Late last week, news broke that Zume, the company famous mostly for raising a whole bunch of money for its pizza robot & cook-on-the-road food trucks concept, had shut down. The company’s demise, first reported by The Information, comes after burning through $450 million and a well-documented pivot away from its pizza robot and delivery technology products to sustainable packaging in 2020.
Here at The Spoon, we’ve followed Zume since its inception and even had its CTO speak at our event just months before the company laid off 500 employees and dropped its automation business.
When Zume inevitably shows up in business school case studies in years to come, here are a few lessons we can extract from the company’s journey:
Startups Should Pick One Thing To Be Good At
You always hear startup founders talk about how important it is to focus, partly because their first product needs to be really good, but also because distractions can keep a team from executing the way they need to execute. Zume was trying to reinvent both food making and food delivery, which meant they were basically running two highly capital-intensive startups in one. They were early enough at pizza automation to have a shot at success, but then they made their job infinitely more complicated by also trying to create an entirely new kind of delivery truck complete with built-in ovens. That’s a lot of time and capital to achieve marginally fresher pizza.
Creating Custom-Designed Delivery Fleets (with Built-in Cooking!) is an Expensive Fool’s Errand
We don’t just have Zume to prove this, but also Wonder, a company that decided they would differentiate by creating an entirely custom-built delivery fleet in which the food was cooked after it left the kitchen. Both of these companies burned through hundreds of millions of dollars and, in the end, realized that they probably should not have invested all that investor capital in something other companies are pretty good at (delivery) just to make sure the food was maybe a little fresher by the time it got to the customer’s door.
Pivots Should be Somewhat Adjacent to Core IP
After spending years and hundreds of millions of dollars to build a food automation and delivery tech business, the company pivoted to a completely different business in sustainable packaging. The company, which had developed a fairly interesting realtime delivery intelligence platform in addition to a food automation platform, likely could have pivoted to a less-capital intensive business in either of these areas and continued to maintain momentum. Instead, they started over in a fairly crowded vertical and never got enough traction to make a go of it.
Tech Companies Rarely Succeed in Creating Customer-Facing Restaurant Businesses
Time and time again, we’ve watched as startups try to build the “restaurant of the future” and fail because building a consumer brand requires focus and capital, capital they don’t have because they’ve spent it all developing technology. Zume, Eatsa, Wonder, and others have shown it’s probably best to choose between being a technology company or a restaurant business, but probably not both. Some may point to Sweetgreen as something of an exception, but even they had to acquire a company in Spyce which had tried and failed to build a consumer-facing brand for their own restaurant robot technology.
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