
The failure of Sprig - dangerman
https://twitter.com/gaganbiyani/status/1265755248922157066
======
vector_spaces
My insight into Sprig's business was limited, but my impression from being in
the industry at the time and knowing several of their vendors and folks
working for them in operations was that they were a typical Bay Area startup
operating in an industry they understood poorly, without much interest in
learning it from people who had made it their lifeblood for generations. You
won't get far in the food industry if you don't appreciate that relationships
are everything -- you can't treat vendors like APIs that hand you some
resource, while building a reputation for low pay among the people making and
delivering your food.

Good relationships with your vendors are how you earn pricing to support good
margins even at "low" scale (compared to say Kroger) and unlock doors that
will take you to 10x and higher. Good relationships with your employees is how
you make people in the industry want to see you succeed -- no one wants to see
yet another player show up in their industry driving down wages (allegedly in
the name of efficiency while wasting orders of magnitude more food than your
typical corner market with approximately the same revenue). And while none of
this will get you all the way there when it comes to city government, it
certainly doesn't hurt.

------
ransom1538
Food creation & delivery: A hyper competitive, low margin, inventory rotting,
regulated, logistical & insurance nightmare. Sprinkle on a San Francisco
Office + 1300 employees: Madness.

What waste: taking $2 worth of food across the city then trying to squeak out
$10 -- after paying for the drivers time, the cooking staffs time, marketing,
lawyers, the inventory staff, SF Rent -- there is nothing left but nursing
home level food and bad reviews. Did anyone at this company know excel? One
employee car accident your insurance drops you. One blown industrial food
fridge your profits are gone for the month. One bad meal you lost a customer.
My mind blows that experienced board members went along with this circus. Uber
for cats just didn't cut it?

------
hn_throwaway_99
Contrast something like Sprig with Tso Chinese Delivery in Austin:

1\. Instead of getting millions in VC funding off the get go, they started
small as essentially a family business.

2\. Chinese delivery is already super familiar to most people, so they just
took it a step further: just a kitchen, no sit-down restaurant, developed
their tech to improve delivery efficiencies.

3\. They kind of got "lucky", if you could call it that, with Covid, in that
most traditional restaurants were killed but a takeout-only business thrived.
They also got a ton of goodwill for giving away free meals during the shutdown
in TX.

4\. I saw news that they recently got VC funding to expand their business.

I.e. they started small, proved their model, then used capital to expand,
instead of getting millions thrown at them with hope that they'd eventually
improve on a "lose money on every sale but make it up in volume" business
model.

------
s1mon
Sprig's food and delivery was pretty good at times, but the whole thing was so
archetypical of venture backed insanity in SF and Silicon Valley. "We're going
to throw a ton of money at X and disrupt it with our complete lack of industry
knowledge and make a fraction back."

It was essentially a decent restaurant with convenient delivery, and no eat-in
option. There's no magical hockey-stick growth curve to be had in the
restaurant business. The marginal cost to delivery another meal or add a new
customer is pretty similar at N as it is at N+1 or N+1000.

How did they get investment with that (lack of a) business model?

~~~
stickfigure
I don't think that's a fair characterization. Sprig's business model was
somewhat novel. It had limited menu items (like 5 choices), prepared in
advance and deployed in a fully loaded truck. Nothing was made-to-order. The
truck just drove around from business to business and dropped off three #4s,
two #1s, etc. It only served peak meal times.

Honestly I'm not quite sure why the economics were unfavorable. It should have
been cheaper and faster than any other kind of delivery food.

~~~
s1mon
Fair enough. I remembered the limited menus, but I had forgotten that part of
the story about the food being already on the delivery vehicle when you
ordered. The marginal costs for additional orders still applies. Unless you're
taking a lot of bulk orders - say for lunch at an office - each order adds
food and delivery costs. There's also the risk that you make too many of
something that no one wants, and it gets tossed.

With having to predict the demand, there was the issue (also coming back to me
now) that they would often not have a lot of choices left after a short time.
The food was sometimes very good, but it was often so-so and too much the
same. Or conversely, something that was really good the last time you ordered
was no longer available. All of that added up to a certainly level of
frustration.

------
morley
> Govt. SF health + planning made our lives hell. They didn't like our
> innovations.

What innovations did they make that the health department didn't like?

~~~
kjs3
Exactly...I'd like to understand that as well. I really don't want to eat food
where someone is 'innovating' (disrupting?) safety and hygiene regulations
without some check and balance. And I don't think this 'attitude' on the part
of health inspectors would be unique to SFO...

~~~
WrtCdEvrydy
Probably some skirting of the rules around temperature keeping for pre-made
items.

~~~
kjs3
Let's be fair...if they've truly come up with a better, or at least equivalent
but different, way of maintaining food hygiene that's more efficient that
isn't being accepted because of regulatory ossification, then yeah, that needs
to be addressed.

But I'd bet you're exactly right, and it's just "we're betting there's not
going to be a major food poisoning incident before we find an exit and make it
someone else's problem".

------
fasteddie
I loved Sprig. I used to use them as my example of a favorite product when
asked in interviewed. Problem: I am hungry right now and can't/don't want to
cook. Solution: As the founder notes, once signed in, it was literally three
taps to get food to my door really quick. Also the design was beautiful.

Doordash, UberEats, et. al have certainly (glactically) widened the variety of
food I could order, but I always find myself suffering from choice anxiety
when I open those up. Sprig gave me a protein and veggie I could order without
thinking too hard.

I get why the food delivery model doesn't work well in the US for anyone, and
I did notice Sprig's decline in food quality, but I am still sad the company
is gone.

~~~
parliament32
>I always find myself suffering from choice anxiety when I open those up

This whole analysis-paralysis trend seems to be a thing not just in food
delivery, but Netflix et al as well. I've lost count of the number of times
I've kept scrolling through Netflix with a bunch of "okay" options at the back
of my head, but searching for something better. Ditto for DoorDash.

I wonder how well an "I'm feeling lucky" button would do on a food delivery
platform.

~~~
briefcomment
When you don't see something that's a definite "yes" after a couple minutes on
Netflix, why not just stop looking? And if this happens often, why not just
drop Netflix altogether? Curious about what proportion of the time Netflix is
just a time pass at best. I can count the number of shows which I would
recommend to a younger me who is deciding whether to watch those shows on one
hand.

------
danellis
> Nobody talks about failure in Silicon Valley

What an odd thing to start with. People talk a _lot_ about failure in Silicon
Valley, to the point that it's a stereotype.

~~~
ska
People talk a lot about it in the abstract, and there is a lot of armchair
quarterbacking. I suppose all of that has a smidgen of value, if nothing else
to set expectations of people starting out.

On the other hand, very few people with truly detailed internal knowledge talk
about the why's and how's, especially avoiding 20-20 hindsight. It's a
difficult enough thing to do objectively for yourself, and sharing it takes
that up a notch. Especially when you're all but guaranteed to have a bunch of
people tell you how you were obviously idiots; many of them having never so
much as tried to build something new.

------
systemvoltage
Why didn't they think "Oh geez, our idea isn't that revolutionary and anyone,
including companies such as lyft or Uber with giant pockets can come in and
swoop our lunch?" That should be the first day conversation. I am sure they
had that, it would be stupid to not have, but the stupid part is about
unsustainable growth whilst ignoring the competitive landscape with delusion.

I know retrospectives are always easy to do and criticize, but these types of
ultra-fast reckless growth companies do not pause for a second and think about
their risks. They're smoking that drug of % growth and VC funds pouring in. I
live in SV and this type of thinking is everywhere. Flail without foundation.
Why not think about building something that no one can just easily come in and
render you completely useless? That means that the business idea wasn't strong
enough and it was mostly scaffolding - there was no foundation. IP was thin
ice. This is pretty common with these delivery businesses.

Build something that no one can easily replicate or compete with you. Build it
so good that even if a competitor emerges, they have a lot of catch up to do.
Build it slow, methodically and strategically. Unfortunately, growth hacking
and bullshit pitches to the investors take precedence in SV from what I've
seen. Not all companies are like that, but a lot of these hot bottle rocket
companies die because of many aspects that were not thought out. Risk taking
is great, reckless risk taking is not. A solid business is like a diesel
engine than a hot bottle rocket. It is unstoppable once it picks up.

I love companies like Boston Dynamics. Took forever to grow. They spun off
from the MIT Leg Laboratory in the 90's, built _real_ IP, not some VC backed
presentation with fancy graphics. Zero expenditures on marketing, all in on
R&D and engineering until now. They're unstoppable and they haven't even
started yet. I know a delivery business is very different from BD, just trying
to make a general point about building IP. Any amount of money that Microsoft
+ Apple + Google all combined can throw billions and billions on this but they
won't be able to compete with BD immediately. It takes time and throwing money
at it doesn't help at all. That's the best hedge you can have!

~~~
skrebbel
Comments like these are why many founders prefer not to share their failure
stories so candidly.

It's a well written, extremely well summarized postmortem. _Of course_ it's
obvious after the fact what they did wrong. You're shooting at an empty goal
and, frankly, it's not very interesting.

~~~
systemvoltage
I recognize it is easy to take shots at failures and I prefaced it with this
recognition.

It feels like this is repeating pattern for delivery businesses, and it
deserves harsh criticism. Anything with Uber for _____.

Would you give a pass to Juicero which raised $118M? Doesn't it deserve harsh
criticism? Or we want to learn from Juicero's insanely delusional value
proposition and may be inspire others to try again? What about Theranos?

I don't give Sprig the same footing for a postmortem than say, Gumroad:
[https://marker.medium.com/reflecting-on-my-failure-to-
build-...](https://marker.medium.com/reflecting-on-my-failure-to-build-a-
billion-dollar-company-b0c31d7db0e7)

------
riantogo
What a refreshing read. We need more stories like these to ground the industry
in reality. The investment machinery and the publication makes it such that we
only hear about the “successful” ones. Then there are the “gurus” who amplify
those rare successes to bait followers: “If xyz did it so can you if you just
invoke the universe to assist you. Let success find you. Move fast and break
things.”

~~~
gallagos
This, so much. Successes are so amplified it’s impossible to find truthful
opinions on shortcomings with primary evidence. These posts were very
refreshing.

------
rwmj
> _we were down to losing just $1 /meal ... We got to $0 margins_

It doesn't sound like at any point they made a profit on any meal they sold,
so in fact they weren't running a business but were just wasting investors'
money. (I'm sure they had great plans on paper to turn a profit). I'd go
further and say it's good that they failed so they can no longer distort the
market for those companies who aren't highly capitalized and can turn a
profit. Although unfortunately the competition in this space turned out to be
another money losing "business" with even deeper pockets.

------
phkahler
I saw one more reason for failure in there:

>> We were running a restaurant doing $6M in revenue but paying real estate
for a place that needed $20M in revenue to be profitable.

Low interest rates. They drive real estate prices way up. Had they been able
to buy vs rent or simply pay less, they would have been in better shape.

IMO low interest rates are actually causing problems for the economy.

------
opqpo
That's why you should never start the Uber of X and the Amazon of Y. Because
if the actual Uber and Amazon see that the market is good they will massacre
you unless you're fortunate to get an offer from them.

~~~
marcell
Fwiw Instacart had the same problem, and it succeeded, even after Amazon
acquired Whole Foods. It's really case-by-case, and depends on so many
factors.

~~~
xmprt
Instacart is doing well but I think it's still too soon to call it a success.
Hell I don't even know if I'd call Uber/Lyft a success yet.

------
aeontech
A bit easier to read:
[https://threader.app/thread/1265755248922157066](https://threader.app/thread/1265755248922157066)

------
SirensOfTitan
> Govt. SF health + planning made our lives hell. They didn't like our
> innovations. We had to bribe officials ("lobbying").

San Francisco's population leans quite left, but they seem to really hate
change over there. I've never lived in a place so hellbent on ensuring that
nothing changes. In fact--the entire bay seems to hate change, and the
peninsula may arguably be worse.

There's that old saying: "you couldn't get elected as dogcatcher," that makes
fun of the sheer number of elected positions in the US. It feels so true at
the local level, with a bunch of domain specific politicians trying to exert
their tiny slice of power. San Francisco seemed quite bad while I lived there,
but they're hardly alone.

~~~
sharkmerry
> 2) Gross Margins (GM). As we grew, our burn rate grew too. We were losing
> money on every meal. If only we could get to critical mass.

> We had epic revenue growth w/ burn rate growth. Soon we were burning
> $1.5-2M/mo!

> We were always “1-2 months away” from managing the burn.

I dont understand, how in good faith, he can bring up SF-regulations as issue
#1. When issue #2 is the crux of all their issues. They lost money on every
sale! Food industry is notorious for thin margins, and then had negative
margins and growth. SF regulations dont matter compared to that.

~~~
notyourday
People who are not in the actual retail restaurant industry do not understand
that there's no way to make money with ghost kitchens. Theoretically, to make
money with a ghost kitchen one needs it to be churning out a very large number
of _standard_ meals at a price that customers want to pay to achieve the
economy of scale which at the same time requires an economy of scale in
logistics, which has its own overhead. By the time you figured out how to make
eick out money there, customer's preference changes and you need to start from
scratch or a competitor shows up and cuts your margins.

~~~
sharkmerry
ghost kitchens can absolutely make money. Them being done at scale with VC
money, most likely not.

But as the below commenter said, if you can use same ingredients across
multiple dishes, it reduces waste and can reduce COGS. A small restaurant can
do it, the issue there is establishing a brand, but if all your orders are
coming via 3rd party apps. not sure how much brand awareness you actually need

~~~
notyourday
> ghost kitchens can absolutely make money.

That is as assumption that has been made time and time again and it always
failed. The most important part of a successful kitchen is a near zero dwell
time. The smallest dwell time is achieved by having a kitchen be colocated
with the customer.

~~~
jayparth
As someone who has never worked in the restaurant industry, I don't
understand, at all, what you mean by this. Could you elaborate?

~~~
notyourday
Dwell time is the time between the order is finished and it reaching the
customer who gives thumbs up or thumbs down ( order is wrong ).

It seems from the initial glance that dwell time is irrelevant because a
kitchen can just go to the next order but that's not actually the case because
without yes/no from a customer the kitchen can continue to make the same
errors without adjusting. In the world of ghost kitchens dwell time is
terrible because in reality the only feedback the kitchen gets is an
asynchronous negative review that will be received a day or two later at best.
That's the reason why pretty much all ghost kitchen based restaurants rapidly
flame out.

------
dmitriid
3 years of constantly losing money.

Failed because of Uber which has significantly larger pockets and is
constantly losing money.

Why are all these called "a business"? These are all price dumping ventures
relying on external coffers.

~~~
folmar
The whole bubble foam is called "gig economy", previously in business as
"sharing economy".

------
fblp
1,300 employees for 4300 meals a day? that couldn't be right. That's less than
4 meals delivered per employee.

------
muzz
> It was UberEATS, which launched that week.

He doesn't mention it specifically, but UberEATS was 15-minute delivery at the
time, IIRC

Competitor SpoonRocket closed just 1 month later: [https://www.inc.com/kenny-
kline/how-spoonrocket-blew-135-mil...](https://www.inc.com/kenny-kline/how-
spoonrocket-blew-135-million-and-ended-in-bankruptcy.html)

Although, Postmates got into the game the month after that, in NYC:
[https://techcrunch.com/2016/04/19/postmates-
launching-15-min...](https://techcrunch.com/2016/04/19/postmates-
launching-15-minute-food-delivery-service-in-nyc-tomorrow/)

------
throw03172019
So Sprig was a venture backed ghost kitchen? It would be interesting to put
their food on Uber Eats today and see how they’d do.

I had it a few times, it wasn’t bad food.

------
baby
Anecdote: I remember trying it in Chicago! I think they had the first meal for
free or something. The food was pretty bad so I never tried again.

------
luhn
Related is the story of Bento from the StartUp podcast.
[https://gimletmedia.com/shows/startup/awhmbo/kitchen-
confide...](https://gimletmedia.com/shows/startup/awhmbo/kitchen-confidential)

The restaurant industry is brutal.

------
jeffrallen
I don't understand restaurant delivery. Just cook for yourself. You get
something cheaper, faster, healthier, possibly better, and the satisfaction of
doing something useful with your hands.

~~~
baby
you probably don't understand restaurants either right?

------
venkyk
slightly off topic: what is the motivation to use twitter for writing very
long posts? splitting your message up into so many tweets seems so
distracting. what's the big idea of splitting it up?

~~~
renewiltord
It's the audience. That's where the audience is.

Also Twitter is amazing, you always see stuff only from the people you follow,
so he knows his audience is people who want to listen to him.

~~~
derefr
Let's put that another way, then:

Why use Twitter for the _whole_ post, rather than using it for a _summary_ or
_above-the-fold section_ of the post, with the actual post hosted somewhere
else and linked to from that summary tweet?

It's not as if any of the individual tweets, other than the first one, were
formatted usefully as soundbites worth an individual retweet. The only thing
people were sharing/responding to was the first tweet. So, AFAICT, that's the
only part that needed to _be_ a tweet, right?

~~~
renewiltord
Clicks through drop off really fast. I know I almost never do it. The tweet
thread format is good for information in small bites. I know that each tweet
has got to have more information and I can just stop at the first that is meh
because it's written for insiders.

Articles on the other hand are written for an audience that usually likes more
background etc. because that audience will complain if the background is
absent.

~~~
derefr
But you have to click the tweet to see the thread anyway. What's the
difference between clicking through to the thread, and clicking through to
open the article in the embedded webview? Either way, you're stuck
synchronously looking at the story until you click "Back."

If it's just a matter of journalistic style, I assume there are people out
there who write articles the same content-dense way people write tweetstorms;
you could just decide to only follow such people.

~~~
renewiltord
I don't know what to tell you except that tweets are way more information-
dense than anything else. The Medium audience demands "modern long-form" style
with personal anecdotes and all that. The Twitter audience demands the punchy
short stuff. So I know what I'm going to get on Twitter.

~~~
derefr
To be clear, I’m not suggesting someone write for some other audience or site
first and then share the results on Twitter. I’m suggesting that someone write
_for Twitter_ , starting off by writing essentially the tweets they were going
to write, but offline in a text editor; then edit the resulting paragraphs for
readability/flow; then slap that prose into a Gist and take the
[https://gist.io/](https://gist.io/) view of it (or do any other equivalent
"pastebin to clean, unlisted-but-linkable HTML page" flow); and then publish
the first of those tweets, as a link to that HTML page.

In other words: maintain a _blog on Twitter_ , where the tweets serve as the
blog’s chronological index / human-readable RSS-feed and interactive comments
section; and floating text pages hosted in arbitrary other places serve as the
blog’s content. This idea is what “microblogging” was supposed to _mean_ ,
before the media re-interpreted it as being equivalent to “really enjoying
this poop I’m taking”-style life-logging.

I’ve always been surprised that Twitter itself doesn’t have a built-in first-
party workflow for this. Tumblr, the _other_ 20-year-old microblogging
platform, does: you can publish a post with an embedded “Read More” break,
that will hide everything below it in your feed but show it when the static-
HTML version of the page is viewed, with the “Read More” link at the bottom of
the post in the feed, linked to said static-HTML page. It would make a ton of
sense to me for Twitter to have something that’s half this, and half Reddit’s
approach to text posts: giving you the ability to create a tweet that, instead
of having a _linked URL_ to go with the tweet, has a _longform text body_ to
go with the tweet.

Think about the fact that you can “attach” a multi-minute-long _video_ to a
tweet as a first-party workflow, and Twitter will host the video for you — but
you _can’t_ “attach” a multi-minute-long blob of rich prose text, where
Twitter will host the text for you. Seems silly when I say it that way,
doesn’t it?

~~~
renewiltord
Haha, I get what you mean, but the people who want that get that from the
Thread Unroller apps so the need really isn't there. The Twitter restriction
ensures that I get Tweet-style content.

------
foobar_
Ah yes, when a competitor offers a product at negative profit just to drive
you out of business is capitalism... except when you do it another country you
call it colonialism.

------
teh_klev
> After @sprig, I took off and traveled the world.

Apart from the spelling, where do I even begin with this last tweet? I'm sure
that most right thinking folks know what I mean.

Edit: just to clarify, I'm looking at the optics of walking away from a failed
business that was a glorified takeaway (that thought it didn't have to obey
food health rules - that's yer disruption there eh?) and still having enough
money in the bank to "travel the world" and expecting us to feel sorry for the
poster. Most normal business owners would never be in that advantageous
financial position.

