Resy and Eater: Ben Leventhal

Transcript from https://podmenti.com/t/d2f4e5f839bdc2d8


I don't think people understand quite how hard restaurants are.
Yeah. If you think about the moving parts at the average independent restaurant and how complicated the production and assembly
and delivery of food is to the table. And you compare that to any other small business.
it's orders of magnitude more difficult. I mean you don't walk into a store
And say I need a pair of socks and sneakers and somebody down in the basement makes you the shoes and socks. Yeah.
But that's what happens when you walk into a restaurant.

Welcome to How I Built This, a show about innovators, entrepreneurs, idealists, and the stories behind the movements.
They built.
I'm Guy Roz and on the show today, how Ben Leventhal's appreciation of restaurants helped him build Eater and then Rezi.
A booking service that over the past year
has seated three hundred and fifty million diners.
If you ask me to name my favorite restaurant
It's
pretty easy. It's a place where they know me.
Now the food happens to be spectacular, but even if it wasn't
The fact that I'm a regular means my experience there is always great, and that's the thing about eating out.
Even if the food's just average, but the overall experience is great, you'll probably have a pretty good memory of the place. And that's what mattered and still matters most to Ben Leventhal.
All three of the businesses he founded or co-founded are ostensibly about food, but really, they're not just about food, but about the experience of enjoying the place where the food is served.
Back in the early days of blogging, Ben started writing about New York City restaurants, and the blog eventually became Eater, which is now owned by Vox. Eater would report on the rise and fall of restaurants much in the same snarky voice that Gawker used for celebrities.
When Ben stepped away from Eater, he wanted to figure out a way to solve a problem he'd often run into.
how to snag a table at a hard to book restaurant. So in 2014, he partnered with Gary Vaynerchuk and Michael Montero to launch Rezi.
Today, Rezi is one of the big restaurant reservation apps along with others like Open Table and Talk.
The original model for Rezi was a little like Uber and Surge Pricing.
If you were willing to pay a premium for, say, uh Friday night, you could reserve a table at an in-demand restaurant.
Now eventually that model didn't work out, and Ben and the team had to make a hard pivot, which you will hear about.
Rezi was eventually acquired by American Express for around$200 million, and today it lists around 16,000 restaurants on the app.

Ben has also launched a third company, it's called Blackbird, and it's tapping into the world of restaurants, rewards, and virtual currency, but
We'll get there a little later. For now, what you need to know about Ben is that he grew up in New York, studied finance at George Washington University, and out of college,
His first job was working at VH One in New York City.
The first thing I did there was I worked out of the on the big shows, sort of things like Storytellers and um
VH1 used to have a show called Divas, which was a big concert.
I get to meet all kinds of people. I was once
For all of five minutes, Madonna's security for one shoot had to escort her.
Get her safely from her uh.
car to her dressing room and
I'm back.
Wow.
Yeah.
Did you see yourself?
kinda climbing up the ranks and maybe one day being executive or
Or did you always kinda see it as a temporary thing?
Uh, you know what happened is I didn't see myself making any progress.
Yeah. I held the executives there in extremely high regard.
Um
Those were the days where MTV
Executives were l just
You know.
Epic.
heroes of of I guess the sort of early media cable media environment. I mean Tom Frost and Jiddy McGrath and John Sykes. I mean these guys were
Huge figures and I
held them in very high regard and
Um, I did want to be one of them.
And um I spent
A bunch of time.
I had M T M V H one and M T V and I didn't really make any progress.
It's amazing just to think about it for a moment. There was a time in the early two thousands, even into the two thousand tens.
Where New York Media Executives
were considered to be such a big deal.
They were hot.
So highly paid. They had drivers.
That would drive them.
to the to the office.
You know?
It it's just so crazy to think about it today.
Because that
whole business is just gone.
Yeah.
Spent all that money in the two thousand nineties and the two thousands.
They were spending, you know, on private cars.
Yeah.
Yeah.
So you saw that
y you you felt like you were not going anywhere.
So what did you do when you left?
Well one of the things that happened
Towards the end of my
Time at V H one is I
I sort of didn't have very much to do.
And uh the job that I was doing was pretty easy, so I had some time on my hands and
That's when I sort of initially started.
doing things on the side and started writing about restaurants and and
Um writing about
The city and
Those projects.
Just on a on a blog.
On a blog. It was initially a
newsletter called She Loves New York and that turned into
Peter.
Who is she?
She was a
You know, the theoretical she just a a woman in New York who loves the city.
All right.
It was a weekly newsletter.
And every week I wrote about
ten or twenty restaurants somewhere in that range.
Yeah.
And I categorized them.
Around
Pop culture.
themes and
Moments.
So
If it was
Baseball season.
And you wanted to go watch the Yankee game.
It would be you know
four places with screens.

But
It developed a


I think at its height it was um
Ten thousand?
Wow.
It was really just commentary and colour and observations.
She lives New York initially was anonymous.
And
I thought that was an interesting kind of hook for it.
And
There was a sort of
Curiosity as to who's writing this and what is this what's really going on here.
And was it like snarky?

It wasn't snarky, the tone of She Loves New York was really
Um
It was insidery.
It was
Awestruck in a way.
Really sort of a
Fascination with the city.
But it wasn't really snarky as such, it was um
Just kind of quippy and insidery.
Alright, so you're you're writing this and uh but uh I mean, you're not making any money off of it, right? It's just sending it out. It's ch this is just like a thing to do.

It was a thing to do and
It had no commercial value.
or potential at any point, although I did think
In the broadest possible sense, I said, Well maybe there could be something here.
but I had no idea what that might be.

And I was simply motivated by
the
fun of writing it.
Meantime, you meet this guy in New York.
Named Lockhart Steel. Who's Lockhart? How did you meet him?
Lockhart steel.
was at the time doing two things that
Or
interesting and relevant to me. One is that he was the managing editor of Gawker.
And two is that he was writing a blog called Below Fourteenth Street.
And below fourteenth Street was
a very early blog. I mean he was blogging when I was still sending out this newsletter.
But I used it as a source.
A lot.
You know, one of the th hooks of She Loves New York was that it was extremely up to date in terms of intelligence, what was opening.
And where you're going to be able to do
And so
It was
Below Fourteenth Street was one of my sources.

And
We had
been introduced through a mutual friend.
And we
Hit it off.
So he was basically kinda doing a parallel thing.
And he's also
Managing editor of Gakker. Was Gakker in two thousand five already
a thing or was it really just a kind of a New York insider thing?

Gawker was an insider thing, but Gawker was pretty well read at the time. I mean
Anecdotally I remember that.
When Gawker would link
to one of my She Loves New York newsletters, it would really spike traffic.
Right.
It would really be a a big win for me.
And Gakker was snarky.
Gawker was very, very snarky, yeah. Yeah.
And so how did how did that
Like what what do you remember about conversations that led one or both of you to say, Why don't we join forces and do something together?
Yeah.
I remember us having two
Seminal conversations about this.
We met at a bar.
And
I said
I think we should do something.
And it should be a restaur about restaurants and it should be called the Eater.
And I said we should call it eater because
One is
It sounds a little bit like Auker and two is eater
Is the
most dressed down way of thinking about people who go to restaurants. They're not foodies, they're not gourmets.
They're not connoisseurs, they're just eaters.
And I said we should do this.
This blog.
And you know, we'll post about restaurants.
And um
We'll both do it.
And
Locke was much farther along in terms of his understanding of digital media than I was at the time and
Of course in part because he was already at Gawker and he just generally was way more in the scene and already had a feel for it.
And he also was writing at that time a newsletter called Curbed.
About
street level, neighborhood level real estate in the city.
And he took to this idea of of restaurants and he said, Well, let's we can the easiest thing to do is to launch it off of Curbs and we'll make it eater dot curb dot com.
And that's how that was the first
Yeah.
It's sub a subdomain of curbed.
And we sort of mapped sketched it out and essentially drew up a wireframe for it.
And um we both contributed some ideas as to how it would function.
An eater was going to be much more.
closer to a restaurant review site.
Yeah.
Well Eater was
The idea was let's put up a couple of posts a day and and then it turned into six and then it turned into twelve posts and
It was
A regular
feed of content about restaurants. Now
We did say
We're not gonna write reviews.
And
We also said we're not gonna post photos of food.
And we say we're really not interested in in adding to the noise with more photos of food. And we're really not interested in writing reviews because we're actually not gonna be any good at that. Um because
As I still do.
At that time we held them.
Big time food critics and extremely high
Garden.
and had a ton of respect for what they do.
And um and we just said we can't compete against those guys. But what we did have was
We have the cadence of blocking.
Which

certainly a competitive advantage. We could post things whenever we wanted to.
And we had um
you know, our take on restaurants. We had our take, which was
That these places are these incredible, wonderful, magical places and the chefs and the o operators of restaurants were
Heroes and villains to be talked about.
So what was presumably you had to get a
you have to get paid. So how was it gonna work? Were you gonna become an employee?
Of curb to get a paycheck?
Yes.
And I mean, were uh two thousand five, were advertisers spending a bunch of money on these sites? Could could it was it possible'cause hosting a web page
was very expensive at the time.
Yeah. Was the business model
I don't know. Was it was it?
Sustainable.
Well
We had a couple of advertisers and
Credit to Locke.
attracted several advertisers through Curbed.
And so there were companies like
My recollection is the New York Times was a company that advertised with Curb.
And
And when I left
what we decided to do was we decided to raise some money.
Mm.
Um
And uh we raised
Uh an angel round of funding for
The
Enterprise, the curb eater enterprise.
And that's how we funded it and
And g we grew into it being a sustainable
advertiser supported content business.
Um, all right, so you now and and you became sort of the editor of Eater?
Yeah.
That's right.
And
You were
the main writer you were
posting two or three pieces a day or you had it one or two people working with you?
We
started by both contributing Locke and I.
M my recollection is three or four posts a day.
We didn't have any other contributors.
for the first years too.
But
We just sort of went about posting. I mean that's the thing about
those days in digital media the
Key to getting one of these things stood up is you just
In some ways you just have to start posting, you have to start producing content.
Um, from what I've read
There was
Definitely an edge s of of snar to some of the
The the reporting.
Yeah.
You guys had like a section called Death Watch.
where you would like count the days before you you felt like a restaurant would die.
We did.
You know
It was a lot of our energy and our just unbridled enthusiasm for restaurants that was coming out.
And
It often showed up as snark.
The
Idea of eater
was that
We loved restaurants. We were obsessed with restaurants, I think about my career.
As
A height ban for restaurants.
And eater was the start of that. And
And we were just so a we were just so
It was just all energy.
Mm.
And
And that often showed up as snark.
And
You know
Knowing what I know now.
I wouldn't do things like Death Watch.
Which in hindsight were
Carson and and
Cruel to the restaurants that
became its subjects and
But we were outsiders.
And we didn't know any better.
And we didn't know what we didn't know. We just knew how much we
Above the scene and
How fun and fascinating.
And exhilarating it all was.
Let me let me ask you about just the
business side for a second,'cause I would imagine you're you're in your sort of
mid to late twenties.
When you
and Lockhart start talking about this idea.
And then it became part of Curbed.
You probably didn't think of yourself as an entrepreneur. You probably didn't think like I'm starting a business, did you?
No.
No.
It didn't even occur to me.
We had a
Joint venture on Eater.
And
Locke did more of
the work of building the business and I did more of the work of building the editorial.
Um
But I was
close to it and sort of understood.
More or less what was going on.
Yeah, it wasn't just sort of
Naive creative.
Writing content.
The passion.
for me was around the content, no question about it.
And all right, so you so this becomes your
It's it's mainly in New York.
At the time.
Yeah.
We hit San Francisco.
Middle LA.
But the
The gravity of the company was
But you know, New York was a center of gravity of the company.
And and was it
profitable or m or at least sustainable, or was it
You know, did it require like constant fundraising? Like how was it keeping the lights on?
It was more or less sustainable, we didn't raise more money.
Um for quite a while after the
initial Angel Round. Um it was a lean, small lean company. You know, we we ran it
Modestly and
We
Didn't have that many employees and
A lot of the
Writers were freelancers and
Um
It was lean.
We ran it lean.
From what I've read, publicists hate it either because
People said well they're not professional food critics.
And they can really
Mm-hmm.
have a huge negative impact.

But they don't know what they're doing.
So when you would see stuff like that, did you just think that was funny? Did you laugh? Did you
Did it bother you? Uh what do you what do you remember of about that?
important things about being an entrepreneur.
Is that you have to be willing to break the rules.
And sometimes you don't realize
the rules you're breaking until
After the fact.
And sometimes you don't realize that it matters.
Until after the fact. But
You know, at the time that we started Eater
There were rules about
food content and there were rules about embargoes and
Um
There was an unspoken understanding that if
As a publicist you gave Florence F Florence Fabricant a story. She was she continues to be a writer at the times, writes the sort of newscoms. She got the exclusive. If she had the exclusive, she had the exclusive and so
We o we often ran into these
Things where
We had the story because we walked down the street and we saw
Um
A construction project and we poked our head in it, it turned out.
that we got to see a restaurant before it was officially photographed and before it was officially announced.
Yeah.
Put those things on the website.
Were you guys ever sued? I mean you must have been or threatened with lawsuits.
Yeah.
I think we got some letters over the years.
Nothing that
Ever
brought us down or became existential.
We always corrected the posts when we needed to.
Um
A lot of the current
I think
style and conventions around
Online media, I think it's fair to say we're
the rules were being developed in that time.
And
There was not the same.
journalistic standard that exists for
Old school legacy media.
The priority was
Pace.
And speed.
And certainly that
took precedents over
I would say accuracy.
in some cases.
Yeah.
You know, if we
Posted a story about a restaurant.
And we said, This is opening next week and the chef
Wrote us and said.

You're wrong it's opening in two weeks. We would
Update the story and say.
It's opening in two weeks. Yeah. And sometimes
publicists because they were playing by the old rules would send us a press release and it would say on the top
On embargo until.
But we didn't ask for the press release and we got these things unsolicited and so we kinda said these are not our rules and we're gonna post it now.
And
We drove people
Crazy with that stuff. We just
The publicists especially just couldn't wrap their heads around what we were doing.
And
Certainly that changed.
Um
And they started to figure it all out and we started to figure out how to play nicely with them, but
Yeah, we just started by saying these are not our rules.
So screw it.
When we come back in just a moment, how Ben moves on from Eater to start Rezi, and why its first business model?
Falls flat.
Stay with us, I'm Guy Roz, and you're listening to How I Built This.
Hey, welcome back to How I Built This. I'm Guy Raz So it's around 2009, and Ben decides to step away from the website he co-founded, Eater, and move on to new things. He works for a while at NBC doing digital food content, and then he leaves that job for a startup.
You worked for a a startup called Kitchen Surfing. It was like a a private chef company and like you could book. Yeah, you could kinda book a chef like you could an Uber. If you had a dinner party on Friday and you need a chef, you could go on kitchen surfing and make a request and get a chef.
Yeah. Didn't work that well. It didn't work that well. It means I'm curbed gets acquired by Vox. I think they uh reportedly for between twenty and thirty million dollars they get sold. I'm assuming out of that you get a j you know, a check too. Probably not enough to finance, you know, the rest of your life, where you could just sit on a beach and drink, you know.
Pina Coladas, but, you know, probably enough to maybe help me start something. Absolutely. Yeah.
So
U
had briefly worked at this start up, kitchen surfing. I I have to imagine that that experience gave you
some ideas or or kinda got your the gears and your head turning about.
food and a a business.

Definitely.
That was a
period of time where I
I learned a lot.
About
startups in sort of a formal way. Like
I learned about
How kitchen surfing went about raising
Venture money and how
um venture backed companies have board meetings and think about roadmaps and
Growth and
things like that. And out of kitchen surfing, I really didn't know what was gonna come next. And I didn't have any strong ideas about what that might be.
And
There's two ways for me that ideas
mature one is
When I write about them.
And the others when I talk about them.
So I like to talk about the things that I'm thinking about.
With people that I trust and that I
That I think have
good strong opinions on things because it helps me figure things out.
And so somebody I had gotten to know over the years
Was Gary Vanerchuk.
So okay, so Gary Van Chick, who's he we he had we had him on the show several years ago. He's kind of a social media
entrepreneur and and he's done a bunch of different things.
You guys are just
Batting ideas back and forth.
at the time. This is twenty thirteen.
Um
Uber starting.
out or it's starting to gain traction.
Yeah.
iPhone apps are exploding.
Um
W what were you thinking about in terms of what
opportunities there were around restaurants and and smartphones.
Yeah. Gary.
in the years that I got to know him.
I was doing Eater, he was developing Wine Library.
Which is
the thing in many ways that started to put him on the map. Yeah. And
We
We're both at a point in our careers
And
Late twenty thirteen.
where we had the head space to think about doing something together.
And
We were sitting down at a restaurant.
Yeah.
And
The chef comes over and he says
You know, it's this is I'm
I've got some amount of notoriety in the restaurant industry'cause it's
Um
This is post eater, of course, and um and the chef comes over and is
happy to say hello and is excited to meet Gary.
And
We've had a great meal.
And uh
We chatted for a bit and he was just talking about how hard the restaurant was. How it really wasn't working very well and
Um
Wasn't very profitable.
And we that was a real
provocation for me to say, you know, there's something
There's something that's off here. Like these restaurants
shouldn't be so hard. The making people so happy
But if none of these restaurants are working.
What's that about? Why is that the case? And that's how we sort of started to
dig into it.
And and did and I think I guess at the time, Gary
Head.
mention that he was starting a fund, like he had raised some money.
to make investments.
And so Gary had some money to play around with.
And
was looking for ideas and so that's how these sort of two things came together.
It's interesting in twenty thirteen you're hearing chefs talk about how hard the
The industry is.
I I can't imagine a a good, even a very successful restaurant doing more than 10% in profit.
No, that's
You're if you're running at ten percent.
as an independent restaurant, you're crushing it.
Yeah.
I don't think people understand quite how hard restaurants are.
And that's always been something that to me is is part of the fascination and part of
the reason to fight for them and to

These businesses are
10 out of 10 difficulty. If you think about the moving parts at the average independent restaurant,
and how complicated.
They use.
production and assembly.
and delivery of food is to the table.
and you compare that to any other small business.
It's orders of magnitude more difficult. I mean you don't walk into a store
and say I need a pair of socks and sneakers and somebody down in the basement makes you the shoes and socks. Yeah.
But that's what happens when you walk into a restaurant.
You say that you're hungry and they go down and they
put a bunch of stuff together and then make you dinner.
And you know, you also can't go from
Storefront to storefront.
Browsing for things that you like, you know? You go and you sit down for two or three hours, you have a meal.
That's you get one shot at it.
Yeah. And I think as we started talking about Rezi, it was it started to come into focus. This is just
This is impossible what these guys are doing and
Let's understand why and
See where the opportunities are.
Yeah.
I mean restaurants I think it's like a third a third a third, right? A third for rent, a third for food, and then a third for
your employees and hopefully you can squeeze those down a little bit so then wherever's left
Yeah. You can
Pay yourself.
But the reality is it winds up.

Well you know it's uh it's like
You you want it to be thirty percent, thirty percent, thirty percent, and then ten percent profit. Yeah. But it it's sort of the reality is it winds up being more like thirty three, thirty three, thirty three. Yeah. I mean I'm I every day I read articles about
really great restaurants in San Francisco that close down because the owners cannot
It's not sustainable. They're they're literally not making
A salary.
And they're
Busting their butts.
Alright, so you
you start to think well what what's the opportunity here? How can how can I
Maybe build something that will benefit restaurants.
And then that we can turn into a business. So what was the
What was the kind of the
The choke point, you know.
the um the bottleneck that you
discovered that could be exploited.
Well,
We thought that the choke point was
That there was no
Variable pricing in restaurants.
Mm.
And we were just talking generally, why is the price of the seat?
the same every day.
No matter what the demand is.
Right,'cause Friday night at at seven thirty
Is gonna be a higher demand than Tuesday night at
Five.
Yeah.
But it's a hundred and fifty bucks either way. Yeah. And we were saying, Wha how is it possible?
the restaurants haven't figured this out. If the margins are so thin.
And it's so hard to generate revenue.
How is it possible that restaurants haven't figured this out?
Right.
And
So we thought that was our
Wedge.
Surge pricing.
And what we did was we the first version of
Rezi was
Just paid.
Reservations.
Ten dollars, twenty dollars, fifty dollars, a hundred dollars.
For reservation.
So when Gary agreed the two of you agreed to work together
Did he have an office? Did you sort of, you know, set up shop?

Dig into this stuff.

He did. He gave us.
A little group of ten desks out in the middle of the floor and
We started banging away. And who's we?
Yeah.
Well you had uh at the time it was me, Gary, and Mike Montero.
who would become the CTO of Rezi.
Gary had known Mike and had talked to him about a couple of different projects. Mike's a
really talented engineer and was looking for his next chapter.
So the idea you you started to develop was hey
Why don't we sell
Seats at restaurants?
Like you know, you you paid a premium for a certain time of the day. Exactly.
Exactly.
And how how is that gonna work? You you I mean, just to get it off the ground, you had to get restaurants, presumably, to agree
to give you an allocation of seats.
Right.
Precisely what we did.

We went to restaurants, I went around the city.
Uh
Went to restaurants where I knew the chefs. And and presumably you had some credibility from your time at Eater. Yes, I brought to Brezzi
The
credibility in the role deck that I developed at Eater.
And I think
It's fair to say that as Rezi grew
You know I
used my product instincts and my content experience and started to sort of round the thing out. But
Really I went door to door with the restaurants.
And I started with the restaurants that I knew.
And
really asked him to take a leap of faith and
Try this out.
And what was your pitch to them? Like you come into a restaurant, you'd say, Hey, we're gonna do the this thing and I would say, Well what's in it
for us, like I mean, we're just gonna gonna give you our seats. I mean we're already selling these out.
The pitch was
Airlines have
First class and business class and premium economy and economy.
And when you go to a concert there's
Front row and
And
Second deck and third deck.
But for restaurants you have nothing.
You have one price, it's one size fits all. Everyone gets the same seat.
At the same price.
And
What if you could charge?
More for seven thirty.
On Friday night.
It's only fifty bucks.
If you want it, it's yours. Fifty bucks for the for the right to have the seat, but then obviously you'd have to pay for the meal.
Yeah.
And that was the pitch. You can generate revenue, you can make customers happy.
And
All you have to do is you have to charge for
Your prime time inventory.
So maybe like Tuesday night you could book it for ten bucks for the reservation, but
On a Friday night it might be fifty or more if it's a hot
Restaurant.
That's right.
In the restaurant we'll get a cut of that.
The restaurant got most of that revenue.
Most of it.
Most of it.
Oh well, okay.
My recollection is that we took twenty percent.
As a vague.
And the restaurant kept the rest.
And were you getting traction, were were you getting restaurants saying, I'm in, I'll I I'm up for trying this out?
It was really hard.
We got restaurants that say yes.
Okay. I remember the restaurants that said yes to us first because
You know, when you're starting a business, the first five yeses are the ones that matter the most and and
Are the ones that
require a tremendous amount of leap of faith.
But there were lots of no's too.
So it would be a mobile app.
Yes. And people could basically buy this I I mean it's a great idea.
There are people listening and I know that you guys got knocked for it'cause people are like, Oh, they're like ticket scalperers but at the end of the day, like
That is for better or worse how capitalism works, right? Is that
There's an opportunity.
And if you can
If you make money off of it.
It's yeah, reasonable and
legal and ethical, uh you know, then it it's gonna happen.
Right. I mean I just went and saw Taylor Swift.
Most of those people in that arena.
Probably bought from the secondary markets.
For better or worse.
Yeah.
But
There's something about hospitality.
That
forces consumers into a different
Mental model.
than they are
Using for other
Entertainment.
Categories.
And uh I think it's the intimacy of it.
I think it's the legacy in the history of hospitality. Restaurants
In people's minds.
Are
First come, first serve democratic places.
When you start pricing them.
Everyone gets a little uncomfortable.
When you say to a customer, you can have this table.
But you have to pay a hundred dollars more for it than the person sitting next to you.
That really, really bothers people.
even though that might be the case at an NBA game.
Or any any concert they go to. Yes.
For some reason.
When it's at a restaurant, people just
psychologically, they just it they they cannot accept it.
Yeah, I think it's about how bespoke it all is.
I think it's about how intimate restaurants really are at the end of the day.
Um
I also think as time's gone on, I mean, this is the number one question that people ask me as the founder of Rezi, like why isn't there more

And I think one answer is
because hospitality is not capitalism in a pure pure sense. The other is that it's actually happening but it's a little bit behind the scenes. You know, when you have credit cards
who get who get paid allocations of tables and you have VIPs and you have concierges.
All those are entities that are benefiting the restaurant economically. And all those are entities that essentially help make sure that higher spending people are gonna be in more valuable seats. So
that's happening, it just turns out that something is sort of
Raw as Rezi One. Oh.
Is not the right.
It's just not the right product for it.
And so a lot of places told us, there's no way we're doing this. This is crazy.
Because they thought people would hate them.
But you got Minetta Tavern, you got
Balthasar. I mean you got some.
very hot restaurant. Still a hot restaurant. Still a hot table to this day.

To make it more palatable, as we said. Well look
Even if you don't want to take the money.
On the consumer side.
This is beneficial.
So charge for the table.
And we'll take your cut of it and we'll donate it.
to a charity of your choice.
I see. So you would could you could advertise that.
That's right.
It sort of was a
A way it was a landing zone for restaurants.
Worrying that they looked like they were greedy.
I think
Balthazar was donating to food bank and
Um
It was easier for restaurants to say yes if they could wrap their head around the fact that okay, well
If it's going to charity, it can't be that bad.
Yeah.

Alright, to get this off the ground you had
Some financing from the
Gary's fund. And did that finance the whole thing? I know you raised you guys raised two million dollars. Did it come entirely from
The venture fund that Gary was starting?
Yeah.
That's right.
Alright, so you have this money and and you've got to build
An app, develop a team.
and get the restaurants on board. So first of all, just from the technology perspective, building out a g a good

Eating up a lot of
a lot of your cash.
Yeah, well we had
Mike.
who as I said is a world class engineer.
And he coded.
The first couple of um versions of it.
But we had raised this two million dollar seed round, so
Our first two hires were engineers.
One for iOS, one for web.
And
Mike was doing backhand work and that was the team.
And at the time, I mean the what
This was not a restaurant reservation site. The open table had been around since nineteen ninety eight already. So you were
Definitively not.
in the business of competing with those those brands.
Yeah, and
Even in those days when we were starting Resi
A lot of people were saying to us, Oh, this is an open table competitor.
You know, you guys are going after reservations. Yeah.
Mm.
But we still sort of said, No, no, this is different. This is not rest we don't want to be open table, this is a Uber for restaurants. This is different.
So but but like how big did you see the opportunity?
For
What you were
Doing. Oh, this could be
Yeah.
A billion dollar business.
Yeah, well the thing is when you're starting something out
And you need to see it through to
it being a big business, you can often kinda squint and see it. I mean that's one of the superpowers of entrepreneurs. One of the superpowers of entrepreneurs is
you can convince yourself of anything. Yeah. And so we had to squint a little bit.
But we could see this being a big business and the idea was
Basically
We're gonna roll this out and there's gonna be this idea of
variable price tables all over the world. And sometimes it might be a dollar and sometimes it might be two hundred.
But
There's always gonna be a clearing price for reservation, and we were gonna be that service.
that determined that price and made it happen.
Except the big bad eight hundred pound gorilla. I shouldn't say big and bad, but just the big you know
Player open table could have easily replicated that if it if it took off.

I think that's true. I mean, I think the idea that you you know, your competitors can just rip off your products
when they get big. I think that's true, but also it's just not of the nature of how big companies work. I think
you often find that they're focusing on other things and they're too busy to worry about, you know, a little sort of fruit fly buzzing in their ear.
Um but you're right. If Open Table had seen what we were doing and said, Oh, this is interesting.
Uh they easily could have stood it up themselves.
The fact of the matter is Open Tables saw that we were doing a couple of things and entirely passed on doing them. They saw that we were pricing tables.
And we were also distinguishing tables. We said
You know
Not all restaurant tables are created equal.
There's bar seats and there's outdoor seats and there's dining room seats. And when you go on open table and you make a reservation
You don't know what you're booking.
Yeah.
And
We had brought
rezy to market.
In the summer of twenty fourteen.
And so we
as really a hack to get the thing going.
One of the things we did was we said to restaurants, Well look
We'll take care of your outdoor seeds when they're available.
And people will know they're booking outside.
And
In the middle of the summer in New York City.
The idea that you could have a guaranteed table outside.
Certainly was something that you could sell for a premium. Which a lot of places did.

But
We did a bunch of things like that.
Um but if at the end of the day all of that didn't uh amount to a real business. We couldn't
Other than, you know, spread sheets that had no basis in reality, we couldn't see it through to the other side and build a big business around that.
How long did it take you before you realized or you know
Making ten bucks here and
Five bucks there is not
I would say by the end of twenty fourteen.
Okay.
So that was the m that was the only model.
for for the first like five months. Yeah, that was the model.
And it became clear that this was not gonna work.
It became clear that this was not
going to be as big as we thought.
And yet
we had the attention of the restaurant industry.
And we had their engagement.
And
We had
They're urgings for us to build something else.
When we come back in just a moment.
How Ben and his business partners ditch their first business model.
Come up.
with a better one.
Stay with us, I'm Guy Roz, and you're listening to how I built this.
Hey, welcome back to How I Built This. I'm Guy Raz.
So it's late twenty fourteen, and Ben and his partners have realized that their initial business model for Rezi is not gonna fly.
Meanwhile, the restaurants they're working with start to give them some
Well meaning advice.
We got over and over again this.
Same.
Feedback.
In different ways, but the feedback was always
You just should build out reservations, like
This is cool, but we want table management.
And we want um
Booking widgets and
You can
do those things, then we don't have to pay open table a dollar per seat, and then you'd really help us.
And that's how we cross the chasm.
Into what
would become reszy as we we heard from restaurants.
Look, this is cool, but this is not.
What we really need.
Right.
So so I guess so I guess at this point you respond to this feedback and that you're getting from restaurants and you

your reservation system, right?
That's right.
And we went really fast to the widget.
So now we had
Rezi.
with a widget deployed to
restaurant's native website.
Meaning
When you click on the
reserve on a restaurant's website, that popped up a reszi.
Power interface.
Right. That was the first really big enlock unlock for us.
That was where we s started to see traction.
And that was'cause the restaurants were asking for that.
The restaurants were asking for it.
And it made sense. It's part of our core thesis. Restaurants should
be in more control and should
Be able to
book their own customers without having to pay a dollar per cover.
And so if you're on a restaurant's website and you wanna visit the restaurant, of course you should be able to
Make a reservation and for the restaurant, of course that reservation should be free.
You you weren't gonna charge a per booking fee. It was just gonna be a flat fee to use
The Resi backend software.
That's right. We said
We're not gonna charge per cover.
We're gonna charge you either ninety nine.
Or
Three hundred ninety nine dollars a month.
I think there was another tier in the early days that was sort of like
Enterprise here.
We would do some custom stuff for you.
And that's it.
You could do one cover or you could do ten thousand covers.
Wouldn't matter.
Doesn't matter.
you're not gonna be metered for demand.
The idea that more successful restaurants pay more is insane.
Uh you pay us a flat fee.
Use the software as much as you want.
But the success of that model depends on getting a lot of restaurants to sign up. You need a lot you need to convert a lot of restaurants from
open table or wherever else they're using to you guys because
If you got fewer restaurants, but you're getting a per cover charge.
Y you know, you don't actually need as many.
If it's just a
Monthly flat fee.
The business depends on having a good sales force out there.
Yeah.
And so I mean we were mainly in New York initially, right?
Yeah.
But to really make this work you had to be
Yet to expand out. Did you where was the next place you went to?
We went to LA.
We had restaurants coming to us.
Because the offering
was attractive.
Whether or not
There was
Resi marketing behind it.
So we had restaurants starting to pop up around the country, but
The next market that we went into from a sort of
Go to market.
Perspective was LA.
And
I know obviously in that in the first few months with
the original business model.
You you you could see that it wasn't gonna work.
Did you start to see it turn around?
I did.
Yes.
You know.
In the first twelve months
We went from being
Rezi, the paid reservation service to Rezi.
the reservations and table management service. And and one of the things that you guys did
pretty early on was you partner you decide to partner with Air B and B. You get them to yes you you approach them and you say, Hey
Let's see if we can integrate this app.
into Airbnb to four restaurants.
Yeah.
So Airbnb was thinking about, how do we
Incorporate restaurants into our offering because
Airbnb at the time was really focusing on.
going deep in every market from a experiences perspective, wanting to be, you know, a sort of a one-stop shop when you visit New York, for example.
And so they were looking for a partner here.
And they came to us and said.
What would you guys be able to do for us from an integration standpoint? They went to some of our competitors too.
They had a pretty considered approach.
And we won that business, basically. We convinced them that
We were the right partner for them.
At some point in that conversation, we said, you know, we'd like this to be both an investment and a commercial partnership.
And um
They agreed.
One of the things that uh presumably
You know, I mean, I know this was happening at the time is is like a CRM for restaurants, right? Where they could know a lot about a customer.'Cause there are a lot of restaurants that I go to, maybe you go to where you go a lot.
Yeah and and then you'll go the six or seventh time.
And then you've a bad experience.
And then you don't go back and you're like, I've been there seven times. They don't even
I've seen the same people there.
Or the same food and they don't
recognize me, which is fine, but
But if that happens and you have a bad experience, that's a big loss for a restaurant.
But if they know that you're there in your fifth or sixth time
uh that could be a huge advantage, right? And this was something that I guess you you you were
That restaurants wanted.
But they wanted something like that.
Yeah, for sure. I mean it
Again, if you look at the history of this
It really comes down to us.
Shipping features.
That our competitors didn't have.
And on that basis convincing larger and larger restaurant groups to sign up with us.
And one of those features.
Was the universal

Before Resi came along.
Every individual restaurant unit.
had its own customer database.
It was essentially
a a customer database on a local server.
And
From the start we said you're univ you know
If you have four restaurants, sell one database.
It's one customer profile against four restaurants. So now you can start to track them across your group.
And uh you don't have to worry about missing a VIP if they're
always going to your uptown location and then they some they come visit downtown. You don't have to worry about missing them.
Um that was a big unlock for us. That was a big unlock.
And the restaurant it really
it mattered a ton to restaurants. It's so obvious now that that was the right that's the right way to think about the guest database, but
That's not how the systems had been architected before us.

So did you at any p at at a certain point hit
Profitability?
Um
We were inside of it when we sold it to Amex. We we we were not profitable.
Yeah.
May twenty nineteen American Express.
Announces uh that it's acquiring Rosie.
reportedly for 200 million dollars.
The timing couldn't have been

Because it was a little less than a year.
Before
Uh the whole industry would collapse.
Temporarily.
But um obviously with Covid. You stayed on.
As CEO after the acquisition.
And um and now it and now it's
Part of American Express's portfolio companies.
Yeah.
I stayed on for a year and a half.
So we and you were there for the first six months of Covid.
For sure.
So what did that do to the I mean I mean I I have to imagine a part of me was relieved.
That you were part of a bigger company.
Better to be lucky than good, as they say. I think we in hindsight timed the exit perfectly.
Um
It meant that we could do some things for the restaurant industry that we would not have been able to do as an independent company.
We did two things and we did them very fast and then the industry followed. One is
We cut fees to zero.
We thought it was really important.
Symbolically.
To say.
we are not in a position to be collecting money from restaurants right now and
And a lot of the industry.
other tech companies followed that and I think it was important that we did that.
And the other thing w we did is that we said to restaurants where we had relationships
uh ones where we had marketing relationships or we were gonna we had signed up to you know maybe later in the year sponsor something. We said well we'll just advance you the money. You know, we're gonna do this event with you all anyway
If we can advance you those funds and that can help you with payroll while the restaurants close, great.
So let us know what you need.
And I'm certainly proud of
having been able to do those things and and getting them done.
While I was still at Imex.
W when you step down in November of twenty twenty.
Um what did you do? I mean, did you just take
Some time off for a while.
I wish I had taken more time off completely.
But

Yeah.
curious ideas driven person. I I started talking to
People about
What to do next?
Um
And one of the things that
I started talking about
Was
The idea of a restaurant currency.
You know, the uh the thing that's happening in this
twenty twenty, twenty twenty one.
Is obviously.
There's a lot of
Interest and excitement around blockchain tech.
And
NFTs and
Cryptocurrency.
And I started to talk about
Just this idea of
What about a currency for restaurants?
Mm-hmm.
There's a lot of restaurants.
It's a trillion dollar industry.
They pay a lot of money in fees to move money from point A to point B from consumers.
to the restaurant units and
And and back and forth.
Maybe there's a currency here. Maybe this should exist.
And that's how we started to
Slowly.
Paint the strokes of Blackbird.
And and Blackbird, Blackbird Labs, which is your newest venture, um, which you launched in twenty twenty three. This is it's basically like a reward program for diners, right? And and so
F from a like a consumer's perspective, how uh how does it work?
Blackbird is is
A
Loyalty company for restaurants.
So you go into a restaurant.
You earn points.
By using Blackbird.
And then you can
Take those points and you can spend them like
Um
currency at any of the restaurants on our platform.
It takes all the restaurants in the world.
And turns them into a one big giant coalition loyalty program that sort of feels like
Something you get in the airlines.
And so when you go to the restaurant.
you basically pay through the app.
Correct.
And so
If I go and I spend money at a restaurant in San Francisco and I gain points
And then I'm in New York and I'm like, Oh, I've got enough points for

How how is that restaurant?
We backstop
All of the points with USD.
So restaurants know.
At any time they can sell us their points for USD.
Got it.
at and it's priced essentially as a really cheap transaction.
It's cheaper than the price that they pay for a credit card swipe.

And so what they know is it's good as cash.
And
Over time, what we hope is that they will hold it.
as points and use those points for future rewards. So effectively we're giving the restaurant industry a currency they can use to acquire and retain.
New customers.
A and a currency is a
It's a cryptocurrency?
It's really just points.
When I say currency, I mean you know, in the way that you go to an arcade and you buy
arcade credits and then you go spend them in in video game machines.
That's the
idea here.
Mm.
So it's like a bunch of airlines are part of uh
Whatever United's called. Mileage plus I can't remember what it's called.
Yeah, the Star Alliance. Star Alliance, forgive me, yeah.
It's kinda like that. Yep, exactly. And so the idea here is that there is a spread.
And we make money.
On
Points going in and out of the system.
Every time a consumer is rewarded points.
Some of those are funded by Blackbird, some of those are funded by restaurants.
We take a vague on that outbound flow of points.
And when they come
back to the restaurants and come out of the system.
We charge restaurants a processing fee for those points as well.
And so how many restaurants are participating?
We have about five hundred signed up across
platform.
Well,
How big of an of an opportunity do you see here?
Oh I think this is

This is a massive opportunity. I mean, we want to create a global currency for restaurants.
You know
I come at this from the perspective that restaurants are magic.
Restaurants are places that make people happy.
that create memorable hospitality experiences. So we want with Blackbird, we want consumers to feel our enthusiasm for restaurants and we want
to
harness that magic and we wanna
Um
Make the app as
as thrilling as the restaurants themselves. So
We want every restaurant.
on the planet to be wired with Blackbird.
And that way.
Create a whole new restaurant economy.
When you think about what happened with the two brands that you started and now you got a third.
How much of of their success do you attribute to the work you put in and how much do you think it had to do with
The luck and the timing and environment, etcetera.
I think luck and timing matter a ton. I mean I think
what you have to believe when you're starting these things out is that you have
unique insights and that you have superpowers.
And so I do think that there's some things that
I've brought to each of these businesses and will continue to bring to the things that I do that
um create market opportunities and and advantages, but
I mean, these businesses are really tough. It's it's so hard to bring something like this to market, so
With each of these businesses we got a combination of timing and brand and strategy.
And execution right.
And those things have led to success.
That's Ben Leventhal, founder of Blackbird Labs, and co-founder of Eater.
and rezi.
And according to Rezi's website, in the 10 years since it was founded, it's made a total of 600 million restaurant reservations.

Hey, thanks so much for listening to the show this week. Please make sure to click the follow button on your podcast app so you never miss a new episode of the show. And if you're interested in insights, ideas, and lessons from some of the world's greatest entrepreneurs,
Please sign up for my newsletter at gyros.com or on Substack. This episode was researched and produced by Sam Paulson, with music composed by Rautin Erablui. It was edited by Niva Grant. Our engineers were Robert Rodriguez and James Willis.
Our production staff also includes Alex Chung, JC Howard, Carla Esteves, Devin Schwartz, Katherine Cypher, Chris Massini, Carrie Thomson, John Isabella, and Elaine Coates.
I'm Guy Roz, and you've been listening.
how I built this.