Disruption Culture: Zume-ing toward Disaster

I am not particularly savvy as it relates to the venture capital game but I am fascinated by the development of ideas. So I was intrigued by the story of Zume Pizza, the brainchild of an entrepreneur named Alex Garden and funded by a $375 million investment from venture capital  firm SoftBank.

The purported breakthrough for Zume Pizza was pizzas being made entirely by machines, placed inside delivery trucks so that the pizza would be made while being delivered to you.

Well, three years and $375 million later, Zume Pizza appears to be on life support, if not clinically dead. Bloomberg provided an interesting analysis of the rise and downfall of Zume. The article is here.

I won’t rewrite the article here, but this story seems to follow an increasingly familiar pattern. “Visionary” person arrives with a proposal not to establish a competitor in a market hoping to gain traction, but to disrupt the market by providing something so radical that it will drive all competition into bankruptcy.

Zume Pizza’s strategy of making pizzas entirely by machine resonated with the folks at SoftBank. Apparently nothing is more evil to these types than actually hiring human beings to do work, so an idea that removes the human element comes off as a winner.

As an occasional pizza consumer, my priorities for the pizza are 1) taste, 2) price, 3) ease of obtaining it (though I usually order pizza and pick it up myself). I don’t find any additional value in knowing a machine made my pizza, even if it is mounted inside a truck driving to my residence.

As the article points out, “a visionary founder with a fire hose of money can’t solve every problem.” And, “I’ve never seen data to suggest that being charismatic and confident and overly brash is linked to a successful business.” Rather, as UC Berkeley business school director Kellie McElhaney suggested, venture capitalists should seek out leaders “who combine confidence with humility.”

I would add to that they should seek out leaders who understand that process is king. That being a “rock star” entrepreneur does not substitute for having a capable, repeatable process that results in a product the consumer actually wants or needs. I would tend to believe that both SoftBank and Zume Pizza could have established proof-of-concept for far less than $350 million. They could have developed a process, a plan and determined there was a demand (or perhaps no demand) for a machine-made pizza without disrupting the lives of 360 people (those laid off when Zume began to tank).

But more and more it appears that the horses have escaped the barn as it relates to that kind of thinking. As hinted at in the article, the venture capital crowd loves their rock-stars-in-the-making, who possess an attitude of “it’s guaranteed to succeed because I the visionary am at the center of it.” And the reason is because the venture capitalists see their younger selves in the Alex Gardens of the world. “And if I succeeded with that attitude, why shouldn’t they?”

One can only wonder how much capital (money, resources, intellectual, etc.) has been squandered and how much progress has been delayed because every one is trying to capture lightning in a bottle, be “the next Tesla, Google, Amazon” or whatever. In other words, the drive to be rich dwarfs the desire to establish and improve a process slow and steady. But then I’m not rich, so what do I know?

About Tim James "Mr. Procedure"

A communicator; all-purpose capability in writing, designing and presenting training for all facets of organizational function. While my focus has been manufacturing, my training/development experience includes supervisory and lead person development, audit processes, continuous improvement and Lean, and Quality Management System implementation.
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