- I am very pleased today to have Matt Howard,
the CEO and co-founder of EatStreet.
I had the good fortune of meeting Matt back when he was
a student, and Matt's someone who very early on struck me as
incredibly thoughtful and, from an entrepreneurial standpoint,
was someone who really got a lot of stuff done.
Every time we talked to him about his business,
he'd made progress on it.
And so having him in here to tell the story of both
EatStreet and his personal journey as an entrepreneur,
this is something that I find incredibly inspirational.
And, in addition to being inspirational, there are a
couple key themes that we're going to be covering throughout
this entire semester, and I want you to pay special attention to
things such as, what was the impetus of the idea?
Once they had the idea, how did he build the team and resources
to actually execute on that idea?
And then, what's his product market fit?
And by that, who's his target customer, and what did he
develop that's better, that solves their problem
better than the alternatives that are out there?
So please join me in welcoming Matt Howard
as the CEO and co-founder of EatStreet.
Matt.
[applause]
- Thank you, Dan. Thank you, everyone.
So I'm excited to be here today. I know this room well.
I took Finance 300 and sat right up there.
I was telling Professor Olszewski
before I came in that every time a
customer service phone call came in for EatStreet, I was sitting
right here and I'd run out to that stairwell and take the
customer service phone call during class
and then come back in and have to copy my friend's notes
to figure out what I missed during it.
So I know this room very, very well.
So, jumping in here, I want to talk about the story of EatStreet today,
give you a little background on how we got started,
how we got going, where we are today, but before I do that,
I'd love to ask you guys two questions.
First of all, how many of you have heard of EatStreet?
Okay. Now I'm going to ask the harder question:
how many of you have used EatStreet?
Okay. Our marketing people are doing their job.
I'm pretty happy with that. So I'm glad to hear it.
So you guys know what we do,
but I'm still going to give the background on the company
just in case you haven't heard of EatStreet.
So, before I jump into that,
I want to give you a little background on myself.
So I'm originally from Larson, Wisconsin, a very small town
about two hours north of here.
So it's about 10 miles west of Neenah.
So up in the Fox Cities area.
I've lived in Madison for the past 10 years,
since I came to school here.
I came to school in 2007.
I graduated in 2011
with an economics and political science degree.
So I was not actually a business major
but took a lot of business classes whenever I could.
I'm a husband to the most understanding wife because
building a company you have to have an understanding,
significant other, and the father to the coolest kid.
This is a picture of Jack up here, who's now 18 months old
and the best kid ever.
Sales was my background in college
and in high school as well.
So in high school I sold running shoes in the Fox River Mall.
If you guys have ever been to Scheels All Sports before,
I sold athletic shoes to runners from that location.
And then, also, during summer, I sold cars.
And that's actually when I got the phone call, without jumping
in to it too early, to start this business.
So it was running shoes, cars, and then eventually
signing up of restaurants.
But sales was always my passion.
It was what I always like to do, and that's what got me wrapped
up in this business to begin with.
I went full-time with EatStreet
the day I graduated college in 2011.
So when it comes to my professional career, this is it.
There really isn't much else besides EatStreet
that I've done since the day I graduated in 2011.
So that's a little background on myself,
now jumping into the background of the company.
So we are a food ordering company.
So we connect you with your local restaurants
for online orders for delivery and pick-up.
So you go to EatStreet, you type in your address, you'll see
all the restaurants that will deliver to you or are close to
you for pick-up, and then you can order from them.
Now, a big misconception of EatStreet historically
was that we did delivery for restaurants,
and that was untrue, up until this year.
We actually acquired a company
to allow us to enter into delivery this year.
So now we are delivering in six markets, so if you haven't seen
the EatStreet car toppers or the magnets on the side of cars,
you will see that much more, especially in Madison because
this is one of the six markets that we launched delivery in.
All the other locations across the country that we have, we do not do delivery.
What we do is send the order to the restaurant,
they get it ready for pick-up or delivery,
and then they will actually deliver it themselves.
But in Madison specifically, our goal is to take the next wave
from the restaurant and actually do the delivery ourselves.
Now, if you haven't used EatStreet,
hopefully you will after today.
And I'm going to tell you why you'd use it.
First of all, it allows you to order
from all the different restaurants in the area.
So you don't have to use different websites to order from restaurants.
You don't have to call the order
in over the phone to restaurants.
There's no language barriers. There's no being put on hold.
There's no having to give your credit card information over the phone.
All that can be done through our website or app.
And it saves you money through exclusive specials and discounts.
So the more often you use Eat Street, the more discounts you
will get, and then you can use those for local restaurants.
So it saves you time, it saves you money,
and it's just ultimately easier
than calling the order in over to the restaurant.
So if you didn't, you haven't downloaded the EatStreet app yet,
I would encourage you to do so.
Now, kind of taking a step back here
and kind of going through the story.
So what I like to do when I'm telling this story
is I like to tell a lot of the hard we went through.
I don't necessarily want to call it the bad stuff, but a lot of
entrepreneurs will stand up and say how amazing everything is
and how everything was awesome.
And I think, although there's a lot of great things that
happened over the last seven years of growing this company,
there's a lot of hard things that we had to go through as well.
So I want to kind of give you guys the first year
of the company today in our story.
So starting off with how we started the company.
So I was not the person who came up with the original idea.
My co-founder called me up one day, his name was Eric,
and he said, "Hey, I have this idea to start a business."
And I had been using a service,
and so did he, called Campus Food.
A lot of you don't know that name
because it actually doesn't exist anymore today.
But what Campus Food did was allow, put all the restaurants
in one area onto one website to let you order food.
Very similar to EatStreet.
It was very popular on campus.
We had been using it pretty regularly.
And then one day they started charging
a 75-cent service fee to the diner.
So EatStreet does not make any money from users.
You pay the same amount if you use EatStreet
than if you call the order over to the restaurant directly.
We charge a commission to the restaurant,
and that's historically how it always had been done.
Well, Campus Food one day decided to start charging that
75-cent service fee, and Eric got an order delivered to him
from Silver Mine Subs here in Madison and the delivery driver,
when he handed him the sub, said stop using Campus Food,
they're now charging you a 75-cent fee.
On top of that, we don't really like their customer service.
So a delivery driver was the reason
that kind of the idea popped into Eric's head.
He had taken Comp Sci 101, so, naturally,
he knew how to build a website, at least he thought he did.
But at that point he was determined, "Well, I'm not going
"to go from using a technology to going back in time
"and calling the order in over the phone."
There's got to be a better way. That kind of light bulb moment.
He looked at the guy next to him, he was taking internship at
a company right over on Regent Street for computer science,
and he looked at the guy next to him and said I want to start a
business, would you help me, because he knew the guy
next to him was the smartest person in the room,
and his name is Alex, and he said yes.
And that was the second co-founder.
And then, that night, they called me and they said,
"Hey, we can build this product."
"We can replicate the success that Campus Food has
"with their website, we need you to go sign up the restaurants."
So Eric's exact words to me were, "You've sold shoes,
"you've sold cars, now I need you to go sign restaurants."
And I immediately said yes. I didn't even really think about it.
I didn't even say give me an hour and I'll call you back.
I just said sure, why not, that sounds fun.
Didn't really think I knew what I was getting myself into at
that moment, but we decided to launch the business.
The first Google searches that each of us did,
my first Google search was how to start a business.
Eric's first Google search was how to build a website because,
keep in mind, at that point we were just sophomores in college.
I had never taken a business class at that point
because I was what I thought was pre-med at that time.
And then Eric and Alex had only take comp sci 101.
So we were pretty new to this to say the least, but we decided
we were going to build this business.
Then came launch time.
And we decided that we were going to launch
in September of 2009.
That was the first launch day.
We wanted to get out in the new semester and get as many college
students using the service as we possibly could.
And the problem that we came into was that I had signed only
about 10 restaurants at that point, but if you think about
all of the data that needs to be uploaded per restaurant.
So if you think of a pizza place,
every topping needs to be uploaded.
They had different sizings.
A large topping cost more than a medium topping.
You have to manually put all of that in.
So the average restaurant at that time to put in all the data
and make the menu populate on the website took about 36 hours.
Well, I only had about a month to do it, and 10 restaurants
with 36 hours each on top of having a part-time job
and getting ready for college,
I didn't have enough time get everything loaded.
So I asked my friends to help.
So we would literally have our friends come over to our house
and have a data entry party, where they would bring all their
laptops over and I would give them menus and they would go
down the line and start adding it to the system.
So my form of compensation for them was pizza and beer.
The problem that I quickly realized was that your drunk
college friends do not put in data correctly. [laughter]
So, pepperoni was spelled wrong, sausage wasn't listed,
it was kind of a nightmare.
So there was no quality assurance across the board.
So we quickly realized that this was not going to work,
that this was not our solution.
So we decided to delay the launch.
We didn't want to get a product out there
that didn't allow you to put pepperoni on your pizza.
So we decided that we were going to launch in January of 2010.
We rebuilt our data entry app
to make it a lot easier to put in the data.
So, to give you an idea, today it takes about 30 minutes
a restaurant to upload a menu.
So we've gotten much better with it over time.
But, at that time, I think we cut it down
from about 36 hours to about 12 hours.
So it was much more manageable for me to do it.
So that wasn't our issue.
Then what became our issue was the fact that the website
couldn't handle the traffic.
And when I say couldn't handle the traffic,
it couldn't handle five users at one time.
So if five people came to the website at the same time,
everything would crash, and you'd have to,
Eric and Alex would have to
slowly bring up the website again
and less than five people could only be on it.
So obviously we weren't going to launch a product
where only five people could be on the product at one time.
And I'll never forget in January of 2010,
Eric and Alex looked at me and said they didn't know
if they were going to be able to fix this problem.
They thought this might be something that they just can't
overcome, and we almost decided to not launch the business.
And I'll never forget what I told them.
I said, "We have too much money invested at this point.
"We have to push forward, and we have to get this out."
Too much money at that point was less than $2,000
because we had each put about $1,000 of our own money.
We still had $1,000 in the bank at that point,
and I looked at them and said we have to make this work.
That's beer money that's gone. [laughter]
So they buckled down.
They figured out a way to make the product work,
and in February of 2010, the day had finally come
and we launched the product and it actually went pretty well.
We had 20 orders. What I like to say is only 19 of them were our friends.
So we had one random person that we didn't know.
We stalked that person for a little bit to figure out how
they found out about us.
But, ultimately, we did have 20 orders that went through.
It worked out great. We were very, very happy. Everything was awesome.
Until the phone calls started coming in.
So what we quickly realized that launching the product was the
first thing, and then the second thing was maintaining
the product and maintaining everything,
all the restaurants that we had on the service.
And I got my first customer service phone call that day
because for the first year-and-a-half of the company
I answered every single customer service phone call
that came into the system.
And the first one that came in was a restaurant
saying where's my daily report?
And I said, my exact words were: "What is a daily report?"
And the guy was like, well, your competition.
And then that kept happening.
Your competition does this, your competition does that.
But the first one was, well, your competition sends me a
daily report at the end of every day with a summary of all the
orders so then we can type that into our point of sale system
and close out the register for the night.
Well, what I wanted to say to him is you only had two orders
today, like you can just add those two orders together
and put that into the system and you're good to go.
He wasn't having it.
He's like, if you're not going to send me a daily report at the end of every day,
my employees are not going to know what to do. We need that.
And until you get that figured out, take us off the service.
So the first day, we thought it was successful,
but then we lost our first restaurant on day one.
So I looked at Eric and Alex and I said I refuse to lose
our first restaurant on the first day.
So they decided that night to pull--
Well maybe I forced them to, I don't know if they decided to--
But they decided to build the functionality for daily reports.
And they pulled an all-nighter, and the next morning
when the restaurant owner came into the store,
the daily report was sitting on their fax machine
ready to go from the previous day.
So I called the owner up that morning and I said,
"Hey, we have the functionality, are we good to go again?"
And he said, "Sure, thanks for building that.
"That's great. I'm really happy with that."
So we got the restaurant back. So we were really, really happy.
Everything was good again.
And then the second phone call came in.
So that night, the same restaurant called again and
said, "Hey, we want to shut down early for the night."
So it was like 7:00 PM.
He's like we're slow, just shut us down early.
And I was like, oh, okay,
that's, sure, I'll do that, not a big deal.
So I hung up the phone and I called Eric,
who was in class at that time, and he ran out of class.
I talked to him and I said, hey, we need to shut down this
restaurant early, they don't want to receive any more orders.
And he's like, oh. And there was a long pause.
I'm like, what do you mean oh?
He's like there really isn't a way to shut down a restaurant early.
So he's like I'm going to have to go into the code, change the hours that they have,
take down the website and bring it back up.
So we literally had to restart the website just to close a
restaurant down early, which, you know, at the time probably
wasn't that big of a deal, but I was like, oh, we can't kick all
the people off the website that are ordering right now
because we have to take down the website.
Granted, it was probably like one person at that time,
but the reality was we wanted every single order possible.
So, once again, Eric pulled an all-nighter,
built that functionality, and then the next day
I could shut down a restaurant early.
So it was these little things that kept popping up.
And we soon realized that every time our competition had
something above us, we were going to get a phone call it.
Restaurants were going to call us out on it.
They were going to say, hey, your competition does this,
your competition does that, you have to as well.
And there's no thing that bothers and entrepreneur more
than a client saying that your competition does something
better or they have something that you don't have.
So we soon realized that there was going to be a lot of that
happening, and those were just a few examples that came up.
But we got through it, we launched.
We were going, we were happy.
This was the first website.
So not a lot of people have seen this.
And I haven't even told you that EatStreet was not our original name.
Our original name was BadgerBites.com.
So these are the original restaurants that I signed up.
Now, keep in mind, it looks, I get that it looks pretty bad,
but back in 2010 this wasn't that bad.
It wasn't great, but it wasn't that bad.
But this was the original website.
I don't know if you're thinking about having a doughnut or
sailboats or a snowball fight on Bascom Hill, but, either way,
it worked, it was functioning,
it was getting orders, we were happy.
So then came what we were preparing for
for our business plan competition.
So UW has a yearly business plan competition
that we decided to enter.
So things were going fairly well, at least thought.
We decided that we wanted to enter this competition
because the top prize was $10,000.
So at that point we'd only invested $3,000 into the company.
So if we won $10,000 that was going to help us a lot to expand.
So we entered this competition, and our goal was to show the
judges that we had a ton of users using the product
and that was really going to impress them.
That was really our thought process
was the more users we have,
the more impressed the judges will be.
So that semester I think I put out 100,000 flyers.
Like I was that guy putting a flyer under every single door,
every apartment building, in every classroom talking about
what Badger Bites was and trying to get students to sign up.
It didn't work very well
because if you just put out a flyer saying,
"Hey, use my product," but no promotion, no reason to use it,
it doesn't really work that well.
I hadn't taken marketing yet,
but I learned that pretty quickly.
But I put out a lot of flyers, and the day of the competition
we only had about 15 restaurants, about 400 users,
and we were only getting about 10 orders a day.
So we were very small. We only make about $2 an order.
So to have 10 orders a day, we were making about $20 a day.
So to give you an idea of how much we still had to go.
And, needless to say,
the competition did not go according to plan.
The judges made us realize that
we had a lot of gaps in our business,
that ultimately our competition had a better website,
more restaurants, more functionality,
more discounts, more promotions.
All things considered, we just weren't really
competing against our competition.
So we received some really great feedback.
The judges gave us all this feedback and said, hey, here's a
couple things that you really need to work on
in order to make this business successful.
So a few things they called out was,
one, you need more restaurants.
15 restaurants is not going to be enough.
There's tons of restaurants in Madison,
and your competition has 50 restaurants.
We went to their website, we could see the differences.
Ultimately you're not going to be able to compete
if you don't get better than your competition.
And then, also, they're like your website's
a little rough on the edges, you need to rebuild it.
Rethink about it, focus on UI a little bit more
and rebuild the website from the ground up.
Now, these were great things to focus on, the problem is we
couldn't afford to pay ourselves at this point
because we were barely making any money.
So we all had jobs or internships.
That summer both Eric and Alex took internships
out on the west coast.
One went to Facebook, one went to Intuit.
And I was still working here selling cars
and working at the Union, where I didn't have time
to go and sign all these restaurants.
So it was definitely a problem, but we found a way to really
find the time to focus on this.
And we rebuilt the website.
We went from 15 restaurants to over 60 that fall semester.
So we actually had more than our competition at this point.
Now, I know this website still looks a little rough on the
edges but, again, a pretty significant increase
in performance over the previous one.
So the UI was a lot cleaner.
And then you'll see on the side here where we see the
restaurants, we also started putting up their promotions.
So whatever special they were running that week.
So a 10% off all orders
or a free California roll with every purchase.
So we started putting those little promotions and discounts
and then asking the restaurants to make them exclusive to us.
So the restaurants were giving us these promotions and only
allowing users that used Eat Street, Badger Bites back then,
to actually, those users to actually get those promotions.
So it was a way to kind of hook the users in and say this is
what makes us different, this is what makes us better, here's why
you use EatStreet over our competition.
So it was a great way to get those users
to kind of see that value.
And, like I said, going over to 60 restaurants,
we were very happy with that as well.
So then came time that I think every startup doesn't like,
tries to avoid, is we needed some legal help.
So looking at-- At that point I didn't even have
contracts signed for restaurants.
The restaurants and us agreed on what cost
that they would pay and that was it.
And that was really our contract or lack thereof.
So we started talking to lawyers and we quickly realized that
there was no way we could afford to actually pay a lawyer.
$300 to $400 an hour is a little too steep for a startup that
barely had any money in the bank account at that point.
So we knew we couldn't afford to pay for a lawyer, and,
thank God, there was a program that UW had just started up
called the Law & Entrepreneurship Clinic.
This is where last semester law students connect
with UW students that are building a company
and give them legal advice, help them write contracts.
So, for us, it was writing a restaurant contract.
It was getting a terms of use, a privacy policy.
All the basics that you need to start a business underway.
So it was a great way for us to get free legal advice
and really become more legitimate in all respects.
And it saved us thousands of dollars in legal expenses, and
we were able to use this until the day we graduated college.
And it was a really, really great program.
So that helped a lot.
And then came our first big promotion.
So we started running these little promotions,
and they were going really, really well.
Like I showed you that 10% off, the free California roll
on every purchase, those things were helping, but what we really
wanted to do was we wanted to run a really big promotion.
We wanted to get a lot of new users into the product
because at that point we'd only had
about 500 people using the service.
We wanted to find a way to get a lot of people
to use the service all at once.
So we decided to run a promotion,
and we ran it with A8 China here on campus.
And it was free General Tso's chicken. Free.
All you had to do is use the service.
We didn't charge you anything to use it
or to actually get that promotion.
And we, so that day I get to the restaurant-- I decided, that was
the first week of classes, I decided that the first week
of classes I probably wasn't going to go.
Put your earmuffs on, Professor.
So I got the restaurant that morning, and I decided to just
make sure everything was running smoothly.
I opened up my laptop, just made sure
that the orders were coming in smoothly.
And then, the restaurant opened at 11:00 AM.
By 11:05, they had 39 orders waiting.
So, at that time, the majority of our orders
were sent by a fax machine.
And still a lot of them today are sent by a fax machine
because that's what most restaurants have.
So the fax, now the problem with a fax machine is
it takes about a minute per page to receive.
So we had 39 orders waiting in queue, and I knew that was going
to take 39 minutes for that last order to come in
and actually get sent through the fax machine.
And on top of that, more were going to keep piling up.
So I quickly called Eric and-- There's kind of theme to my
story here-- It's just always calling Eric and Alex
like you need to fix this.
And I called them and I said this is not going to work.
We need to find a better solution
than just the fax machine.
So we discussed, we're like,
"Okay, how can we get the orders to the restaurant."
And we said, Eric's like, hey, I got an idea, how about I email
the orders to you, you receive them on your laptop,
and you just print them off normally.
So don't send it through a fax machine,
just get a normal printer and just print them off.
And I was like, that can work. He was at home, thankfully.
He built the functionality in 45 minutes,
and then quickly brought my printer from my room
over to the restaurant, I hooked it up to my laptop and started
printing off all the orders as they were coming in.
And that entire week I didn't leave that restaurant.
I was in that restaurant for 12 to 14 hours every single day
printing off those orders.
I'll never forget, I went to the owner of A8 China
and was like we have a lot of orders coming in,
I really need, like we have a lot.
He goes, don't worry, I have a big pot.
[laughter]
I was like get the biggest pot you have
because these orders are coming in fast.
And he, I've never seen someone work harder in my entire life
than what he worked that week because he made every single one
of those entrées and it was a big pot, so it was good.
So that was kind of solved.
Now the first problem was that I smelled like
General Tso's chicken for, like, a couple weeks.
The second problem was realizing that we had offered to
pay $2 for every entrée that we sold.
We sold a lot of entrées.
We had 1500 new users come to the product
in that five-day period.
So it was over a $3,000 expense when it was all said and done
that we had to pay for each user.
We didn't think it was going to go that well.
We had only had 500 users up until that point, so we didn't
think we were going to quadruple our customers overnight,
or over a five-day period.
Myself and Eric each had to call our parents
and convince them to give us $1500 each
because we could not afford to pay him at the end of that week.
And, thankfully, we convinced them to do it.
And they got stock options later in the company, so hopefully
that $1500 will be worth a lot more than it was at that time.
Thankfully, they gave it to us, and then we kind of sat back.
We're like, okay, we just went from having $3,000 invested
to now we're $6,000 invested.
Like, again, back to the we spent too much money.
Now we've doubled it in a week period.
So the question was, was it worth it?
And what we very quickly realized was it was.
Before the promotion we had 500 total users.
We were averaging anywhere from 10 to 15 orders per day.
After the promotion, we had over 2,000 users, so 1500 new,
and we were averaging 50 orders a day.
So we very quickly realized that this was a great way
to get a lot of new users on the product.
And you'll see whenever Eat Street launches a new semester,
we do do a lot of promotions.
We try to get students back in and ordering
from EatStreet right away.
We will never do free again.
I apologize we're not going to start that up again.
This was a little too stressful to ever do free.
But there's always some really great discounts
in the first couple weeks of the semester.
So we learned a very valuable lessons that these
promotions work and that we should continue to do them.
Then we went back and entered
the business plan competition again.
At that point, we had 9,000 users, we were getting 150
orders a day, and I'm happy to say we won the competition.
So we went back from being in probably dead last place
the previous year to going on to win the competition.
So we won $10,000, we won a free office
that UW gave us for a year,
and I went full-time with the company
literally like two weeks later.
And the really cool story that happened to me on this one was,
I'll never forget because I was deciding between taking--
I had two job offers on the table
because I was just about to graduate,
and my mom was pretty concerned that I needed to take
one of those job opportunities
because I had to pay for my student loans.
You know, I had to become a real person after I graduated.
And when we won that competition, my parents were
watching it on the livestream, and my mom called me up after
that and said, okay, don't take your job, we believe in you,
you're actually like, you're onto something.
If these judges picked you to win this over all the other
great ideas, because there was a lot of really cool ideas, she's
like don't take those jobs, go on and continue the company.
What she didn't realize was I had already turned down
those jobs and I was already planning
on going full-time with the company, but it was great
that she told me that that was the right idea.
So I'm glad she did that.
So we wanted to use the funds to start expanding the company.
We were really doing well here in Madison.
We wanted to bring it to more cities.
So expansion to additional markets
started the day after I graduated college.
We hired our first employee.
So at that time I had taken
every single customer service phone call.
Any time a restaurant had called in,
I was the person they talked to.
I finally was able to hire a person to help me
with that so I could actually have a life.
I was the cool kid in the bar with the iPad in hand so I could
run out to go answer customer service phone calls
if a restaurant ever called.
Now I had someone that could actually do that for me,
and I could actually be a 22-year-old for a change.
So it was a great moment for me personally, and they helped a lot.
His name is Ian, and he's actually still with us today, which is awesome.
We then identified three markets to expand to that summer.
So we decided we were going to expand to Milwaukee,
Iowa City, and Ames, Iowa. Those were the three markets.
We wanted to kind of show that we go to a bigger city, like
Milwaukee, and then even smaller cities, like Iowa City and Ames.
So we wanted to kind of show that you could replicate this in
various different cities than just the size of Madison.
Now, the problem was even though we had $10,000 for the business
plan competition, we had also saved up about $15,000
in profits from the business.
So I had about $25,000 in the bank
when I started the expansion.
The problem is that's not a lot of money.
By the time you're paying yourself, you're paying for travel expenses
and all that goes into signing up restaurants,
it wasn't a lot of money.
So we were really on a shoestring budget.
So that summer I started with Milwaukee, and the funny thing
about Milwaukee was that Eric took an internship at Intuit
out on the west coast and I lived with his parents.
So every night he called me and said, "What are my parents up to?"
because I had dinner with his parents almost every night.
So I got home-cooked meals, which is great, but it
was a little weird to be at my co-founder's parents' house while we were starting this,
but it saved us a lot of money so I wasn't complaining.
Then I went to Iowa City, and I refused to buy,
to pay for an expensive hotel.
So I found the cheapest hotel,
which was $27 a night in Iowa City. One star.
And if you've never been to a one-star hotel in Iowa City,
I wouldn't recommend it.
But it was a smoking room.
It was not the greatest two weeks of my life.
But it allowed me to stay really cheap and really start that
market with not a lot of money.
Then I went on to Ames, Iowa, to sign up restaurants in Ames,
and I subletted from an apartment.
And I'll never forget, I don't know what I was thinking
because for a three-week period they charged $100.
That should have been my red flag.
It was too cheap.
What I quickly realized was the first night
that they had a bug infestation problem.
So let's just say I didn't have the greatest time there.
But the moral of the story here was I had to keep things cheap.
We didn't have enough money for me
to get in nice hotels or live lavishly.
So it worked out.
Now, with that expansion, one big problem came,
which is we realized we were expanding too fast.
Going from one market to four markets overnight with only one
part-time employee helping me was way too much.
And we actually ended up shutting down Ames
only three weeks after we launched.
We had to make the tough decision, and, ultimately,
I'm really happy that we still tried to do it because we
learned a very valuable lesson: how not to start a new city
and that's just as important as how to start a new city.
So, very quickly we realized that Ames was not going to work.
We cut the market and decided to focus on Milwaukee and Iowa City
which ultimately was definitely the right decision
so we could focus our efforts and really replicate
the success in those markets.
Then competition started to heat up.
So our competition realized that
we were started to expand pretty aggressively,
and Campus Food decided to drop their 75-cent service fee.
So that was something I was using very, like I was telling
all the users don't use Campus Food, use EatStreet instead
because we don't charge you that 75-cent service fee.
Well, that went out the door one day when they realized that we
were starting to steal the market share away from them.
So we had to change up our marketing to combat that.
And then, only a few months later, our biggest competitor in
the industry today, Grub Hub, actually acquired Campus Food
for $48 million.
And the first thing I looked at Eric and Alex and said was,
"How did Grub Hub get $48 million?
"Where did that come from?"
Like this idea of the fact that they had enough money
to acquire a company of that size, it was like,
wow, this is kind of scary, the fact that they could do that.
And so what we decided was,
okay, we obviously are onto something ourselves.
Milwaukee, Iowa City, and Madison
are going really, really well.
If we're going to make this an actual business,
if we're going to compete with people
that can raise $50 million in venture capital,
we need to expand faster.
And so that was kind of the catalyst
that pushed us to start looking at fundraising.
So, to date, EatStreet has raised $37 million
in venture capital to help us expand the company.
So the very first investment was
$150,000 seed investment from Gener8tor,
an accelerator program here in Madison and Milwaukee.
And they allowed us, that $150,000 allowed us to go from
three to 13 markets and replicate the model.
And that's kind of always been the story of EatStreet.
Whenever we raised funding, it's always take the funding,
start more cities by getting more restaurants signed up,
getting more users on the product,
kind of replicate it there,
and then go on and raise a larger round of funding.
So then the series A funding came,
kind of the first big chunk of money that a company will raise,
and that was $2.5 million in January of 2013.
That was by far the hardest investment I've ever raised.
And the reason it was hard was
we didn't really have enough traction to show.
You know, at that stage of a company, an investor needs to
believe in you and your vision a little bit less than the numbers
because the numbers aren't quite there yet to justify raising
that much money, but without the money you're not going to be
able to expand the company very, very fast.
So we found an investor
who eventually believed in our vision,
but that was really hard.
I went out to Silicon Valley for months on end
trying to convince investors to invest in us.
And the story that I kept hearing from Silicon Valley,
where you'd expand to raise capital from, was if you're a
first time entrepreneur and you're going to raise a large
round of funding like this, you need to be out here.
I need to be close to you so we can help you grow the company,
but we're not going to just give someone $2.5 million
and then say we'll see you in a couple years,
go back to Madison.
So we almost relocated the company, but I was very lucky to
be able to find an investor in Chicago that believed in me
and my vision to expand the company
to eventually put in the $2.5 million.
So I was very happy that we were able to keep the company
right here in Madison.
And then came our series B funding of $8.4 million.
That was actually the easiest round of funding that I had
raised because at that point I had done quite a bit
with the $2.5 million that I had raised in the series A.
So I had a lot more money to get more traction.
So now it was a little bit less believe in me and my vision and
more believe in the numbers, believe in what we've created,
believe in all the markets that we're in today.
So that one went really, really well.
A lot of local investors.
And then the series C funding of $26 million came in in 2015.
That got hard again, and the reason it got hard again is
Madison is not known for venture capital or for companies
that are venture-backed to raise $20 million-plus.
You'll see the seed and series A happen on a
pretty regular basis, but there's not a lot of companies
that are raising over $20 million venture capital rounds.
So I had to find an investor who really believed
that we could build a big company.
And luckily we found an investor in Europe who actually had
invested in a very similar company to what we do but in
Europe that went very well, and they made a lot of money on that
deal and they decided to take that money and fund us with it
and get back into the industry.
So that was really, really great
that we found an investor who believed in us.
So that investment, all those investments
allowed us to expand a lot.
Now, I'm kind of skipping over about six years at this point,
but I wanted to walk through the funding that we had raised
because that has allowed us to transform EatStreet
into what it is today.
So we're still headquartered in Madison, Wisconsin,
which I'm very, very proud to say.
It's something I very-- I feel passionately that I want to
continue to be headquartered here in Madison because I think
we have the right talent here, we have the right infrastructure
built to continue to sustain our growth.
Now, the story of EatStreet has always been, and still is today,
we are a food ordering company focused on what we call
tier two and tier three markets.
So those are cities like Madison, Milwaukee,
and Iowa City, but also Tucson, Richmond, Lexington,
Syracuse, Ithaca, Ann Arbor, East Lansing, Columbus.
Those are all markets that Eat Street has a presence in today,
and we're going to continue to expand that as we grow.
We're in 250 cities across the country.
We have 15,000 restaurants in those 250 cities.
And in the last 12 months
we've had 1.7 million people use our product.
So that means they've actually used a product
that EatStreet powers just in the last 12-month period,
and that's up from 800,000 the year prior.
So it's growing very, very fast.
We have 150 corporate employees that are based here in Madison,
and we have over 500 delivery drivers.
So delivery, like I said to you guys in the beginning,
is kind of a new endeavor for us.
We're only in six markets today
and already have over 500 delivery drivers.
So as we expand that initiative, our employee count is going to
go up very, very significantly.
Like I said, we've raised over $37 million today as well.
So, on top of just expansion and all of that,
we've also expanded our platform.
So this is everything that we offer up to restaurants today.
So our marketplace product is what you know,
which is called EatStreet.
That's what most consumers recognize the company as.
But when we sign up restaurants,
we also power their individual website.
So we give them their own website with their own online
ordering so they kind of custom brand their own product
and actually offer online ordering to their users.
We're also happy to say that partner channels is the third
part of our platform, and we today have partnerships
with companies like Yelp, Facebook, and Google.
So if you're using Yelp, Facebook, or Google, there is a
chance that you're actually going to be ordering through Eat
Street because they use our API to pull in our restaurant data
and actually allow you to order from those restaurants.
So some really exciting partnerships like that.
And then, lastly, delivery.
We acquired a company called Zoomer earlier this year
that allowed us to launch delivery in six markets.
So when a restaurant signs up for EatStreet,
they can sign up for all of these products.
EatStreet.com is just one part of our company,
but they can sign up for all these different services as well.
Like I said, we're in 250 cities across the country.
There's only three states that we're not in today,
that we don't have a location in.
But you can see, for the most part,
we are nationwide at this point.
So with this, 15,000 restaurants.
So that venture capital allows us
to expand very aggressively across the US.
Tomorrow my goal is to take over the world.
So, slowly but surely, we're making pretty good progress
in the states, but tomorrow hopefully we can expand faster.
Now, one thing that's been really exciting
that about a year ago we opened up our new office.
I like to show people this when I'm doing presentations.
So this is our first office
that we actually built ourselves and made ourselves.
This is our front entrance right as you walk into EatStreet.
We have two levels.
So the seventh and eighth floor, we're right on West Washington,
right across the street from the Hyatt Hotel.
This is the seventh floor where our marketing department sits.
This is also the seventh floor where the sales department sits.
So everyone in our sales area.
We have actually a lot of sales interns right now.
We just hired 10 UW students to help us with signing up
new restaurants this semester.
Their desks are all right in the middle there.
And then, moving upstairs, this is the eighth floor.
This is what we call our game room.
Better picture right here.
So if you want to play shuffleboard, ping pong,
or have a beer, because there's a kegerator up there,
you can relax in our office and do that.
So we're very, very happy to call this home.
It took us over a year to build it out, but we are very much
that startup culture of work hard, play hard,
and it's been a lot of fun to open up this new office.
Now, I want to end today by just some lessons
that I've learned over the time.
Now, over seven years there's a lot that I've learned.
So I'm only going to touch on a few things that I think are
really important if you're starting a business because
I'm sure there's some of you in this room that have decided
that you actually want to start up a business.
And I wish these were things
that I had known in the early days when I started the company.
So the first thing I would say is don't do it yourself.
I have tons of people that come up to me after these
presentations saying, I'm a business major,
I want to start a company,
but I don't have a technical co-founder
and I need to hire a consultant.
My first piece of advice is don't hire a consultant.
How many times did I tell you guys
I had to call Eric and Alex to fix something?
Consultants don't answer their phone at two o'clock in the
morning or don't pull an all-nighter to build a daily
report to keep your restaurants happy.
If you're going to start a company
and you want to be the business end of it,
find someone who has, and it's a software company,
find a CTO that can be your co-founder.
Without Eric and Alex, we'd have never been where we are today.
They built everything from scratch.
They were always right next to me, helping me grow this thing,
and everyone should have a co-founder to lean on.
Second thing, reach out to those around you.
I wish I had known had vast the resources are at UW
when you're a student to help start and grow a company.
The competitions that are out there
and the Law & Entrepreneurship Clinic
are just two things that I mentioned.
There's a lot of other resources today.
Every year there gets to be more resources.
So use the university to your advantage.
On top of that, there's a really vast entrepreneurship community
in Madison that people, there's kind of those been there,
done that entrepreneurs who will give back and mentor companies.
So meeting those people by attending conferences and
meeting other people that are starting companies like yourself
are really important because you can avoid mistakes
by learning from people like that.
Finding the right advisers.
There were countless times over the years I got hit with a
roadblock that I could not overcome, and I had advisers who
eventually were a lot of our investors that I could call on
and be like, hey, I need help with this
or I can't figure this issue out.
What I call them is they're the kind of been there, done that entrepreneurs.
So they're people that have already built companies, they
know what they're doing, they've hit roadblocks similar to this,
and they can help guide you on that process.
So finding anywhere from two to five people that can kind of be
your go-to is really, really important when you're expanding,
especially when you're expanding fast.
And then the last thing I would say is
jump in head first and commit to an idea.
Not everyone is going to sign up right away.
I only signed up 10 restaurants originally, and then it quickly
went to 60, because we started getting traction,
we started realizing we were on to something,
and restaurants decided to sign up.
Not everyone is going to sign up right away.
It's going to take a little bit of time.
And I didn't plan on being an entrepreneur.
Eric called me one day and I said, sure, why not?
Seven years later, if I had said no to that,
that would have been the biggest mistake of my life.
So you got to jump in, you got to commit to it,
and we saw an opportunity and we went for it.
You know, there was countless roadblocks over the years that
could have stopped us from what we were doing, but ultimately we
kept our heads down, we kept growing,
and we decided to make this business into what it is today.
So I would encourage you, once you have an idea, once you have a team,
to really commit yourself to it and make it a reality.
Thank you guys very much.
[applause]