Dear Dara & Tony
Wonder is the Netflix to Your Time Warner
Audio by Eleven Labs- Pronunciation and cadence can be a little funky.
First some quick context: This is an email from me to the CEOs of Uber and Doordash. where I've also CC'd the founder of Wonder, and the CEOs of Amazon & Netflix. I cannot actually email them because I am me and they are them. But a guy can dream, right?
To: Dara Khosrowshahi, Tony Xu
CC: Marc Lore, Andy Jassy, Ted Sarandos
Dear Dara & Tony,
The Albanian army is coming.
Wait- what? Click here for rewind sound.
In 2010 Jeff Bewkes, then CEO of Time Warner, told the New York Times the following about Netflix’s potential to disrupt media on the whole:
“It’s a little bit like, is the Albanian army going to take over the world?…I don’t think so.”
It’s fair to say Bewkes got this wrong, really wrong.
Dara, Tony…Wonder is your Albanian army right now.
I am sure you’re both well aware of Wonder but just in case anyone else reads this email here’s a quick primer.
Wonder was founded by Marc Lore who started Diapers.com and sold it to Amazon. Then he started Jet.com and sold it to Walmart. Put a pin in those acquisitions and we’ll come back to them later.
Wonder started as a company sous vide-ing and re-therming food on trucks for rich people in New Jersey but eventually realized that was not the future of feeding America. Duh!
They changed gears and now have eleven brick & mortar locations with another nine on the way, all in the New York and New Jersey areas.
The locations offer food from nearly 30 unique menus out of small footprint stores offering dine-in, takeout, and delivery.
Wonder also bought Blue Apron and recently acquired Relay. Relay does what Uber and Doordash do but just in New York City and they actually EMPLOY a delivery team.
You guys might be thinking, it's ghost kitchen meets food hall- I’m neither intimidated nor impressed. But Lore is doing something different, something rooted in a deeper understanding of the role that restaurants and food play in our lives. He’s treating restaurants and chefs as content creators with influence on our most basic human biological need: food. A recent New York Times article “said the company has spent $60 million to date acquiring the intellectual property, and hundreds of millions more on the culinary engineering, necessary to develop this particular food preparation system.” Lore and Wonder have also recognized the importance of guest facing presence and brand as restaurants become the driver for ground floor retail.
This is where the Netflix analogy comes in. You guys are on the Netflix playbook from the pre-House of Cards days. You’re trafficking in the commodity of moving stuff around. Netflix was doing it with other peoples content and DVDs. You’re doing it with food, other peoples food.
Wonder is on the current Netflix playbook of locking down talent and intellectual property. For Netflix that meant David Fincher, Shonda Rhimes, Ryan Murphy, etc. For Wonder it means Marcus Samuelson, JJ Johnson, Jose Andres, etc. Wonder is offering restaurants new, asset light, high margin revenue that is not entirely predicated on additional inputs of labor and cost of goods. Doordash and Ubereats take high revenue shares and increasingly lean into advertising to further bleed restaurants.
In Blue Apron and Relay, Wonder has also incorporated multiple distribution channels. Scale this up and Wonder will own the rails end-to-end while offering comparably more back to operators versus Doordash & Uber. It’s a compelling value proposition for operators and food-obsessed guests.
Now, Dara & Tony, back to those acquisitions of Diapers.com and Jet.com. The existential threat is when Wonder is acquired by Amazon and helps them finally crack the multi-trillion dollar economy that is restaurants and the supply chain that supports them.
Doordash & Uber are in that moment that Ted Sarandos described in 2013 where the goal became to become HBO before HBO could become Netflix. The value proposition to guests will need to shift toward restaurants (content & experiences) you cannot get everywhere else. To accomplish this both companies will have to become true partners to restaurants with aligned incentives. Wonder, while a fraction of the size, is far ahead on these fronts.
And while I have you both, if you’re interested in fighting off the small but mighty Albanian army before it’s too late, I have an idea. There’s this great All Day, All Alcohol concept out of Boston with killer rotisserie chicken, SB Dunks chicken bites with addictive sauces, great cocktails, genuine hospitality and a solid brand. It’s got good unit economics and AUVs of $4M. I hear they’re looking for investment for ongoing growth. I also hear there’s a guy involved who has some interesting ideas about untapped opportunities for restaurants in retail commerce, content & advertising, real estate, gaming & gambling, micro-fulfillment, and more.
Ted- I see you with your Netflix Bites. Feel free to chime in.
Andy- just thought it couldn't hurt to keep you in the loop.
Eli
eli@shybird.com