So at some point when our point-of-sales feature set continues to expand and becomes more addressable to someone who has a Clover system, for example, then we'll go after that TAM. But I'm not going to build some like bells and whistles system that makes no sense so I can go and sell to as many shops as I want to tomorrow.
I think just being patient leading with product, using feedback from sales as a data point, but not as like the roadmap. Those are probably the biggest mistakes people make.
Turner: Yeah, it can be tempting, especially if you need revenue. Probably sometimes to the customer that's giving you this feedback might not know the big vision of what you're doing. They might not realize that you're going in a certain order because they will actually be better for them.
It's almost like this concept with a reverse franchise. In 2010, you pitch this idea of a reverse franchise independent pizza shop, they're like, “Get outta here. I don't want to be like Domino’s.” But it's like, “No, it's all the same benefits, but you still get your own brand.”
Ilir: Exactly. You know, we're just trying to like help them focus on one or two jobs in a day instead of eight because focusing on eight jobs is hurting their success.
Turner: Yeah. So how big do you think Slice could be? Just curious. Like revenue, size of impact?
Ilir: I try to create milestones. So like Slice 1.0 was this bootstrapped company where we created this product market fit. Slice 2.0 was getting to a $100+ million in revenue annually, which we've done and have announced that publicly.
Slice 3.0, the next milestone is $500 million in revenue annually. So I see a very clear line of sight to that number and it's a math formula. It's like today we work with close to 20,000 locations we make around, let's call it $7,000 per location in revenue annually.
Well, I know that number's going to be 10 at some point – $10,000 annually and scaling to 50,000 locations. So 50,000 times $10,000 as an average will get us to $500 million in revenue.
Turner: Wow, close to 20,000 locations means you've got pretty high market share of independent pizza shops.
Ilir: Yeah. But what I want to do is two things. I want to make it really easy to open up an independent shop, so I want to expand the number of independent locations in the US. And there's a lot of opportunity in international markets.
I also think we can bring, at the right moment in time, this platform to an adjacent category.
Turner: Can you talk about what categories you like?
Ilir: I would say any category that is very fragmented, predominantly made up of like owner-operators, that is mostly offline. An illustrative example could be bakeries. We can decide that we're going to create a bakery category and help bake shops become really, really successful.
Turner: And is this mostly like restaurant related because it has synergies with the supply ordering and point-of-sale and all that stuff?
Ilir: Exactly. So you want to kind of go into adjacencies instead of like totally new worlds.
Turner: And then once you get a couple different categories, it's almost like instead of opening DoorDash or Uber Eats, you open Slice that has a lot of different options. And as the business, it's like, “We're not giving up 30%, it’s $1 or $2, whatever the fixed order fee is.”
Ilir: Yeah, and it's really about direct relationships with the merchant. This is another sort of misconception. Slice doesn't really serve as the middle player. Like Slice’s technology connects you, Turner, to your favorite local pizza shop. In a way, that is stronger than calling.
For Slice, our job is to build stronger relationships between the consumer and the merchant. We don't want to be in the middle. Middle players, like third parties are becoming synonymous with higher costs, which is accurate, and more problems because there's now another party in the mix.
For us, we build core products for shops, connect them to the owners, and then try and be a sort of a helper in that process to make sure that they know how to leverage these systems.
Turner: Are we going to have to get a name change then from Slice?
Ilir: I don't know. I like Slice. One of the reasons why we went from MyPizza to Slice was that it can imply pizza, but I think it can expand to mean a lot more than just pizza.
Turner: Yeah. I think it can too. It's a single word, a short word that you can be adaptable with. Apple is the phones, it’s not fruit.
Ilir: Totally.
Turner: So do you want to do rapid fire questions? Just couple questions. Who is your favorite CEO? Do you have any founder or CEO that you really look up to?
Ilir: Wow, favorite CEO… I've been learning a lot more about Frank Slootman at Snowflake. The reason why I get drawn to him is just his focus on performance, his focus on teams, and just constantly maintaining a very high bar for performance. It's very easy to kind of slow things down a little bit, especially once you're successful.
I would say from an inspiration standpoint, this is maybe pretty cliche, but what people may feel about Elon Musk, I think he has an incredible ability to tell a very big story. His ability to completely remove any constraints from his thinking in terms of what companies he's building, what they can be, is very inspiring.
Turner: I've kind of learned that if he says something or if he tries to take on some crazy project, I'm like, “Okay, why is he right? Like what is he seeing? Like what do I need to change or how do I need to just like open my mind to why it could work?”
And I can still totally disagree. Like I think some of the recent maybe moves he's made, I'm like, “That was ballsy. That was an interesting choice.” But hey, I can see why you did that.
Ilir: I think from a day-to-day standpoint, for sure, there's a lot to debate and argue about, but for SpaceX making humanity multi-planetary, it's a huge vision. He may end up failing at that, but along the way he has very easily built spaceships that launch and land, like it's nothing.
And so I think that's what big visions are capable of in terms of giving teams ambition to do something really unique. So I really admire that.
Turner: Do you have anything that you were maybe not good at originally being a founder or business operator that you're now really good at?
Ilir: A lot of things. Well, I'm still very bad at a lot of things, I guess is the way to say it, but one thing that I've tried to get better at is listening, active listening. Any founder has to do a million jobs, and you kind of know how every job is. So when you start scaling the team, you still know all those things better than anyone because you did those jobs.
I think that's the curse of bootstrapping and then going to scale. In those early years or middle years, I was not giving enough space to people to learn their own version of what it's like to operate Slice, because I had the luxury of time and I had my way and I would not give people enough time to learn their way.
I think patience and listening and those kinds of things are definitely in a much better place today than they were like six years ago.
Turner: That's encouraging. So I saw you tweet this. Did a baby really order a $94 order on Slice? What happened?
Ilir: It made it on Reddit and it was like the post of the day!
Turner: Were they playing with the phone, and pressed the buttons?
Ilir: Seemed like it. So this person posted on Reddit that their baby had their phone and with any product like Slice, we don't do payment verification when you hit place order. It's not going to say, “Can you reenter your information?”. We’re trying to make ordering pizza easy.
So yes, the baby ordered $94 of pizza. I remember reaching out to the person. I think we covered the cost of that food, but it was pretty cool that a baby could do it.
Turner: Yeah, what a good marketing line. So easy a baby could order! So last question, do you have a favorite interview question that you like to ask at Slice?
Ilir: One that I learned from actually from Keith Rabois, he posted this on Twitter. Twitter for me is like an education platform, by the way. It can be whatever you want it to be. And for me, I use it for education.
But one of the questions that I really loved was if you were to join Slice, who would follow you? The answer can be very telling in terms of what kind of leader you're potentially hiring.
If they say everybody, I'd be cautious because the question is, are you holding people accountable? If they say nobody, that's a problem.
Turner: The details of the answer matter, because you probably want to know if you hire like a new CTO or CMO, do they have a bench that they can come and fill in and they're just really good.
Ilir: Exactly. But I don't want the entire bench because that is an indication that they're potentially not holding enough people accountable and they're just in essence, creating this safe space for people to just do whatever. What I try to hear is a little bit of a balance.
Turner: So maybe they have like two or three people that they know from prior jobs. And they say, “I'm going to try to get her to join,” or “I think I can get her.”
Ilir: But also you want them to ask a question. So you want them to say, well what does Slice need?
Turner: That's fair. That's actually probably a good answer.
Ilir: So most people will be like, oh my God, all these people, this person will come and that person will come, and so on and so forth. And obviously it's hypothetical, right? They can't break a non-solicit or something like that, but again, the spirit of the answer is very telling, which is why I love it.
Turner: Yeah, that's fair. Actually, I lied. This is the last question. You said something about this, which I was just kind of intrigued by. The first employee at Slice, she still works there. Is that true?
Ilir: Yeah. So while the first employee at MyPizza is still here, so is the first employee at like version two, which was Slice. So Jen Berger who joined in 2015, we had a little tiny office maybe the size of this room.
There was no furniture. There was like one chair. There was a cardboard box and she put her laptop on there. We walked to Best Buy to buy a laptop. That was the onboarding process.
Turner: Wow. Was it a pizza box? The cardboard box that was on?
Ilir: I wish. Big mistake. But it was just a box and that was her desk and she is now our sales leader globally.
Turner: Is she based in New York?
Ilir: She's based in New York.
Turner: Why do you think she stayed? Did she ever try to leave? Were you ever like, I need to give her new challenges? How do you think about keeping someone like that so long?
Ilir: It's a good question. I mean, it's probably a good question for her, but I like to believe that we established a really good relationship just filled with trust. I think she had unlimited opportunity to tackle different problems every couple of years, whether it's going into management or going into different categories in terms of profile of shops selling different products.
I think it was a combination of those things, but mostly I like to believe that I've treated Jen as like a partner in the business. I communicate with her about different changes or different opportunities well in advance of even communicating with a company. And I do that with a handful of people who I think are real drivers in the company.
Turner: So do you think that's important then, as a founder? If there are things that are coming down the pipeline, you want to make sure you communicate things that may catch people off guard?
Ilir: Without a doubt. Especially again with tenure, especially with people who are really critical to the success of the business, both former success and future success. I don't know if other founders do this, but I've got a select number of relationships where I am very close with people.
And by the way, they push back on me. They'll call me crazy if I do something stupid. They happen organically over time and you usually are drawn to those people because of their performance. And I would say, yeah, you've gotta wrap your arm around them and keep them close.
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