Sweetgreen recently introduced a limited-time, sustainably farmed salmon from Patagonia. Are there other examples within the Sweetgreen brand where tech has shaped those kinds of decisions?
From my perspective, the tech is … kind of a three-ring circus, if you will. Some relates to how you are sourcing and the supply chain, the farm-to-table side; some relates to how you are managing it. The data associated with operations give you the ability to track things and, based on real-time big data, being able to make some adjustments is increasingly important. And the third is how technology is used to improve the consumer experience, particularly around convenience, but there are other aspects.
One thing for example, Revolution Foods has done using technology to improve the consumer experience is engaging with kids in schools to get their thoughts on menu items and create little competitions and voting around different options. They have real-time feedback in terms of how the kids are actually liking things and eventually rating things and suggesting things, so they're engaged in the culinary creation process as opposed to simply being told here are the options and eat it and go back to class.
Do you see food startups supplanting tech startups?
I think in some ways the line between those two is starting to blur and that will accelerate. I think food startups will be using technology and tech startups will increasingly be targeting a $5 trillion food industry, but the lines will blur a little bit.
As I said with these three waves of the Internet, there will continue to be second-wave companies created that are more pure-play technology-focused, app-focused. But I think a lot of the momentum in this third wave is going to be attacking things like food and education, health, transportation, you name it, that really is the Internet of things—another one that's ripe for disruption and requires a partnership between the technologist and the entrepreneurs with some of the existing players in some of those industries. I think it will be difficult to disrupt the healthcare industry, for example, without partnering with hospitals and health plans. I think it will be difficult to disrupt the education system without partnering with universities and professors. That partnership aspect is going to be important.
OrderUp is an example of somebody that's essentially in the business of partnering with [quick-service] providers particularly, and that's how they scale. They're not in the business of operating, nor in the business of actually creating food; they're really in the business of bringing technology that provides more convenience for consumers and drives volume for restaurants.
Do you see this fascination around food waning or do you see it being something that's going to continue to grow?
I think it will continue to grow. First of all, it's something that everybody can relate to. Investors look at what they call Total Addressable Market, or TAM. In this case, the total addressable market is 100 percent. Everybody eats three times plus a day—in this country, I think I saw it was 4.9 times a day on average. So it's a big business, and it’s transforming assets on the production side and a lot of things in the agricultural tech space that are interesting, some on the distribution side.
We talked about some of the supply chain issues and some on the convention side where there would be different options in homes or different options in restaurants or different options in schools or different options in offices or different options when you're on the move. I think there's going to be a lot of different innovation happening in all those different sectors, and I do think entrepreneurs and investors are beginning to realize this third wave is breaking, beginning to look at some of the opportunities in that space, and, just from an economic standpoint, beginning to recognize that the food industry is a huge industry. Just look at the fast-casual space; a company like Chipotle is worth $20 billion, Starbucks is worth $70 billion. These are big numbers that are starting to attract the attention of entrepreneurs and investors recognizing that it feels like some new brands are going to be emerging.
Obviously our bet was Sweetgreen; it has the opportunity to be the next Chipotle, and the interest [has grown] since we invested in that, which is probably now almost two years ago, eighteen months ago. The inbound calls we get from other investors include pretty sophisticated investors who want to invest in Sweetgreen. We probably get more calls about Sweetgreen than any other couple dozen investments that we've made because there's a sense that something is happening there with some of the trend in the market, what they've done in terms of building the brand and the authenticity, the actual execution, the results, and the places they've opened like in New York City and others. The inbound interest in that is significant, and I don't think that would've been there three or fours years ago.
What can emerging brands learn through either reaching out to potential tech partners or trying to integrate that disruptive mentality into their business model?
I think it is recognizing that they are particularly skilled at certain things, and those skills are important. Some of the things I mentioned around menu, menu design, supply chain management, real estate selection, hiring and training people, or a whole host of skills that are complicated and hard—they're quite good at that. That's not necessarily something that people who bring a tech perspective or an engineering perspective necessarily would understand or be good at. At the same time, there are some things that other people do understand better in terms of some of what's happening with new technology, how they can be leveraged in new kinds of ways to provide better operational efficiency, and, more importantly, greater consumer convenience and satisfaction.
Everybody trying to do everything themselves is likely going to be difficult. For example, we've gotten calls from people because Sweetgreen has developed a pretty compelling tech solution around ordering on smartphones, and people want to learn that. So we're now looking at that as a potential avenue for expansion rather than everybody trying to make their own.
How do you surround yourself with people who understand this? Some of it is hiring some younger people generally who are more in touch with what's happening here, but also partnering with some of the entrepreneurs to figure out ways to engage with some of the startups there and not just focus on the business as it is today, but focus on where it's going. The hockey player Wayne Gretzky, it was often said the reason he was so great as a hockey player is he focused on where the puck was going and just positioned himself to be where the puck was going. I think that's the opportunity for people in the food space as well.
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