Linear #021: vSaaS For Pizza Shops, Verticalizing Payroll, How Long Should a CEO be the Head of Product?

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May 22, 2023

Slice: vSaaS for Pizza Shops

This Albanian immigrant built a $1B company by creating software for pizza shops. It's a big business, having recently crossed $100M in revenue. The inspirational story of Slice 🧵 🍕

Slice is a software operating system for independent pizzerias. The business supports over 19,000 independent pizza shops across 3,000 cities. It's roughly double the size of dominos and has become the nation's largest pizza network.

Slice offers a full suite of software tools for mom and pop pizzerias. Some include: -Point of Sale -Online Ordering -Custom Websites -Marketing Services -Discounted Supplies

But like many software unicorns, Slice has very humble origins... Ilir Sela, founder of Slice, immigrated to New York City from Macedonia when he was just 10 years old. To support the family, his grandfather, uncle, and father operated pizzerias in Manhattan in the 70s.

Sela, born into the pizza business, saw how family pizza shops struggled to compete with national chains like Dominos or Papa Johns. As the world moved online, this problem only grew worse. Small pizzerias had no expertise in the internet.

Sela saw an opportunity. He aimed to build a tool that would enable small pizza shops to have the same software infrastructure as the big guys. Previously having sold an internet biz for $500K, Ilir used the capital to go all-in on solving the problem, & in 2010, founded Slice.

Almost all vertical SaaS companies start out with a simple wedge product. Something easy to implement, with little friction, and can provide a lot of value quickly. Slice was no different, launching initially with online ordering.

His first customers were friends and families, but something magical was happening for them. Average orders increase from $18 to $30 when his clients moved from phone-only ordering to online. That was the "aha!" moment.

Ilya hustled to expand to 80+ independent pizzerias throughout New York City completely bootstrapped. $40M of transactions were flowing through the Slice platform and in 2015 they raised their first financing round.

Slice didn't stop there. With a maniacal focus on the customer, Ilya realized there were A LOT of other areas that they could help out. They expanded into customized websites that made it easy for a small shop, with 0 web design skills, to have a beautiful online presence.

One of my favorite parts about Slice is it provides MORE than just software. As their network grew to thousands of pizzerias they entered into the group purchasing space.

One of the values of Dominos and other large providers, is using their scale to drive down the price of supplies like ingredients, pizza boxes, beverages, etc. Slice took a page out of these successful franchises book, and launched a supplies tool. A beautiful recurring model.

Vertical SaaS always seems small on the surface. An entrepreneur pitching software for pizza shops 10 years ago was likely told frequently that the TAM was way too SMALL. Or, "why wouldn't pizza shops just use a horizontal tool like Toast or Square?"

Ilya has proven them wrong. Pizza is a BIG market. The US pizza market is ~$44 billion, with over 75K pizza shops in the US, and ~40k of them being independent pizzerias.

Today, Slice serves over 19K pizza shops in the US and says it's saved them over $265 million. $1B of pizza sales have flown through the Slice Platform and they crossed one of the ultimate SaaS milestones - $100 million in revenue.

@IlirSela tweeted this recently:

8 years ago I was operating @slice as a bootstrapped company when I reached out to a number of great leaders in the restaurant tech space — @wileycerilli is the only one who responded. He opened so many doors for me which helped me scale to what is now a >$100M revenue company.

We're now starting to see others replicate what Slice has done for pizza in other restaurant categories. Odeko just raised a $53M to do the same thing for independent coffee shops...

Ilya proved that the American dream is alive and well, and that there is so much opportunity in Vertical SaaS. It's been fun to watch @IlirSela, thanks for being an inspiration to us all!

One ‘How To’:

“Verticalizing” Payroll

One Biz Story:

How Long Should a CEO Continue Being the Head of Product? (SaaStr - Jason Lemkin)

Roughly, for me, for as long as it’s about a 10-hour a week job. Or often, maybe only up to $3m-$5m in ARR or so. These days, especially, I see way too many SaaS companies at $8m-$10m ARR or beyond without a true VP of Product.

Three mistakes I see so many SaaS founders make:

First, they wait too long to hire a full-time “head of product” even after the product gets complex. Once your product has 50–100 workflows, dozens of use cases, 100s or 1000s of customers, etc. … even just 15-20+ really big customers, all using your product differently … it’s just too much to hack and juggle informally. My rough rule of thumb is somewhere between $3m and $5m in ARR in SaaS most products just get too complicated to hack product anymore. You’ll ship better-prioritized features, with happier customers, with better trade-offs, with a full-time head of product. CEOs that hang on too long here start shipping features and products that are no longer force-ranked the way they should be. And the key is to hire a true head of product. Someone that can own it, and in the past, has owned a product. If you hire someone too junior, you get a project manager but not enough of an owner here.
And second, later, CEOs wait too long to give up on being the product visionary. Hopefully, the CEO is always the strategic visionary, forever. But at some point, the product itself gets so deep and rich, and the markets evolve so much, and the customer needs are so varied and nuanced once you dig in deep … that the founders’ original product vision becomes too simplistic, too dated and stale. Every 5–6 years or so in most cases, everything in the market has changed, and the product has evolved so far that the Day 0 vision is very dated. At this stage, founders need to let go and have the team own the product vision — not them. The founders still are the heart of the corporate strategy. But the team is now spending 1000x more time with customers, with feature enhancements, with nuances on product lines with 1000s of features … you have to let the team define 95% of The Future. And your job becomes more to set the direction, but not provide the directions.
And finally, too many CEOs just hire too junior of a product person. That never works. You need someone seasoned enough to own the product and the product roadmap. Someone that has truly put features into production and managed some sort of team. Not someone just to make charts and hope someone in engineering might listen to them.

So bring in more help, and let it go a bit earlier than planned. It’s your idea, and your vision, but both of those need to evolve in the coming years.