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Brett Brohl is a managing partner at Bread and Butter Ventures, and for most of his life, he’s worked in the startup world. He spends his days investing in early-stage founders and sharing his best practices on entrepreneurship and investment on his YouTube channel - Brett's Brain.
He interviews plenty of prominent SaaS startups for Food and Beverages and shares the insights on his blog and podcast, Full Stack Food. Most recently, great people like the CEOs of Plenty and Farmers Business Network joined the podcast.
Brett has tremendous experience working in Food Tech with Food Startups. So, in today’s interview, he will share his observations on post-Covid changings, mind-blowing startup ideas, and what to expect to see in our kitchens soon.
Nat: COVID was everywhere, and today's world is not the same; it’s a new reality for all of us. How do SaaS products and SaaS in the food industry adapt to those realities?
Brett: It's really interesting. You could argue that COVID had a greater effect on the Food system than in any other industry outside of pharmaceuticals. I believe there was already a trend of digitizing the food system and bringing technology in software into the food system before COVID.
What I think COVID did was two things:
- It shone a light on some of the issues, especially in the supply chain - transportation, logistics, and food manufacturing and some of the antiquated systems used in that world.
- The other thing is that it forced technology adoption in the food system much more quickly than it would have happened without COVID. The rapid adoption of technology took place in large enterprises, like farms, food manufacturers, or retailers, to food retail, restaurants, and grocery stores. Suddenly, everything has to be touchless, remote, and you have to do delivery because people can't go out. And if those enterprises don't change the way they operate from a business perspective, they go out of business.
“I believe in founders. Successful investing is all about the people.
Nat: There are plenty of online food ordering/delivery services nowadays. Have you got a chance to observe how online ordering/delivery is diversifying to meet the new demands?
Brett: In the US, Amazon has had a huge impact on customer expectations; consumers are so used to being able to get something immediately when they want it. Amazon makes everything available at your fingertips.
The hard part is that many delivery companies aren't profitable, and if you're talking about restaurant food delivery, the restaurants are giving up 30% of their margins. Restaurants already don't make a lot of money on each of their orders. So is this sustainable?
We recently invested in a company called Carbon Origins, a robotics company. So, as a last-mile robotics delivery company, they are working on little robots that will go on sidewalks and deliver your food for you.
I believe that food delivery is a thing, and it's not going away. But I don't think the way we currently do it is economically viable. The reality is that we're going to have autonomous robots doing the delivery because, in the long run, it's far cheaper than having human beings do the delivery and probably more food-safe, more reliable. Some statistics say that 1 out of 3 restaurant deliveries are tampered with by the person doing the delivery as they'll look at it, touch the food, etc. When I saw that, I was like - "Holy crap, it's terrible!".
Having truly autonomous robotic delivery is the future of food delivery. So, it's a hard technological problem, and Carbon Origins uses a combination of VR to do it. So, it's a cool company. But that's a whole other conversation.
“Robots are the future of last-mile delivery - autonomous robots, and you're going to see them in most major metros within the next five years.”
Nat: Could you dwell more about this startup? Will they use drones for delivery sometime?
Brett: They're not using drones. The reason I like ground delivery as an investor is partly because of airspace regulations. There are other issues like payloads, but flying things around big cities is hard to do because of federal rules, it can scare people in the United States.
So, we invested in a company that focuses on ground robots with wheels. The hard part is to make something truly autonomous, that is operating in an environment like a sidewalk. In my opinion, it's more complex than building an autonomous car.
Roads are structured with a grid, with stop signs and stoplights. It's hard to do, but you can train that AI because it's a grid. But on the sidewalk, you might run into a dog; you might see a fire hydrant; who knows what you could run into. All these possible events can happen to the robot moving on a sidewalk. Having enough experience to train that artificial intelligence will take years and years.
Carbon Origins is working to resolve this issue by building technology that enables remote VR workers. So, when a robot encounters an event that it doesn't recognize, like a fire hydrant, it alerts a VR driver and says: "Hey, I need your help," so the driver wears a set of VR sets and navigates the robot around that situation. And while the VR driver is navigating the robot around that situation, the robot learns from that.
When the driver navigates it 5 times, the robot might learn for the next one. But, again, that takes time and effort. But technology is enabling it. It's super cool!
Nat: What is your forecast for this industry? Should we expect any booming services? And if yes, what would that be?
Brett: Robots delivering your food sounds like fun.
Another thing is the dark kitchen movement - it's almost like co-working spaces that exploded worldwide. Over the last several years, there has been a movement toward having dark kitchens for food producers and consumer packaged goods. You can also have Restaurant Brands that don't have a storefront. So, suppose you believe that food delivery will continue to be a major part of how people eat and get food experiences. In that case, there's no reason why you couldn't have one restaurant location where they have several different restaurants in one kitchen: Italian style, Mexican style, Burgers, etc. And the consumer might not even know that it's all from the same place. So, you can build brands out of one location without having as many expenditures upfront to build out a restaurant.
Another fun innovation that is coming. You know, the Keurig machine for coffee, right? Where you push a button, and coffee comes out. Well, I think there's a world in the relative near term, where you have a machine in your house, and you push a button and meat come out. If you want a hamburger, it comes out, or you want a steak, and steak pops down, or you want a chicken breast, and chicken breast appears. And it's all cell-based production, but it all happens in your home. I’m pretty sure something like that happened on Star Trek. And actually, there's a company in Tel Aviv, Israel, that's working on that right now.
I understand, it's still way out from reality. But it could happen in my lifetime. I guess it depends on how long I live.
A final thought is the “Fourth Bin”. There's a company called Dispatch Goods, where we also invested. Lindsay, the CEO, is amazing. In many countries, you have your garbage, recycling, and compost bins, so you have three different bins where you put whatever comes out of your house.
Lindsay believes that there's going to be a fourth bin, which will be for reusable items. For example, if you order restaurant delivery, it's going to come in a glass or metal container, and you're going to eat out of it. You're going to put it in the fourth bin, and there's going to be a service that comes and picks up those reusable items, washes them, and brings them back to the restaurants.
And I think that's going to be a reality where households and enterprises will have four bins instead of using single-use plastics. It'll just remove the need for many plastics and improve the circular economy and food sustainability.
“There's a world in the relative near term, where you have a machine in your house, and you push and if you want a hamburger, it comes out, or you want a steak, and steak pops down!”
Nat: Do you often face ethical dilemmas while working in one of the most ethically-challenging industries?
Brett: From a pure concept perspective, we won't invest in it if something doesn't align with our values.
We have had to deal with founders that have done something that's probably not ethical. Fortunately, that hasn't happened too frequently to us, but you deal with it. When this happens, it is our job to call it out because ultimate transparency is really important for entrepreneurs. It is something we strive for with all the founders that we work with, both ways.
We have worked with large food enterprises, and often, they come under fire for some of the things they're involved with, like bad worker conditions, deforestation, or carbon footprints. And part of my answer, when I say why do I work with those companies, is: "I wouldn't work with them if I didn't think they're trying to do better. If I am working with them, I believe they also deeply care about these issues. And maybe I can help.” I certainly can’t help by just ignoring them. Instead, I have a strong voice at the table that people respect, and I'm not afraid to be loud and make my opinion heard.
Am I doing more harm by not getting involved or not having a seat at that table? I guess that's the question you should ask. It's better to be a part of it and try and be a change-maker than stay out of it.
Nat: If you met 10 years old Brett, what would you tell him?
Brett: Stay on course! You're going to have a fun life!
Your biggest regret?
I wish I had started my first startup younger. I wish I had moved into entrepreneurship earlier. Because when you are younger, you have fewer responsibilities, so it's easier to fail and take bigger risks. I started my first real company when I was 25, and I wish I had started when I was 18.
What is your best investment?
We've got an awesome portfolio. I've made probably about 90 investments over the last five years. I’ve also invested with TechStars, so we have a really big portfolio of companies from there, and many of them are performing quite well. So, it's a tough question to answer. Even sometimes, the ones that fail, I don't feel bad about the investments that we've made; they were good investments. There was only one company I regret investing in out of 90 that I've done. But other than that one, I made good investments. The people I believed in and the founders I believed in, and it's about the people.
Your most extraordinary startup you've encountered lately.
The last mile of a robot delivery company is pretty cool. And if you talk to Amogha, the CEO of that company, he's crazy. He's brilliant so that one's pretty cool from a pure tech and big business standpoint.
I could probably pick some wild stuff like an airplane without windows, which is funny.
I got pitched by movie studio production companies, even though I don't invest anywhere near that.
The machine that you push a button and a steak fall out. Robotic chicken coops.
In-store or online.
In-store. Personally, I like to touch, feel, and see the food. I think I'm so old, and in-store is something that I grew up with, but online is certainly a reality today and will continue to be a reality.