19 ms·

SoftBank’s $375M bet on pizza went bad fast

187 points by Balgair 7y ago

bb88 7y ago
Best quote from the article: “I’ve never seen data to suggest that being charismatic and confident and overly brash is linked to a successful business,” says Kellie McElhaney, founding director of the Center for Equity, Gender, and Leadership at the University of California at Berkeley’s business school.
SQueeeeeL 7y ago
SoftBank sounds like they didn't get the memo startups involved in physical world don't really work because you can't "disrupt" complex logistics networks
Spooky23 7y ago
Of course it did. The notion of some capital intensive robot to make pizzas is and was absurd on its face. What problem was this company solving?
- tyingq 7y ago
  I think it's even narrower than that. Mobile pizza robots. Since non mobile ones surely already exist in the frozen pizza world. They seem to have been solving for a delivered pizza that's maybe 10 minutes more fresh. I don't think there's much value there.
  - friendlybus 7y ago
    The way to do automated pizza is to miniaturize and streamline like what Wozniak was great at doing at Apple. Retain the storefront and physical location. Push the storefront to be more community driven as an open plan restaurant and pickup location. Develop tech to generalize automated food prep and inventory storage. Build up from the basics engineering disciplines for a fully custom assembly pipeline. You don't want to lose the place in the community or the accountability of having humans to hold responsible for your food. A storefront can carry that. I don't understand buying a robot arm and calling it a day. Or cooking pizzas in black-box trucks that may arise suspicion in their cleanliness or quality. Being able to see your food being made adds a lot. How you do all that and compete with the big dogs is an interesting question.
    - tyingq 7y ago
      I typically only see 2 or 3 people manning a Little Caesar's. I don't know how much cheaper a robot could make an operation like that. Here's an actual work schedule: http://i.imgur.com/ukj47cs.jpg http://i.imgur.com/ukj47cs.jpg
      - friendlybus 7y ago
        You're not really building a robot, instead filling in the line between already automated sequences like the oven and chiller. Costco has a saucing mechanism, the biggest transformations are storing delivered inventory, managing dough proofing, topping pizzas accurately and self-cleaning. Cutting, boxing, delivering and taking orders is all straightforward. I know what a schedule looks like, I used to make them for some of the busiest pizza shops out there. Shops next to universities and large business districts are the easiest to make the financial savings argument. The shops that benefit from a 24/7 model can make savings and increase throughput. Delivering on-time and without error can be massively improved. Making a cost reduction on the huge amounts of tiny shops out there is a great place to prove the tech financially, not where you'll see the most dramatic impact. There is another automated pizza startup out there that has taken big frozen pizza factory tech and shrunk it down to retail size. It's not the right answer either. That tech makes too much sacrifice in accuracy, flexibility and quality for quantity. There are more factors that go into this, maybe something better pursued elsewhere than discussed here.
asciimike 7y ago
Matt Levine's comments on this yesterday [1] are comic genius: Presumably many local pizzeria owners have never heard of Masayoshi Son; presumably many more just would never have thought “oh we’re actually a pizza tech company and we need hundreds of millions of dollars of venture capital funding to scale.” But if you have the proper mindset, if you believe in yourself, if you are not a guy opening a pizza place but a founder who previously sold a tech company, if you hire a strategic and retail consultant, if you test out various combinations of “[giant tech company] of [broad category including pizza]” for the pitch, if you call your pizzeria “the Gigaranch” or “the Pizzaplex” rather than “Al’s Pizza & Subs,” and sure sure sure yes fine if you employ some robots to careen around town sloshing cheese around trucks, then maybe you can be the pizza proprietor to rake in Masayoshi Son’s millions. You craft a pitch calculated to convince Masayoshi Son that your pizza delivery business will change the world. You meet with Masayoshi Son. He convinces you that you will change the world. Now you are all believers, all in it together. He hands you piles of money. You go home and weep to your friends, “I am going to change the world.” The friends are like “wait what with the pizzas?” But it is too late for skepticism, you have the money, the robots are in the trucks, they are fanning out across town, the cheese is everywhere, they cannot turn back. [1]: https://www.bloomberg.com/opinion/articles/2020-02-14/robot-pizza-trucks-hit-some-bumps https://www.bloomberg.com/opinion/articles/2020-02-14/robot-...
- Aqueous 7y ago
  this is one of those moments where i really, really feel like we are all characters living in Neal Stephenson’s Snow Crash
  - ISL 7y ago
    It might be time for the Hiro we need. Still hands-down my favorite first-chapter of a book.
  - frikk 7y ago
    It's truly too on the nose.
  - pstuart 7y ago
dmix 7y ago
> Some hires came directly from coding schools that specialize in quick boot-camp-style training courses. One adviser recalls being surprised to learn that some Zume coders had last worked at the porn-and-hookup site Adult FriendFinder, known for a security breach that exposed the data of 412 million users. I kinda get the bootcamp concerns, but what's wrong with being a programmer at a porn site? I also highly doubt the problems were with the software team either. After the robotic delivery truck problem failed, which I think was a critical piece of the puzzle as they were essentially replacing retail pizza stores with mobile robotic food delivery machines. Which is something new - and critically something actually scalable with VC funding. Instead this ended up requiring a sophisticated infrastructure if it was going to compete with pizza stores on every corner, who already have ovens and drivers close to the last mile customers + these old pizza companies already have central marketing funnels from mobile apps, phone calls, and online orders which then distributed "leads" to the various local franchise locations. So an Uber-style play is pretty pointless. I'm curious if they should have tried a bit harder to solve the robotic pizza truck problem, so they didn't need to build out a centralized facility or a bunch of smaller delivery shops. Especially on the cusp on automated driving, these could just automatically pick-up food restocks at the central location and stay mobile as long as possible. I'm convinced too many startups give up too easily as soon as they face hard problems then pivot to boring old-industry style companies that aren't real startups/VC companies. Replacing minimum wage workers with robots will never be exciting by itself.
- deleted 7y ago
  [deleted]
- wbl 7y ago
  Pizza chains haven't even displaced the local pizzeria who make a higher quality product. It's inherently a resturaunt business and resturaunt are a terrible proposition.
  - nitrogen 7y ago
    In SF the chains have terrible quality, but in other places you can actually get pretty good pizza from a chain, if the style you want is in their lineup. Where I moved from the chain pizza was all pretty good. One day after I moved here I needed something quick and familiar so I ordered the same thing I used to get, and it was awful. So it comes down to the local management, and in areas where management is sound, the pizza is fine and robots add no value in time or quality.
mhluongo 7y ago
Despite the poor company, fanboying over getting a Levine callout in the "blockchain" bit heh [0] [0] - tbtc.network
DevX101 7y ago
Has SoftBank made ANY bets on American companies that are on trajectory to make significant returns?
- tempsy 7y ago
  They purchased most of their Uber stake at $33. It's at $40 now, so they've made money on Uber despite what the media wants you to believe.
  - icebraining 7y ago
    Yes, they technically did. But they are congratulating themselves on an 18% gain, having invested in early 2018. The S&P 500, with reinvested dividends, is up 22% over the same period.
    - tempsy 7y ago
      Upside for Uber is higher than S&P at this point. Could easily go above IPO price given the general upward trend + their good earnings.
      - alephnan 7y ago
        Then they could have bought S&P500 first, then buy into Uber now
        tempsy 7y ago
        That’s just called hindsight. If anyone knew at the time of decision what the perfect investment was we’d all be billionaires.
        alephnan 7y ago
        Right, we don’t. But no one buys the S&P500 because it’s the perfect investment. It’s diversified. Much less risky then buying an individual stock like Uber.
Multiplayer 7y ago
Interesting hit piece. I know Alex from the gaming industry - he's very smart, very driven and very nice. 3 thoughts: 1. 375mm is a huge number. 375mm is also 1/3 of 1% of the fund... so small potatoes. Any numbers they throw around are going to look enormous and make great headlines. 2. If some of the investments don't sound a little crazy to you, then what is their differentiation or thesis? Remember PG's essay about good companies often start off sounding like terrible ideas. 3. Yes, anyone that can raise large amounts of money, well, that may be their core strength. Raising money. They need to pair that with someone that can build a team. It's not a bad thing to be able to raise funds. Every SoftBank funded company must have an army of reporters looking for weakness. One of the cons of getting money too easily I suppose. That said, I did not / do not understand Wag, and I have 3 dogs and I pay for dog walkers. Against my will, I'm married, she insists. I'm not totally craZy.
- OnlineGladiator 7y ago
  > 2. If some of the investments don't sound a little crazy to you, then what is their differentiation or thesis? Remember PG's essay about good companies often start off sounding like terrible ideas. It's very different when you're investing at the seed stage as opposed to putting in what would normally be considered late stage capital. By that point, your valuation should be justified by your numbers, not your dreams.
- tmpz22 7y ago
  Are you saying lighting $375m on fire at the same time wealth inequality is imploding is not a newsworthy item? That a CASCADE of laughable investments by Softbank is not newsworthy to the VC/tech/software establishment?
  - anm89 7y ago
    Correct. You are not understanding the VC business model. It's only lighting money on fire if the fund as a whole fails to generate returns. The EXPECTATION is that many component investments will fail. This is exactly the same model as YCombinator. Most of their individual investments fail and this isn't, nor should it be, news worthy.
benibela 7y ago
Would it be a sound investment strategy to short everything that is fianced by SoftBank?
- vesinisa 7y ago
  AFAIK they only invest venture capital meaning the stock is very rarely publicly traded meaning it can not be sorted, or generally even invested in.
iamgopal 7y ago
Sometimes I pity masayoshi son, while I fail to earn a hundred thousand properly.
jakemal 7y ago
Is this really all that significant? It seems that since the WeWork fiasco, all of SoftBank's failures are being covered by news organizations. But isn't that simply the nature of venture capital? Invest in a lot of different things, most of which will fail, and make up for the losses with the Ubers of the world. (edit: It sounds like Uber was a bad example to use) $375 million sounds like a lot of money, but it's 0.3% of their investment fund. I'm not sure if SoftBank is suddenly performing worse than they have been in the past or if people simply just care more about the losses since they had such a major one recently.
- OnlineGladiator 7y ago
  > Invest in a lot of different things, most of which will fail, and make up for the losses with the Ubers of the world. Ironically, SoftBank is one of few investors to lose money by investing in Uber.
  - jakemal 7y ago
    I wasn't aware of that. So it's a bad example but the idea behind VC investing still stands.
    - OnlineGladiator 7y ago
      I understand your point. My point (which I didn't really explain, so that's my fault) is that SoftBank is an especially terrible VC firm - at least when it comes to making money.
    - rhizome 7y ago
      Eh, in general, but equating the reasonableness of a fund by the percentage of their total is not sound. $100B can still be dumb money, and inventing valuations as a product of this is actually harmful to actually-viable companies. It sucks the air out with bad money (if you can believe in such a thing). "VC" is not a synonym for "smart money," and "the idea behind VC" being "everybody is betting tho" doesn't explain their outsized presence and outsized effects.
  - 7y ago
randycupertino 7y ago
Has SoftBank made any profitable investments lately? All I hear about them is going bust (WeWork, pizza...).
- fxtentacle 7y ago
  "SoftBank Vision Fund has had 12 exits. SoftBank Vision Fund's most notable exits include NVIDIA, Uber, and Flipkart." https://www.crunchbase.com/organization/softbank-vision-fund https://www.crunchbase.com/organization/softbank-vision-fund
  - rrss 7y ago
    Didn't SoftBank buy high and sell low for nvidia, though? (and maybe uber, too?)
    - sdinsn 7y ago
      Not for Nvidia, they sold at $218/share with an average basis of $105/share. I can't find a number for Uber alone, but they posted a $6.5B loss for Uber and WeWork together.
      - rrss 7y ago
        Ah, thanks. I didn't realize they had options to sell at $218, so I was thinking of the market price in Feb 2019.
GCA10 7y ago
There was a spoof book in 2008 called "Manifold Destiny," which consisted of dinner recipes that could be wrapped in aluminum foil and placed under your car hood, near some hot part of the engine -- to be nimbly cooked in the course of an hour's drive to your destination. I skimmed it in a book store, back in the day. Quite funny! (Where else could you learn about Hyundai Halibut With Fennel -- cooking time 55-85 miles.) Shoot me for not realizing that it was a visionary guide to getting funded by Softbank.
- seem_2211 7y ago
  There's a good Top Gear episode where they tried 'cooking' with a car engine (apparently the food tasted awful) https://www.youtube.com/watch?v=o9vhGiSL904 https://www.youtube.com/watch?v=o9vhGiSL904
  - lazulicurio 7y ago
    They should have gotten Alton Brown to do their cooking for them! https://www.youtube.com/watch?v=tqABijWMlxA https://www.youtube.com/watch?v=tqABijWMlxA
- gstipi 7y ago
  As a matter of fact, 2018 saw the first "carbeque" world championships, to be repeated in 2020 - https://www.carbeque.one/en/ https://www.carbeque.one/en/
- NotSammyHagar 7y ago
  Except future robotic cars will mostly be electric I think, and you can't have engine block tv dinners anymore because evs don't generate waste heat like ice cars. But you could have electric ovens in them ;-)
yalogin 7y ago
Wow a pizza compNy that delivers and cooks on the way to your house, all done by robots. I can see the pitch. All cooking is automated and in a few years we will become a self driving car company also and automate everything from taking order to cooking to even delivering to the door. There will be no human involved except to refresh the bank account to look at the money we are making! Instead they ended up increasing their costs multiple times by cooking in parking lots and delivering over scooters. Wow. Classic example of not understanding what they are doing. Both the founders and investors have no understanding of either the tech or pizza marketplace and blindly jumped in. I guess it’s great for the founder. They make money almost for free.
- ngold 7y ago
  I was listening to a podcast with a french fry tech lady that suggested little roaming robots dispensing air fried fries out of it's little belly.
- notyourday 7y ago
  > Classic example of not understanding what they are doing. Both the founders and investors have no understanding of either the tech or pizza marketplace and blindly jumped in. May I present you... https://techcrunch.com/2019/09/25/bodega-once-dubbed-americas-most-hated-startup-has-quietly-raised-millions/ https://techcrunch.com/2019/09/25/bodega-once-dubbed-america...
- rileymat2 7y ago
  >Wow a pizza compNy that delivers and cooks on the way to your house, all done by robots. I am not sure I suppose in really high real estate cost areas that might be good, but it does not strike me as an obviously good idea with respect to capital usage.
- 0x8BADF00D 7y ago
  > They make money almost for free. And the employees too, they got fat severances. All of this reminds me of a government jobs program. Strange, isn’t it? If the free market wasn’t so distorted in the US (primarily because of government involvement), companies like this would never get funded in the first place. Instead we have government jobs programs popping up all over, due to QE by the Fed. Next time they should just helicopter the money directly to everybody. Way more efficient.
rcpt 7y ago
Those pizzas were not good but I don't think it had much to do with the robot. I don't know why they didn't just spend a bit more on ingredients.
- abhgh 7y ago
  I found them okay-ish. In fact, I felt the cooking was not uniform because it felt more "bready" towards the periphery (yes its supposed to be like that, but this was more than standard pizzas). NB: things may have improved, I had ordered in Jan 2017, after seeing one of their vans going by in Mountain View.
- _jal 7y ago
  They had multimillion-dollar robots to pay for - you want good cheese, too? Truly, the customer is never satisfied.
fxtentacle 7y ago
I am honestly surprised that nobody mentioned the critical quote: "The fund is less than three years old and we’ve already had eight IPOs and returned $10.6 billion to our limited partners." I would be willing to believe that. Maybe SoftBank is making money and paying out profits, despite some of their companies publicly failing in spectacular ways. In that case, they are absolutely correct to ignore public opinion and continue doing what they were doing before.
- abrax3141 7y ago
  Unless they spent $20b to make back $10.6 :-) [In some circles it’s called ‘Selling a dollar for fifty cents.”]
tempsy 7y ago
FYI: Uber is back to around $40 after a good earnings call. Softbank purchased most of their shares around $33 (though I think they also purchase some around $48), so they are mostly profitable on their Uber investment. Not out of the question for Uber to reach $50+ by end of year.
heyflyguy 7y ago
ok so how exactly do you pitch to softbank?
lostlogin 7y ago
It would be interesting to know the number of pizzas sold. What did each one cost SoftBank?
baybal2 7y ago
I think you need to be seriously stupid to spend $375M on something like a pizza chain. To me it looks surreal seeing people giving somebody like him $100B
cnst 7y ago
I've actually interviewed with Zume in winter 2017/2018, they've initiated the contact through one of the platforms that only accepts the top-5% of applicants in the first place. They've set me up for a failure during the initial phone screen by asking a tricky set of two simple questions that noone else has ever asked together and in that order, where you have to answer the first question before you see the second one: * “You've worked at company X. Rate your performance on a scale from 1 to 10 for how your supervisor would rate you.” * “What is the reason for your separation from company X.” (Try doing these two questions in the above order if you've ever been let go from any job, and when the answer to the first question is fixed before the second question is revealed.) These bros then went ahead and made a hard rejection right there on the phone, waiting for my reaction as if I'm a zoo specimen (it was kind of a shock to me at that time, as I've never been hard-rejected and humiliated like that before or after this incident). Am I now surprised or disappointed these folks have failed? Not really. You get what you preach. The whole idea seemed kind of stupid and overblown in the first place.
- marcinzm 7y ago
  >(Try doing these two questions in the above order if you've ever been let go from any job, and when the answer to the first question is fixed before the second question is revealed.) I just always assumed people made things up for these questions and rehearsed their fake story ahead of time.
  - cnst 7y ago
    > I just always assumed people made things up for these questions and rehearsed their fake story ahead of time. How could you do that if you've never heard of the questions? (I did hundreds of screens, and it's never came up before.) Does everyone always research what questions each company asks? I guess if you're aware of the trap, it might be possible to avoid, indeed. Then it becomes a test on whether you've researched the company or not prior to the call; whether or not if have ever been fired; and whether or not you're a good liar. Also, even if you're aware of the question — do you rate yourself below 7, or hide the fact that you've been let go by the person rating you 7 and above?
seibelj 7y ago
AI is the biggest scam of all tech pitches. Get some data, make a neural network, slap a single-page app on front of it, and BOOM - disrupt [insert sector that employees N-thousands of people]. "Once we scale, we won't have employees - and you'll own a percentage of the black box that disrupts the whole industry." The parts of any business that can actually be automated by "AI" (aka machine learning, aka automated statistical analysis) are not the pieces of the business that justify its existence and value to customers. Self-driving cars are the most obvious debacle, but it's the same story everywhere - enormous capital to get the data and engineers to automate, but even the "good" AI still gets it wrong much of the time, necessitating endless edge-cases, human intervention, and eventually it's a giant ball of poorly-understand and impossible to maintain pipelines that don't even provide a better result than a few humans with a spreadsheet. Imminent implosion to the AI sector is incoming, sell now before the hype completely wears off.
- ttul 7y ago
  Yet AI _within_ large companies is producing enormous benefits. If your AI startup is helping customers implement AI on their own data, you may have something. A one page web site on top of your own startup data? Yeah that sounds risky.
  - seibelj 7y ago
    Do you have any examples of "enormous", tangible benefits from machine learning own data? I can see some benefits on the margins, but I have not found any evidence of disruptive productivity enhancements.
stewbrew 7y ago
Where I live they have this TV show where startups have 2 minutes to pitch their idea to some investors. I remember people who built a fully automatic pizza machine. They asked for a few thousand euros and failed. I wonder how much money they would have got from Masayoshi Son. Somebody should make a TV show for/with him.
kemyd 7y ago
2005: We will have fully-autonomous cars by 2020 2020: Making pizza automatically is so damn hard
moneromoney 7y ago
SoftBank will go bankrupt. Such bad and incompetent investments...
jesseryoung 7y ago
> In January, Zume cut 360 jobs, leaving a little over 300 employees, and said it would focus on packaging and efficiency gains for other food delivery companies. Am I understanding correctly that they went from an idea to 660 employees in 2 years? How common is this in VC funded startups? I can't imagine this would be easy to manage effectively.
thrower123 7y ago
Is there a list of successful Softbank companies? It's starting to feel like the only time I ever hear about them is when some batshit Web 7.0 gig-economy company that should never have existed starts losing its shirt, and then it turns out that Softbank has invested hundreds of millions of dollars in it.
joncp 7y ago
I researched Zume quite deeply for interviewing with them and I never could figure out how they intended to make money. They had a vast plan that was way to big to execute all at once and none of it was ever going to be complete. I got the sense that they had received way too much funding and had gone on a feature-creep binge as a result. I learned a neat lesson from that: you can kill a startup with too much money up front.
xenospn 7y ago
This is very odd to read as a founder. On one hand, you have VCs and Angels telling you you have to be "10x of everything's that's out there!" to get a 1M seed check. On the other, you see someone who's arguably 10x worse getting a medium sized bank given to them.
rebuilder 7y ago
So, hindsight is 20/20 and all that, but how was this supposed to work? The pizza assembly apparently was done at a central location, which means they can deliver to a limited area. Let's say max 30 minutes for delivery, how far is that in a metropolitan area? The factory is not going to be cheap. It seems like they figured making pizzas was the bottleneck, when really delivery is it.
deleted 7y ago
[deleted]
vslira 7y ago
It's worth remembering that Vision Fund's apparent thesis wasn't just to have a many-losers-compensated-by-a-big-winner portfolio like most VC funds, but that they would pick winners by sheer scale of their checks. That should imply a smaller shares of outright failures (if Uber, Wework et al can even be called that, which I'm not sure) Unfortunately to test said thesis they HAD to raise that much money (maybe half was enough, but then again, if they could raise 100Bn, why not?) and HAD to burn it like they did. Apparently the result is that scale alone can't bring the kind of outsized returns VCs rely on, even if they do end up creating juggernauts. But to learn that, someone had to try.
- Balgair 7y ago
  > but that they would pick winners by sheer scale of their checks So, $10 billion cargo-culting?
alister 7y ago
Wouldn't it make more sense for the VCs to make 375 bets of $1M each rather than 1 bet of $375M? Just the other day we heard about the troubles of 23andMe that had $786M in venture funding. Are there any examples of startups that got >$300M in early funding that went on to become a huge success?
- dmurray 7y ago
  There aren't enough companies for the $1m bets. The Softbank Vision fund was closer to making 375 bets of $375m each.
Traster 7y ago
It's really peculiar. It's the nature of venture capital that your moonshots will pay off the dozens of trash companies you invested in, but what happens if some presidential candidate decides his media organisation is going to write an article about every single one of your investment failures? Is this a matter of a media eco-system that doesn't understand a business mdoel sticking an oar in where it doesn't belong?
miohtama 7y ago
Sounds like Zume would have been a perfect merger partner for Juicero!
woodandsteel 7y ago
That robotic arm looks like it could lift something 100 times as heavy as a pizza.

187 points by Balgair 7y ago

bb88 7y ago

Best quote from the article: “I’ve never seen data to suggest that being charismatic and confident and overly brash is linked to a successful business,” says Kellie McElhaney, founding director of the Center for Equity, Gender, and Leadership at the University of California at Berkeley’s business school.

SQueeeeeL 7y ago

SoftBank sounds like they didn't get the memo startups involved in physical world don't really work because you can't "disrupt" complex logistics networks

Spooky23 7y ago

Of course it did. The notion of some capital intensive robot to make pizzas is and was absurd on its face. What problem was this company solving?

tyingq 7y ago
I think it's even narrower than that. Mobile pizza robots. Since non mobile ones surely already exist in the frozen pizza world. They seem to have been solving for a delivered pizza that's maybe 10 minutes more fresh. I don't think there's much value there.
- friendlybus 7y ago
  The way to do automated pizza is to miniaturize and streamline like what Wozniak was great at doing at Apple. Retain the storefront and physical location. Push the storefront to be more community driven as an open plan restaurant and pickup location. Develop tech to generalize automated food prep and inventory storage. Build up from the basics engineering disciplines for a fully custom assembly pipeline. You don't want to lose the place in the community or the accountability of having humans to hold responsible for your food. A storefront can carry that. I don't understand buying a robot arm and calling it a day. Or cooking pizzas in black-box trucks that may arise suspicion in their cleanliness or quality. Being able to see your food being made adds a lot. How you do all that and compete with the big dogs is an interesting question.
  - tyingq 7y ago
    I typically only see 2 or 3 people manning a Little Caesar's. I don't know how much cheaper a robot could make an operation like that. Here's an actual work schedule: http://i.imgur.com/ukj47cs.jpg http://i.imgur.com/ukj47cs.jpg
    - friendlybus 7y ago
      You're not really building a robot, instead filling in the line between already automated sequences like the oven and chiller. Costco has a saucing mechanism, the biggest transformations are storing delivered inventory, managing dough proofing, topping pizzas accurately and self-cleaning. Cutting, boxing, delivering and taking orders is all straightforward. I know what a schedule looks like, I used to make them for some of the busiest pizza shops out there. Shops next to universities and large business districts are the easiest to make the financial savings argument. The shops that benefit from a 24/7 model can make savings and increase throughput. Delivering on-time and without error can be massively improved. Making a cost reduction on the huge amounts of tiny shops out there is a great place to prove the tech financially, not where you'll see the most dramatic impact. There is another automated pizza startup out there that has taken big frozen pizza factory tech and shrunk it down to retail size. It's not the right answer either. That tech makes too much sacrifice in accuracy, flexibility and quality for quantity. There are more factors that go into this, maybe something better pursued elsewhere than discussed here.

asciimike 7y ago

Matt Levine's comments on this yesterday [1] are comic genius: Presumably many local pizzeria owners have never heard of Masayoshi Son; presumably many more just would never have thought “oh we’re actually a pizza tech company and we need hundreds of millions of dollars of venture capital funding to scale.” But if you have the proper mindset, if you believe in yourself, if you are not a guy opening a pizza place but a founder who previously sold a tech company, if you hire a strategic and retail consultant, if you test out various combinations of “[giant tech company] of [broad category including pizza]” for the pitch, if you call your pizzeria “the Gigaranch” or “the Pizzaplex” rather than “Al’s Pizza & Subs,” and sure sure sure yes fine if you employ some robots to careen around town sloshing cheese around trucks, then maybe you can be the pizza proprietor to rake in Masayoshi Son’s millions. You craft a pitch calculated to convince Masayoshi Son that your pizza delivery business will change the world. You meet with Masayoshi Son. He convinces you that you will change the world. Now you are all believers, all in it together. He hands you piles of money. You go home and weep to your friends, “I am going to change the world.” The friends are like “wait what with the pizzas?” But it is too late for skepticism, you have the money, the robots are in the trucks, they are fanning out across town, the cheese is everywhere, they cannot turn back. [1]: https://www.bloomberg.com/opinion/articles/2020-02-14/robot-pizza-trucks-hit-some-bumps https://www.bloomberg.com/opinion/articles/2020-02-14/robot-...

Aqueous 7y ago
this is one of those moments where i really, really feel like we are all characters living in Neal Stephenson’s Snow Crash
- ISL 7y ago
  It might be time for the Hiro we need. Still hands-down my favorite first-chapter of a book.
- frikk 7y ago
  It's truly too on the nose.
- pstuart 7y ago

dmix 7y ago

> Some hires came directly from coding schools that specialize in quick boot-camp-style training courses. One adviser recalls being surprised to learn that some Zume coders had last worked at the porn-and-hookup site Adult FriendFinder, known for a security breach that exposed the data of 412 million users. I kinda get the bootcamp concerns, but what's wrong with being a programmer at a porn site? I also highly doubt the problems were with the software team either. After the robotic delivery truck problem failed, which I think was a critical piece of the puzzle as they were essentially replacing retail pizza stores with mobile robotic food delivery machines. Which is something new - and critically something actually scalable with VC funding. Instead this ended up requiring a sophisticated infrastructure if it was going to compete with pizza stores on every corner, who already have ovens and drivers close to the last mile customers + these old pizza companies already have central marketing funnels from mobile apps, phone calls, and online orders which then distributed "leads" to the various local franchise locations. So an Uber-style play is pretty pointless. I'm curious if they should have tried a bit harder to solve the robotic pizza truck problem, so they didn't need to build out a centralized facility or a bunch of smaller delivery shops. Especially on the cusp on automated driving, these could just automatically pick-up food restocks at the central location and stay mobile as long as possible. I'm convinced too many startups give up too easily as soon as they face hard problems then pivot to boring old-industry style companies that aren't real startups/VC companies. Replacing minimum wage workers with robots will never be exciting by itself.

deleted 7y ago
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wbl 7y ago
Pizza chains haven't even displaced the local pizzeria who make a higher quality product. It's inherently a resturaunt business and resturaunt are a terrible proposition.
- nitrogen 7y ago
  In SF the chains have terrible quality, but in other places you can actually get pretty good pizza from a chain, if the style you want is in their lineup. Where I moved from the chain pizza was all pretty good. One day after I moved here I needed something quick and familiar so I ordered the same thing I used to get, and it was awful. So it comes down to the local management, and in areas where management is sound, the pizza is fine and robots add no value in time or quality.

mhluongo 7y ago

Despite the poor company, fanboying over getting a Levine callout in the "blockchain" bit heh [0] [0] - tbtc.network

DevX101 7y ago

Has SoftBank made ANY bets on American companies that are on trajectory to make significant returns?

tempsy 7y ago
They purchased most of their Uber stake at $33. It's at $40 now, so they've made money on Uber despite what the media wants you to believe.
- icebraining 7y ago
  Yes, they technically did. But they are congratulating themselves on an 18% gain, having invested in early 2018. The S&P 500, with reinvested dividends, is up 22% over the same period.
  - tempsy 7y ago
    Upside for Uber is higher than S&P at this point. Could easily go above IPO price given the general upward trend + their good earnings.
    - alephnan 7y ago
      Then they could have bought S&P500 first, then buy into Uber now
      - tempsy 7y ago
        That’s just called hindsight. If anyone knew at the time of decision what the perfect investment was we’d all be billionaires.
        alephnan 7y ago
        Right, we don’t. But no one buys the S&P500 because it’s the perfect investment. It’s diversified. Much less risky then buying an individual stock like Uber.

Multiplayer 7y ago

Interesting hit piece. I know Alex from the gaming industry - he's very smart, very driven and very nice. 3 thoughts: 1. 375mm is a huge number. 375mm is also 1/3 of 1% of the fund... so small potatoes. Any numbers they throw around are going to look enormous and make great headlines. 2. If some of the investments don't sound a little crazy to you, then what is their differentiation or thesis? Remember PG's essay about good companies often start off sounding like terrible ideas. 3. Yes, anyone that can raise large amounts of money, well, that may be their core strength. Raising money. They need to pair that with someone that can build a team. It's not a bad thing to be able to raise funds. Every SoftBank funded company must have an army of reporters looking for weakness. One of the cons of getting money too easily I suppose. That said, I did not / do not understand Wag, and I have 3 dogs and I pay for dog walkers. Against my will, I'm married, she insists. I'm not totally craZy.

OnlineGladiator 7y ago
> 2. If some of the investments don't sound a little crazy to you, then what is their differentiation or thesis? Remember PG's essay about good companies often start off sounding like terrible ideas. It's very different when you're investing at the seed stage as opposed to putting in what would normally be considered late stage capital. By that point, your valuation should be justified by your numbers, not your dreams.
tmpz22 7y ago
Are you saying lighting $375m on fire at the same time wealth inequality is imploding is not a newsworthy item? That a CASCADE of laughable investments by Softbank is not newsworthy to the VC/tech/software establishment?
- anm89 7y ago
  Correct. You are not understanding the VC business model. It's only lighting money on fire if the fund as a whole fails to generate returns. The EXPECTATION is that many component investments will fail. This is exactly the same model as YCombinator. Most of their individual investments fail and this isn't, nor should it be, news worthy.

benibela 7y ago

Would it be a sound investment strategy to short everything that is fianced by SoftBank?

vesinisa 7y ago
AFAIK they only invest venture capital meaning the stock is very rarely publicly traded meaning it can not be sorted, or generally even invested in.

iamgopal 7y ago

Sometimes I pity masayoshi son, while I fail to earn a hundred thousand properly.

jakemal 7y ago

Is this really all that significant? It seems that since the WeWork fiasco, all of SoftBank's failures are being covered by news organizations. But isn't that simply the nature of venture capital? Invest in a lot of different things, most of which will fail, and make up for the losses with the Ubers of the world. (edit: It sounds like Uber was a bad example to use) $375 million sounds like a lot of money, but it's 0.3% of their investment fund. I'm not sure if SoftBank is suddenly performing worse than they have been in the past or if people simply just care more about the losses since they had such a major one recently.

OnlineGladiator 7y ago
> Invest in a lot of different things, most of which will fail, and make up for the losses with the Ubers of the world. Ironically, SoftBank is one of few investors to lose money by investing in Uber.
- jakemal 7y ago
  I wasn't aware of that. So it's a bad example but the idea behind VC investing still stands.
  - OnlineGladiator 7y ago
    I understand your point. My point (which I didn't really explain, so that's my fault) is that SoftBank is an especially terrible VC firm - at least when it comes to making money.
  - rhizome 7y ago
    Eh, in general, but equating the reasonableness of a fund by the percentage of their total is not sound. $100B can still be dumb money, and inventing valuations as a product of this is actually harmful to actually-viable companies. It sucks the air out with bad money (if you can believe in such a thing). "VC" is not a synonym for "smart money," and "the idea behind VC" being "everybody is betting tho" doesn't explain their outsized presence and outsized effects.
- 7y ago

randycupertino 7y ago

Has SoftBank made any profitable investments lately? All I hear about them is going bust (WeWork, pizza...).

fxtentacle 7y ago
"SoftBank Vision Fund has had 12 exits. SoftBank Vision Fund's most notable exits include NVIDIA, Uber, and Flipkart." https://www.crunchbase.com/organization/softbank-vision-fund https://www.crunchbase.com/organization/softbank-vision-fund
- rrss 7y ago
  Didn't SoftBank buy high and sell low for nvidia, though? (and maybe uber, too?)
  - sdinsn 7y ago
    Not for Nvidia, they sold at $218/share with an average basis of $105/share. I can't find a number for Uber alone, but they posted a $6.5B loss for Uber and WeWork together.
    - rrss 7y ago
      Ah, thanks. I didn't realize they had options to sell at $218, so I was thinking of the market price in Feb 2019.

GCA10 7y ago

There was a spoof book in 2008 called "Manifold Destiny," which consisted of dinner recipes that could be wrapped in aluminum foil and placed under your car hood, near some hot part of the engine -- to be nimbly cooked in the course of an hour's drive to your destination. I skimmed it in a book store, back in the day. Quite funny! (Where else could you learn about Hyundai Halibut With Fennel -- cooking time 55-85 miles.) Shoot me for not realizing that it was a visionary guide to getting funded by Softbank.

seem_2211 7y ago
There's a good Top Gear episode where they tried 'cooking' with a car engine (apparently the food tasted awful) https://www.youtube.com/watch?v=o9vhGiSL904 https://www.youtube.com/watch?v=o9vhGiSL904
- lazulicurio 7y ago
  They should have gotten Alton Brown to do their cooking for them! https://www.youtube.com/watch?v=tqABijWMlxA https://www.youtube.com/watch?v=tqABijWMlxA
gstipi 7y ago
As a matter of fact, 2018 saw the first "carbeque" world championships, to be repeated in 2020 - https://www.carbeque.one/en/ https://www.carbeque.one/en/
NotSammyHagar 7y ago
Except future robotic cars will mostly be electric I think, and you can't have engine block tv dinners anymore because evs don't generate waste heat like ice cars. But you could have electric ovens in them ;-)

yalogin 7y ago

Wow a pizza compNy that delivers and cooks on the way to your house, all done by robots. I can see the pitch. All cooking is automated and in a few years we will become a self driving car company also and automate everything from taking order to cooking to even delivering to the door. There will be no human involved except to refresh the bank account to look at the money we are making! Instead they ended up increasing their costs multiple times by cooking in parking lots and delivering over scooters. Wow. Classic example of not understanding what they are doing. Both the founders and investors have no understanding of either the tech or pizza marketplace and blindly jumped in. I guess it’s great for the founder. They make money almost for free.

ngold 7y ago
I was listening to a podcast with a french fry tech lady that suggested little roaming robots dispensing air fried fries out of it's little belly.
notyourday 7y ago
> Classic example of not understanding what they are doing. Both the founders and investors have no understanding of either the tech or pizza marketplace and blindly jumped in. May I present you... https://techcrunch.com/2019/09/25/bodega-once-dubbed-americas-most-hated-startup-has-quietly-raised-millions/ https://techcrunch.com/2019/09/25/bodega-once-dubbed-america...
rileymat2 7y ago
>Wow a pizza compNy that delivers and cooks on the way to your house, all done by robots. I am not sure I suppose in really high real estate cost areas that might be good, but it does not strike me as an obviously good idea with respect to capital usage.
0x8BADF00D 7y ago
> They make money almost for free. And the employees too, they got fat severances. All of this reminds me of a government jobs program. Strange, isn’t it? If the free market wasn’t so distorted in the US (primarily because of government involvement), companies like this would never get funded in the first place. Instead we have government jobs programs popping up all over, due to QE by the Fed. Next time they should just helicopter the money directly to everybody. Way more efficient.

rcpt 7y ago

Those pizzas were not good but I don't think it had much to do with the robot. I don't know why they didn't just spend a bit more on ingredients.

abhgh 7y ago
I found them okay-ish. In fact, I felt the cooking was not uniform because it felt more "bready" towards the periphery (yes its supposed to be like that, but this was more than standard pizzas). NB: things may have improved, I had ordered in Jan 2017, after seeing one of their vans going by in Mountain View.
_jal 7y ago
They had multimillion-dollar robots to pay for - you want good cheese, too? Truly, the customer is never satisfied.

fxtentacle 7y ago

I am honestly surprised that nobody mentioned the critical quote: "The fund is less than three years old and we’ve already had eight IPOs and returned $10.6 billion to our limited partners." I would be willing to believe that. Maybe SoftBank is making money and paying out profits, despite some of their companies publicly failing in spectacular ways. In that case, they are absolutely correct to ignore public opinion and continue doing what they were doing before.

abrax3141 7y ago
Unless they spent $20b to make back $10.6 :-) [In some circles it’s called ‘Selling a dollar for fifty cents.”]

tempsy 7y ago

FYI: Uber is back to around $40 after a good earnings call. Softbank purchased most of their shares around $33 (though I think they also purchase some around $48), so they are mostly profitable on their Uber investment. Not out of the question for Uber to reach $50+ by end of year.

heyflyguy 7y ago

ok so how exactly do you pitch to softbank?

lostlogin 7y ago

It would be interesting to know the number of pizzas sold. What did each one cost SoftBank?

baybal2 7y ago

I think you need to be seriously stupid to spend $375M on something like a pizza chain. To me it looks surreal seeing people giving somebody like him $100B

cnst 7y ago

I've actually interviewed with Zume in winter 2017/2018, they've initiated the contact through one of the platforms that only accepts the top-5% of applicants in the first place. They've set me up for a failure during the initial phone screen by asking a tricky set of two simple questions that noone else has ever asked together and in that order, where you have to answer the first question before you see the second one: * “You've worked at company X. Rate your performance on a scale from 1 to 10 for how your supervisor would rate you.” * “What is the reason for your separation from company X.” (Try doing these two questions in the above order if you've ever been let go from any job, and when the answer to the first question is fixed before the second question is revealed.) These bros then went ahead and made a hard rejection right there on the phone, waiting for my reaction as if I'm a zoo specimen (it was kind of a shock to me at that time, as I've never been hard-rejected and humiliated like that before or after this incident). Am I now surprised or disappointed these folks have failed? Not really. You get what you preach. The whole idea seemed kind of stupid and overblown in the first place.

marcinzm 7y ago
>(Try doing these two questions in the above order if you've ever been let go from any job, and when the answer to the first question is fixed before the second question is revealed.) I just always assumed people made things up for these questions and rehearsed their fake story ahead of time.
- cnst 7y ago
  > I just always assumed people made things up for these questions and rehearsed their fake story ahead of time. How could you do that if you've never heard of the questions? (I did hundreds of screens, and it's never came up before.) Does everyone always research what questions each company asks? I guess if you're aware of the trap, it might be possible to avoid, indeed. Then it becomes a test on whether you've researched the company or not prior to the call; whether or not if have ever been fired; and whether or not you're a good liar. Also, even if you're aware of the question — do you rate yourself below 7, or hide the fact that you've been let go by the person rating you 7 and above?

seibelj 7y ago

AI is the biggest scam of all tech pitches. Get some data, make a neural network, slap a single-page app on front of it, and BOOM - disrupt [insert sector that employees N-thousands of people]. "Once we scale, we won't have employees - and you'll own a percentage of the black box that disrupts the whole industry." The parts of any business that can actually be automated by "AI" (aka machine learning, aka automated statistical analysis) are not the pieces of the business that justify its existence and value to customers. Self-driving cars are the most obvious debacle, but it's the same story everywhere - enormous capital to get the data and engineers to automate, but even the "good" AI still gets it wrong much of the time, necessitating endless edge-cases, human intervention, and eventually it's a giant ball of poorly-understand and impossible to maintain pipelines that don't even provide a better result than a few humans with a spreadsheet. Imminent implosion to the AI sector is incoming, sell now before the hype completely wears off.

ttul 7y ago
Yet AI _within_ large companies is producing enormous benefits. If your AI startup is helping customers implement AI on their own data, you may have something. A one page web site on top of your own startup data? Yeah that sounds risky.
- seibelj 7y ago
  Do you have any examples of "enormous", tangible benefits from machine learning own data? I can see some benefits on the margins, but I have not found any evidence of disruptive productivity enhancements.

stewbrew 7y ago

Where I live they have this TV show where startups have 2 minutes to pitch their idea to some investors. I remember people who built a fully automatic pizza machine. They asked for a few thousand euros and failed. I wonder how much money they would have got from Masayoshi Son. Somebody should make a TV show for/with him.

kemyd 7y ago

2005: We will have fully-autonomous cars by 2020 2020: Making pizza automatically is so damn hard

moneromoney 7y ago

SoftBank will go bankrupt. Such bad and incompetent investments...

jesseryoung 7y ago

> In January, Zume cut 360 jobs, leaving a little over 300 employees, and said it would focus on packaging and efficiency gains for other food delivery companies. Am I understanding correctly that they went from an idea to 660 employees in 2 years? How common is this in VC funded startups? I can't imagine this would be easy to manage effectively.

thrower123 7y ago

Is there a list of successful Softbank companies? It's starting to feel like the only time I ever hear about them is when some batshit Web 7.0 gig-economy company that should never have existed starts losing its shirt, and then it turns out that Softbank has invested hundreds of millions of dollars in it.

joncp 7y ago

I researched Zume quite deeply for interviewing with them and I never could figure out how they intended to make money. They had a vast plan that was way to big to execute all at once and none of it was ever going to be complete. I got the sense that they had received way too much funding and had gone on a feature-creep binge as a result. I learned a neat lesson from that: you can kill a startup with too much money up front.

xenospn 7y ago

This is very odd to read as a founder. On one hand, you have VCs and Angels telling you you have to be "10x of everything's that's out there!" to get a 1M seed check. On the other, you see someone who's arguably 10x worse getting a medium sized bank given to them.

rebuilder 7y ago

So, hindsight is 20/20 and all that, but how was this supposed to work? The pizza assembly apparently was done at a central location, which means they can deliver to a limited area. Let's say max 30 minutes for delivery, how far is that in a metropolitan area? The factory is not going to be cheap. It seems like they figured making pizzas was the bottleneck, when really delivery is it.

deleted 7y ago

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vslira 7y ago

It's worth remembering that Vision Fund's apparent thesis wasn't just to have a many-losers-compensated-by-a-big-winner portfolio like most VC funds, but that they would pick winners by sheer scale of their checks. That should imply a smaller shares of outright failures (if Uber, Wework et al can even be called that, which I'm not sure) Unfortunately to test said thesis they HAD to raise that much money (maybe half was enough, but then again, if they could raise 100Bn, why not?) and HAD to burn it like they did. Apparently the result is that scale alone can't bring the kind of outsized returns VCs rely on, even if they do end up creating juggernauts. But to learn that, someone had to try.

Balgair 7y ago
> but that they would pick winners by sheer scale of their checks So, $10 billion cargo-culting?

alister 7y ago

Wouldn't it make more sense for the VCs to make 375 bets of $1M each rather than 1 bet of $375M? Just the other day we heard about the troubles of 23andMe that had $786M in venture funding. Are there any examples of startups that got >$300M in early funding that went on to become a huge success?

dmurray 7y ago
There aren't enough companies for the $1m bets. The Softbank Vision fund was closer to making 375 bets of $375m each.

Traster 7y ago

It's really peculiar. It's the nature of venture capital that your moonshots will pay off the dozens of trash companies you invested in, but what happens if some presidential candidate decides his media organisation is going to write an article about every single one of your investment failures? Is this a matter of a media eco-system that doesn't understand a business mdoel sticking an oar in where it doesn't belong?

miohtama 7y ago

Sounds like Zume would have been a perfect merger partner for Juicero!

woodandsteel 7y ago

That robotic arm looks like it could lift something 100 times as heavy as a pizza.