On this week’s episode I sit down with Noah Glass, Founder and CEO of Olo. Olo isn’t a household name, but that’s by design. They are a white label solution that powers most of the restaurant apps you have on your phone. These apps streamline ordering and specialize in supporting takeout.
While I suspect that most people would correctly guess that the majority of the food ordered from restaurants is eaten off premise, I doubt that most folks would know that takeout is 13-times larger than delivery. Olo is supplying the software products to make that happen and have been on an upward trajectory for years. They just recently IPO'd this past March.
Noah is clearly brilliant. I went a bit off my prepared questions in order to do some deep dives with him about how he operates Olo.
He shares some incredibly valuable wisdom about how they use analytics to craft their products, how to leverage a product advisory council, navigating the IPO process, and much more.
MPD: Welcome Noah.
Noah Glass: [00:02:19] Thank you for having me mark.
MPD: [00:02:21] Great to have you here. So I'm going to start off by actually doing your intro. I find that it's, it's better for me to brag for you rather than to have you do your background. If I miss anything, let me know. So today we have no glass. He's the founder and CEO of Olo powers.
The restaurant apps that you use when you order from your mobile phone. And they do that specifically for when you're at the restaurant to avoid the line. It's not a delivery app. Ola went public on the New York stock exchange earlier this year on St. Patrick's day. And as of this morning is worth $4.2 billion.
Noah's journey is one of the food of a food ops entrepreneur. And to be clear, he's not a food entrepreneur who is launching new food products. Delicacies or whatever Noah has spent his career advancing the operations of the food industry. And before he founded, although he started another company called , which was designed to streamline the ordering in restaurants as well.
So we're going to get the relation a little color in the relationship between those two when we get into it. But he's also, he does a lot of stuff beyond that appropriately. He's a board member at the culinary Institute of Ameri. He is a, also a board member for share our strength and know slash no kid hungry, the nonprofit fighting to make sure all children in America have access to food.
I think a noble and worthy cause. And on top of that, he's a Renaissance man. When he was an undergrad at Yale, he was both on a lacrosse team and in acapella. So he is a person of many talents. No. What did I miss?
Noah Glass: [00:03:59] I don't know if you get acapella into an intro, you've really covered all of your bases. I'm impressed by your Intrepid research mark.
MPD: [00:04:08] Thank you, buddy. All right, let's start. So for the folks listening, would you just start off by giving an overview of Olo just to baseline.
Noah Glass: [00:04:16] Yes. So Olo is a leading on demand commerce platform for enterprise restaurants. And what that means is that we are the software platform that enterprise restaurant brands use to build their direct to consumer channels.
And this is enabling consumers to then order and pay ahead. And then have a faster experience collecting the food at the restaurant or getting it delivered to them. So you mentioned that the origins of the business are in take out and that is true. We also do have additional capabilities to enable delivery of food.
And we're now doing this for over 400 restaurant brands in 69,000 to individual restaurant locations around the United States. And also in Canada,
MPD: [00:05:03] any restaurants we've
Noah Glass: [00:05:04] heard. I'd say a lot of restaurants that you've heard of at this point restaurant brands, like five guys, shake shack, sweet green Wingstop Applebee's Chili's cheesecake factory.
We've. We've had a lot of. Brands from different segments of the industry from the fast casual segment, like five guys and shake shack and sweet green to the casual dining brands. And then most recently the kind of family, the dining brands like Denny's and I hop and others and QSR quick service restaurant brands in both of those categories.
I didn't start Olo with those as the intended audience for our platform, but it's been amazing to see how many different use cases on demand commerce has in the restaurant industry and how many different kinds of restaurants have been able to utilize it.
MPD: [00:05:59] So when I download the cheesecake factory app, that's you guys.
Noah Glass: [00:06:04] We're the platform that apps like cake, factory or websites that enable you to do an order and pay and get the food at the restaurant or get it delivered kind of experience. Those are all built.
MPD: [00:06:17] Okay. And to clarify the core problem you're solving. What's the core reason. What's the main reason I'm going to download this app regardless of what restaurant
Noah Glass: [00:06:26] it is.
Yeah. The main reason is that so much of the restaurant industry is transactions are off-premise. They are food that is consumed, not inside the four walls of the restaurant. And certainly that's been true in the era of COVID-19, but it was true long before that as well. If you look at 2019 63% of all restaurant transactions were not consumed inside of the restaurant, but were consumed outside.
And so with that, Has the way in which consumers use restaurants, it stands to reason that the ability for a consumer to order ahead and pay ahead so that their food is ready and fresh when they arrive and they can then take it with them without having to wait for it is a value to the consumer and a platform that enables you to do that better and have a better consumer experience is valuable to the restaurant operator.
Because it lets them tap into those consumers and those transactions that flow from those consumers and at the same time increase their operational throughput capacity. I hadn't heard somebody introduced me as a food ops entrepreneur, but I do like that. I think operations is a big area where our platform has been helpful in making our restaurants run better and provide better kind of digital hospitality for this new way.
MPD: [00:07:42] How big is a company today and you're a public company, so this is all stuff people can find on the web. And I interviewed private company CEOs there. They're careful about what they share, but I think yours is all out there.
Noah Glass: [00:07:54] A lot of out there I'll share the things that are out there. How has that so last year in 2020, We processed a $14.6 billion worth of food sales through our platform.
We had a revenue year of $98.4 million in 2020, and we just had our first earnings call last week and we got it to a range. But for the point of the range for 2021, we were guiding to $140 million revenue company. That's
MPD: [00:08:27] great growth. Thank you. So what's the revenue in the business and revenue model in the business.
You just said what the revenue is. And it's obviously a lot less than the food orders being purchased, which makes sense. Is it a transaction fee subscription? How are you guys structured from a revenue model?
Noah Glass: [00:08:44] We define that revenue model as transactional SAS. So there are elements to the revenue model that are typical SAS subscription fee revenue, where it's a per store per month kind of fee.
And then there's a usage based component and that's the transactional piece. So the more orders that our restaurant does, the more deliveries that our restaurant does, the more revenue Olo generates. And so it's been an exciting time for us to see just how much the industry is going through a digital transformation where we've seen year over year, doubling of order volume.
So if I look back. 2017. We processed about 50 million orders and then in 2018 and a hundred million, and then in 2019 200 million, and then last year we processed over for 500 million transactions. So over a 10 X growth in order over a three-year period, the milestone of hitting Ola order, number 1 billion since our founding in June, 2005.
MPD: [00:09:46] We when we're on the, putting my investor hat on as a VC, we see a lot of companies that come in with a SAS model, but the whole thing grail is when they get to what you call transactional SAS when they have the yeah. Baseline. But they're really participating in the revenue creation of the customer, which business line is bigger for you.
Is it SAS or transactions?
Noah Glass: [00:10:08] I think that over time, the consumption-based components of our model are inevitably going to be the larger piece of the business. So what's nice. It's a little bit of a razor and blades kind of model. The SAS subscription is the razor and then you keep selling more and more blades as the consumption-based component of the business.
And we think there are other just great examples of this in the SAS universe, to your point, companies like Shopify are very inspirational to us and he's snowflake, are very inspirational to us. As you think about a purely consumption-based model, although is something of a hybrid much more like a Shopify, although notably our transactional revenue is not from payments today.
It is from. Order volume and it's from delivery volume for those orders that are placed explicitly
MPD: [00:11:00] for delivery. So when you guys are setting out your goals for this year to grow, I guess by 50%, top line, pretty awesome. What are the things that drive that? Is it signing up more restaurants?
Is it getting more usage than the apps to product features? What do you got? What are the levers you guys think about?
Noah Glass: [00:11:20] Really the two major drivers, the KPIs of the business are number of restaurant locations, live on the platform and also our poo and our poo for those unfamiliar is just average revenue per unit.
So for Olo, we're constantly looking at how do we add more restaurant brands and important component of our business model is that when we sign a brand, it's a universally adopted across all of the stores, whether they're corporate owned or franchised within that brand. So we're going after the largest enterprise restaurant brands that are out there, that's been incredibly fun, efficient model for us and continues to be.
And then we're thinking about how do we make sure that we're driving increased utilization of the platform by the end consumer, and that's where offering things like our ordering platform to enable digital takeout. And then adding on to that, our dispatch platform, enabling delivery of orders. So that restaurants can say, even though I don't have delivery drivers, I can now meet the needs of the on-demand consumer when they want that order delivered to them at home.
That just helps to add to the utilization of the platform. It creates more value for the restaurants and at the same time, it drives more revenue for Olo. When we
MPD: [00:12:33] see really early stage founders, they. And they're really focused on the acquisition part of what you're talking about, signing the customer, but the devil is really in the details of customer success and getting penetrated through the organization.
You're successfully doing that at the enterprise level, which is one of the hardest ones I got to imagine. This is one of the hardest categories to penetrate. Given you've got franchises, you have varying degrees of sophistication. You've got geographical differences. What have you learned about customer success and penetration?
Lessons that other entrepreneurs who are focused on enterprise or land and expand strategies can take and implement their own businesses.
Noah Glass: [00:13:15] Customer centricity is really at the heart of everything that we do at Olo. It's at the heart of the products that we build. It's at the heart of the way that we engage with partners on the other side of our ecosystem, by being an open platform, but constantly being in communication with our customers at both the brand and the individual store franchisee or corporate owned restaurant manager level.
Is so important in what we do. Our tracking of this through net promoter score and broader customer satisfaction tools has been such an essential thing about our business because obviously you're getting customers to re up and renew with you at the end of a term is critically important and having a great working relationship where.
Helping to provide value and having those customers then say, I want to do more with you. I want to buy more of the product modules that you're offering. And also having those customers serve as part of that product innovation flywheel. So we have an incredible product advisory council made up of our customers that has been such a key to our success.
They're telling us the things that they see. That they believe Olo can help with. We then build those things in partnership with those customers. We sell that back to those customers in the product advisory council and more broadly. And it's just an incredible flywheel effect of product innovation that has served us well.
And it's led to, we announced as part of our S one, that when you look at our core three product modules, ordering. Dispatch, which is delivery enablement and then rails, which is enabling restaurant. He wants to take orders from third-party restaurant delivery, marketplaces like a door dash or Uber eats.
71% of our customers are using all three product modules. So the hit rate that we've had of not just launching one product that was beloved by the industry, but then innovating with our partners to get a second and a third. Hit on our hands has been awesome and it comes from that customer centricity.
So one of the things that we also focus on is a metric called net revenue retention. And we have consistently had net revenue retention of over 120%. That's huge,
MPD: [00:15:40] really easy to build a business when existing customers grow by 20% every year without additional sales. So you, you mentioned the product advisory council.
That's a great, I loved the word flywheel for this. They tell you what they need, you build it, they buy it, they tell you what they need, you build it, they buy it business grows. Do you pay those people to be on the council? How did you pull that together? How do you incentivize people to give you the Intel that you.
Noah Glass: [00:16:11] They are naturally incentivized to be on that panel because they want to provide those insights and they want Olo to build those capabilities on their behalf. That is an incredible, incredibly powerful effect. And what we've seen is that when we laid out a bold vision for what this product advisory council would be, and this is.
I think back in 2014, we first started thinking about putting this group together in a formal capacity. We said, we want people that think about a restaurant industry that will be 51% digital. And what that meant was the majority sales channel will be digital. And it was at the time of bold vision because I don't know, we were probably in the low single digit percentage of overall restaurant industry transactions that were digital.
We can come back to where we are today, but that group we identified as this is the group of thinkers that are within our customer base that are both working at the brands who will be the first to get to that 51% digital milestone. And that are innovative thinkers where they're imagining what restaurant operations will look like at that level.
And it's really a cross section of operations, folks, tech, folks of digital folks, marketing folks. It's a really great group. And then our entire Olo executive team, including our product team and our design team, but our entire executive team attends those meetings because they're that important to us as a pipeline for innovation.
MPD: [00:17:52] What's the right time for the entrepreneurs, listening, who it makes sense to have a product advisory council. What stage of the company do you set that. Is it seed series a, when can you set it up? When do people care enough to jump in?
Noah Glass: [00:18:10] For us, I think it was. And maybe this is something you can extrapolate more broadly.
For us, it was when we got to the point within our customer's businesses where it really mattered, it hadn't become truly mission critical, but it was on a path to getting to being mission critical. And that's where we knew they would be invested. They would attend these meetings. They would provide their best ideas in their own self-interest and that would benefit us and the rest of the customer base.
I don't know that it's really tied to a company's financing stage. It's really, I think, tied to that level of engagement with the customers where the customers are not just saying, I want you to build this little thing for me, or complaining about a bug in the system, but they're actually coming to you as thought partners and saying, here's where I see the industry going next from my vantage point within this restaurant brand or from other experiences that I've had.
And really have an iterative brainstorming process with you. I think for us, that was also coinciding with getting to a critical mass of restaurants within the fast casual restaurant segment. And for those less familiar, fast, casual, these are the restaurants where typically you're ordering. For a personalized meal of high quality ingredients, think Chipola think sweet green, think five guys or shake shack.
That's the fast casual segment that was the early adopting group of on-demand commerce. And we were starting to see interest outside of that. Early adopters said. So we were seeing interest from casual dining brands. We were seeing interest from coffee and snack brands from family dining a little bit from quick service restaurants that typically have a drive-through.
And we started to think about, okay, our platform is going to have a much larger. Relevant than just the fast casual segment of the industry. Let's start pulling in ideas for these other segments, from those who are seeing this as an opportunity and engaging with Olo as a result of it.
MPD: [00:20:16] So I want to dive in a little bit yeah.
Here, because in talking to you and completely off my question list here, but this is more interesting. I'm realizing that your customer success and penetration story is a big part of this game, and it's a huge challenge that entrepreneurs in the enterprise in particular, no, one's talking about it.
Everyone's talking about acquisition and revenue models, but how you get everyone to use it? Can you think of some situations and obviously no names mentioned where you had resistance from a D for adoption. There was a bunch of franchisees or people who are like never going to use it. Don't care.
How do you, how did you break that down? What's the tactical strategy? Is it sending a lot of emails? Is it pressure from management? What do you do to chip away at resistance? When you're trying to penetrate a larger organization with a lot of different decision makers.
Noah Glass: [00:21:16] It's a great question. And I think that a lot of our success has come from fishing where the fish are biting.
And what I mean by that is back to what I just said about starting with a specific segment of the industry, where we knew that our value proposition was strong and where we could create great reference accounts. So in working with five guys, burgers and fries as an initial customer, we built up a great case study of the way in which we helped five guys be just as convenient or perhaps even more convenient, then fast food competitive.
Because instead of going to the restaurant, waiting in line, instead going to a fast food restaurant and waiting in a line of cars to place an order of the drive-through, you could order ahead and pay ahead and have the food ready when you got there. And that level, the playing field terms of convenience, four or five guys, and made them as convenient as the most convenient alternative option.
We use that success to then take that story. And to your point, we did. W we actually very consciously didn't use it as the five guys story. We used it as a reference story where we described what five guys looked like in a way that made sense to other operators where they said, oh, I have those same problems.
I too have long lines of customers waiting to order and getting frustrated by the wait. I to have a restaurant that gets overwhelmed at peak times. And given what you did for five guys, the success that you were able to provide through your platform, again, as a nondescript customer of Olos I can map that on to how it could be helpful for me.
And a lot of that is customer centric selling or solution selling 1 0 1, but it was super helpful for us having great case studies out there. And having them be accessible and not a case studies where the first thing that a restaurant group would think of was I'm not like five guys. I don't sell burgers.
I sell salads, but instead, oh yeah, I have similar challenges in my business and I can understand how you were able to help them overcome that. And it creates the vision in the buyer's head about how your solution could also help them get over the problems that they're facing. And we've just done that rinse and repeat over the years.
Little baby steps into those later adopting cohorts of customers. The most recent thing that I'm really excited about is the quick service restaurant segment. Because if you can imagine, that used to be the pinnacle of convenience you would get in your car, stay in your car and pick up your order at the drive-thru in 180 seconds after placing it and be on your way.
Now that doesn't seem convenient anymore because every other restaurant lets you order ahead, pay ahead and it's ready when you arrive or even better, they delivered to you. And so now we're seeing this QSR drive through segment, really making this massive migration onto on demand, commerce and polo as a result.
MPD: [00:24:20] So for those listed in quick service restaurants, that's a fancy for fast. That's right. QSR. Yes. Why did you start this, of all the things you could do with your time? Your background is more of a traditional, well-educated academic type, student athlete coming out. How did you become food ops guy?
What was the transition?
Noah Glass: [00:24:46] I think there are two points of origin that converged to start Olo. So the first is that in high school, one of my first jobs was a pizza delivery driver. And I did that over the summer between my junior and senior year in high school and little things about the experience just stood out to me that could be made better and the internet was starting to become a thing.
And. I just imagined that there could be a better way for me to do my job as a pizza delivery driver and for the restaurant more broadly to engage with consumers than the way that it was being done strictly over the phone. So that was one thing that was, in the back of my head, if I'm connecting the dots backwards, the other thing is that.
A real smartphone geek before it was cool. I, so I love that it was one of the first people to be carrying around a Palm pilot, personal digital assistant. And I had this as something that was in my pocket in 2003, when I first moved to New York city and I was using an app called indigo. I don't know if you remember of indigo, but it was this incredible.
It wasn't called an app. Then it was just, Palm pilot software, but it would show you all these points of interests that were near you on an interactive map that would move as you moved and you could click in and sees a GAT reviews and other interesting things about restaurants. And I just fundamentally came to believe that we were all about to have these magical devices in our pockets that were location aware, internet enabled.
And because of that, those two facts and because they were personal devices could become not just content or communications devices, but could become commerce devices and open up for all of the brick and mortar retailers out there. All of the benefits of e-commerce that they had been left in the dark on up until that point.
And those two things came together where I felt. If I, as a consumer, want to use this to order ahead and pay ahead and have a better, faster VIP experience at the coffee shop or restaurant that I go to. And also on the restaurant side and the operator side, they could do things better. They could increase their throughput capacity.
They could better serve me, their customer and increase my loyalty by having a platform like this. Now I can see it there's value on both sides of the equation, and someone's going to do this. I'm in a position at the time in 2003, where I had no debt, I had no of responsibilities in the world and I was supposed to head off to Harvard business school in the fall of 2005.
And luckily I ran into my seed investor, David Frankel, and he said to me, look, if you believe in this enough, To quit your job and withdraw your admission to Harvard business school to pursue it. I'll give you half a million dollars to get you started. And that was such a gift. It was such a conviction test for me that I felt like, yeah, this is the one time in human history.
When this is going to happen, that consumers are going to adopt smartphones. And it's the best time in my life to take a shot at something like this. So I've got to do it. I owe it to myself.
MPD: [00:28:06] Did you have any reticence about not going to Harvard business school? Pretty hard to get into HBS. Very prestigious carries with you your whole life.
How was that? How'd you make that decision?
Noah Glass: [00:28:18] It was really a knee jerk gut decision. I just, I knew that this was the right decision for me. There have certainly been dark moments, all those journey where I have revisited that moment and thought maybe I should have thought about that a little bit longer.
Maybe this was the wrong decision. I haven't felt that way in a while. I'm happy to report. I've never felt less that way than I do today. But yeah, there, there have been times when I've thought about the path not taken. One nice thing is that for the past three years, I've been able to go back to HBS virtually the last two years and teach a case study at HBS about polo and specifically about our dispatch product, which is enabling on demand delivery.
And that has. Fun and exciting and engaging with students is great. And a little taste of what that experience looked like, but also really satisfying that I still get to go to HBS and I don't have to pay for it. And
MPD: [00:29:20] I think teaching somewhere is probably more credit than attending. So you probably check the box,
Noah Glass: [00:29:27] perhaps.
I'm not sure. I really can be called a teacher. I'm like a guest, a visiting, subject matter expert or something, but I take your point. Yeah.
MPD: [00:29:38] Okay. So you mentioned the delivery bit when people are looking at this company, how do they think about competition? Are you competing with door dash?
Like where do you fit in this world?
Noah Glass: [00:29:49] I think all of the time people imagine that the restaurant industry, especially during the time of COVID has just become all delivery. That's the only thing that restaurants are doing. It's a hundred percent delivery dine-in is gone. Take out never existed. It's really interesting.
When you look at how transactions layout across the industry, I mentioned that 63% of all transactions, our off-premise. So that's interesting in and of itself, but the majority of transactions within restaurants are not consumed inside of them. Restaurants. That was true again before COVID-19 that's a 2019 statistic.
If you break that down further, It is 21% drive-through and just 3% delivery. This is 2019 again and 39%, 13 times the size of the delivery market is take out and take out is really where we play. It's our origin as a company. It's what we're helping restaurant brands to do first and foremost. But if you think about that, the plurality of all restaurant industry transactions are ordering your food.
And eating it somewhere other than the restaurant, but picking it up yourself, not through drive-through, that's an amazing thing for people, even who are students of the industry to contemplate what's happened as a result of COVID is yes. On-premise dining has decreased down to instead of 37% of the industry, just 17% of the industry take out, remains the largest.
And delivery has grown, but it's still only 9% of overall industry transactions. So we work as partners with companies like door dash with companies like Uber eats that are. Partnering with Olo in multiple ways. One to serve as a a delivery service provider in some cases where they're the ones collecting the order at the restaurant and delivering it to the end consumer as part of our dispatch platform.
And then also as partners on our rails product module, where they're getting feeds of menus from Olo, and then sending orders that originate on their apps and sites. Through Olo into the restaurant point of sale system. But because Olo is the exclusive on demand commerce partner for this critical mass of the must have restaurant content, we play this essential role in the restaurant ecosystem.
And because we're an open platform, we aspire to work with everybody that wants to engage with those restaurants. And we feel like that's the role that we're meant to play for the benefit of the industry as a whole.
MPD: [00:32:41] Do you think going forward delivery is going to be bigger than pickup? What's the, I know the trend here.
You got a bump with COVID is, the tail end. It's not over, obviously in the states, there's more work to do internationally. We have a solution to the COVID now, and that people are resuming life. Where does this go? I'm shocked by the fact that pickup is so much bigger than deliver it.
I never would've thought that it's massively bigger. So where does this go? Longer term.
Noah Glass: [00:33:17] I do think over time that there will be more delivery in the industry. I think it's interesting to look at the digital mix. So of, and I should say I'm quoting statistics here from NPD group. And that that's one of the data sources that we constantly track to see how the industry is moving.
When you look at digital sales it is 6% of overall sales that are digital delivery, and it's 12% of overall industry sales that are digital pickup. So still two to one, even when you look at just digital of pickup over delivery, I think over time more restaurants will offer delivery in house. We see a lot of activity with restaurants, engaging with hiring drivers.
To deliver their food as a first party delivery service. And I think that you'll see continued growth from the third party delivery companies there just so many times when a consumer is maybe leaving work, heading home, and it's just easier for them to order ahead, pick up curbside and head home.
I think that take out is a really meaningful part of the industry and always will be. And it is always surprising to people, especially when they're based in New York city, based in San Francisco, based in a delivery centric market, just how much the restaurant industry engages with customers through pickup.
MPD: [00:34:46] So this is fascinating because while you were talking I clicked a few buttons and DoorDash is valued 10, 10 times the value of Olo. Does that make sense?
Noah Glass: [00:34:59] I think door dash is a great company, a great partner of ours. And we've, really grown the companies in lockstep. We, we have seen them arrive on the scene a little bit later than Ola was started and just have a lot of growth in primary markets, secondary markets, tertiary markets, bringing delivery to places where delivery had not existed.
Through first party delivery. I don't have anything bad to say about DoorDash. I don't begrudge them that valuation. I also wouldn't trade places with anybody in the industry. I love where Olo sits at the center of the restaurant ecosystem. As the hub with a lot of great spokes of restaurants on one side and partners on the other, there are certainly restaurants with a higher market cap than Olo.
There are certainly ecosystem partners that have a higher market cap than Olo. I'm thrilled with where we sit and how we're growing. Yeah, it sounds like a
MPD: [00:36:01] really strong network effect position at BN. So I want to switch gears a little bit. You just took a leap that a lot of entrepreneurs talk about a few too.
And I think there's some pros and cons to it. You went public and it's a different game. How has transitioning from a private company to managing a public company, changed things for you?
Noah Glass: [00:36:27] I think maybe it's worth visiting re spending some time talking about why this was an important leap to make please.
And why? In 2019, I went to the Olo board. This is the time we are at the moment when Olo has to start thinking about becoming a public story. So the reason for that was it felt to us again, that we had started to enter into mission critical status for our customer. And constantly in software. There's this question that every software buyer has to ask of.
Do I want to build, or do I want to buy, do I want to build something in house or do I want to utilize a SAS platform? We had witnessed in late 2019 three of our direct competitors get acquired. And after getting acquired, have their business, their core business that was competitive with Olo gets shut down.
And have those engineers repurposed or just, you uh, focus changing and every time and it happened, it was a good thing for Olo. We picked up a lot of those customers who had the rug pulled out from under them, and then we're scrambling to find the solution, but those stories and the pattern recognition that this was happening a lot of companies like Olo were getting acquired and then shut down was terrifying for the restaurant industry, given that.
The services that these companies and Ola were providing, had grown to be such a large percentage of their overall sales have had come to represent a mission critical system. And so it felt to me, like in order for us to really put to bed, this kind of note on the decision tree of maybe I should build this in house, or maybe I have to build this in house because I can't trust it to a third-party platform that may.
Run out of money or may get acquired and shut down. We need to make a statement that we're going to be independent and we're going to do this for the long-term and that those two things and a great business model and a strong balance sheet. I mean that we are a stable platform for the restaurant industry to build on long into the future.
And I think we have really sent that message and I believe. That it's been heard by the industry and that we're seeing our customers reassured by this. We're seeing prospects reassured by this, that, okay. I get that Olo. Is the first scaler in the on demand commerce space. And I get that this is a company that on June 1st is going to turn 16 years old, but you guys are reinvigorated.
You're going to be doing this for many decades into the future. And that is to be clear. Absolutely. My intention I've been doing this for a long time. I intend to do it for the rest of my career provided that my board will continue to deem that a good idea.
MPD: [00:39:32] That's fascinating. Cause usually when you hear people talk about the exit.
It's to get shareholder liquidity. It's a financial decision, right? It's maybe to bring some more capital in the business to scale faster and a certain point, there's at least I used to be not checks big enough to match what you can get going public. But this this narrative about signaling stability, I think is pretty novel and sounds very authentic.
I'm sure it resonates well with the companies in the market where you're 16 years into the deal. Were you getting any pressure from investors to say, Hey, what's happening? And for those listening venture deals are typically, you expect liquidity between year seven and 10, maybe seven and 12.
So you were on the back end of long. And was there pressure or was it, this is the right time.
Noah Glass: [00:40:25] I'm incredibly fortunate to have very patient and long-term oriented investors and they have. Seeing the company growing and scaling. And it's not like we were starting to slow down. We were seeing, as I just walked through transaction volume doubling year over year, I think the broad view on the board is we were really early.
Some might've said too early at some point along the way. But the fact that we were so early meant that we could do a lot of the really complex and really difficult technical things, integrations into legacy point of sale platforms that are used by the largest enterprise restaurant brands. So we were laying the foundation even in two weeks.
Yeah. I was in five and six and seven for what would then turn into a company that could PO in 2021. Almost on the contrary I had investors saying. Why would we do this? From the financial perspective we're growing, we're not gonna the door profitability in 2019, we're going to have a profitable 20, 20.
We have a lot of people circling around wanting to invest in the company from the private equity side. Why would we do this? Like why introduced risk? And it took really drilling home. This, we need to signal stability. We need to. Really be a mission critical platform for the restaurant industry that we serve from this point going forward that the board had to warm up to you.
And then ultimately say like that sounds right. This is exciting. This is the next stage of maturity for the company. And we should do this.
MPD: [00:42:08] It's very powerful. Here's one of the knocks on going public. I want to hear what you think about. People worry that when the company goes public, the market punishes short-term missteps, right?
You gotta hit your earnings every quarter. You've got these earnings calls you have to do now. And I think you said you were about to do your first one. So have, has it changed the way you're thinking about operating the business to be more short-term focused? And the subtext of that is when someone becomes more short-term oriented.
They're usually leaving some innovation on the table. They can't make those long-term investments in technology that might take two years to build better game changers. So do you feel that this has handcuffed you in any way as a CEO
Noah Glass: [00:42:54] or this as well as an argument for not going public or the challenges with being a public company and a public company CEO, I was a hundred percent eyes wide open and.
Took a lot of care in making sure that this did not happen to Olo. And when we think about product innovation, when we think about strategy, we think on a very long-term scale we always have. And if anything, we are. Planning even further out into the future. Now, imagining that we're going to be around for a long time.
I'll tell you when I started the company, I did not think I would be running it 16 years later. Now I do, and I, and that enables you to do some planning that maybe wouldn't have been prudent planning when you were worried about a burn rate. And you're worried about when you had to. It'd be heads down on running the business because you had to go out and raise more funding.
There are plenty of distractions for running a coherent strategy for a business on behalf of an industry when you're a private company. And if anything, I feel like this has provided clarity in terms of our longterm orientation. I say to everybody who is a member of T-Mobile. I want to do this for the rest of my career.
And I want you to come to feel that way too, if you already do great. And if you don't, I'm going to keep working on it. I want the best people at Olo and I want the best people to be here has lifers in the company because I think we have a lot to do build. And our canvas, if you will, has just gotten bigger and bigger over time.
MPD: [00:44:40] What does that canvas look like now? What's the long term. What's the long game. Because it's not just going into more restaurants, right? It can't be just that. I'll talk you through
Noah Glass: [00:44:51] How we described it in our S one, because it is truly how we think about it. First worth noting is that the enterprise restaurant space is absolutely massive.
If you look at our total addressable market, just selling what we sell today to the enterprise restaurants in the U S we identified that as a $7 billion opportunity. So that would be your
MPD: [00:45:15] revenue if you captured all of it for the folks listening. That's right.
Noah Glass: [00:45:19] So we're looking at guiding, as I said to $140 million of revenue this year at midpoint that implies a 50 X opportunity just doing what we're doing now for the folks that we're doing it for in the geographies that we're doing it.
And all of those things are qualifiers. So peeling that back, there are other things that we can do for enterprise restaurants beyond what we currently do. One thing. We mentioned in the S one that we've talked a little bit on our earnings call, which we just had last week, our first one, and that investors have been interested in is a payments offering.
So we have a payments offering that is in beta. It is called polo pay. It is. Maybe not surprisingly, very similar to other commerce platforms that have launched payments offerings. Think about Shopify with Shopify payments. Think about Coupa. That was an opportunity that we saw that not just BOLO saw, but our product advisory council saw.
Yeah. There's a lot of value that Olo could bring to us if you had a payments offering and that really checked the box for us of this, isn't just some self-serving thing. This is being asked for by our customers. There's a ton of data that we're sitting on. There are SMB restaurants that we don't touch today that represent another big opportunity.
Putting all that together, grows the Tam to 20 20 billion. There are international restaurants. As many as there are in the U S and then some that expands to 40 billion. How I started in the origin, question that you asked was not thinking let's go build a great on-demand commerce platform for restaurants.
It was rested. Neurons are a great first vertical for our on demand commerce, plat, and there are so many other kinds of brick and mortar retailers. Who could benefit from the ability to let their customers order ahead, pay ahead so they can have the order ready and waiting for them when they arrived or deliver orders to them, same hour.
And those brick and mortar retailers would perhaps stop bleeding out market share to Amazon and other e-commerce competition and recapture based on convenience that local consumer long-term. We're really excited about that opportunity as well. Starting to see Olo being pulled into other adjacent verticals where the capabilities that we have enabled for our restaurant customers could add value in those sets of customers as well.
MPD: [00:47:53] Okay. So you go public, you make a bold decision, it's a good signal to the market. You do it for incredible reasons. How do you any tips for folks who are telling the line here, listening CEOs, it would be public companies. People who are thinking or hoping to do it in three to five years for managing culture.
How do you bridge your team from private company to public company? What are the pitfalls or is it just, it's just easy. You just flip the switch and Hey, we're public and that's it. I feel like nothing's that easy.
Noah Glass: [00:48:23] It's early days, so I don't know that I'm really the expert on I've been managing a public company and the public company is culture for two months.
So perhaps I'm not the best expert on this. However, when we think about culture we draw a lot of inspiration from Danny Meyer, who is one of our investors and board members. For those of you who maybe not, maybe are not familiar with Danny, Danny is the founder and CEO of union square hospitality group.
A set of great, fine dining restaurants. In Manhattan, he's also the founder of shake shack and he was also perhaps most relevantly for Olo on the board of open table for, I think about 15 years before open table was taken private. And then in 2014, joined the board of Olo and made an investment in Olo and long before any of that.
At least as being involved with Olo, Danny was a personal hero of mine. His book setting the table was like a Bible with an Olo. And in that book and speaking, yeah, Danny, you'll hear a lot about this concept of enlightened hospitality and lightened hospitality is similar to conscious capitalism, but with a restaurant industry lens or our hospitality, it is a stack ranking of stakeholders.
Where you start with your team and then your customers, and then your community and your partners. And then last in the ranking is your investors. And the thinking is if you take care of those groups in that order, if the team comes first, if you keep culture strong, if you let the best people do their thing and keep them around and you weed out people that aren't a good fit for the culture over time.
That will be the best thing ultimately for your shareholders. And I absolutely believe in that and buy into that. And that is how we run culture, had a Olo. It was a real gift that for the first eight years of our story, we were a 12 person. And that culture really steeped over that time. And we were able to name it and talk about the different cultural touchstones at Olo.
At the time that our president and COO joined the company as employee number 13, with the mandate of help us to scale up, we need to be able to meet all the demand that's out there. A 12 person team can't do that. We can't destroy. What's special about this place and to Matt, Tucker's credit, Matt, as our president and COO, he really had us codify our culture and that document that we produced in 2013 remains our culture map today.
So I think, we've, we've scaled pregabalin, public, and maintain that culture in a really healthy way. And so far so good. And my expectation is we will continue to honor that culture going forward.
MPD: [00:51:30] I love that. And by the way we, we have a different version for the same thing. We call it the upside down pyramid, which we didn't invent.
But we took, we think about the org chart, which is typically a pyramid and we flip it. So the most senior people are on the bottom. And it just, it doesn't change anything behavioral or functionally, but what it does is it changes the concept from managing people to supporting them. And I think that's solving for the same thing you're getting at any company that I think wants to scale and have a good culture.
However you define it or get there whatever you read, you're going to land on something like that. Or your culture is going to start to get up. Let me ask you've uh, you've got people going to listen to this who are going to be fascinated with the IPO process. They set out on a journey, they jumped off a cliff to be an entrepreneur.
It's terrifying. Some people found some Terrafirma on the way down. How did you think about doing the IPO versus a direct listing? Direct listing has become more popular way of putting your stock in for pub in public trading, but there's less of a process. Around getting early buy in from investors.
How did you guys go through that calculus? And what's your view on IPO versus direct?
Noah Glass: [00:52:43] Yeah, I think that we tend to do things straight down the middle at Olo. And that was how we thought about both this question, IPO versus direct listing, and also the IPA versus spec consideration that is released was in Vogue at the time of these conversations.
One, one interesting element of Olo story is that nobody knows who we are. Nobody outside of the restaurant industry knows who we are and that's by design. We are in the background as a software platform, promoting the restaurant brands that build on top of us. We are not a house full name. And so we wanted investors to meet up.
Yes. And to hear our story and to spend the time with us. And we got to do that in the form of testing the waters meetings. We got to do that in the form of a really tightly orchestrated zoom based because of the times roadshow. And that has been an amazing component of this journey is known and respected by the most blue chip investors that are out there investing in public software companies.
So I think this was the right call for it. I don't know if I could have articulated as well going into it. It felt like, this is the normal thing to do. Let's do the normal thing for this process. But I, I do believe it had that great benefit where polo is known by the right people. Now, although has gained as share owners a lot of great investors who have long-term conviction in our opportunity.
MPD: [00:54:24] Could you give just for the folks listening a summary of what the IPO process is? W what are you, what do you go through when you sign up for an IPO as a CEO?
Noah Glass: [00:54:34] So in stages you are ultimately at the end, I think this is the part that everybody knows listing your shares or a component of your shares on a stock exchange.
For us, we were deciding ultimately between the New York stock exchange and NASDAQ and wound up selecting the New York stock exchange where we want to list our shares. You're floating some percentage of the company and arcade. We floated about 10% of the company before the shoe at some companies do as much as 15 or even higher at times, but that stock is going to be listed on a stock exchange freely on the public market.
And leading up to that end point. As I mentioned, you're meeting with a lot of investors. You're trying to convince them about why this is a viable company and one that they should want to allocate some of their portfolio dollars toward. And there are a whole bunch of governance related work streams. In terms of your board, your team, the things that you're signing on to in terms of walkup agreements and whatnot insurance, there are a whole lot of work streams that are not the component of an IPO that everybody thinks about it.
That moment where you're ringing the bell or having that sort of stuff, crossing the finish line, feel. Um, but fundamentally it's about meeting public market investors who may not have met you. Some of whom may have tracked you for a long time, but telling your story in a way that has been reviewed by law firms and auditors, and ultimately regulators in the sec to make sure that it is a fulsome story of your company and your opportunity and all of the risks associated with the company.
And that's one of the most important parts. Articulating all of the risk factors here are all the things that could go wrong with our company and really making sure that you're thinking about every single one and telling investors, eyes wide open here are the things that keep us up at night.
MPD: [00:56:52] I want to be respectful of your time. Last question for you. What's the most important thing you've learned as an entrepreneur, a chance to impart a little wisdom on the list.
Noah Glass: [00:57:03] I'm actually going to go back to speaking about Vindico for a second, because I had the great honor of meeting Jason debit, who is the founder and was at the time CEO of indigo and was a total fan.
And I remember him saying, because I asked him this very question about his journey and Hey, I'm setting out as an entrepreneur. What is your advice? And I remember him saying. You need to hold fast to your big assumption, your big vision. The point in the horizon that you're trying to get to, but you also need to constantly reevaluate all of the little assumptions and some of the assumptions that you make will be completely wrong.
Some will be right. Some will be a little bit of both, and you need to constantly reevaluate and be able to tack the business. So that you get to that point to the horizon. And I think that one of the things that I've read recently it was a Jeff Bezos quote, I believe really rings true because it maps onto this.
It was be stubborn with the vision and be flexible on the details. And that's probably a much cleaner, more polished version of the same advice, but so much of being an entrepreneur is being a founder is about starting the fire and keeping that fire burning is really the job of the CEO and keeping that fire burning and all of those stakeholders, certainly yourself, but then also your team and your customers and your community and your partners and your investors.
Is I think the challenge at hand and you need to stay true to that fire and keep it burning strong and bright. And you attract some great people to it.
MPD: [00:58:58] No, thanks for being on today. I think there was a lot of wisdom shared in this and this conversation grateful for you.
Noah Glass: [00:59:05] Thank you for having me mark.
I really appreciate it.
MPD: [00:59:12] Wow. That was solid advice for founders. I particularly love his strategy about going public in order to signal stability to customers. In spaces where there's a lot of turnover, that's a pretty interesting move. And I've never heard that before. If you focus on products and respect the process, the money will follow.
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