Andrew: Three messages before we get started. If you’re a tech entrepreneur, don’t you have unique legal needs that the average lawyer can’t help you with? That’s why you need Scott Edward Walker of Walker Corporate Law. If you read his articles on entropy, you know that he can help you with issues like raising money, or issuing stock options, or even deciding whether to form a corporation. Scott Edward Walker is the entrepreneur’s lawyer. See him at walkercorporatelaw.com.
And do you remember when I interviewed Sarah Sutton Fell about how thousands of people pay for her job site? Look at the biggest point that she made. She said that she has a phone number on every page of her site because, and here’s the stat, 95% of the people who call end up buying. Most people, though, don’t call her. But seeing a real number increases their confidence in her and they buy. So try this. Go to grasshopper.com and get a phone number that will make your phone number sound professional. Add it to your site and see what happens. Grasshopper.com.
And remember Patrick Buckley who I interviewed? He came up with an idea for an iPad case. He built a store to sell it, and in a few months, he generated about a million dollars in sales. While the platform he used is Shopify. If you have an idea to sell anything, set up your store on shopify.com because Shopify stores are designed to increase sales. Plus, Shopify makes it easy to set up a beautiful store and manage it. Shopify.com.
Here’s the program.
Hey there freedom fighters. My name is Andrew Warner, I am the founder of Mixergy.com, home of the ambitious upstart and the place where proven founders come to tell you their stories so you can learn from them. Get out there, build your own success story, get your own freedom and then come back here and hopefully do an interview where you teach others what you learned along the way. And in this interview I want to answer this question. How does a founder, who tries everything end up finding his hit business? In this interview, you’re going to hear about the laundry list of companies that Eddy Lu co-founded with his partner. I want to focus on, though, two of those businesses. A franchise called Beard Papa, which he still owns today and runs passively, apparently at only three hours a month. And I want to focus on Grubwithus, which has one of the most impressive collection of investors. Grubwithus is a social network that brings people together over tasting menus at top restaurants. Eddy, good to see you.
Eddy: Good to see you, Andrew. And thanks a lot. And I’m sure people don’t know this, but you were one of our first mentors and advisors for Grubwithus, way back when you were still in Santa Monica.
Andrew: When I was still in Santa Monica, I loved getting together with you and Daishin over lunch and talking through this idea and it evolved since then. And later in the interview I want to hear about the evolution. How you found your groove with Grubwithus.
Eddy: Sounds good.
Andrew: But I mentioned a laundry list.
Eddy: Yes.
Andrew: Can you give people that list of companies that you started before Grubwithus?
Eddy: Yeah, sure. So just way back when, Daishin and I were roommates in Santa Monica. I was working at Lehman Brothers when the company still existed. Daishin was at Edmunds.com. We just hated our corporate lives. Every night we talked about wanting to do something for ourselves, wanting to just build a business. We didn’t know what that was, but we just wanted to do it. So both of us, we just decided to quit our jobs, cold turkey, on the same day, just hand in our resignations, and just figure it out. What that entailed, we didn’t know. And our parents were super annoyed at us for just quitting our high-paying jobs like that. But we just said, “you know what, let’s do it.” So Daishin and I quit and we literally started every company under the sun. I mean, some people say that but we lived it.
Andrew: For example?
Eddy: We started off with a gold apparel line. I mean, I enrolled in sewing classes at Santa Monica College and if you know me, that’s just not something that I should be doing. We tried that, it didn’t work. We opened up a tea business online. We created iPhone apps, iPhone games, really bad ones, just because it was that market of pumping out games. We day-traded. We did import, export. When we were on a trip of Asia, we had a friend that was selling undergarments, so we said, why don’t we try selling female undergarments in night markets in Asia, just to see that experience was. So we tried literally tens of businesses. And nothing really stuck, we weren’t really passionate about anything. This one time in San Francisco, we chanced upon this product called Beard Papa’s, it’s a cream-puff franchise.
Andrew: Well, before you get to Beard Papa’s, you said lady’s undergarments in night markets in Asia?
Eddy: Yeah.
Andrew: We’re talking about panties you’re selling in a market, standing in a stall.
Eddy: Yeah.
Andrew: Now, what was the vision there? You’re a guy who worked at Lehman Brothers. You’re a guy with big ambitions for himself. You want to leave your mark on the world. You weren’t going to be satisfied with the biggest stall in the night market selling the most underwear. What was the vision behind that?
Eddy: Well, so that was during our import-export phase. We were trying to sample a lot of items and clothes and what not. And we just wanted to test the market. Just test a bunch of stuff and we just wanted to get there, to see how people reacted to us. And I think we just wanted to push ourselves. We’re not natural sellers, and this is the product that is just way out there. And we wanted to see, with our abilities, how we could impact people to purchase things from us.
Andrew: You wanted to test your guts and test your sales skills by selling women’s underwear?
Eddy: Yeah. Basically, at this point, we had no shame. We were willing to try anything and this was one thing in the long list of things that made us who we are now.
Andrew: Credit card websites, that means a site where essentially you were running affiliate programs for credit cards…
Eddy: Exactly. Exactly.
Andrew: OK. Tea company, what was that?
Eddy: We had a good mentor as well who had a really successful tea business, just selling B to B, and we just valued him as a friend and mentor and we wanted to see if we could just explore that option. Again, we like to deep-dive into anything we do, so we flew up to San Francisco for five days to become tea masters, and we learned everything there is about tea, and we just started building this retail consumer website just around selling tea.
Andrew: You know what, I know that when I try selling people things, you’re putting yourself on the line. And as that line in the movie, Barbarians at the Gate goes, “People buy you and they buy what you’re selling.” And it means that you feel great when someone buys from you. That they love you, that they really, really love you. When they don’t, you feel hurt. I know even when my revenues at Bradford and Reed were down, I felt a sense of lower self-esteem. When Mixergy wasn’t doing very well, especially with revenue, I felt a lower sense of self. And here you were, going through a list of businesses that didn’t work. And you had to keep up your confidence. Was it an issue for you at all to keep up your confidence?
Eddy: I think it was more of an issue of survival, and just wanting to prove that we can make it work. We made the gamble to quit our corporate jobs.
Andrew: But you weren’t making it work. So weren’t you feeling like, boy, we are real losers. We should’ve stuck with the jobs. We’re not like these people who, I mean, you’ve got some top investors, we’re not like Alexis Johannan [SP] who happens to be an investor of yours, but made Reddit huge. Did you feel to yourself, we’re not like, I’m looking at who else is in here. Your email probably wasn’t on your radar back then who invested in Grubwithus. But you’re not like these guys who you’re reading about. Instead, you walked into their world, and you’re getting slapped down. Now, really, dig deep and see if you could remember how you felt back then. Were there any of these feelings that I’m bringing up? This inferiority?
Eddy: All day long.
Andrew: So give me an example of how you felt about it.
Eddy: Yeah, there were days, just super dark days that I wouldn’t be able to sleep because we were just not making any money, in fact, losing money, because we’re trying out all these businesses and thinking back to where we were back then, and just a shift of lifestyle between me and my friends was kind of the worst thing. My friends are still in these high paying jobs, and they’re going to Vegas, they’re having fun, and I’m saying, I can’t go, they want to hang out for dinner, and I can’t do that. And it’s just super heart wrenching. But I think the people that me and Daishin are, we’re just fighters. That just motivates us even more, to say, let’s do this. And that just made us not sleep until 4-5:00 A.M. every night just trying to crank out things and working on things, and really trying to push hard to be scrappy and prove ourselves.
Andrew: I had a similar, well, I had this experience. Tell me if you had anything like this. I remember going to my former boss’s house when I was soon out of college and starting my first business. And I walked around this beautiful garden, and people were really nice and supportive of me because they wanted to encourage me. I was a former employee of their friend. And I remember one guy that came up to me and said, ‘If you need anything come to me and I’ll help you.’, and I was in such a sense of nothingness that I wanted to respond back and say, ‘And of course if you anything I’m there for you.’ I couldn’t even say that because there was nothing I could do, I felt so like inadequate in this room full of people who were on top of the world and these were [??] people who were doing extremely well for themselves.
And I did feel that shame and at the same time I went back to my desk that night, after that party, and said, ‘I want to do something big.’, I was inspired by how much they had, I was inspired by how big they were going to be in the next few years based on the trajectory of their current lives, you feel that way too it sounds like?
Eddy: Yes, definitely and I mean one … since we’re talking about lows … one huge low was after a few years of trying to do our own things, it was one of my best friends weddings and I didn’t even have any money to buy his present so what I had to do is scrape up credit card rewards from like three different credit cards, and by the way these are all maxed out, that’s why I had rewards, I had to scrape up and just purchase separate gift cards for him from these different credit card rewards and it was just super duper embarrassing that I had to piece mail my best friend’s wedding gift and so with that I also felt like, ‘You know what, this is ridiculous, we have to really build something sustainable on something that we can be proud of.’
Andrew: All right, in our pre-interview you told me about the bickering that you and Daishin got into when you were running your franchises, Beard Papa, and I want to get to that. Thanks for being open about that but let’s find out about how you met this guy, who in your lows, you were able to turn to and be fired up together and who later on, even through the bickering, you were able to stick together, how did you meet this guy?
Eddy: I met Daishin about 10 years ago when we were both at Berkeley. He was one of my friend’s roommates and we actually didn’t hang out to much in Berkeley, we’d hang out and play basketball. I knew he was a competitive guy so that was a good quality that he had but it wasn’t really until I moved back down to L.A., from San Francisco, did we start … I needed a roommate because I was moving down and he needed a roommate so we just decided to live together and literally from that point, the very first day we lived together was when we said, ‘Hey let’s do something together.’, and so yes …
Andrew: I see, two people who are both determined to do something, who are both ambition, finally meet each other and you say, ‘I’m not alone in the world and this guy is not just feeling the same thing I am but he’s in the same place where I am. We’re both struggling to do something.’
Eddy: Yes.
Andrew: OK. All right, so you told me about all those ideas that didn’t pan out and then there was one that did. You’re in Northern California and you saw what?
Eddy: Yes and so I saw this huge line for something and I was with my girlfriend and I was just like, ‘What is this thing?’, and she said, ‘Oh it’s this cream puff store called Beard Papa’s.’ And the line was so long that I didn’t even try the product that day because I just didn’t want to wait but it seemed like, when just looking through the window it seemed like something that was just super simple. It was just these cream puffs that you just filled and you sold and everyone was happy, right, the consumer’s seemed like they really liked the product and the company seemed like it was doing well.
So I got back to L.A.
Andrew: By the way, what is, I had to ask my wife this when I first heard of cream puffs, what is a cream puff?
Eddy: It’s basically, it’s like a French kind of crispy flaky outer shell and with kind of this custard cream that’s filled inside of it.
Andrew: OK.
Eddy: So think of, yeah, kind of a baked donut but there’s also custard cream inside.
Andrew: OK. So you’re walking into, you’re walking past this restaurant, you see a long line, first of all which is an indication of something that’s exciting?
Eddy: Yes.
Andrew: And then you see, you look inside and say, ‘Just cream puffs, those aren’t that hard to do.’, I mean, calling someone a cream puff means that there’s nothing much to them for a reason because cream puffs are so simple. Let me just stop here for a moment and talk just about your personality and how you are different in my mind and in everyone’s mind, different from the average person.
Most people would see that long line and go, one of two things, ‘[??] another fad that we’re all going to get carried away with, another long line for me to wait in.’, you had a different approach, you said, ‘Look at that opportunity there, there’s something to it, I wonder how much money they’re making, I wonder what they’re going to do with this business? I wonder what the business is behind it. Is it just one person or is it a franchise, is it one location?’ The whole thing, that’s what goes on in your head all the time?
Eddy: Yeah. The girlfriend would argue that that’s a bad trait that I have because . . .
Andrew: Why? Give me and example of what you do with your girlfriend, a typical interaction that involves [??] like this.
Eddy: Instead of just enjoying the experience, I wonder how this operates or how this works, or how this gear functions or what not and she’s like, ‘Why don’t we just enjoy the moment and have fun instead of constantly work thinking about these little business operational things?’
Andrew: OK. You’re just constantly at maybe a restaurant going, ‘This guy is making a killing.’ or going in jewelry store saying, ‘Look at the markup on this jewelry.’ That’s the way your mind works?
Eddy: Especially at a restaurant, since we’re doing bread with us now. After we have a meal it’s ‘Hey, can I talk to the manager?’ I don’t think it’s the best experience for her.
Andrew: By the way, if you guys are in the audience, we’re going to do a Grub for us here. I happen to be in D.C. We’re going to get a bunch of people together. We’re going to use Grubwithus to organize it and we’ll just have a meal, a small meal. Not a packed house with dozens of people, but just a few people having conversation around a table. I love that idea. It will be up on the website and hopefully you’ll grab it in time. Once it’s over, I’ll pull it off the website. If it goes especially well maybe we’ll repeat it, but I want to keep it small. If you’re not in that first group, sorry, but there’s a reason for it. I want to be able to have a real conversation everyone who comes to the dinner. I’m also going to ask you, ‘Why $21 per plate? How you can do that?’ Let me write that down. Grubwithus.com if you want to see what I’m talking about.
All right. You see this thing, interesting idea, what do you do with it?
Eddy: Immediately, when I went home, I talked to Daishin. I was like, ‘Do you know this product? What it’s about?’ He actually had heard about it. It was something that he liked as well and he was like, ‘OK. Why don’t we check it out? We literally went to each store and sat outside the whole day. We didn’t have anything else to do. We sat outside and just counted customers and counted product. We saw how much volume these stores were doing and said, ‘This is a viable business. There’s a lot of customers coming in and they buy multiple, multiple cream puffs per purchase.’ We looked up the different franchise rights and things like that and we looked up the franchiser. It was this conservative Japanese company that actually runs this thing. We contacted them and they didn’t contact us back. Being us, we started to be more aggressive and what not. There whole thing was, being a conservative Japanese company, they’re not willing to take risks. We were unproven, super young, and we didn’t have franchise or food service backgrounds. They finally wrote back saying, ‘Honestly, we’re looking for people that are more experienced and that have proven themselves.’ Being us, we created a PowerPoint Deck and we gathered up a couple of investors and said, ‘Look, the reason we want to do this, is because we’re young. We have different ideas. We want to make this thing a huge success, you really need to pick us as franchisee’s.’ They met us a few times and they were, I think either shocked or wowed or what not by us, but they said, ‘OK. Let’s try it out, let’s do this.’ They really made it known that we were the youngest people they have ever dealt with. Beard Papa’s is big, they have like 300 stores in Japan. It was a risk they were taking, but they were willing to take on us because they believed in us.
Andrew: How old were you guys at time?
Eddy: I would say 26, somewhere around there.
Andrew: OK. Why didn’t you guys say, ‘You know what, this is doing really well, why don’t we create our own brand name? Your Papa’s is no McDonald’s as far as name recognition. People don’t even know what a Beard Papa is,’ maybe, ‘we’re going to call ours “Cream Puff.”‘ Why didn’t you copy it?
Eddy: Well, one, we have no idea how to make these things. We never intended this to be our sole business. Like you said, we wanted it to be more passive where, since it was so simple, we could count on other people to run this while we’re still building our other sites. This was just more of a income generator while we’re going on to our next thing.
Andrew: Did I get that right, you’re spending about three hours an month running it right now?
Eddy: Fortunately we have really good managers now that are in place that just run the store. And yeah, like I was telling you earlier, I’m, those three hours, even though it’s just three hours it’s still a head ache, you know, to us because when they call that means there’s a problem. Let’s say the fridge is broken or the AC’s broken or what not and those are the kind of things that we have to deal with during our three hours.
Andrew: Right. So they get you on board. In fact, before I even get to what happened at the launch, we’ve got to ask about the investors. How much money did it take and where did you get the money?
Eddy: It took about, it takes about $200,000 a store.
Andrew: $200,000 to launch a cream puff store?
Eddy: Yeah.
Andrew: OK.
Eddy: You know, I mean, there are franchise fees, there’s you know, yeah, it varies. Our first store was done super cheap. If you can get a space that was already a restaurant establishment you can save a lot of money, you don’t need to fix too many things up. So, our first one was probably about $100,000, but on average I would say $200,000. But yeah, we, that first store was just friends and family. I mean we had a bunch saved up from our corporate gigs so we took that and put it in.
Andrew: So is this before you had to scrap together a bunch of reward cards to pay for a friends wedding gift?
Eddy: Yeah, so.
Andrew: So after this you got to a point that was so low that you couldn’t afford wedding gifts. OK.
Eddy: You know what, it’s because we put all our money into these and since these are capital intensive to start up, you know, we didn’t really think longer term, we just said, OK, let’s put out money into this and work on the next thing. That’s kind of what happened, so.
Andrew: Was one or the other of you putting in more money?
Eddy: No, we all put in about equal amount.
Andrew: OK. Alright, so you get the store up and running, now it’s time for you to start selling, what was that like?
Eddy: It was really fun, I mean, being like web people we, and this is back in the day, we would spam like Zynga and like Myspace and sites like that where that’s where all the people were and you know, we would just every day, OK, so, we would write a blog post every day about how we created the store and it was just like the fun things and the pressing things, you know, just a blog post on Zynga of these different blogger or whatnot. And it really captured an audience and people were like, oh, I can’t wait till you open and whatnot.
Andrew: So people from Zynga read your story about putting up a store, read your story about putting up a sign that day and they said, I want to come in and check out this store.
Eddy: Exactly.
Andrew: There were enough people in LA who were reading your Zynga blog post, who were walking into your store?
Eddy: And I mean this was back in the day when Facebook just came out and you could poke anyone you wanted, so we literally went on to our local universities and high schools and we poked so many people. Every time we got banned from Facebook from poking too many people, we just created a new account, put up our name, Beard Papas or whatnot, and just kept poking people.
Andrew: First name Beard, last name Papa?
Eddy: Yeah, and things like that, you know, and just created spam email addresses and just did this continuously until enough people knew about us that you know, yeah, and the day we launched it was great. You know, there was lines out the door and all that good stuff because we made all the hype. So.
Andrew: I love hearing this stuff. It’s like, people are going to hear that you spammed this and they’re going to forget that in past interviews guys like Matt Molinwick asked him how he got his first users and he goes, I spammed people’s comments on their blogs. I go, what do you mean? And he goes, well back then it was OK to go to people’s websites and tell them about your new software and they’d come over. Alright, so you get all these people in the store. It’s a hit, right from the start, there’s no down time, there’s no waiting for people to come in. It just boom, takes off.
Eddy: Yep.
Andrew: Where does the argument come in between you and Daishin? Who gets the biggest cut of the profits?
Eddy: No, so I think.
Andrew: Who gets to hit on the staff?
Eddy: The, I mean, you know, when you work with a co-founder so closely every day, you know there’s going to be frustrations. Even like the pettiest little things. I mean, I remember one argument, it was about pay and how we were going to structure paying our managers and employees and we were literally in a crowded, crowded restaurant and just things escalated and we were yelling at the top of our lungs at each other in this crowded restaurant, we didn’t even care that everyone at the restaurant was looking at us. I
mean the waiters were looking at us…
Andrew: What were the two sides? You believed what, he believed, what else
Eddy: I think it was just the difference on the percentage that we would give our manager or what not.
Andrew: Was one of you the kind of person who said, “No, I don’t want to give them anything” and the other said, “you got to be generous with them, we’re doing well.”
Eddy: I think I’m more on the cheap side and Daishin’s [??] more on the giving side, so I think that’s how the line [??] went. I didn’t want to give them nothing, but we were just trying to figure that out. And, at this restaurant we were just bickering and bickering, and I think the whole restaurant stopped to watch what was going on. And we were with a third friend and he was just trying to pull us off. I don’t even know if we paid, but we kept on yelling at each other
and we just walked off to where we just left the restaurant and continued fighting outside.
Actually, that wasn’t even the worst one, the worst fight was … I think it was just aggression and frustration. We were playing basketball together and we started playing more and more aggressive, we were guarding each other, which is something we never do anymore because of this experience, but we were guarding each other, and then we just played so aggressive that we started pushing each other that we started actually fighting on the basketball court. Our friends were there and they were super scared we just started fighting like hitting each other and pushing each other and I think it was just a buildup of all this frustration that we felt to each other. But the crazy thing was that we were building [??] at this time. We fought and we were so mad at each other, but we drove to the basketball courts together so we had to drive home together. And, it was so awkward to be in the car after this crazy fight where we were just punching each other or what not. Our friend was so scared he was following us home. But we literally got in the car, and we were so mad, but then we said “you know what, we’re in this together, we have to make this work , we have to build our site” so literally that day like an hour after we had the biggest fight of our lives, we drove to Starbucks and started coding again.
Andrew: Why didn’t you guys get angry at any of our dinners or lunches? It would’ve been great, I would’ve had a great story. Well let me ask you this, how do you bring it back together after you argue in a restaurant, after you’ve made your point of view so clear in front of a friend that you cant really take it back and not lose face. Because, you know the guy knows where you stood … how do you bring it back?
Eddy: I mean I think that’s the testament to a good friendship and relationship right? You know what’s important at the end of the day, it’s what your building in your relationship, and I think we always made sure … the biggest problem was that co-founder issues and breaking teams apart, because co-founders couldn’t agree right? I mean after all these fights that’s why we realized we can be a really strong team together. Because after every fight and every issue, we knew at the end of the day that we were both aligned in a single mission and single goal, and that’s what we were going to do and just forget about any fights we had, let’s just build something really cool, and I think that’s how we knew we would be able to build businesses together.
Andrew: You know my brother and I, we wouldn’t get into big arguments, but if we ever did get into big arguments building our first company Bradford and Reed, we could bring it back together by just remembering how important it was to build it. Now, the importance of building a greeting card company, which is what we had, is not to us the most passionate activity to ever be in. We didn’t wake up and say we have to see an online greeting card in the world or else the world will be friendless and loveless without us. It was more of … I know for myself, so I’ll speak for myself, an internal need to be somebody in this world. An internal need to have something tangible, something financial, to have something that also stood for my abilities in this world. And that was so important to me and not having it made me feel such a sense of inferiority, I mean I couldn’t even have somebody say to me at a dinner or at any kind of event “if you need anything let me know,” without it triggering in my head, you loser, you have nothing even to give back to them. And you know all these things were constantly playing in my head … where does yours come from, if you could be as vulnerable as I allowed myself to be there, what would you say?
Eddy: I think that you exactly hit it on the head, where it’s that feeling where you need to be someone, and that’s why we were so unhappy at our corporate jobs where you’re just a cog in the wheel. You’re listening to what other people want to do, and it’s just not fulfilling. And I just really wanted to make an impact and I think, based on what you said, I think you said it better than I could’ve ever said it.
Andrew: Thank you.
Eddy: I think we shared the exact same emotions.
Andrew: And I do think great things can come from that, or you could end up trying to shoot a president from that. It could go either way.
Eddy: Yeah.
Andrew: Thankfully, for the most part, we end up trying to do something good in this world, and I think we’re fortunate to live both in a country and our part of the world, this entrepreneurial world which gives us a path to channel this passion, which gives us something meaningful to do with this and then gives us rewards along the way, or some re-assurance that we’re on the right path.
Eddy: Sure.
Andrew: And then you came up with this idea for Grubwithus. And the original idea came from where?
Eddy: The original idea, just going back when we were talking was, home-based meals where people would go to people’s homes to have a nice meal, instead of right now, where it’s, you go to restaurants and you meet people at different restaurants.
Andrew: How much of airbnb was an influence on you? You know, airbnb, the website that allows anyone to rent out space in their home. Instead of going to hotels, you go to airbnb and find space in someone else’s home. I’m defining what airbnb is. Next, I’ll explain what Google does.
Eddy: Airbnb definitely did factor into what we were doing. The main thing was that, it’s kind of ironic, we thought that restaurants were too expensive, and this was back when we were super poor, obviously. And we said, “wouldn’t it be great if we just had people cook for us.” I mean, people cook at home all the time. It’s so hard just cooking for two people at home, why not just open up your home and have other cool people come over so they can eat with you? And I think airbnb definitely inspired that because we looked around, and they paved the way for, yeah, it’s OK to have people in your home that you don’t necessarily know. So we said, “you know what, since airbnb has that model, maybe we have a viable model where we can put up tacos night for five dollars. Anyone who wants to come over, come over.” And so that was our original vision. The problem with that was that, even though it’s great, it’s so taxing on the cook and the host, because one, you have to buy all the ingredients, you have to prepare everything for a couple hours beforehand, and then you have to host people and clean up afterwards. We just realized that from the host’s end, it was just so much work for very little gain. As opposed to airbnb were, you just say, I have this floor that I’m not using, and just stay over. It’s just so little friction. So we built this initial site, but we realized was that, we did a few meals, and that social experience of bringing people in real life over something like food because one, you need to eat everyday, right? And two, food makes people happy. And just that social aspect of bringing people together over food just made people so happy and just built really awesome friendships that we just couldn’t ignore.
Andrew: So the friendships and the connections that happened over a meal were more important to the business model and the business idea than the savings over a few bucks on a meal by doing it in someone else’s house. I see. Before I even dig in, I want to understand the evolution of it. Because often when we as entrepreneurs see that an idea doesn’t work, we keep at it. And we just say, “no, if only I could explain it to you a little bit differently, you would realize.” And instead, you pivoted, which is a harder thing to do. But before we even get into that, let me just stick with Beard Papa’s.
Eddy: Sure.
Andrew: Beard Papa’s Cream Puffs, the official full name of the restaurant. You’re doing pretty well with it. You got a line outside the door for the first one. You eventually end up opening up a second in southern California, and then a third in Chicago. Why didn’t you decide to keep at it?
Eddy: So a franchise is still strictly regulated by the franchisor. You have to use their marketing material, their templates, their menus and all that stuff and you know what we probably broke every franchise, legal regulation . . .
Andrew: For example?
Eddy: Being us we wanted to make things better actually I would, we would create our own menus for our stores. Daishin does all the graphic design stuff so he would create awesome posters and just like point of sale little images and what not and we would, we created a website for our own little stores and whatnot and the franchise got so mad and they sent us take this down or else were going to revoke your charter and you need to get these things approved. Funny thing is they actually approve and now use some of the images that we created.
Andrew; That Daishin created are now part of their, now their telling somebody else that there in trouble for not using something the Daishin created.
Eddy: But it was, again, franchise rules and, you know, basically every few months we would get slapped on the wrist about something because we were trying to push the envelope and just really build up something huge.
Andrew: Push the envelope towards what end? It’s to bring in more customers, to bring in more sales?
Eddy: Yeah.
Andrew: What was one of your ideas that man, if they would have only listened, or maybe they did listen, would’ve increased sales tremendously?
Eddy: I mean since they were a more conservative company, I mean, there marketing materials were just not up to par with what you would see at, let’s say a Jamba Juice or a Baskin Robbins or what not and we just wanted to really showcase the product, have huge pictures of the product and just have edgy little messages and the like.
Andrew: Like what?
Eddy: I don’t, I honestly don’t….
Andrew: And where would you have shown these messages that were so edgy?
Eddy: Oh, just our windows displays and things like that. So let’s say a huge picture of an éclair with the custard oozing out and it’s like, eat me or whatever edgy message.
Andrew: I see.
Eddy: They were just really resistant to those things and at the end of the day we realized that being a franchise, you still have a boss, you still have to report back to them and the main office and whatnot and you are again, even though it’s your own business, you still a cog in the wheel in that you have to follow their rules and regulations and we just, that wasn’t our personality and it wasn’t something that we were excited about doing continuously and we just wanted to build something on our own.
Andrew: Could you teach me one or two things that you learned from having built up a couple of, three actually, Beer Poppa locations, what did you learn that maybe is useful to me or to the audience of people who are listening to you right now or entrepreneurs who are building things, who are looking for a few ideas that they could integrate into their life’s and businesses?
Eddy: For a brick and mortar store perspective location honestly matters so much even if your five steps away from the main of retail traffic or whatnot, it’ll impact your bottom line tremendously and I think that we didn’t think about that as much as we should have. And two, hiring a lawyer is actually matters. What was crazy is that we did everything ourselves for our first couple stores. We were I mean this is slightly illegal but we were our own general contractors in that we literally didn’t hire a general contractor. We just had a buddy that was the figurehead but dealt with everything because we wanted to save a bunch of money and to that extent we also were our own lawyers which doesn’t work out to well in this world because lawyers, you pay them because they see these contracts time and time again and they know the pitfalls that …
Andrew: What’s a pitfall that a lawyer could have helped you anticipate?
Eddy: These contracts obviously are super bad for standard lese contract are super bad for the person renting, leasing a space right? After we signed our first least contract and we started working with lawyers afterwards, he had read the first leas contract and just said these terms are just so horrendous for you guys if you guys ever can’t pay or whatnot. It’s just the end of you guys. We just didn’t understand those things and just now going forward I realize the benefit even though we pay them $100’s of dollars and hour, it actually makes sense to have a lawyer go through important documents.
Andrew: You know what I think John C. Devorack [SP] keeps talking about the idea of a dummy contract that most people who, the old guard, when they have a contract to give somebody who’s new in the industry; they give them the dummy contract. Now let’s see…
Eddy: Yep.
Andrew: if he’s going to take all this BS that we’re going to shovel at him, if he does, then great we got him.
Eddy: Yeah.
Andrew: If not then we know just how smart they are by how much they push back. What are some of the things in a dummy contract that they put in to test it, to test intelligence? To test naivety, I should say?
Eddy: Yeah, I mean, this was a long time ago, but basically you’d have to guarantee everything, right, so if you don’t pay, you and everyone else you know is a guarantor on the contract and, I’d have to go back and look but just different covenants that I don’t, just bind you. Yeah, I honestly…
Andrew: OK.
Eddy: have to check back, but…
Andrew: Alright, I remember renting a floor space in New York and one of the things that the land lord asked for was shares of my company. I said shares of my company? Nobody else in this office, in this building, is giving you shares in their company, ‘But Andrew, you’re running an internet company, we hear about all of these internet companies giving out shares and options.’ I thought, I’ve got to make sure you understand I’ve got a real company here, I’m not handing out shares and options to everybody.
Eddy: Yeah.
Andrew: So they do push. What kind of revenue did you generate with one of these stores?
Eddy: Anywhere upwards of 500k to 800k.
Andrew: OK. And profits?
Eddy: Profits, maybe around 10% of that.
Andrew: OK. And that’s enough for you guys to live on and it’s enough for you guys to start thinking of what’s next also.
Eddy: Yeah. But like I said, it’s not a super profitable thing, and there’s a couple mouths to feed so it wasn’t super great, and we were rolling back, we were putting all of our profits back into more stores. So it’s not, we actually didn’t take much from the stores because we said, you know what, we’re going to build up another one so why don’t we save the profit for the next one.
Andrew: Alright, so you bring in, let’s say, from the first store $500,000, you keep only $50,000. The two of you have to share and live off the $50,000, and if possible you have to kick some of that back into another store, and maybe find a way to buy wedding presents for your friends.
Eddy: Yeah.
Andrew: I see, OK.
Eddy: Yeah.
Andrew: How deep in debt did you get, how much credit card debt did you have?
Eddy: We would probably, something like 50k each, probably.
Andrew: Do you still have that debt?
Eddy: Very little of it.
Andrew: OK.
Eddy: So…
Andrew: OK.
Eddy: Very little.
Andrew: You know, I lived at…I keep bringing it back to me but, I’m trying to relate this and make you understand that, I’m asking you for stuff that I would myself be willing to reveal. I got to $70,000, I think, in personal debt in Bradford and Reed days, and I didn’t intentionally pay it off, even when we could, because I wanted to have that bit of pressure on me. I didn’t want to have all these wins without feeling like, I’m taking a little salary, they can’t really pay this debt because I’m still in that startup mode, I’m still in the boot strap mode, and I’m not going to take life easy. I’m going to remember that every month some amount has to go back to the credit cards.
Eddy: Exactly.
Andrew: Alright, so you told me where you got this idea, you told me what the original vision was…
Eddy: Mm-hmm.
Andrew: and, did you build out the site with this vision and try to get people to use the vision of home cooked, to cook meals at home and so on?
Eddy: Yeah, so we built up the site completely on, that’s when we did a few meals, and that’s when we realized the experience was awesome, just the logistics of hosting was bad, and we actually canned the idea for a while. We, this was right before we moved to Chicago, we stopped working on this and we just started working on other web opps, because we said, you know what, it’s just too labor intensive for the host, and we didn’t think about restaurants at all at this point, we were just, it’s not going to work, so we’re going to just move on to the next idea. We shelved [??] for about six months, but the problem is, we moved to Chicago and that’s when it really hit that we had, we didn’t know anyone, we didn’t have any friends in the city, and we just kept going back. I would go to a bar or a coffee shop and it’s just so hard to meet people because people go to bars to either hang out with their friends or pick up other people, or what not, and it just, it wasn’t in line with our interest of just wanting to meet friends in the city, right, and we kept going back. [??] was so great for actually meeting real friends because you sit there for a couple hours and you connect with people instead of like at a bar where I can say hi to someone and they can run away from me. So, throughout these six months we kept on going back, and we were just, no but the business model doesn’t work, and then [??] had, I don’t know why. All of a sudden it was just an epiphany: “Why don’t we just do these at restaurants? They know how to cook way better than we can. Why don’t we just host these at a bunch of cool restaurants in the city?” We were, “Oh yeah, why didn’t we think of that a long time ago?” So that’s when we dropped whatever else we were doing and just started to rebuild the site based on restaurants.
Andrew: Did you try to get people to do it in their homes? I have to say, I feel like I let you down. You and I were going to do this, but it was just as I was getting married and moving to Argentina and it was a hard deadline. For some reason we couldn’t make it work and I feel like I should have just pushed harder to make it work at our house. Even at the same time, I know where my head was then. I was leaving the country and so on. Did you try to get people’s homes, and if so, what was the reaction you had?
Eddy: A couple people did it and that’s when we had those experiences. The general consensus was that people were excited but then it was, “Oh, I talked to my husband about this and he was really uncomfortable about people coming over to our house…”
Andrew: I see.
Eddy: …”Even though I think the concept is awesome and I’d love to do this and meet people.” There was just so many of those things that I think we will do some of that stuff in the future, but it just didn’t seem super duper scalable because it was so much work for our hosts. When we did these meals with a couple of these hosts we asked for feedback and that was their biggest thing. They’d spend hours and hours because they want to make a good impression cooking for this. Then they’d have to clean up and all that stuff. We just realized that it probably wasn’t the best model.
Andrew: OK. There’s a local place, or some other web site that has that idea. Olivia and I at some point will go to a house event here and check out what it’s like and get a sense of whether and why it’s working for them. For all I know, they probably have five hosts in each city and that’s it. Maybe that’s enough. I don’t know; I’ll find out. At that point, when you and I talked what kind of feedback, in retrospect, could I have given you that would have been more useful? What could I have done? You were very flattering to say that I helped out and I hope that I was able to help out even a little bit. You know me. I’m always looking for more. I’m always thinking, “What could I have done even better? What could I do to rock it next time?” In our conversations, in retrospect, what would have been even more useful?
Eddy: I think always trying out the product is number one. I think if we just set up those dinners at your place and whatnot, we could just go through the actual experience. We could see what the friction points were and what we could reduce. I think that would have been probably the best thing – just going through the product.
Andrew: Just doing it at somebody’s house?
Eddy: Exactly.
Andrew: I remember that being part of our conversation. The software was really well developed, but it there was also a lot there, right?
Eddy: Yes. You were great in terms of helping us initially; helping us get our thoughts wrapped around this stuff. It was good.
Andrew: So then you decided on this new approach. You’re in Chicago and it’s time to launch and find restaurants. You yourselves were going to book these restaurants, right? OK. This is always something that I’ve always liked about you guys, whether it’s in the stories that come out or in our personal conversations. You guys are willing to put yourselves out there. You’re willing to stand out in a market and sell ladies underwear. You’re willing to reach out to me at a conference. You’re willing to go into restaurants and say, “we need this place,” instead of shying away from it. So you walk into a restaurant. What’s the first restaurant and what’s the first reaction you get when you say, “Hey, I want to host an event here?”
Eddy: First and foremost I guess, restaurants love money. It wasn’t a hard sell for these restaurants. Our first restaurant was this place called Talia Spice [SP]. It was a Thai restaurant and we were eating there. Again, we asked to talk to the manager and said, “Hey, we have this concept that we want to bring recurring groups of people into your restaurant.” Let’s say on a weekly or monthly basis. They said, “Sure, why not?” It was at that point we just started working on a deal with them and things like that. I think what also helped was that Groupon is based in Chicago. Their biggest hesitation was, “You’re not like Groupon, right? You’re not going to take 75% of my profits?” We said, “No, no, no. We want this to be a sustainable business for both of us. People are going to use our site because of social utility instead of financial utilities so they’re OK paying more, just give us, you know, like, 30% off or whatnot and so restaurants are really happy with that. We’re bringing them customers, they don’t have to discount too much and …
Andrew: So the idea is, you give them the money to reserve the spots and then the customer, the diner gives you the money?
Eddy: Well yes, so the diner first gives us the money, so you know we say, let’s say, yes $21 menu, everyone prepays online and then the day of or a couple days after each meal we send money to the restaurant and the reason why we do that is because we’ve operated restaurants and whatnot, we know that if we ask the restaurant to kick us back money, we’d never see the money, we would be a collections agency all day long and we’d be like, ‘Hey we gave you 30 people last week, where’s our money?’ So we knew we had to be the middle man to collect the money from the restaurant.
Andrew: OK. Why don’t you give it to them before?
Eddy: Well so we, some restaurants we give them, like, the day of the meal but there’s no real reason to give it to them before, I guess, because they get paid when services rendered.
Andrew: OK. All right, so you got the location now, you got the business model, you keep a percentage of the money that people pay, I don’t know whether you do yet or not but that’s the model, what do people too, where do you get diners? You guys can’t even find friends when move into Chicago …
Eddy: Yes.
Andrew: … now you’ve got to find customers who become friends?
Eddy: So this again is just, we were just willing to do anything and everything, right. In Chicago there’s … everyone takes the train in the morning to go to work … there’s this free newspaper called the RedEye that everyone reads. It just has gossip, news, sports, whatever and they drop off these free newspaper at every subway or every train station at like 5:00 in the morning and so we didn’t obviously have money to advertise on the RedEye, I think you know where I’m going with this but so we printed out 10,000 flyers, 10,000 (___) flyers and we woke up at 5:00 in the morning, got on our bikes, (___) actually didn’t have a bike he ran, but I got on my bike and we went to many, many subway stops.
We took out the RedEyes from the stand and we individually stuffed our flyers into every single newspaper and put it back so that when the people got up to go to work, we would take a RedEye and our flyer would fall out from the newspaper and we literally got, yes we literally got a huge push because of that.
And what was even better was that restaurants saw the flyer, you know, people that worked at restaurants and they started calling us saying, ‘Hey I saw this thing in the RedEye, I’d love to do this at my restaurant.’, and the other side note is that restaurants were, like, ‘and also how much did it cost to partner with the Red Eye to do this because I’d love to advertise with an insert in the Red Eye too?
Andrew: Oh no.
Eddy: And (___) and I always joke that that could’ve, if (___) didn’t worked, that could’ve been our side business just charging restaurants so that we would just wake up at 5:00 in the morning to stuff their flyer into the newspaper for them.
Andrew: Did you get into any trouble for doing that?
Eddy: Not yet.
Andrew: Wow.
Eddy: That’s really how we started.
Andrew: OK. And then at some point you went to Y Combinator?
Eddy: Yes.
Andrew: Why did you decide to go to them for funding?
Eddy: This was right when we launched in Chicago with this stuff and again we went for dinners and we realized that it’s just something that people really need and love. People had such a great experience at these dinners that, I mean it was just the two of us, we were coding, marketing, selling, just together and before Y Combinator we would try to pitch VCs and whatnot and they don’t give you the time of day, like, we’ll pitch VCs and they’ll be like, ‘Oh yes why don’t you come by next week?’, and we’ll go there and, you know, a couple of interns will show up to talk to us instead of a partner, an associate or whatnot and it’s like it was so hard really gaining creditability.
And we knew we could build a good company by ourselves but we wanted to be a great company and a huge company and it would just help us, propel us so much faster if we went through a program like Y Combinator so that we had creditability and you definitely get creditability. Now we just ask the YC partners can we get an intro to this famous guy or that famous investor and it’s like, sure, and the intro gets sent out instead of a free YC where you’re slaving away talking to these interns at these VC firms. So that’s why we did it.
Andrew: Do you remember you interview at Y Combinator?
Eddy: Yup.
Andrew: Why did you nail it? What were the questions that got you in?
Eddy: I think our concept just resonated with a bunch of the partners. Even, Jessica Livingston and some of the corners they said I would never ever in my life, when I was single it was a bidding site but I would use scrub with us to meet new people and maybe find a date because it’s not award. I just go and half fun at a dinner at a restaurant and through serendipity maybe I’ll get a job offer and maybe I’ll find someone and so, everyone is like yeah it’s just such a cool concept to meet people that, you know, we just kind of feed off that and I think they really like how scrappy we were. Just stories of us stuffing newspapers and us just doing these little things they knew that we couldn’t, cause one portion is just to build the site but we could actually hustle and market and things like that and yeah, I mean, after the interview, everyone says the Y Combinator interview is super scary and your rattled and what not, we had a blast at our interview and afterwards, guys were fist bumping each other because we were like we got in. There’s no way we couldn’t get it because we were just like, you know, there was just so much energy in the room and we were just, everyone was just super into the product. So, we had a great experience for our interview.
Andrew: Alright, you spent a few months, its three months right, at Y Combinator? What changed in those three months about the vision for the product or about the approach to getting new customers?
Eddy: I mean, what’s great about Y Combinator is that they really help you focus on what’s important. [?] And I, we had these crazy idea for our website. It was funny, I remember the day, cause when you launch at Y Combinator it’s when you to your [?] posts right? That’s kind of when you bring yourself out into the world and say hey I’m a Y Combinator startup this is what I do and so, a couple days before we had this crazy idea, since it’s like all about the people on the site we would have this shopping cart mentality where we would put people into the shopping cart. The people you wanted to eat with next, and when they go to a meal it’s like checking out you shopping cart so you can, it’s just like this complicated system about going to a dinner just this cumulated way of checking, adding people to your shopping cart and so, we wanted to launch with this and we had a meeting with [?] and we said Ok this is our new concept, this is what we’re going to launch with and he literally tore us a new one. It was just like you guys are making this thing way to complicated. If you want to do some of this cool stuff after people have gone to Meals and are users, fine but just for these initial users just make it simple? Just tell them it’s a great simple casual, social dining experience. Why are you making all of these different layers and layers of friction on top of your product and he was literally yelling at us and he was just like I’m not letting you launch with this product, just make it simple and so he was like come back to me with your done and literally [?] and I we were so amped up that, there were no 24 hour joints but there was on 24 hours Safeway, this grocery store and we literally went to the Safeway and just coded the whole night just to fix all the problems that he was yelling at us about and we didn’t sleep that night and we scheduled another meeting with him the next day cause we really wanted to launch. And when he saw that we were on the meeting list he’s like, you guys again? I thought I told you to fix all you stuff. And were like, no, no, no but we fixed everything and we showed him a completely revamped website that we worked on the whole night and we was like wow you guys really hustled and got this done and so, he’s like OK let’s do it and we launched the next day.
Andrew: Was he right?
Eddy: Generally he’s right, yeah.
Andrew: About cutting down the shopping cart?
Eddy: Yeah, I think he’s seen so many websites, apps and we just had these grand visions, if there’s too many friction points to book a meal, people are going to drop off and with his help we were able to scale down the site so that it was a two-click reservation process. You just knew you were going here for a social experience instead of all this other, unnecessary stuffs.
Andrew: OK. What was that door there? The person in the office next to me just slammed the door. Actually, it’s not slamming the door. It’s just the way the door happens to shut very loudly it sounds like slamming. Why do you do it, then? Why do we, as entrepreneurs overcomplicate our problems? If you could think back on this one thing, how do you get to that place? Because if you can dissect how you got there, I can understand next time I’m there, why I’m doing what I’m doing.
Eddy: I think it’s because it’s always the push for, OK. How do we get more users on our site? How do we retain them? How do we, you know. Like, oh yeah, our growth is stalling. I think if we added this feature, or if we did this, it would be so awesome. And I think we wrap ourselves around that so much that we forget that probably simplicity is the best way to get more people in the door, providing a clear value proposition, instead of “let’s add this feature and this layer to the product, and this and that.” We think that this will help, and I think that was our problem. Just too many ideas on how to better the product that weren’t really bettering the product.
Andrew: I see. I have a friend who is a caterer. And he works with great chefs, he works great, I don’t know beyond a chef who else he works with. But he throws these huge parties. Party Charlie [SP], I interviewed him a lot back on Mixergy. And once I sat down in the kitchen after the party that he was running was a hit. It was actually for some TV show on Showtime where the pornstar was going to find love, and not be in a porn relationship, it was all kinds of stuff. But he threw this party off and he goes, look. He sat down with someone who said to him, “you were right to tell me not to do this.” And he goes, “I know. Every time I put one of these together with you guys, it’s brilliant. Everyone has their dream for what it could be. And it’s all great, but if you have your dream, and he has his dream, and she has her dream, and I have my dream, it’s going to be a nightmare.” And it sounds like you’re saying the same thing here. You have this dream for how to make it go viral. You have this dream for how to get repeat business. You have this dream for how to up the revenue, maybe per user. And if you put all these dreams together, you have a nightmare. Am I understanding it right? Is it just too many things all at once?
Eddy: Yeah. And just like building things on top of our existing platform that we think will help, but he put on his new user hat, and he was just pretending like he was a new user going onto our site, and I think all these extra layers would benefit an existing user, but if you’re a new user and you see the site, and it’s like, wait, but I see food, but I see a shopping cart, and I see people, he was just saying that it was just so confusing to a new user that was looking at the site. And I don’t know if I could say this, but he basically said, he was super amped up, and yelling at us too, but he said, “once they become your users and they log in, you can tell them to eat shit for all I care. But on your home page, when you’re trying to acquire users, make it super simple.” He literally told that to us because he was so mad at us that we were trying to complicate the initial strings and the initial value propositions.
Andrew: You can absolutely say that and actually, anyone now who goes to Grubwithus.com will see how seriously you took his message. There is nothing to complicate what you need them to do. If they absolutely want more information, it’s there for them from what I remember on the bottom of the screen. But there’s nothing to confuse people. They know exactly the path to go on. I understand now the product. I understand how you got your initial users. I understand how you got the restaurants. What I’m curious about now is the natural next step. You want to go bigger than the people who you can reach by sticking your flyers in somebody else’s publication. How do you go bigger?
Eddy: I think we’re still working towards that right now. It’s all about, 1.) making sure that the meal experience went awesome. Because the minute you have a bad meal experience, that’s when you lose that user.
Andrew: What makes a bad meal experience?
Eddy: Let’s say the restaurant didn’t really know what to do, or the restaurant was super slow, or just a few logistical things that we have to do a better job at educating restaurants on how to utilize our platform and how to really create a rate meal experience for them. And so I think that’s number one because we’ve seen once people have a great meal experience, they’ll tweet about the experience, they’ll write blog posts, they’ll Facebook. There was, at actually our very first [??] dinner there was this very influential blogger that went to the meal and, you know, she wrote a beautiful blog post about the meal and to this day we still get a bunch of traffic from that blog post and she’s even written an ebook that we were in and that people create meals like saying, hey, I saw [??] so I’m trying it out and things like that. Just you know, creating that wonderful real life experience for people will just help spread the word virally.
Andrew: But that’s not, that’s not, what did they used to call it? The Mario Andretti tactic, that’s not the thing that’s really, that hasn’t shot you up. I follow you guys very closely, I didn’t happen to read her blog post. What are you doing that’s, or what did you do to get users in multiple cities to come in and sign up and go to a meal in a way that they aren’t used to doing?
Eddy: I mean, I think just we’ve, I mean we’ve been written about a decent amount, it’s like I think that definitely helps. But yeah, we honestly haven’t spent much on online marketing. We’re going to ramp that up soon but it’s really just, yeah, people writing about us and just selling the value proposition to other people.
Andrew: Here’s what I saw that did work. Right after you guys finished Y Combinator, or maybe even while you were still doing Y Combinator, several people who were associated Y Combinator started doing lunches and dinners. In fact, Jessica Livingston did one for Women Founders. I’m now looking at your Crunch based profile and we see Alexis O’Hanion did one, Grub With Me. I saw on your website that he even did another one, sometime like Raise Money for Awesome Awesomeness. Something like that. So he had a lot of fun with it. That helped.
Eddy: For sure.
Andrew: What else, tell me about that, the impact of that.
Eddy: And people like you hosting meals, thank you for that. That will definitely help. It definitely helps because they have such big audiences. You know, I mean, everyone wants to eat with Harge from Y Combinator and Jessica and people like that and so when they Tweet and message and things like that, you know, hundreds of people come to the site to check it out and then even if they don’t get to eat with one of them they’ll be like, oh, this is a cool site so let me check it out and let me see what’s going on. So I think, you know, we always try to partner with cool things and we always try to have themes every month, you know, like this month it was like a Farm to Table theme so that, you know, we try to get different audiences, right? Not just in tech but like different genres, you know we had a veggie week were we had prominent vegetarians on our site and things like that.
Andrew: I see. So you recruit people who are prominent vegetarians and then the way you recruited Alexis O’Hanion whose a prominent start up entrepreneur and investor and you know that they’re going to have their own followings and people are going to want to go and have dinners with them. But it’s not just with them, if you get a prominent vegetarian who participates, does she or he also help spread it beyond their dinner?
Eddy: Yeah, I mean, they definitely, I mean, we try to encourage people to do recurring meals and just like, you know, and even brands. There’s a couple brands that do recurring meals where it’s just like this is a great way to expand your audience in real life. Really get to know your people.
Andrew: I saw that you guys on the site are recruiting brands. So what’s a brand for example. Brands and affiliates. I don’t even know where it is I’ve got so many tabs open. I’m spying on you and then I ended up getting really caught up in this weird Beard Papas, so I’ve got a whole bunch of Beard Papas tabs open.
Eddy: OK.
Andrew: By the way, the reason that I ask that is because I try not to do interviews with start ups. I want to know about stores that have beginnings, middles and ends and it seems like you’ve got an ending for Beard Papas but also the Y Combinator people who are in your class who knew of you kept telling me that this is these guys have some franchise, you’ve got to find out about this, there a bunch of people who went through Y Combinator and have backgrounds like that that others in the program didn’t get to ask you about but they’re curious as hell about. Anyway, going back to the partners, what are some of the partnerships?
Eddy: Yeah, I mean, we’re, I mean I think we are partnering with companies like Wired and Gobot and CitySearch and you know, different brands like Turner Sports and MBA on TNT and things like that where it just like, they, and a couple retail brands where basically their whole thing is kind of, yeah, you can build a community online but once you bring your fans offline and have them engage with one another to build up the brand and get excited over talking about the brand, they kind of become customers for life because they had such a good, memorable experience talking about your product in real life with other people that are passionate about the product. That’s kind of like the sell that these brands really want, just intimate gatherings about their product everywhere in the country. You know?
Andrew: You know what? I’ve got to tell you. If I had a little more time internally to do this, I would love to do a Mixergy dinner across the, I was going to say the country, but around the world, anywhere where there’s a past guest who is up for doing it.
Eddy: Yeah.
Andrew: But I need somebody to recruit the past guests, then we’d have to promote it. To get someone to get five people, ten people to come out to dinner with the past guests is fairly easy.
Eddy: Yeah, it is.
Andrew: Then, to know that they’re going to have a meaningful conversation, or if it’s with one past guess to be able to ask them questions about their business, to be able to just get to know them, to be able to just have a dinner and talk about the food in front of you is easy.
Eddy: Yeah.
Andrew: I just the time for it, but I’d love it.
Eddy: You know what? We’ll help you with that. I’ll email you about it.
Andrew: Let’s not make a promise that we haven’t delivered yet or haven’t put together yet for the audience, but if you and maybe someone in the audience wants to help you guys out, just recruit the guests for me.
Eddy: Yeah.
Andrew: I’ll promote it, but I want to be able to get people together and talk to them.
Eddy: Got it. We’ll help you out.
Andrew: You will? All right. Good. I’m up for that. Affiliate program, has that been effective for you?
Eddy: You know what? We just launched it recently. I think we’re talking about migrating back onto Commission Junction or ShareASell or one of those platforms to really get the word out. A couple people are using the program, but I think we don’t promote it all right now. So, really putting our affiliate program on a site like Commission Junction, they’ll help us promote it.
Andrew: It’s one thing that you guys are trying out, it hasn’t been a huge hit yet, but OK. The chicken? What about the chicken that pops down when I go to grubwithus.com?
Eddy: We literally pushed that thing yesterday. So, you’re probably the first person to ask me about the chicken. A couple of our employees upstairs are laughing.
Andrew: Are they listening in on this? Cool.
Eddy: They hear you talk about the chicken. Anyway, what we’ve realized is that people had a great experience at their meal, but we still don’t do a good job engaging people post-meal and just really building that community and connecting people online afterwards. Just reinforcing that friendship and just getting them to go to more meals together and what not.
The first fun way we want to do it, instead of rating the people you eat with and what not, was just have this fun virtual gift that you would give away to the people that you had a fun time with at a meal. Let’s say you ate with five people, you’ll have 10 chickens in your bank after a meal, and you can just assign chickens to different people.
Maybe you’ll give three chickens to Mary, two to Bob, or whatever, and then they’ll get an email saying, ‘Hey, Andrew. Andrew gave you three chickens and this is what he thought about you.’ You know? So, just a fun way to engage people post-meal to know that they made an impact on you and this is your thank you. You’re giving them this virtual good. It’s fun.
Andrew: I see. I know that I sometimes eat at restaurants with communal tables, and it’s kind of fun to talk to be people for a few… I love talking to strangers, so it’s fun for me, but it’s hard to follow up with them afterwards because what do you even say to them? It’s kind of dorky to say, ‘Hey, let’s get together again.’ It feels a little needy. You’re giving me a way to just say, ‘Hey, had a good time with you.’ Maybe they tap me back, kind of like the old poke on Facebook.
Eddy: Yeah.
Andrew: Then, maybe we go have another meal together and [grow up with us] or go out for drinks somewhere.
Eddy: Yeah. Totally.
Andrew: OK. All right. I think I’ve got everything here in my notes. Yeah. Got into the fights, got into the in real life social network, why it started. Let me see? Is there anything that I missed? Anything that the audience of entrepreneurs would need to hear?
Eddy: I think we got it.
Andrew: When you charge the meal that you put together for me, by the way.
Eddy: Yeah.
Andrew: $21 is what you are charging people. I’m not promoting it. I’m sure by the time we get to this point it’ll be sold out.
Eddy: Yeah.
Andrew: Better be. Better be.
Eddy: [Pretty good.]
Andrew: How much of a margin could there be for you? $21 for a dinner?
Eddy: Our margins are generally 20 or 30%.
Andrew: OK. All right. 20 or 30%. I’ve dug into every number that I could. I’ve dug into every number that I could. I’ve gotten the whole story. I’ve gotten the bickering. I appreciate you being open about all that. The only thing I didn’t get to, which I will do very quickly now, is the plug for Mixergy Premium.
I’ll say this instead of promoting a specific course. I’m going to say thank you to everyone who’s a Mixergy Premium member. The reason that I have researchers here doing this, the reason that there are editors who are putting this up, the reason that this project Mixergy exists is because you guys are signing up to Mixergy Premium.
You’re getting courses for yourself through well-known entrepreneurs. You’re getting a bunch of other stuff, but what you’re giving in addition to the money is, you’re giving us a whole team here of people who are making this all happen. I notice it and I hope you guys do, that the research is getting more in-depth, that the quality of the interviews is getting stronger and stronger.
I know that in the coming months, it’s going to get even better and better and better. If you went to mixergypremium.com and signed up, and got all kinds of stuff for yourself, I want to say that you gave us as a team a whole bunch of stuff. Thank you for doing that.
All right. The website of course is grubwithus.com. Even if you have no interest in dinners, even if your schedule is too packed, and I can’t imagine that it would be, I still recommend you go check it out just to see the registration flow. You’re going to see a lesson not just learned, but applied. You heard about it here in the interview. You should go and check it out in real life. All right, Eddy. Thank you for doing this interview.
Eddy: Thanks Andrew.
Andrew: All right, thank you all for watching. Bye.
Eddy: Great. Yeah.
