“Bikeshare apps” for food trucks. For those who are uninitiated, bikeshare apps (Lyft, Citibike, etc.) have an app that shows you where bike docks are, how many bikes are available, pay for renting of bicycles, and other digital experiences with customers. Truckbux wants to do the same thing for food trucks, showing where they are, what their menus are, allow for pre-orders and payment, and also ultimately build a two-sided marketplace.
Note: I couldn’t invest in TruckBux because of a stupid error on my side, not confirming the investment again within 5 days when TruckBux changed some of the terms. So they’ll go on my missed portfolio.
- Eliminating the pain point of payments and lines for customers seems like a nice win-win, and that story makes sense for me.
- Loved the customer stories from food truck owners. That was a nice touch.
- Providing SaaS for B2B in the COVID-conomy, which fits my thesis for the world right now. Concerned how COVID-time food trucks compete against cloud kitchens and restaurants who embrace similar mechanisms, but could see the diversity of joining one mega fragmented market (food trucks) into one app is a value add. Overall, the net loser should be commercial real estate anywho.
The 6 Calacanis Characteristics (91 161 18)
|1. A startup that is based in SV||Fail: Headquartered in Austin, TX|
|2. Has at least 2 founders||Pass (3)|
|3. Has product in the market||Pass|
|4. 6 months of continuous user growth or 6 months of revenue.||Pass (sort of): 2018 revenue was $680, 2019 revenue was $12,532.|
|5. Notable investors?||Fail: No one I recognize.|
|6. Post-funding, will have 18 months of runway||Pass: Raising $1MM at $67947 yearly burn means 14.7 years, though obviously burn increases once the money comes in.|
The 7 Thiel Questions (ETMPDDS)
- The Engineering question:
- Good Enough: The technology here is pretty boring. Use React and other modern technologies to build a web/mobile/native app suite for startups. Boring in this case is good though.
- The Timing question:
- Good: COVID has driven up the acceleration of adoption in all technologies that increase revenue/decrease costs. That said, not sure how COVID affects food truck’s growth timelines.
- The monopoly question:
- Yes: If they could build it, for sure. Spend the marketing dollars to build the consumer side of the platform, build in loyalty programs, and onboard enough food truck customers.
- The people question:
- Not Bad: None of the team members here seem to have deep startup experience. That said, everyone’s a newbie until they’re not.
- The distribution question:
- Good: The team seems to have enough hustle to onboard and hunt down food truck operators. I would also heavily recommend building in a referral program and paying food truck vendors a fat commission for food trucks after they process their first $10k in orders (1.5k in revenue for TruckBux.)
- The durability question:
- Uncertain: going into the deck, I saw that not only are they trying to become the bikeshare app for Food Trucks, but also they’re trying to get into the delivery game via integration with Postmates and Square. What’s to stop Postmates and Ubereats from onboarding food trucks?
- *What is the hopeful secret?:
- Food trucks are going to compete more with restaurants for the delivery food game as well as experiential dining, accelerated with COVID. By giving the stability and quality of experience of restaurants via clear menus, order ahead, and stable location, TruckBux will be able to elevate the food truck industry to compete head-to-head with traditional brick and mortar restaurants.
What has to go right for the startup to return money on investment:
- COVID: Will COVID accelerate the order from food trucks? Or will it just increase ordering from traditional restaurants and the novelty for food trucks will go away? If we’re talking about saving costs, why even have a food truck, and not just go full cloud kitchen?
- Identify the Key Growth Lever: What actually is TruckBux’s business? Are they focusing on delivering (in which case they need to figure out how to stop hemorrhaging money to Postmates at some time?) Or are they a PoS/CRM (in which case they need to compete against Square?) How key is the map portion (which as far as I can tell is their unique value prop?) Need more clarity.
- Growth, growth growth: Why does this food truck only have 60+ food trucks after 1+ year in business? What does it take to go to 600, then 6000? Do food trucks even matter, or is it mainly transaction volume?
What the Risks Are
- How much demand is there for an app that allows consumers to find their favorite food truck? I’m not the market in that I prep lunch and like buying lunch at food trucks for novelty, and therefore, aren’t hyper motivated to track one specific food truck and pay in advance. That said, for regular food truck consumers, and assuming COVID accelerates the transition to capital light business models, I could see this working.
- Death by Transaction Costs: If TruckBox has to add another 15% of cost to a food truck order, in addition to the costs that Square/Postmates/whatever tech the food truck is doing, then TruckBox has to create 15% more value minimum. Again, is creating a map, building a network of food trucks and menus, and building a marketplace worth the upcharge?
- Market Size & Revenues: Doing some napkin-back math, “there are now over 25,476 food trucks in the U.S. and the booming industry is now over $2.7+ Billion.” meaning each food truck on average brings in $105,982 in revenue a year (likely with pareto distributions.) At 60 food trucks now, if we assume the company could get to 1000 food trucks in the next 18 months (!,) increasing their revenue by 20% (!!) that’d be 1000 food trucks*105982 revenue per food truck*0.2 differential in increased revenue*0.15 revenue they capture=3.176MM ARR annual revenue per year. From there, the goal would be figuring out how to onboard more food trucks, get more market share, and offer more value for the 15% they are proposing.
Muhan’s Bonus Notes
- Bonus points for diverse team.
Total Amount Raised: US $391,467
Total Round Size: US $1,000,000
Raise Description: Seed
Minimum Investment: US $1,000 per investor
Security Type: Crowd Note
Valuation Cap: US $6,000,000
Offering Type: Side by Side Offering
This is where I’ll post updates about the company. This way all my notes from offering to post-offering updates will be on one page.