Today I'm with Deron Quon. Deron is an active angel investor and a serial entrepreneur. He is the founder of menus.com and Data Essential the global leader in data for the food service industry. Simultaneously, he built Collective Solution, a 2,700 person call center operation.
Deron’s mission is to create more loving and meaningful interactions between people and his current company, Hoopla, is part of that mission.
Deron, glad to have you here. So I did that little bit of introduction, but I figured I'd actually turn it over to you.
Well, I have to note that probably like people in your audience I did start my career in the asset management industry more in the traditional stocks and bonds area but you know I really felt like I didn't want my life to just be measured in basis points. So, me and two partners started menus.com.
We really had just the simple mission of trying to make it easy for people to find the things that they crave And so we built the largest database of restaurant menus in the country and credit to one of my business partners Homan Lucky Johnny went to India taught a lot People how to type in menus of foods they've probably never seen in their life And so we we created a business that then eventually failed Oh yeah. but people call it the pivot today Of course back then it was we just were trying to eat food and pay rent So we basically created an early big data science play which was taking All the words in a menu and doing some quantitative analysis on that to really show what trends were happening on menus across America Give me an example maybe.
Sure So one of my early pieces of research that I sold was to craft and I told craft I said Would you be interested to know what the most popular cheeses on sandwiches were and what the additive effect or cost effective cheese was on a sandwich. And they said Yeah sure And um I was able to do that and got a whopping $300 for that piece of research
it. but you grew, Data Central grew to a really large
right Yeah So What we figured out was selling a report on cheese or ribs or chicken wings wasn't really Gonna make a business So we created a SAS platform Then we allowed food manufacturers and chain restaurants in the US and around the world to be able to subscribe to and be able to get the insights that they needed
And so like I'm a fancy restaurant and I'm.
to decide what to put on my menu?
Well what's interesting is it wouldn't really be that but what you're saying is we would go and really look at the fancy restaurants and we would help identify the trends the food flavors and ingredients that they were using
And we know there's a menu Food cycle right Things start in fine dining but then they eventually end up in the fast food fast casual restaurants that we eat today
So if you think of just simple things like salted caramel like we just take it for granted that salted caramel was a sweet savory combination that everybody loves But you know 10 years 12 years ago that wasn't the case That was more of a fine dining little thing and then it became more popular
Hmm. Fascinating and then you ended up this company after many
Yeah I was gonna say uh I I joke to people that it was an 18 year startup
Um but yeah we we ended up selling the business uh the majority of the business to spectrum
business Mm-hmm. ,
so basically uh growth equity round
Why spectrum equity? How did you choose them or how did they choose you?
Yes That's um definitely a story in we created a SAS business that had super high retention because all of our clients basically once we got into the budgets of a large like a Tyson Foods or Nestle like don't leave And Spectrum had a great experience with a lot of other data type businesses so they really saw the potential Like for example they were uh the one Bought Seamless web and combined it to create GrubHub Oh interesting. Yeah
and so I wanna ask lessons learned operating the
business, but also let's just stick with private equity lessons learned for you from selling to private equity.
Oh yes Well I think the this is the the simple founder lesson which is make sure your books are gap Make sure you're you know you're buttoned up and ready to sell And I think that's the biggest lesson is is a lot of people in AUR is vc You're always preparing your company founder To sell and what it takes to be um bought But you know me and my two partners we actually bootstrapped the business after menus.com failed So we ran this business you know just ourselves We didn't really know the value of what we had created and therefore we weren't really prepared from a a liquidation type event What do we need to do from Legal financial hygiene to make it super easy for a transaction So there was a little hair I think on the transaction but we got it done with good banker partners and TPAs
was it a lot of just sort of like accounting type stuff that needed to be cleaned up? Like I'm I, I think there are probably lessons for startups even in venture portfolios.
Oh, sure So like I said Having good books and understanding your numbers and making sure their gap is just making it easy for your acquirer right to, to do their due diligence Um but another thing that we had which is probably not dissimilar was partnership issues You know we Had been together for almost 20 years Mm-hmm. .
And so over 20 years you know we've had great ups and downs And so getting to that exit point you know not everybody was on the same page And so the exit process and working with our bankers and our lawyers sometimes felt like therapy you know that's what makes Entrepreneurship venture human cause End of the day we have businesses and they throw out either cash flow and profits but we're really talking about people and histories and people have different wants and needs out of a company And it was definitely a little bit of a process for us to kind of get on the same page But I think once we did I think we were very happy that we were able to get our deal done
Wow. Got it. I mean, anything I should ask there about getting on the same page
Well some somebody told me good paperwork makes good
what Robert Frost and good fences make good neighbors. yeah. Good paperwork.
good friendships. Yeah So law firms listening you should definitely put that on some stickers but it's so true, right?
Because things as you know would change so quickly Again some of the biggest reasons why companies fails because you know founders go different ways and so what does that mean in terms of equity and ownership and I don't think we were quite as buttoned up as
Do you still think about, I mean, you have so many years of experience in the sort of food service data world. Do you still think there's interesting opportunities there? Is that something that you'd invest into as an angel investor or run away from?
How do you think about that?
Oh that's such a great question Um because over the many years I've talked to a lot of founders that want to get into food and restaurant related businesses and um you know what's really challenging about restaurants is the fact that it is a very mom and pop business So when you're trying to sell into Businesses let's face it a lot of them aren't just there picking up the phone They're out you know servicing customers there's just a lot of stuff that happens in the back of the house of a restaurant and makes it very difficult for restaurant owners to make purchasing decisions on software or whatnot That said everybody's gotta
and I do think that there's so much more innovation To happen in food And I think one of the exciting things about where our private equity firm has helped take us global is the fact that I think there's so much more global trends that still have yet to come to the United States You know
Well just you know Asian influence foods Right. you know not that long ago I was in the Midwest talking to big food manufacturers and they're like sushi you know raw fish like I've never eat that type of thing Mm-hmm. .
or if you just look at the portfolios of a McDonald's or kfc just the innovation that happens Those local franchises I just think are really cool You know so whether it's um more curry flavors or pizza with shrimp and fo um crab and things like that in Asia you know it's just different
I'm fascinated by what what we're gonna start eating
You heard of hear
folks That's right.
Imitation Crab Pizza Yes
Uh,Anything else in trends in food that we should know about
Well I think you know people's their own palettes have really expanded over the years since Food Network brought culinary arts to media And so you you now look at the expectations of the younger generation Foodies Mm-hmm. combined with Instagram and whatnot So people definitely want more experimental flavors They want it to look good so I think that whole trend of fancy foods that are colorful that are bringing in again other ethnic and um inspired flavors is gonna
But okay, I need to keep
there's so much more here.
meanwhile, you started the, collective
that That's right So when we started Data Essential we were aggregating you know menu Data mm-hmm. . And so we needed to continue to aggregate menu information So we needed people to be able to code in type in menus our clients were asking us Oh so if we had launched a new product can you tell us What people think of it What restaurant tours would they buy it What did they think of the brand and the packaging We said Yeah sure So we created the largest online restaurant operator panel To do that we needed people on the phone
And we actually started here in Westwood hiring off of Craigslist you know in between job actors and actresses to be able to do these wonderful phone surveys which they were great at but they were flaky
we started with 20 people in the Philippines and that's how we started collective solution And uh from there then we expanded to providing you know back office services So data entry to um photo editing for companies like minted.com We do customer service for like Fashion Nova so you know e-commerce companies here in Los Angeles And uh other companies like That we do customer service for as well
What do you think enabled you to grow? I mean, obviously you had demand from customers, but not everyone. And was it also a bootstrapped business?
Bootstrapped business That's right so we we were able to do okay for I think a little while but One of the things that was so important because we are a people business right was when I read Tony Shay's Delivering Happiness and he really focused on culture right And I think that was a big wake up call for most of the industry in terms of oh this Zappos culture was so forward in terms of you know making people happy in his case They had no limits on your average handle Time of a call People could talk for an hour just to make their customer happy wouldn't really work in our situation.
But the whole premise of giving people more voice really creating what your culture was and I remember what he said was it doesn't matter what your core values are What matters is that you have some And so uh I took that to heart we had a great team already but then creating really cultural values that everybody could rally around was a big change for us
it And how did you think about that also in an
Well I think it was one even more important internationally because we were here in Los
and um we didn't have a very big office here in the us So really the culture that we had in starting in the Philippines Had to be an extension of us and us our co-founders you know being you know scrappy and truly entrepreneurial So we wanted Toue our center and our people in the Philippines with that same culture And then we opened up in Honduras and Jamaica as well okay, loyal listener
asks me to ask about failures, but what about just lessons learned?
Oh well I think the first thing in you know in any business and especially in venture is that you're gonna fail a lot And I just think about I don't know how many things that I've thrown against the wall to see if they stick whether it's a new product or a new pitch a promotion I think you know goes back to the grit that people talk about today It's you know you have to to not be afraid to know that these things are gonna fail that you're gonna have to iterate So I think some of the lessons learned Are definitely having perspective on the journey if money is the only end then you know that could be very sad ending Mm.
I really like the notion that it's, you have to appreciate the journey part of it.
I also heard someone say that like if you study innovation and what makes someone innovative, one of the main characteristics is having tried a lot
So if you try a ton of stuff, like a few things are gonna be extremely innovative.
Or just have ADHD and a lot of of ideas will come out
I mean, that's a whole interesting topic. I think, a lot of my friends now are learning about their
Well I got self-diagnosed about two years
And it was one of those things where I was watching my son who was you know seven at the time just not being able to sit still at the dinner table And so I started researching the topic and then low and behold I'm like Oh darn it It's genetic.
genetic It is genetic. Yes yes. So um yeah I was on a a call with Ryan Peterson and other CEOs and I just was mentioning the adhd and he said you know embrace it It's your superpower my husband
diagnosed himself essentially, and it changed his view of his whole life almost.
That's so great you said that because for me that's what it was It allowed me to forgive
myself for all the things that I kind of beat myself up on you know people that are certainly high functioning adhd which a lot of Innovators and entrepreneurs are there's still a lot of cost So yes knowing the diagnosis and knowing that's just Hey this is my neurology was actually very
Yeah. And I don't know you super well, but I feel like you examine life more than some people.
I mean, I asked you about your Breakfast of
Champions that you convene people, but you don't ask them to tell you about your their business so much as to examine their life.
That's right Very fair assessment
so during the pandemic and then when we were able to reconvene in person I really shifted the true center meaning of Breakfast of Champions to be more heart driven And we're all struggling with something And if you can get or be rather vulnerable with other people than Trust appears So Yom Kippur was in
October, Dave Atonement So that was naturally led to what have we not forgiven ourselves for What mistakes maybe that we've made that we've not forgiven and what does that cost us
emotionally? And when you come to Breakfast with Champions a big group is broken into a table of six so that table of six can go deeper and really have a good sharing about whatever that topic might
Let me just just, stay on this topic. Like you're also part of Y P O you're
eo. I think a lot of people who aren't part of those, they're a little opaque.
first off, what chapter are you a part of
So I joined Y P O Beverly Hills and then just recently transitioned to Y p o Gold Los Angeles because I turned 50 And so the benefit um of Y P O is that it does give you in a sense access to people that you wouldn't normally have access to but in a way Is giving So in any chapter we have a forum in forum you meet with the same smaller group of people eight to 10 people every
you know and it's a very structured you know four hour meeting with high degree of commitment Different protocols in which you communicate You know you're sharing experiences You're not telling people what to do or giving them advice And so the effect is you get a personal board of advisors that's really non-judgmental and I think that's pretty you know rare I've told my EO group so that's entrepreneurs organiz I had a great forum that was together for about eight years and I don't think I'd be married today if it wasn't for my EO forum Wow.
And I think That's also like I said what I'm trying to recreate him Breakfast at Champions you know basically people that don't always have an opportunity to join an EO or a
ypo mm-hmm. .
but they can still get that experience at our breakfast
So you have a big exit and then how did you think about what you wanna do next? Or how did you think about doing angel investing? Like what role does that play for you?
Yeah Angel investing I enjoy not always from just the pure mechanics of the business but really when I connect with the founder so it definitely usually starts What is your goal and I started angel investing um just casually um then Put together a small I call it a my own self fund I was thinking of doing a rolling fund with another VC from the Bay Area but then I got the entrepreneurial bug
So Angel investing is not your main business now, but just staying with Angel investing.
Is it pree companies just getting going? Is it seed companies? Will you do later stage
Yeah you typically pree and seed stage companies one of the funny stories was uh you know Clinton Foy who's at UTA now when I was running a fitness group Saturday Fit Club where we did a fitness activity every Saturday I remember one of the times he asked me at Bootcamp at Mother's Beach in Marina Delray if I wanted to invest in a eSports team that he was looking to create at the
was Right So it's sometimes like that you know and just once again believing in the the friends and the vision that they have
Yeah. And so, okay, so you thought maybe I'll do some angel investing. Maybe I'll do a rolling fund but you got the bug again.
what was it that got your imagination or
you excited enough to build another company?
Yeah I think it's just that there's so many opportunities and problems to be solved out there Right And I think in every entrepreneur has that inkling of why can it be To solve that problem So what I saw was that short form video was really exploding We happened to have been the content moderator for Trier And so we saw that when Trump was trying to ban TikTok in the United States that their volumes just super spiked
Oh the call
The call center. Yeah So the call center, we we did the moderation content moderation work at the time and and then also so I saw the need for as a father just trying to find I'm trying to find things for my kids to do all the and going to Yelp as a father Um it just wasn't a very effective tool So uh I conceived of hoopla hoopla.com to be a resource where I can find experiences and book them but after watching it in short form video So that's what we're attempting to do is create this marketplace of experiences So I think kind of this next frontier is how to short form impact the general services that we use in our life
So it's more discovery. I mean, I did use the app and I noticed like
discover new yoga classes in Marina Delray
or something. Right?
Yeah So really from the experience creator side we want to help people start a business Manage it and grow it from a video I think that's a really powerful notion because if you are gonna be a solo entrepreneur starting a new business what are you You can put your stuff on Instagram it might be seen DMing is not a way to manage a business on the back end with payments and scheduling and it actually surprises me still like Craigslist is still around
So I could go start Mini's surf company
Exactly Like that's what I think is actually exciting is that the unlocking the human potential That we didn't know exists If you're gonna do mini surf experience you're not gonna set up a website and Yeah You know pay Yelp money to advertise or whatnot
Fair enough. And do you have thoughts on raising venture versus bootstrapping? And do you think bootstrapping just makes people a lot more discipline? Upland
Oh, yeah. And I think today, especially this marketplace, you need to have that common sense of, look, you can only spend what you're really making. what a true margin is. One thing that, uh, , I don't know if I mentioned to you. People that get a lot of capital, maybe not anymore, but you know, they're always s splurging on their really fancy office.
And I think the one thing that in our bootstrap experience was that we subleased our office is, and we moved like 11 times in 13 years.
And it really spoke to that sense. , this is our money, so we're not gonna waste it on something that you know, doesn't really make an impact on the business.
And, um, it also goes to the type of people you hire. You know, if you're hiring people just because they want to be in a super cool environment, that's not necessarily the person we want. they have to have a certain scrappiness as part. Their dna, which was our culture. But then, you know, when we were able to, you know, then we bought real estate, our we have pretty places but that was kind of earned money that was just given
That's a good point. Any other thoughts or advice for entrepreneurs? You'd like. To share
I think we especially as business people have to understand that we're just not our
work. You know And it's so easy to fall into that identity trap of I am of venture capitalist I'm a founder this is who I am is a quote that it's not attributed to me I heard it from someone but I gave this paper a napkin Wisdom To my friend and the quote was to be great You need to do great things teach other people to be great and inspire greatness in others and that inspire greatness in others Part I think is important because it means everybody has that capacity to be A positive influence in somebody else And we don't always see that I love
Great. Well this has been wonderful. I mean, I love learning about what you've built a really important big companies in LA and now investing back in the community.
I think that's the most important part And I was having a discussion with Darren Ang executive director of Lava that we definitely need more people founders that have had exits to reinvest in the ecosystem There's so much potential
here. There is It's
Yeah, it is very exciting.
. Well, this was wonderful. Thank you That was