A Meeting with Young Entrepreneurs
I got a call from one of the mass challenge finalists a few weeks ago. They were planning a new Sushi restaurant concept and were hoping I could help. I think they got more than they bargained for. Here’s how they saw it:
I couldn’t help but laugh. Not a “hahaha- you’re so witty!” laugh. It was a “hahaha- are you serious? I just spent the last year believing steadfastly in something, and you just made me go back and question everything….asshole!” – you know, one of those laughs.
A bit of background might be useful. My first big entrepreneurial venture was as one of the earliest Boston Chicken (Market) franchisees. While I was still in college I convinced my parents to take mortgage on their house to give me the money to start the business along with 2 partners. Though it worked out, it’s not a recommended financing strategy. It did however, give me an accute appreciation for how every dollar is spent in a new business, particularly a restaurant. After I sold that business, I managed a 65 restaurant business unit for Allied Domecq (Dunkin Donuts & Baskin Robbins). That gave me a lot of experience with scaling a restaurant business.
Fast forward, I’m an advocate for the lean startup approach and think a lot about how the approach can be used ouside of software where I apply it at my company Blueleaf. With that backdrop, the Sabi Sushi guys stroll into my office. Man was I fired up.
Here’s how Shaan Puri describes the first part of the conversation:
John P. – I love your concept, obviously, that’s why I took this meeting…I do think there’s a huge need for great sushi, and more accessible through your style, price, speed…but I don’t think you’re going about this the right way.
Shaan/Dan - (zoning out, ready to hear another person talk generically about how 90% of restaurants fail)
John P – Let me ask you this. How much does it take to open a location?
Shaan – About $400k to be safe
John P – And how long is the lease?
Shaan – 10 years..
John P – How long does it take to find a location…6 months? And then to build/design it – another 5-6 months?
Shaan – (nodding, grimly)
John P – So lets say you sign this lease tommorrow. You put in $400,000 to build it, it takes 6 months to open, you’re on the hook for 10 years…and the landlord’s asking for a $100,000 security deposit? And assuming that goes well, it’ll take another year or so to get the 2nd location, and you’ll have to go raise another half a million dollars to pay for it…
Shaan – (nodding, and quickly becoming nauseated)
John – so from the start, commitment is pretty heavy…How many customers do you have on board so far? Have you tested the concept…at all?
Shaan – Well its hard to test the restaurant…without the restaurant!
John – That’s what I thought to myself before you guys came in. I’ve owned restaurants before. And well: everything’s great about owning a restaurant…except the f*%&ing restaurant! So listen to this idea, and tell me what you think…
That’s when he outlined the idea. A radical one. An idea so strange that he left me (someone who talks so much that he’s on pace for an arthiritic jaw by the age of 28) – speechless, with no rebuttal.
If you’re someone who thinks about the Lean Innovation approach embodied in the Customer Develpment process and Lean Startup movement you probably know where this is going. Kill the capital investment. Compress the time to market by an order of magnitude. Get feedback and iterate. In otherwords: Kill the restaurant part of your restaurant!
The rest is here where Shaan talks about their new concept. He’s funnier and more entertaining than I am so I’ll leave it to him to tell the rest of the story of what came out ot the meeting.
I’m excited that these entrepreneurs will open in a few days rather than a year. They’ll do it with 1/10th the capital and they will have had 12 months of learning compared to where they would have been following the classic restaurant playbook. I would bet on these guys in almost anything. They have the highest bias for action of any entrepreneurs I’ve met in the past few years.
I’m proud to have been able to give these guys a little nudge and play a small part in what I’m betting will be their huge success. And, I’m looking forward to helping with the coming operational challenges of starting and scaling.
Sometimes it’s good to be the asshole … just sometimes.