Being an entrepreneur is hard. I know entrepreneurs who have never been successful. I know other entrepreneurs who have become fabulously wealthy. There is also what I refer to as the cult of the celebrity CEO. The poster child is Marc Lore.
I like Marc. I had the pleasure of speaking with him several years ago at the headquarters of his company, Jet.Com, which was acquired by Walmart in 2016 for $3.3B. I was not a fan of the acquisition. I contacted executives I knew at Walmart, and I made the argument that Walmart should acquire Shopify and Jet.com. I knew my suggestion was doomed when several executives asked me, “Who is Shopify?”
After the acquisition, Lore went to work for Walmart leading their e-commerce transformation. Lore left Walmart in 2021. On the whole, I believe Lore helped make Walmart a better company. I also believe Lore came up with ideas that should have better been left unsaid. For example, recommending that Walmart offer a service whereby Walmart associates would gain entry to homes and deliver online groceries direct to a customers’ refrigerator. Bad idea. Customers have resisted letting strangers into their homes regardless if they’re wearing a Walmart vest.
Lore’s latest adventure is called Wonder.
According to media reports, New York-based Wonder, is a mobile restaurant delivery service that has raised $350 million in Series B funding. The company is now worth about $3.5 billion, according to The Wall Street Journal. The funding round was led by Bain Capital Ventures and included participation from Accel, Alpine Group, Amex Ventures, Forerunner, General Catalyst, GV, NEA, YieldStreet and others. This latest funding round brings Wonder’s total amount raised in debt and equity to $900 million.
The startup partners with popular chefs to create exclusive menus and bring their recipes to mobile restaurants. Users can then order dishes from these mobile restaurants to their doorsteps. According to Wonder’s website, your order is cooked and plated “just steps away from your door, then served as soon as it’s ready.”
In a blog post about the raise, Lore said Wonder is now available in 22 towns in New Jersey and services over 130,000 households. Since the platform’s launch six months ago, Wonder has created 19 mobile restaurants. The company has collaborated with several famous chefs, including Bobby Flay, Nancy Silverton, Michael Symon and more.
Lore says the new funding will be used to continue to expand within the tri-state area in New Jersey, with Bergen County being next on the list. Wonder is also going to launch 11 more restaurants, which will bring the company’s total number to 30.
“Our innovative techniques, technology, world-class culinary partnerships, and talent opens up so much potential for exciting, new possibilities,” Lore said in the blog post. “Wonder has a real opportunity to not only completely change how people eat, but also to create a better future with access to the world’s best food in a convenient, affordable and sustainable way.”
The Wall Street Journal reports that although Wonder currently has a limited market reach, the company plans to expand into new areas across the United States by 2035. Wonder also aims to add other prepared-food businesses to its network, as it plans to add ready-to-heat meals and meal-preparation kits to its delivery service.
On the surface, I understand why Lore launched Wonder. I am a former advisor to the CEO of a company called, Zume Pizza, that raised $375M from SoftBank in 2018. Zume wanted to cook food as vans were traveling to customers. I made the argument that Zume could become a Unicorn if the company launched strategically located commissaries, ghost kitchens, cold chain micro-fulfillment centers, repurposed and rebranded certain cafes and restaurants as Zume Pizza, and most of all, create the ability to deliver hot cooked meals cheaper than consumers can buy the ingredients at grocery stores to cook the meals themselves.
The last point is key. I believe the only way Wonder succeeds and scales is by delivering food cheaper than consumers can purchase groceries.
As the company grew, Zume encountered issues with its ovens which frequently spilled the contents being cooked as the vans were in motion. To solve the problem, I designed ovens that could be mounted on gyroscopes guaranteeing that the ovens would always remain level as the van was in motion. It wasn’t enough.
Zume didn’t succeed not because the idea for cooking and delivering food wasn’t sound, the company failed because the CEO became distracted by other things resulting in SoftBank not releasing all of the funds. You can read about the story of Zume here.
I currently advise a company called Muncho. Similar to Zume, the company cooks pizzas inside vans. The company is currently raising funds for expansion but it’s been challenging to gain the attention of investors. Muncho makes and delivers a fantastic product, but the CEO, Adam Chain, lacks celebrity status. I’m betting that Adam succeeds. When Adam was 10 years old, he was diagnosed with a rare cancer and told he was going to die. The Make-A-Wish Foundation even granted him a final wish. Adam didn’t die. Adam is fully recovered and thriving. Adam is the type of person investors should be flocking to.
Is Wonder a good company? It’s too early to tell. However, in my opinion, there is no way that Wonder, in its present form, can scale and be profitable. There is also no way, in my opinion, that Wonder is worth $350M. I place the actual value of Wonder at no more than $50M. However, investors worshiping at the feet of a celebrity CEO aren’t valuing Wonder for its actual value, they are valuing Wonder for what they believe Marc Lore will eventually create. Lore should not be criticized for the high valuation of the company.
Will Wonder succeed? Only time will tell. I wish Marc Lore all the best. Note to Marc: Contact a fellow New Jersey/New York City entrepreneur, Corey Apirian, I believe the two of you will have a lot to talk about.
TOPICS OF INTEREST THIS WEEK
A House Divided
Many CEOs continues to make a mistake by openly disagreeing with recent decisions made by the Supreme Court. I find it fascinating how easily some CEOs are willing to label many employees within their companies as being irrelevant and persona non grata. Are you a member of the NRA or do you own a gun? Your opinion doesn’t matter. Are you Pro Life? Your opinion doesn’t matter. You’re Pro Choice? Your opinion doesn’t matter. You support the police? Your opinion doesn’t matter.
Where does it stop?
CEOs that take sides accomplish nothing more than labeling themselves as being incapable of leadership. Any fool can pick sides in an argument. Skilled executives can manage their companies and bring employees together regardless of what’s taking place outside their four walls.
I believe what we are about to witness isn’t just a migration of people moving to and from states depending on whether or not abortion is legal or illegal, there is going to be a massive resignation and migration of people leaving companies that don’t support their views or make them feel wanted.
We run the risk of becoming a country that is divided not only by legislatures and voters in states, but also divided by executives at companies that pick sides based on decisions made by the Supreme Count.
Abraham Lincoln’s words, “A house divided against itself cannot stand,” echo from the past.
Until next week,
Brittain Ladd
