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SoftBank-backed pizza startup shuts down after raising $445M
- shaunregenbaum 3y agoWhat did people expect?
- bhaney 3y agoPizza, presumably
- Hamuko 3y ago1. Scale like hell 2. ??? 3. Profit
- wongarsu 3y agoBut step 1 is exactly the problem. I assume whatever production line makes my frozen pizzas looks pretty much like Zume's robotic pizza assembly line - except for the part where those are frozen and can be shipped from a single factory to a whole country. Zume reinvents the whole process, but instead of freezing it they put it in a delivery truck and heat it up on the last mile. Which means the factory has to be close to your delivery area. Now, factoring in competition from all other pizza delivery services, how much scale can you achieve with that? How long until automation of these small-scale runs pays off? And how many sufficiently big cities are there to expand to?
- Ekaros 3y agoProper fully automated pizza making solution might sell. But to me at least one video I saw the whole thing was half-baked(in multiple ways)... Maybe a container sized unit or something that would take ingredients from one end and push out warm pizza in a box from other... I could see those going to self-service or dark kitchens.
- fnands 3y agoAh SoftBank, please never change.
- ID1452319 3y agoThey didn't actually receive $445m in cash money though, surely? It must have been contingent on them having a working product, IT MUST????
- pjc50 3y ago"Having a working product" is often "too late to invest" in startups. It's just part of the culture. If you want to invest in somewhere that actually makes pizzas, you can buy an Italian restaurant in any city in the country. https://www.forbes.com/sites/jackkelly/2022/12/05/early-venture-capitalist-investor-in-zoom-with-a-200x-return-offers-his-views-on-the-future-of-the-startup-space/ https://www.forbes.com/sites/jackkelly/2022/12/05/early-vent... : in some sense, the real product, the hugely profitable one, was "the idea of a pizza company". Or, if we look closer, the idea of a packaging company. They did indeed raise over $400m actual cash. https://www.crunchbase.com/organization/zume-inc/company_financials https://www.crunchbase.com/organization/zume-inc/company_fin...
- birdyrooster 3y agoMasayoshi Son is like Marissa Mayer on a speedball
- gnicholas 3y agoDiscussed previously: https://news.ycombinator.com/item?id=36177048 https://news.ycombinator.com/item?id=36177048
- mikestew 3y agoA half a billion dollars...for a pizza place, robots or not. I should have some profound comment to make here, but this has reached a scale where my meager human mind cannot keep up, similar to a journey to Pluto or summat. It's almost as if SoftBank is just here for our entertainment, and the end game is...hell if I know, but I am entertained.
- slg 3y agoDominos is one of the 10 biggest restaurant chains on the planet and their market cap is only $10.6b. Anyone who thought to value this startup at over 20% of that does seem comically and entertainingly incompetent.
- distortionfield 3y agoSoftBank is starting to seem like the Jim Cramer of SV funds
- frankreyes 3y agoIt seems the business model is to throw enough cash at the problem and you'll get a profitable business.
- gnicholas 3y agoPizza was supposed to be their beachhead, and they were going to expand to other just-in-time food delivery.
- deleted 3y ago[deleted]
- stickfigure 3y agoI was also skeptical of this particular venture, but keep in mind that Domino's has a market cap of over $10B. There's a lot of money in ubiquitous things like pizza or laundry detergent. The execution here sounds poor, but the concept of "use technology to revolutionize <common everyday thing that lots of people spend money on>" is not lunacy. Just hard.
- selimthegrim 3y agoJust think they could’ve spent it on pizza cake.
- fma 3y agoI was wondering why Youtube pushed a Zume pizza video to me the other day. It probably got popular due to the bankruptcy (https://www.youtube.com/watch?v=TkhWonFm-Lw https://www.youtube.com/watch?v=TkhWonFm-Lw). As cool as the concept looked I wasn't sure how viable it would be to try to mass deliver all those pizzas. I imagine the bottle neck is # of delivery drivers during peak hours...and you simply would want more drivers, not 1 person delivering 50 pizzas. I guess I found my answer. Dominos did partner with General Motors for a fleet of Bolt EVs for their delivery vehicles. It would be cool if Dominos built into the hatchback warmer ovens. Now that would be a more viable business model than a UPS truck size driving around.
- flakyfilibuster 3y agois the co-founder/-ceo actually buying the shit, that she regurgitates? how is this a real person?
- qingcharles 3y agoAbsolutely not. The idea sounded good in the founders' heads, and now a tech blog is here to interview you, so you better "believe" what you are selling.
- qingcharles 3y agoSo many cool technologies in that cringey video, but none of them add up to a whole new pizza delivery brand.
- 0cf8612b2e1e 3y agoFor comparison, a How It’s Made of industrial scale frozen pizzas https://m.youtube.com/watch?v=EW6UCWDQfj0 https://m.youtube.com/watch?v=EW6UCWDQfj0
- wildzzz 3y agoSo they still have humans loading up the dough flattener, applying cheese and toppings, taking the pizza out of the oven, putting it in the automatic cutter, and then handling the pizza until it gets to your door? Other than the dough flattener, I don't really see this as a major improvement. Applying sauce takes about two seconds and can be done by the toppings guy. Automatic cutters already exist but are a little faster and more consistent than a human. Getting a dried out pizza that has been driven all over town doesn't seem that appetizing either. I worked in a Sbarro's location in college and we did the same thing with pizzas before the lunch/dinner rush and it just dried them out. Being in a box doesn't help much either but I'd rather have more direct deliveries than my food sitting in a warmer for who knows how long. Paying half a billion for a sauce machine, robot arm for loading the oven, and what is essentially a food truck with a big oven has got to be the biggest waste of money. This has to be some form of money laundering. If this really was such an obvious innovation, why haven't any of the big chains done the same? The fast food industry is always trying new ideas to help speed up food and make it more consistent so I don't see them missing the idea of something like using a robot arm. A pizza food truck is probably one of the best ways to enjoy a pizza, outside of an actual restaurant, if you want fresh without the degradation during the trip.
- selimthegrim 3y agoJust think, they could’ve spent it on pizza cake.
- runeks 3y agoOne thing's for sure: this is a much worse business case at 5% interest than at 0% interest. Borrowing money at 5% for an expensive machine that can be replaced by paying monthly salaries for labor is not a great business proposition. But it may be at 0% interest.
- dougSF70 3y agoThis is what I don't understand, the capital cost of a machine to replace humans only works if the productivity multiplier > amortized capital cost / annual labor cost. However there must be a limit to the multiplier due to market constraints...what if you can produce 10x pizzas but the demand isnt there. I have come to learn that individually start ups are just experiments and they only make it sense as a collective asset class.
- rchaud 3y agoRobot pizza chefs, food delivery and office rentals. Mayasoshi San may be history's first de-industrialist.
- V__ 3y ago> The company had raised $445 million in venture capital funding, including $375 million from SoftBank in 2018 at a $2.25 billion valuation. > [...] lay off over half its employees and attempt a very hard pivot from robotic pizza delivery to sustainable packaging. Evaluations apparently mean nothing anymore?
- bayesianbot 3y agoThe linked Bloomberg article[0] had this info I found quite funny: > Last June, Zume bought a company called Pivot Packaging to jump-start its ability to sell compostable containers to other businesses. It held a one-day test at a Pizza Hut in Phoenix in October, with the goal of expanding the tests to more locations in January or February of this year. But the boxes can’t legally hold food in some jurisdictions, including San Francisco, because they contain the chemicals known as PFAS So.. compostable forever chemicals, how does that work? [0] https://www.bloomberg.com/news/articles/2020-02-13/inside-the-firings-at-softbank-s-robot-pizza-startup https://www.bloomberg.com/news/articles/2020-02-13/inside-th...
- singron 3y agoAren't pizza boxes already compostable? What was going on? I would have loved to seen the investor pitches and board meetings.
- deleted 3y ago[deleted]
- PurpleRamen 3y agoOn their own they are compostable, but after usage they are drenched in oil and other stuff, which makes it impossible to recycle them, and harder to compost in a regular unprepared setting. So maybe their aim was to make them compostable for any private customer or unprepared garbage companies?
- giaour 3y agoYou can generally compost food-soiled paper products, though I expect the cardboard used in pizza boxes wouldn't break down easily in a home or vermiculture composter. Commercial or municipal compost service providers should be able to handle a pizza box just fine. E.g., the Seattle municipal compost program lists pizza boxes as one of the top 5 things you should be putting in your compost bin: https://www.seattle.gov/utilities/your-services/collection-and-disposal/food-and-yard/compost-right https://www.seattle.gov/utilities/your-services/collection-a...
- jarym 3y agoI wonder if a pizza chain will pick up the carcass of this startup to use as a base for a robotic pizza maker.
- _dain_ 3y agoInvestors must be pretty cheesed off that they couldn't deliver. Everyone wanted a slice of the low-rate environment pie, but now it's cooled down and doesn't taste so good anymore. But maybe some hungry folks will buy the dip. Pepperoni.
- frankreyes 3y agoSlice of pizza.
- rubatuga 3y agoThe Silicon Valley TV show had a pizza startup that met a similar demise [0], bringing the show closer to documentary than fiction! [0] https://www.youtube.com/watch?v=LYu-d6y5HRo https://www.youtube.com/watch?v=LYu-d6y5HRo
- dstanko 3y agoThat show is a documentary
- mr90210 3y agoThey were so accurate about many things… Including our beloved ChatGPT.
- Sohcahtoa82 3y agoA couple years ago, I was interviewing for my first job at a startup. The company was very small at the time (~75 employees), and my interview loop included the CEO. When he gave me a chance to ask him questions, I asked if he watched the show Silicon Valley, and asked how real the show is. He laughed, and said yes, he loved the show, and that it's surprisingly realistic. There are things that they exaggerate for comedic effect, obviously, but generally the show isn't too far off from reality.
- oldstrangers 3y agoIf any VC firms want to hire me to vet investment ideas I'm available. "No, do not give the pizza startup $445 million." Simple.
- jacquesm 3y agoI do DD for a living. It's rarely that simple. But SoftBank is a special case.
- asfarley 3y agoHow did you get into the field?
- jacquesm 3y agoI've been a small time investor for decades and would usually be the one to handle hard tech issues at the start-ups I invested in if they ran into some kind of wall (scaling, hard to find bugs). Someone (another investor) noticed that and tipped off a friend who worked for a really large fund, they hired me to do a DD job on a company in Germany and that got me my launching customer. Syndicated deals grow the network and bit by bit it became a pretty serious player. Now doing anywhere from 20 to 45 jobs per year depending on the economy.
- ohgodplsno 3y agoIf any VC firms want to hire me, I'll definitely take $445 million to make an automated gourmet Mac'n'cheese startup. I promise it'll take over the world, especially if I can give myself a multimillion salary.
- MattGrommes 3y agoI'll do it for only 10% of the investment. "Instead of giving them $445M, give me $44M and then don't do the pizza thing. You'll save $400M. You can't afford not to give me this money."
- hoofhearted 3y agoDoes anyone have a more detailed explanation as to what this company was doing, and how much they actually spent?
- mytailorisrich 3y agohttps://en.wikipedia.org/wiki/Zume https://en.wikipedia.org/wiki/Zume I think they didn't really know what they were doing but must have been very good at pitching VCs.
- hoofhearted 3y agoLike an Adam Neumann of pizza?
- SaintSeiya 3y agoVC start-ups where never about the start-up or the product. They are designed to shut down after few years of rising capital to pay the execs ridiculous amount of money. Is about funnelling those funds to salary and bonuses before it runs dry. Rinse and repeat.
- mangecoeur 3y ago$445 million for a pizza truck
- iJohnDoe 3y agoSeems like pizza making robots would be a success. Just the right amount of sauce. Just the right amount of cheese. Toppings spread evenly out. Oven sensors to get a consistent cooking time.
- doxeddaily 3y agoCostco actually uses some tools to help with this and I think their pizza is pretty solid.
- spywaregorilla 3y agoI feel like the limiting factor on pizza production is not labor speed, but oven capacity.
- doxeddaily 3y agoFascinating, I actually know the CEO, I used to consider him a friend back in the day but he got a little bit of ego over the years. I'm sure he made out like a fucking bandit from this. Still it hurts to have your company go down and his net worth just took a massive plunge.
- deleted 3y ago[deleted]
- CyberDildonics 3y agoI wonder if softbank realizes that frozen pizza is already cranked out in automated factories.
- raverbashing 3y agoFor this to make sense it would have to be that labour would be one important factor in the cost of pizza And that somehow making 10 pizzas instead of one would mean people would consume 10x more pizza Surprisingly (not) this does not seems to be the case Zume: Pizza for sure
- keenmaster 3y agoIf Blaze Pizza couldn’t beat Dominos in flavor and texture when I’m right there picking all the ingredients and eating the pizza fresh out the oven, then Zume had no chance. The fundamental issue is that these pizzas are made expediently. There are compromises made in pursuit of automation and speed that make the pizza worse than Dominos/Pizza Hut/Papa John’s. Those aren’t paragons of pizza-making by any stretch, but they’re the competition. Theoretically you can create a machine that puts out a pizza that rivals the best pies in Brooklyn or New Haven, every single time, but I guess investors thought that the plebs will eat fancy DiGiorno’s at Domino’s prices and not notice the difference. Maybe one of the major pizza chains will buy Zume’s IP and iterate from there. I don’t think they’d deploy the technology until it reaches human-equivalence for at least some of their pizzas or part of the pizza-making process. Pizza chains can play the long game. A pizza robot startup valued at $500M can’t.
- asfarley 3y agoI think it’s really unlikely that anyone will buy the IP because Zume wasn’t a serious robotics company, it was a vibe/feeling/vapourware thing. My understanding is they never reached the point where they could automatically place most toppings. They were becoming less robotic as they attempted to expand.
- keenmaster 3y agoInteresting that topping placement was their barrier to full automation. You’d think dropping stuff on a bounded circle is a solved problem for robots.
- iamcasen 3y agoThis has to be fraud. I can't see any other possibility. VC's aren't stupid.
- sanjiwatsuki 3y agoI really enjoyed Zume Pizza as a product. They sometimes could get a pizza to my door within 10 minutes of me ordering.
- ilamont 3y agoSolid PaaP metrics.