SoftBank had big dreams for Zume Pizza and its pizza-making robots. Two years ago, the Japanese conglomerate poured a monumental investment of $375 million into Alex Garden's pizza startup hoping its robots would be able to make pizzas better and faster than humans... and while in-transit, too.
Zume's cheesy revolution never came, though, Bloomberg reports. Instead, there were complaints about cheese dripping everywhere, paltry little sauce on the pies, and chaos within the company. Garden, who said he wanted Zume to become the "Tesla of fresh food, and the Amazon of fresh food" was all talk and no walk. Humans: 1, pizza robots: 0.
A doomed Zume — Zume insiders told Bloomberg that Garden lacked a sustainable vision for the company. He reportedly gave incoherent speeches about corporate values, had his investment requests rejected by FedEx, UPS, and Kroger, and eventually slashed 360 jobs in January this year. In spite of trying to pivot his company into a delivery startup, interest in Garden's project has waned. An anonymous source close to the matter told Bloomberg that Zume generated revenue of less than $1 million in 2019. Another tale of a startup with hundreds of millions of dollars pumped in and almost nothing coming back out.
Pivoting to nowhere — The man who once dreamed to bring groundbreaking innovation to the pizza-making world has now retooled his startup into a logistics and compostable packaging business, though Bloomberg notes not many have faith in Garden's entrepreneurial skills.
Zume's attempt at selling compostable containers has been a complete failure with the startup failing to impress Pizza Hut last year. The company's food boxes pitched to Pizza Hut allegedly had "chemicals known as PFAS, which the Environmental Protection Agency has said can harm humans."
A history of lapses in judgment — SoftBank has a troubling record of investing in startups that inevitably crash and burn. While SoftBank's $375 million investment in Zume pales in comparison to other Vision Fund investments like the $4.4 billion poured into WeWork, its shaky trajectory sounds awfully similar to SoftBank-financed Brandless' fate, which closed shop in early February.
Blind spots in SoftBank's financial governance — Bloomberg offers a theory as to how these founders manage to win SoftBank's approval. If they are charismatic enough, the outlet reports, SoftBank turns soft on them, no pun intended. It's the perfect recipe for an eventual letdown.
While Zume appears to have been a disaster from the start, SoftBank doesn't seem worried about its impact on its investment portfolio. In an email to Bloomberg, the company said its Vision Fund "is less than three years old and we’ve already had eight IPOs and returned $10.6 billion to our limited partners." Sounds great, but SoftBank failed to explain why it pinned such high hopes on startups like Zume, WeWork, and Brandless, whose business models were hubris-driven and clearly unstable from the get-go.
(Video credit: CBS Evening News)