Remember this guy?
Thor: Hey Josh, Thor Wood founder of SnapShyft. How are ya?
During our last call-in show, Thor wowed us with his 30-second elevator pitch. He wanted to be on the show so bad that he called over 200 times until he got through. Now that’s a superfan. And when he was talking to me on the phone, he crushed it.
Now, let’s see how Thor does in front of five hungry VCs... in the pitch room.
From Gimlet this is The Pitch. I’m Josh Muccio.
Our investors today
I’m Charles Hudson
Charles started Precursor Ventures, where he’s invested $45 million in over 100 startups to date.
I’m Sarah Downey
Sarah’s a partner at Accomplice and they’ve invested $600 million in over 200 startups so far, one example, a company called Draftkings.
I’m Michael Hyatt
Michael built and sold two software companies for over $500 million dollars and now he invests for himself.
I’m Jillian Manus
Jillian is an angel investor and a partner at Structure Capital, where they’ve invested $98 million in high-profile startups like Uber.
I’m Phil Nadel
Phil companies that sold for hundreds of millions of dollars. Now he manages Forefront Venture Partners, one of the largest syndicates on AngelList.
The pitch for SnapShyft... is coming up. In just a moment.
Alright, here we go.
Sarah: Your name is Thor?
Jillian: Hi. Thor?
Thor: Yes, ma’am.
Sarah: You look like a Thor.
Jillian: I love that name!
Michael: Okay Thor the mighty.
Thor: My name’s Thor Wood. I’m the founder and CEO of SnapShyft. So a priest, a rabbi and a nun are sitting in a restaurant waiting for service. And in walks an elephant. They immediately recognize the danger of this situation and quickly vacate. This elephant in the room is the seemingly unsolvable problem that’s plaguing the food and beverage and hospitality industry. Staffing. You’ve got record high turnover, record low retention for workers and managers. It takes a month to replace an employee. And replacement costs alone are a staggering $150 billion each year in the US. Solutions that exist today have done nothing to mitigate the problems. So we created the SnapShyft labor marketplace. Our solution connects these understaffed food and beverage and hospitality operations with actual qualified industry pros on demand.
Think of Thor’s business is like a match-making service for restaurants and hotels who need to cover shifts... and workers looking to pick up extra work here and there.
Thor: We’re growing 45% month over month. And this is directly tied to our actual chart topping fulfilment rate that is three times the staffing industry average. And that's just part of the story. Because the workers love us. They're getting paid near instantly through us. Earning on average over 50% more than the national industry rate. Now I'm here today to raise $250,000 to help us move forward with additional pilots, and product enhancements for our target customer base. Thank you.
Michael: Okay, so I need a sous chef right away. Sell me on signing up.
Thor: So, it would take roughly 3 minutes for you to create an account, as a business. We validate you, that you exist with tax ID. And it’ll take you 30 seconds to post a shift. And immediately it’s broadcast in a radial pattern. So it’s going to hit the highest rated, that are the closest, that meet your requirements.
Michael: Smart. How fast can I get somebody? It’s 3 pm and I just heard my sous chef’s not gonna turn by 5. Can I, is that fast?
Thor: Our record’s 18 minutes.
Michael: I post a $15 job and you’re pretty sure I’m not going to get any calls for it, for example, do you come back to me and say, up it to 17, you get your job? //
Thor: We actually provide analytics that’ll give you a percentage, odds of fulfilment.
Michael: That’s interesting.
Thor: So if you’re at 15 and it’s 60%.
Michael: So it’s two things, it’s the amount of hours and the rate.
Michael: And I assume that what happens is, I need a sous chef right away so I'm going to pay more money to have him come in. So it's the on demand, I pay a premium?
Thor: So for on-demand, $35. For advance scheduled, it's 20. On the back end, we have a la carte charges. So if you want to boost your shift, it’s $3. If you want white glove service, it’s $20.
Michael: Oh, kind of like Auto Trader with the cars. What’s white glove service?
Thor: That’s where my team, specifically my cofounder Stephanie, who manages the ops, she’ll jump in and make sure that, you know, we’re giving it an extra crank.
Michael: How many people do that?
Thor: Right now, it’s Stephanie, myself.
Michael: No, no. How many take you up on it?
Phil: How many customers?
Jillian: Ask for that?
Thor: Oh, on the white glove? We’re at least 50/50. White glove is very sought after.
Michael: Why? Because someone will physically go and fill that job? Finds John Smith, puts him in?
[00:16:36] Thor: So the system is automatically sending out push alerts. This means we’ll send out a batch of texts as well.
Jillian: And what’s, what’s the premium on that?
Thor: It’s, it’s $20.
Jillian: How many workers are in the system now?
Thor: So 27,000.
Thor: But they’re not all active because they’re spread, they’re.
Jillian: How many are active?
Thor: Ah we’ve got, I believe, 8,000 that are active. Um, and it fluctuates.
Michael: How do you qualify a worker?
Thor: So you have to have at least six months experience in the industry that we can validate through references. And then we run a seven-year county criminal background check. You pass that, we'll do the reference check. You pass that, you're activated. But then we hold you accountable.
Michael: Do you get rated like an Uber kind of thing?
Charles: I should just disclose, I have an investment in a company that does exactly this. So...
Charles: So, um...
Jillian: Which company?
Charles: It's called Pared.
Jillian: What's Pared?
Charles: Pared focuses more on back-of-house restaurant. Think sort of sit down, to fine dining.
Jillian: Okay, got it.
Charles: So higher end. But um this is an industry where historically labor has had very little control over hours, shifts, things like that. Oftentimes they have to work multiple jobs because the employer doesn't want them working more than 30 hours for a bunch of insurance and benefits reasons. And platforms like this really do empower workers to have more control.
Jillian: So, tell, tell us about you. You said you were a recruiter. Tell us a little bit about your background.
Thor: So, Midwest. Ah, grew up in Indianapolis. Um, Catholic family. Anyway, got into ah recruiting. Found out that I was pretty good at it. I did that for twelve years. But in terms of food and beverage and hospitality, I did this since I was 14. And so I've got family members that own the catering operations and I was always working. I was bartender, I was back of house, security, from time to time. Ah... But I always, it always came back to the frustrations. I literally hated the industry because I was a hard worker. And if people didn't show up, I'm doing their job for not much more.
Sarah: And are you guys based in Indianapolis?
Thor: Yeah. We’re headquartered in Indy. Ah proud to be. It’s a huge convention town. I believe it ranked number 13.
Jillian: No, no, it’s fantastic.
Michael: Are you really just all your revenue right now is Indianapolis?
Thor: Ah we’ve got a little bit coming from Denver.
Michael: Give us your roll out plan of cities you’re going to next.
Michael: What’s your next five cities?
Thor: Heh. So ah, Chicago. We’re gonna lock and load further on Denver. We have Nashville, we have Miami, and then ah Philadelphia.
Michael: How are you going to open up Chicago? What are we gonna do?
Jillian: Yeah, what’s it going to take to open a market? Go ahead.
Thor: Ah, we’ve got 2,800 workers already. So...
Jillian: Yeah, you've the workers, so you have the supply. But talk about the demand.
Thor: That’s our sales. The workers are the ones that bring, we have referral programs to bring businesses in.
Michael: Okay, but how do you sign up the restaurants in Chicago?
Thor: I’m not following your question.
Jillian: In other words, who, who is going to sign up? If you’re in Indianapolis.
What's going on here? This is really strange!
Michael asks a straightforward question, like, How do you get more clients in Chicago? Oh, that should be an easy layup for any founder. But Thor totally missed his shot. And then, Jillian swoops in to help him.
Jillian: Who is physically in Chicago that’s going to be, it’s just contract sales?
Thor: No, so we will do it in-house in Indianapolis. Or it’s self-serve. They can quickly get on and do it.
Michael: I know. But how are you finding these restaurants to come on your platform?
Thor: Oh. So yeah. Chicago’s massive, right. So we’ve got tens of thousands in a list already. We’ve been building a list.
Phil: So what are you going to do? You gonna cold call them? Or email them?
Michael: Are you gonna call them?
Thor: No, we’re not going to cold call. Unless you’re our ideal customer. Think about not restaurants but more, more or less full service hotel operations.
Thor: Catering options. Venues. Like large event or convention facilities. Because then you have a hierarchy where you’ve got typically a general manager, a VP. Perhaps you have legal involved, you have HR. And so what we found, when you have those layers, you insulate yourself from turnover. Because managers are lasting five months. So if I sold you as a restaurant today, odds are you’re not going to be there. Our champion’s gone and I have to sell you again in three to five months.
Michael: Okay, one more time, how do you then add a client in Chicago?
Thor: Pick up the phone and then get in person.
Michael: You have to go, you have to go in person?
Thor: Let me give you an idea of why.
Jillian: Wait, hold on. Hold on. // With these new funds, I’m going to assume you’re going to hire some sort of sales manager. // Are you going to basically build a more, a sophisticated sales team which is really what we’re looking for you to say.
Jillian: Because for you to get on the phone and call and then fly to Chicago, fly to Philadelphia, fly to Denver, with such a small team. That doesn’t make sense...
Thor: It’s tough. Near impossible.
Jillian: ...in terms of how you’re going to... Well, you can’t scale it that way.
Jillian: If in fact, as you’re saying, this is // very high touch in terms of...
Jillian: ...to gain the trust in the, right, the business.
Thor: Absolutely. And the reason I’m bringing this up, so our most recent ideal client is going to be a $300,000 a year client. I will get on a plane for that client. Versus a restaurant that’s going to do $1,200 with us a year.
Phil: But, but more generally how are you going to acquire the meat and potatoes?
Thor: Exactly as she laid out. We’re going to have a sales team. We want to have, right now, with this, finishing this raise, we want to add three account executives.
Jillian: Okay. That’s what we needed to hear.
Finally. That was brutal. It’s not a good sign when the investors have to drag the right answer out of you. When we come back will Thor be able to field even tougher questions maybe without Jillian’s help this time.
That’s after the break.
When we left off, Thor was stumbling over some really basic questions about his business. And the questions, they aren’t gonna get any easier. Guess who’s got another question… Michael Hyatt. Big surprise there.
Michael: I've asked some questions and the answers have been well, white glove, and then my founder comes in. It's not scalable, right? Tell me, you're building a company in this day and age, tell me something that you're doing that is gonna, like, really give you a kind of that 10x push. Like, do you have technology? Like what are you doing that's more than placing people in this kind of efficient way?
Thor: And that's fair. And we're doing things right now that do not scale, absolutely. Uh. It's self-torture. I joked about that today. Ah, like consistent self-torture.
Michael: So what, what are you, what are you gonna bring in and, I hate to use the word, because it's overused, but AI or prediction machines or something that starts knocking out a lot of things humans would do to make this much better? And tech is the hammer, Thor, to actually...
Michael: ... get ahead, way ahead of these ah tech, these ah, these...
Jillian: How long have you been waiting for that?
Michael: It just came to me. From the gods.
Sarah: Great Odin's raven.
Michael: And, and, and so like what I'm trying to get at is, is what's the thing that you're doing that makes us go, Wow, it's going to be very hard to catch up to you.
Thor: Yeah. Over time, you're going to accumulate tons of data, and that trove can be used for predictive purposes.
Michael: Yeah, but like everybody comes in here and says...
Thor: I know.
Michael: ...I'm making data. And like everybody makes data. But, data’s worth nothing unless you do something with it.
Michael: I'm trying to get excited about how you're going to crush the thing, you know?
Thor: Yeah. To give you an idea, to answer your question with a side statement, we need 1,000 of our ideal customers to trust in us. And we're at a million doll - or a hundred million dollars, excuse me. At those numbers that I told you earlier. Now we have to earn that. But how do we scale? How do we get that 10x or beyond.
Michael: No, but that's not what I'm asking. I'm not...
Thor: I know what you're asking.
Michael: I'm normally, Michael Hyatt's sit here and starts yelling about numbers more. But I'm trying to figure out now is, what are you doing that's going to be like. Okay, let me give you an example. Okay. The number, the largest company in the world is probably Microsoft. They cannot catch up to the number three or four largest companies in the world, Google, on search. That, that should be astounding to people, that the largest company in the world, and the most eff... they can't catch up because Google has the flywheel effect, so every time you use Google, you add to their prediction machine. It's so strong that even the largest company on the planet can't catch up.
Michael: So, now back to you. What do you have that makes it so I won't be able to catch up to you in three to five years?
Thor: Fulfilment, at the end of the day.
Michael: No. That's not it. Like I need, I'm looking for something else. I mean...
Jillian: Hold on. What will you do with the data? Right now you're collecting, what are you collecting and what are you going to do with it?
Thor: Workers like to be guided. You're going to be great at this position, here you go. But we have to have the data on what they're good at, their personality. It goes a little bit deeper than just surface-level skills. So being able to collect that, and to be able to do something. Most of our, the able bodies in the US are not engineers. They're not in IT. They're blue collar. We can impact them. But we have to be able to build this thing out so that we can suggest to them, and then start to impact the turnover rate, which is some regards over 100%. If you can meaningfully impact that at all, you're talking billions.
Jillian just came to his rescue again. But Michael is done trying to get answers out of Thor, so he turns to Charles.
Michael: Charles, the company you invested in, do they have, are they really working on the tech stack?
Charles: Yeah. I can't say too much. But yeah, from the beginning their, their thought was... I mean if you think about it like... I'm debating how much to share about their long-term roadmap. But these are, these are people where the existing tools for reputation and career management like don't apply. Like, the LinkedIns of the world. There, there isn't a reputation/resume-experience tech stack that's readily available for these people because it's a different, it doesn't fit neatly on. And also because of the turnover, you come and you say, hey, I worked at this restaurant five years ago. The manager who was there when you were there is long gone.
Charles: So you can do some interesting things with technology that are hard to do because of the level of turnover on both sides of the industry.
Jillian: Okay. That's super interesting. So but back to your point.
Jillian gently steers the conversation back to Thor.
Jillian: You’re talking around it a little bit. Are you trying to match skills with open jobs? With labor that perhaps doesn't automatically see themselves being able to apply to those jobs or fill those jobs, but you're able to tell them that, Hey, you do have the skills and therefore we are going to recommend.
Jillian: And we're, you are going to upskill them? Or.
Thor: Yeah, I like what, how you describe that.
Thor: And but externship, upskilling, that sort of thing is very powerful.
Thor: And we've got people, we have a coin system. That is basically in-app points. And we've got people that have crossed 100,000 and they're literally getting jobs now as at premiere restaurants as sous-chefs when they didn't even have knife skills. You're definitely upskilling. And ah, there's a lot to that.
Jillian: It's really important for you to be able to understand and be able to create a skills profile that's even bigger so that, that does create some sort of matching. That makes this, a not just a recruiting, but more of an upskilling as I'm looking at, or reskilling or.
Thor: But the answer's yes. It's on our roadmap. But I will say that there's competitors out there that do that today, and they're at 34% fulfilment rate. And we're at 91% for the entire of 2019. And that’s where this 150 billion dollars, half of that is lost productivity because they don't have the workers.
Thor: So if we can even, I mean, we're touching that right now, and that's, that's the big picture.
Sarah: Can you talk a little bit more about the competitive landscape? Just who’s out there, how well funded are they? Like, what’s your take on them?
Thor: Yeah. Now. So, the big, you know, beast is the temp agency model. We have appreciation for companies like Pared, um. I think our mantra and approach can be similar in that regard. You had Shiftgig in Chicago. It raised a lot of money. They’re a software company selling to temp agencies. So, bring it on, right. You know, we want to, we would actually want to do battle. If we know you’re using a temp agency, we smell blood in the water.
Sarah: That's such a Thor thing to say. It's like battle and blood in the water.
Phil: I do have a, a little bit of a portfolio conflict. Um, we're investors in a company called HireMe, which is not, ah, they're not doing the sort of gig worker thing, but they're, they're placing um hourly workers in restaurants and um and similar venues. So it's, it's a little too close um for me. I'm going to pass.
Thor: I appreciate that.
Michael: So I'm a pass. But I would be very much interested in coming back in if you can after the show show me a real definable tech stack.
Michael: This is just rife for just doing so much prediction analysis and so much machine intelligence. And so if, if you show me that you have a real focus on, you know, using tech to rapidly scale your margins, this is seriously interesting. So I'd love to hear more after the show, but for now, I'm out.
Thor: Sure. Thank you.
Sarah: I feel similarly to you, Michael. I think, um, tech is basically forefront of what I do and how I invest. So I feel like I’d want to see that. I understand that that’s an unsatisfying answer because it’s a chicken and the egg problem, like you get the cash to build the tech and the product. But it’s just, it feels a bit early and I’d like to see that skills marketplace built up too.
Sarah: So for that reason I'm out for now.
Thor: Thank you.
Everyone is out except Jillian, who’s been helping Thor this whole time. But does she really want to invest?
Jillian: I'm actually with everyone else. I think the competitive landscape is something else that really worries me. And so I'd have to educate myself a lot more on that. // But with the caveat is I actually really want to invest.
Jillian: I'd like to do due diligence. I'd like to start on or down that path. And based on that, it would be what I'd be able to commit as well.
Jillian: Okay. But thank you so much.
Thor: Thanks for being thoughtful.
Thor: Take care.
Jillian: Nicest guy
After Thor steps out of the room. Jillian gets a head start collecting intel. She asks Charles about his investment Pared.
Jillian: Why couldn't Pared move into this, though?
Charles: They already... I mean, the thing I've seen that goes wrong a lot of times is even not all restaurants are the same. Like you've got fast food then you've got like everything above that. So everyone who's tried to do generic blue collar has failed because a roofer, a plumber, and a restaurant, and a restaurant worker are all blue collar workers, but they make radically different amounts of money, they have radically different needs for leads. And so even, so I think you have to pick like a really specific tier to initially go after. Otherwise you end up with this like hodge podge of products.
Charles: But look, labor marketplaces, he, the one thing he said that’s right is labor marketplaces, like, if you're the place where people find jobs...
Charles: ...everyone goes there and the jobs go there and you can't catch up because you can't. Craigslist should have been disrupted a long time ago. It's still a really liquid place to unload stuff.
Phil: But you're right. I mean, he has a 91% fulfilment rate. That's very impressive.
Jillian: That is.
Phil: And restaurants will stick with him.
Charles: That's right.
Jillian: That should have been at the forefront, that we need a sales team, we need a sales strategy.
Phil: He said he’s hiring, he’s going to hire three people, but that means it’s not.
Jillian: But that’s after I probed, you know.
Phil: Yeah. And that means that the sales process isn’t in place yet.
Jillian: But I do want to follow up with him. I do think there is something there. But, okay, good to go. All right. Thor.
Jillian: Just that name.
Sarah: And he was such a Thor.
Well that pitch was rough to listen to. I’m dying to know. What was Thor thinking during all that?
We’ll find out after the break.
It’s been about a month since we’ve spoken to Thor, our superfan-turned-founder in the hot seat. And needless to say, things didn’t go well for him. And he knew it. Producer Heather Rogers, got Thor on the phone to talk it through.
Thor: Oh my gosh! Like, so I was nervous when I left. I was like, I think, you know, I think I botched a few things. You build it up in your own head, cause we’re fans of the show and you get in there and it's like, Yeah, we're right in front of you guys. This is awesome. And It's almost like if you're, if you're telling a story to your best friends and they're not, um, reciprocating or they're not finding it funny or you just kind of have this you know, weird, like, Oh, you don't like what I'm saying? And it can kind of, mess with your head a little bit. At least it did for me.
But the thing is, Thor had already raised $500k from other investors.
Heather: How many times have you pitched?
Thor: Ugh! I'd say we're well over a hundred, 110 pitches.
So what the heck happened in the pitch room?
Thor: You know, it was one of those, um, uh, where I just got trapped in my own, my own thoughts. And so if I'm reading the room and I'm reading Michael's face, uh, I could tell that he was displeased. He wanted me to drill down, truly, on here's what we're going to be building. And I've got an investor in the room that had taken part in one of our top competitor’s raise. And it was part of that. It was like, How much do I want to divulge here?
Thor: And the questions were good. These are questions that we get when we're in closed rooms meeting with investors. And we happily dive into it with specificity in those rooms.
Heather: But like you didn't say that.
Thor: Right. He had me flustered. You know, um. It's just, you know, my answers weren't sufficient in the moment and, you know, unfortunately, uh, can't redo that.
Heather: Mm. So Jillian was very supportive of you during the pitch. She helped you out with answers a couple of times and I was wondering how that felt to you.
Thor: Look, I love her. Like, she's awesome. Humanity emanates, right. But she did, it was nice of her to throw me a rope every once in a while to pull me away from the shark.
After the pitch, Jillian and Thor went through due diligence and she ultimately decided to pass on the deal. She was concerned about a bunch of things: California’s new rules on gig economy workers, union issues, competition. Just too many things that soured the deal for her.
But Thor is staying focused on his mission. He won’t be distracted by what the investors want, a better tech stack or dreams of data, machine learning and AI. Instead, he’s laser focused on one thing.
Thor: For us, honestly, we eat sleep and breathe what’s in the moment right now and that’s tending to our user base because that’s what gets us to a billion dollars. Not some fancy tech that does what? You know. At the end of the day it really is quite simple. And that’s what I tried to at least end with with Michael was that we ended the year at 92 percent fulfillment for all of our clients. That’s mind blowing. It's all about the workers for us. They're underbanked and they're underserved. Let's fix that. It's worker first mentality. That's why we have a 92% fulfillment rate because the workers are fricking rock star badasses. And we treat them like that.
For Thor, getting workers the jobs they need is the way to build SnapShyft to a billion dollar business. But investors, they often don’t have the same level of passion for the problem, or the people, as the founder does. And so, they didn’t see the same potential that Thor saw in his business. They wanted to see things like data, machine learning and AI. Because to them, that’s where the real value is: the technology.
And that's where Thor sits. Torn between what the investors want, and what he feels is right for his customers.
The Pitch is hosted by me, Josh Muccio. Produced by Heather Rogers and Kareem Maddox. We are edited by Sara Sarasohn.
Theme music by The Muse Maker. Original compositions from Breakmaster Cylinder, Peter Leonard, SoWylie and The Muse Maker. We are mixed by Enoch Kim.
Lisa Muccio coordinated the recording of this pitch.
As a reminder, no offer to invest is being made to or solicited from the listening audience on today’s show.
Thank you so much for listening. We’ll be back with a brand new episode. In two weeks. See so if you haven’t already, take a moment to “follow” The Pitch on Spotify so you don’t miss it.