Join CEO.com for an exclusive live virtual event to hear from Slice founder and CEO Illir Sela.
Illir will share inspiring stories and invaluable perspectives on the entrepreneurial journey. Join the conversation live to gain invaluable insights from a successful tech entrepreneur.
How are you? Thank you so much for coming on. I'm so excited to learn more about Slice and your background. How did you get started in all of this? Tell us your story.
Yeah, thank you so much for having me on here, Clint. How did I get started? I come from three generations of small business owners. They happen to be in the pizza industry, so they own pizza shops dating back to the 70s and most recently in the early 2000s, I want to say. And I saw firsthand the challenges that small business owners face. They're in business alone, and while they are following their passion for craft or to provide for their family, they're inheriting all these business problems.
And Slice exists to help independent shop owners, specifically in the pizza industry, to be in business for themselves, not by themselves. Primarily we help with technology platforms to help digitize their customer base, help grow their revenue, reduce cost, give them back time.
And it's more than just like DoorDash or GrubHub, right? I mean, you're like fully integrated into these restaurants to help them make money, handle their deliveries, that type of stuff. Is that right?
Yeah, I would say DoorDash, GrubHub, Uber Eats, these are direct to consumer companies that use restaurants as inventory. Think of it that way. And they bring consumers to the restaurant, but the restaurant's still left on their own to manage their business. Slice is a core partner, so we're integrated. A good analogy would be Amazon versus Shopify. Slice is much more like Shopify for brick and mortar independent pizza shops.
Commerce enablement is our core product, and so we empower them with websites, online ordering with their brand, their customer base, their data. We've got a consumer app, which is also very much connected to their customer base. We've got a point of sale system that sort of reconciles all these channels. And now we've most recently launched the Supplies product where we're bringing buying power to independent merchants.
And you started this because you come from a long line of pizzeria owners, is that right?
Yeah, three generations. I have a ton of family members and friends that own pizza shops today. They've all chosen the independent path because they're very passionate about either a brand they want to bring forward or a recipe that they want to bring to the world. They're very authentic. And so their choice in life in terms of being able to open up a pizza shop was either to go the franchise path, so think Domino's or Papa John's, or the independent path. And the franchise path, as I say, takes away the creative freedom. And so, many of these family members ended up operating their own independent shop.
What was fascinating as I grew up and was surrounded by all these operators is that they were all kind of very similar. They were all running very similar businesses, they just didn't really know it. They were working alone. When I think the real unlock comes from working more together, being all on the same platform, realizing some of those economies of scale. But, yeah, to answer your question, three generations, 30+ family and friends that own pizza shops today.
What I love about your model is you're not treating these restaurants and these pizzerias as though they're inventory. You're actually rolling up your sleeves and helping them run a successful independent pizza shop. And as we all know, I mean, independent pizzerias are so much better than the ones you named before like Domino's or Papa John's, like it's not even close. So the more of those that we can get is just unbelievable.
What's the response been? Because you've been doing this for a while and you've raised a lot of money, so I know you're well on your way. How are restaurant owners responding to this? How are they feeling about this? What feedback have they given you?
Yeah, I mean, the product works incredibly well. Today we work with just about 20,000 locations around the country in all 50 states. Slice is a lifesaver to be quite honest. I think what's happened over time is that independent merchants have realized the incredible importance of digitizing their business. Using software to better understand their customer, to be able to connect with their customers through marketing, like consumer retention marketing through email and text and push, to be able to understand trends, and most importantly, to free themselves from the telephone.
Because the bottleneck for most of these merchants is actually the phone. On a Friday night when it's super busy, they're operating typically alone or with a very small staff. We found out that 20+% of their phone calls go unanswered. That's a big problem when 80% of those phone calls become orders, that's revenue that they're just leaving off the table.
And so yet, to your point, certainly independent shops have a better product, we know that. They keep our communities more colorful, more authentic, more diverse, but they're lacking the tools and the scale of some of these larger chains, and that's where Slice comes in. I think that the goal is to, again, provide them with that same platform, if not better, so that we can level the playing field between a Joe's Pizza and a Papa John's. The idea is that the consumer shouldn't have to sacrifice the convenience of ordering for a better quality product.
Yeah, I love that. I think that's genius, actually. And as I understand it, you raised $43 million in 2020 in a Series C round. You've raised at least $82 million in funding so far. I don't know if those numbers are fully accurate at this point, but what's the end game here? Are you going to take this thing public or?
Yeah, we've actually raised $125 million total.
Okay. Yeah, I assumed like that because my data was all the way back from 2020.
Yeah, and look, we're processing billions in transactions every single year on behalf of these independent shops. In terms of where we're taking this, there's a lot of room for growth. Again, we work with just about 20,000 shops. There are 55,000 independent local pizza shops in the country today, so we certainly have a lot of room to grow in terms of the number of merchants on the platform where we can come in and help.
I'm pretty excited about giving future operators the opportunity to launch their own business in a way that's faster and less painful, so I think we have an opportunity to grow the number of shops that are operating in the US. And then the very exciting opportunity is to continue to vertically integrate so that we drive adoption of our products and services, both current and future, for more and more of these merchants.
So it's sort of a, how do you grow the number of merchants on the platform and how do you grow the number of products that each merchant is leveraging in order to improve their business? So there's a lot of room to grow. Now what does that mean for the business? Whether it's a public company or we remain private, we're pretty confident that we have a ton of optionality.
At the end of the day, great businesses always have optionality, and I'm pretty proud of the fact that Slice is in a position where we haven't been pigeonholed into a specific path. We've got many different options in terms of how to continue to scale.
Yeah, and the public markets right now are turbulent, and so obviously I'd stay private as long as you can just given that factor. In fact, touching on that a little bit with the economy and kind of the turbulence in the economy, particularly over the past, I don't know, six months to a year, and kind of the uncertainty there, how has that affected your business and just as importantly, how has that affected the businesses of the customers you serve?
Yeah, that's a good question. Look, I would say I'm pretty fortunate to be operating in a business model and serving a customer base that I believe is now a staple in the country. Pizza and pizza shops are the cornerstone of every single neighborhood nationwide. Regardless of how big the city is, whether you're in Manhattan or the suburbs of New York or in a small town in the Midwest, it is very likely that there was a pizza shop, if not multiple pizza shops that serve their customers in that neighborhood.
It tends to be a very habitual product, I think because it's affordable, it travels incredibly well, and it's social, it feeds more than one person, typically, a large cheese pizza. The American consumer is habituated to this experience at least once a week. So everyone for the most part has their pizza night, whether it's a family pizza night, at work, or with friends.
And what we are seeing is on the consumer side, more and more consumers are deciding to make their night out inside. So certainly there's more people who are choosing to order pizza on a Friday night than go out to dinner in certain geographies. On the shop side, on the merchant side, there's this amazing renaissance where more and more people are deciding to turn their passion into a business, their craft into a business, or they want to manage, they want to control their own destiny in terms of how they provide for their family.
So a record number of pizza shops opened up last year. I believe the number is just about 4,000 net new pizza shops that are independent, opened up in 2022. I think that's an exciting sort of number, and we kind of see that trend continue to see its way through here in 2023. So from an overall industry perspective, it is a bit of a countercyclical, it's a bit of a staple, and wildly consistent is the best way I can put it.
And I imagine you said like, hey there, you have 20,000 pizza shops so far in the country, there's 55,000, so there's a lot of room to grow. Is there on the roadmap, do you even go beyond pizza shops? I mean local delis, kind of just locally owned restaurants entirely?
Yeah, we talk about that from time to time. I think we have to earn the right to do that, but certainly there are other categories where there's families that run the business, typically owner-operated, small format, takeout delivery. Again, to your point, whether it's a deli or a bakery or a taco shop, you name it. I think there's certainly an opportunity for Slice to be helpful, but we have to earn the right to do that.
And I've always really believed in focus and making sure that we really see our way into the businesses of these shops and make sure that we're actually making an impact at scale before we explore these other categories. I'm certain the Slice model has the right to win in any category. So yeah, I think at some point most likely, but for the foreseeable future, we're still focused on pizza.
Yeah, that makes sense. I'm interested, when you started this thing, how did you beta test it? What were those early days like? I assume, did you go to family members and say, hey, try this thing out? Yeah, tell me about the early days.
Yeah, early days started with a couple of hypotheses. Well, the first thing I did was I knew the economics of the pizza shop within the four walls through and through, but I did not really fully understand the total addressable market, the industry data.
So I spent a few months studying the pizza industry in terms of how it was broken down. At that time, and actually I'll share the numbers today, it is about a $47, $48 billion industry in the US. That means $48 billion in revenue passes through about 77,000, 78,000 total pizza shops in the US.
Out of that 78,000, about 20%, 25% of those locations are the big chains. I call them the big pizza chains: Domino's, Pizza Hut, Papa John's, Little Caesars. These are brands that have already invested in the platform that Slice has also created, and so we kind of don't view them as potential customers.
So that leaves about 55,000 locations. And what I also witnessed was that these big pizza chains had really started to break out in terms of digital ordering. So at that time, 30% of Domino's order volume was digital. For independent shops, it was like 1%. Today Domino's is about 85% digital and still independents are kind of lagging and trailing. So the hypothesis that I started with was like, okay, it's pretty clear that at some point, I don't know if it's going to be in two years or 20 years, but at some point every order is going to be a digital order.
And certainly merchants don't really realize that today, and definitely the consumer is not behaving that way today, but that's the way history's moving. And so when I looked at the economics of that change, meaning what happens when consumers move to digital, I studied Domino's and I was looking at their earnings release. Very quickly realized that the online consumer was spending more money every time they placed an order. The online consumer came back more frequently. The online consumer costs less to serve. We spoke about the bottleneck of the phone, certainly that no longer exists.
So what happens is if you trade or if you move your offline volume to digital, you see this increase in revenue and decrease in cost. As soon as I saw that, it was off to the races.
First thing that I did was I started to build websites and online ordering components for some family members, to your point. And yeah, I would just sort of show them, creating a business model that was pretty much a win-win.
They would not have to pay a dime unless we delivered value, and if we delivered value, they'd have to pay $2 per order. So it was $2 per order capped and pretty quickly kind of took off. Word spread, more and more people wanted a website, more and more people wanted an online ordering product. And that was sort of the beginning.
How have you built the culture as you've grown of the company and how has that changed?
The culture? So first and foremost, our focus is on the customer. And our first customer is the business, our second customer is the consumer. You have to have empathy for the customer. These are operating businesses, very, very difficult to operate. As I mentioned, typically owner-operated. They have demand curves that are sometimes unpredictable, meaning they can get busy at any moment, and you have to have a lot of empathy for that because if you call them on a random day for anything, even if it's to introduce them to Slice, you have no idea what they're going through. In that moment, their oven may have broken down. In that moment, their kitchen staff may have called out or their delivery drivers didn't show up.
And so our culture is really just thinking about the customer first and leading with empathy. Second part of our culture is you've got to be really thoughtful about gradually leading operators, these shop owners, to success.
We can't follow them. We have to listen to them, but we cannot follow them because if we follow everything they tell us to do, it is most likely going to lead us all into not an innovative path, not a path where we can create value for them or for Slice.
But what we have to do is listen and lead. So show empathy, lead, and then you've got to execute really, really fast. So you've got to be scrappy and you've got to have that owner's mentality. So that's been the culture that we're trying to maintain.
Obviously as we've scaled, our team today is over 800 people globally, I've certainly learned a bunch of lessons for how to hopefully undo some of the mistakes that I think I've made along the way. And it certainly becomes very challenging to maintain that culture, as I mentioned. But I think we try every single day to make sure that we integrate it into our core values, into our performance reviews, and so forth.
I'm interested in when you first realized, hey, this thing's going to work, right? I can build software, I can do this for a large amount of, because the early days you're like, Hey, let's beta test this with these various shops, let's build them websites, all that type of stuff. What was the turning point where you were like, hey, something big's here.
That's a good question. I was very heads down, so just so you have a sense for the history of the company, I started in 2010 and I bootstrapped for six years. No outside funding, it was really a different company. It was under the brand called Mypizza.com, and we were simply building websites and online ordering for independent pizza shops, one after the other. We didn't have a consumer app, we didn't have a point of sale product. It was just websites and online ordering. And to be quite honest, I was just so heads down operating that playbook.
Certainly I was very conscious of the growth rates, so we were growing pretty quickly. The scale wasn't there because you're charging $2 per order, even if you go from 10 orders a day total to 100 orders per day total, that's still not necessarily significant scale. We're talking about 3000 orders for the month. We're talking about $6,000 a month. That's not a lot of money. And it took us a long time to get to 100 orders per day.
But what I paid attention to was the growth rate. Was sort of the hypothesis proving true where more and more consumers adopted this channel and were more and more shops adopting the technology. And I would say it wasn't until 2015, February of 2015, I was at a Starbucks location just kind of working. It was sort of my office and I didn't even have QuickBooks. I was managing our sort of metrics out of an Excel sheet.
And it was that month that I looked at our numbers and I realized, okay, wow, we are on a run rate for $40 million in sales for the year just based on that month's volume. We're on a run rate for $4 million in revenue and we're profiting $3 million of that. It was high margin, super efficient, low cost, very scrappy. I would say February of 2015 was like, wow, this is a different beast.
And that was the time when I picked my head up and said, okay, how do I treat this business with more—I don't want to say respect, but how do I bring more resources into this business in order to really make sure that it's set up for success for the second stage?
I wonder, what were the failures along the way? Where were the hard points where it was like, man, how do I keep going?
Oh wow. Well, early days, for example, shop owners like pizzeria owners wanted online ordering, but they didn't want to change the way they worked. So they were not open to us sending some tablets or some technology that they would use in order to pay attention to this new digital channel. They didn't want to change their workflow at all.
And so for the first couple of years, whenever an order would be placed with one of the websites we were powered by the consumer, that order would show up on my email address and I would personally call the order into the pizzeria. So if you, Clint, placed an order for Joe's Pizza using one of our websites, it would come to my email. I would call Joe's Pizza and say, “Hi, this is Ilir, I've got an order for you from MyPizza,” and I would read it out.
And that was pretty fascinating, but I did that for two years. I remember, I had a very specific ringtone on my phone that told me that there was an actual order that was placed. And again, this is early days. The volume wasn't necessarily wild, but there were moments where I couldn't call the pizza shop. Life happens. So we figured out how to transmit orders via fax machines. And so that was the next stage. Let's fax orders in. You would place an order online, we would fax it in, and very often those fax machines or that fax API would break down. And I had no help, no way to bring these orders or transmit these orders to the merchant. The consumer would complain, where's my food? The merchant would say, I don't know, I never got it. And so that creates this real big problem.
I would say it was a collection of those kinds of issues that in that moment in time, those days, those problems felt fatal. Because it was like, I mean, I don't know how to overcome this. How do I keep going with this fax API if it's going to keep dropping every other day? So it was a bunch of scrappy, duct tape problems that would certainly break every few days.
Now imagine that over the course of two to four years where you're just dealing with that every single week. So I think it was very helpful over time in allowing not only myself, but eventually our team to build a lot of resilience.
What have you learned about leadership as you've grown from just you in the Starbucks coffee shop to now over 800 employees globally? What lessons on leadership would you provide someone who's like going through that amount of growth and what have you learned yourself?
That's a great question. On leadership, the first thing is, I mean really, really it is important that everyone is very clear on the mission of the company. Because people come together and you want to become a team. You don't want to be a bunch of individuals. You want to be one team, one big team. Teams have some common traits.
For us, and I think for businesses, that common trait really needs to be the business mission. Our mission is to keep local thriving. There are people on the team that are more passionate about that mission than I am, and I live and breathe it 24/7.
And so I think it's really important that especially for a startup, for a company that's trying to really grow fast and change the way the status quo is sort of operating, bringing people on board who are excited about the mission is critical. But people won't be excited about the mission if as a leader, you're not reminding them of that every opportunity you get. Stories about shop owners where their life has changed because of Slice. Stories about Slice's ability to impact. A consumer after a soccer game, maybe it was a tough loss or a great win.
So being able to really connect the team to the mission in a way that's real, not just by speaking it, but showing the impact and bringing the outside stories in is probably one of the most powerful things you can do as a leader as a company scales, because you're not going to have one-on-one conversations with everybody at the company. It's just not possible after some point.
Second thing is I think you always have to have a very high bar. I think the best people in the world join certain companies because they really want to win and they want to work with other great people. And so having a very high bar for who's part of this team and how do you ensure that you motivate people and maintain this sort of really high performance culture, I believe is a very important second part of leadership. Like, leaders set the tone of the company and leaders determine what's acceptable and what's not acceptable.
Now, I'm not saying if something's not acceptable go and lose your mind. But you've got to make sure that those things are very clear and that you hold the line on what those traits or qualities or core values or KPIs.
The third part I think is you've got to enjoy the ride. You've got to enjoy the journey. You've got to make it really, really fun and enjoyable. I think leadership sometimes comes across as incredibly serious and incredibly daunting and challenging, but it's got to be fun. The environment that people work in has to be a fun environment. Otherwise, we spend so much time together as a team that if it's not fun, if you're not enjoying the ride, as we say, I think it can become challenging for the team.
So those are some examples amongst many, but what I've learned is to always focus on the mission, hold a high bar, and make sure everyone's having fun.
Ilir, I can't thank you enough for coming on the show, talking to us, sharing your experience. I'm blown away by the platform you've built. I love the focus of what you're doing, and I love the mission, which is to help kind of locally owned pizzerias survive in a world where Domino's had this incredible technology for so many years and it was hard to compete with that if you were a local pizzeria and you've really come in here and leveled the playing field, which is incredible.
We always end every interview with this question. At CEO.com, we believe chances given are just as big as chances taken. You took a chance to start Slice, which is incredible and it's life changing when we take chances on ourselves, but then we also have this kind of reverse thing where chances are given to us. And I wonder if there's anyone in your life or anyone that you can think of who gave you a chance that led you to be the success and Slice to be the success that it is today?
Too many to name. I mean, certainly my parents are very entrepreneurial, so they've always believed in me and I think put me in a position to take risks without having to feel a sense of too much risk. But I would say specifically professionally, I'll tell you a quick story.
In 2015 when I decided that Slice really needed to be better resourced and put in a position to really grow as the next stage, I went on Twitter. I'm very active on Twitter. And I reached out on Twitter to a gentleman named Wiley Cerilli. Wiley was a leader at Seamless in the early days, which is now part of GrubHub. Founded a company called SinglePlatform and sold that company successfully. Super smart. And I had heard of him, but we didn't know each other. So I went on Twitter and I tagged Wiley and I said, "Hey Wiley, do you have some time to chat?"
And I actually did a similar thing with three other leaders in the restaurant tech space. Wiley was the only one to respond. He said, "Sure, I've got a few moments. Let's catch up." We jumped on the phone and he immediately connected me to basically the people that helped set Slice up for success for this next stage of growth. Connected me with the people who ultimately led our first seed round. And this was a person who was just so open-minded to what we were building and willing to listen. You'd be surprised by how rare that is, which is kind of interesting.
So I would say, personally, my parents, obviously. Professionally in 2015, I certainly wouldn't be here today if Wiley hadn't responded and then taken the time to meet with me and help me better understand what this company needed in order to be set up for success.
That's incredible. Ilir, your story is unbelievable, you're unbelievable. I love Slice. It's such a cool concept. I love the whole story behind it and continued success, my friend. We'll catch you down the road. Thank you so much for coming on the show.
Thank you so much for having me. This was great.