start again today no. 92: burger math
invention or discovery, Berkshire Hathway, boutique / social search, dark forests, home, orange peels, Hofstadter's law
We watched Bar Rescue this week. Chef Al, a DMV-based chef with an incredible story and ability is their chef consult this season, and we wanted to see him in action.
The host shows up at a failing bar that’s dirty, disorganized, and losing 100s of 1000s of dollars. The owner started as a waitress and is at her wit’s end. If you’ve seen The Profit, you get the idea.
To get to the bottom of the problem, the host digs into costs and finds that for every burger sold, the restaurant loses $2.50 (and $1.50 on every plate of wings). Bartenders aren’t measuring liquor pours, creating $300k in annual liquor waste.
To stop the bleeding the chef consult simplifies the menu and makes more in-house. A professional bartender comes in to teach the team how to mix drinks. They implement systems to compare end-of-night bottle weight vs the POS to limit discrepancies. After 4 days of rebuilding, they start again.
Burger math came in handy this week when someone asked about unit economics at the Minority Small Business Showcase this week. Many of the entrepreneurs have growing CPG brands or brick-and-mortar concepts. One in particular, Black Coffee out of Atlanta, is thinking about their next location and whether to do an equity raise.
CPG is out of favor with many venture investors but represents 10% of total US employment and contributes $2T to the national GDP. Uncle Nearest is a recent case study in taking a non-traditional funding path to achieve nationwide distribution and a $900m valuation.
Ade at 1863 Ventures shared how an early investor at Cava evaluated the venture scale potential of the company with our new class of venture fellows.
“You know what I did? I signed up for a shift in the kitchen.”
He wanted to understand the customer experience knowing that for Cava to be successful, not at 20 locations but 300, as they grew, the customer experience could not degrade one bit. Is there paper on the floor? Are the ingredients fresh? Is the kitchen clean? If any of these things were no, it’s a negative signal on the management team’s ability to create a consistent customer experience.
Many CPG brands & brick & mortars start as small businesses. As I was reminded in Buffet’s annual letter this week, Coca-Cola was launched in an Atlanta drug store in 1886. If you can nail the unit economics and customer experience, you can scale.
What I read this week
🤖 a camera, not an engine - Venkatesh Rao,
The way ML researchers talk, it looks like they’re “doing” and “building” like you would with an invention, rather than exploring and mapping like you would with a discovery. But the thousands of refinements and tricks being reported week after week should be treated like reports from expeditions on unknown continents.
📊 berkshire hathway 2023 shareholder letter - Warren Buffet
“Warren, forget about ever buying another company like Berkshire. But now that you control Berkshire, add to it wonderful businesses purchased at fair prices and give up buying fair businesses at wonderful prices.”
In reality, Charlie was the “architect” of the present Berkshire, and I acted as the “general contractor” to carry out the day-by-day construction of his vision.
💡 why we need more boutique search engines - Sari Azout,
I believe the opportunity in search is not to attack Google head-on with a massive, one size fits all horizontal aggregator, but instead to build boutique search engines that index, curate, and organize things in new ways.
💡 making the internet alive again -
The best parts of the Internet — the best parts of it for you, whatever that might mean to you **— are usually hard to find. That’s precisely what makes them so special. It may finally be time to see a more social version of search.
💡 the dark forest theory of the internet - Yancey Strickler, cofounder of Kickstarter
Dark forests like newsletters and podcasts are growing areas of activity. As are other dark forests, like Slack channels…invite-only message boards, text groups, and on and on. The dark forests grow because they provide psychological and reputational cover.
Home, I learnt, was as much about place as people, and the shared history, shared references and trust a community forms together.
💛 orange peel people - MaryKathryn Conceison, 5th grade teacher
Any time she’d give us an orange, it was always peeled. And if we had tuna fish, there was a mint taped to the sandwich bag for after lunch. Celebrate these seemingly small acts of kindness that say “I want your life to be easier.”
📊 it always takes longer than you expect - Ryan Holiday
I see you, I love you, peel an orange for someone this week,
H