Ben Gilbert: evaluation

Transcript context

…Well, there was a guy named Chris Bruzzo who was the first social media person at Starbucks and he’s now in marketing at EA. But anyhow, Chris was kind of before his time at Starbucks and just kept pounding on the opportunity that social media had to be an awareness vehicle and a traffic driver. He didn’t have much budget but he kind of relentlessly kept on it and I think Howard started seeing that through social media they could literally send people into the stores. If you think about retail, one of the key metrics that every investor looks at is same-store sales. In fact, I was privileged enough to know a guy named Jerry Gallagher, may he rest in peace, who was the inventor of same-store sales. I asked him to join the Potbelly board with me, which he did. But anyhow, the concept of same-store sales was I think became a valuation driver for these retail companies. So at the beginning, the first aha was if technology and social media could drive traffic and incremental traffic into the stores, then that was worth investing in. But as recently as five years ago, many traditional food and other retailers really had a hard time investing in technology because they couldn’t really see the return. They felt it was cool to be on social media but they didn’t want to spend money. Yeah. I think there’s a good tech trend to extrapolate here is the shift from technology as a cost center in the IT spend to a revenue driver and a core part of the product organization and the driver of part of the innovation of the company. I mean, when you look at some of the things that have happened with Starbucks, they’ve had a lot of experiments with other technology company partnerships and bringing things that weren’t huge. I mean, there was like that 2012 Square deal. They had that early partnership in the mid-2000s with Apple and iTunes and co-advertising there. Then they still have I think like the song of the week and the app of the week with the free download card in the stores. The thing that ended up really working in my mind is they have incredible loyalty due to their app, I mean, or manifested in their app. They were one of the first to pioneer putting those gift cards in the app and now I don’t think I’ve actually used cash or a credit card at a Starbucks to buy anything other than reloading my card so I can get my stars. They’ve always been pioneers in loyalty and then using technology as a lever to strengthen the loyalty program, I think in my mind at least, that’s the thing that they’ve really exemplified the best in using technology of any retailer on earth. Yeah. It’s funny that you say that because 12 years ago, Madrona and us invested in a company that had order-ahead and –…

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