The Build #8: Pizza

For Mason Wartman, a “dollar slice” shop in Philadelphia offered a way to downshift into a lifestyle business after a stint on Wall Street. He never expected that a customer’s suggestion would land him global attention, and a new mission.

Transcript

Announcer:
From 2820 radio in Philadelphia, it's The Build. Conversations with entrepreneurs and innovators about their dreams, their triumphs, and their challenges.

Joe Taylor Jr.:
Pizza. Dough, sauce, cheese, it's a simple recipe. And the goal of a simpler lifestyle lured Mason Wartman away from a fast paced job on Wallstreet, to a dollar a slice shop in Philadelphia. Developing a great product in an affordable price took Mason nearly a year, but what happened next landed him national attention from the likes of Good Morning America and The Ellen Show.

Joe Taylor Jr.:
On this episode of The Build, Mason shares how he's not going to let the spotlight change his quest for simplicity, even as he navigates his business through some unexpected and unprecedented growth. It's the story of Rosa's Pizza shop coming up next on The Build.

Announcer:
The Build is made possible with support from 2820 Press, providing business consulting and content strategy services to customer obsessed companies nation wide. More information at 2820Press.com.

Joe Taylor Jr.:
It's The Build, I'm Joe Taylor Jr., joined today by Mason Wartman, founder of Rosa's Fresh Pizza here in Philadelphia. Welcome!

Mason Wartman:
Hey Joe, how are you? Thanks for having me.

Joe Taylor Jr.:
Very well, thanks. Good, good, good. I often talk to folks who, and I'll frame this up differently, for a blip of my career I was a financial journalist and so I interacted with a lot of folks on Wallstreet and in the city and London, and I found that there was a certain kind of personality I would interact with a lot. Folks that were very driven, very sharp. From what I understand, you got to Wallstreet and interacted with a lot of folks and kind of came to a revelation.

Mason Wartman:
Yeah, I had just gotten a little bit tired of the work, I wasn't learning that much, and I'd always wanted to open up my own business. I left Wallstreet and I saw the success of the dollar pizza spots throughout New York, Manhattan specifically. If that was a concept I could work back home in Philly.

Joe Taylor Jr.:
And so, Philly's your home? Grew up whereabouts?

Mason Wartman:
Plymouth Meeting. Montgomery County, right outside the city.

Joe Taylor Jr.:
Excellent. You come in to center city, you find a location, now dollar pizza is not usually the first thing that first time entrepreneurs lean into.

Mason Wartman:
Yeah, I don't know. I really liked the small, simple businesses, elegant business model, and you have to have something to sell, and coming from Wallstreet all I knew was like analyzing stocks and valuing stocks, and I was good at it but a lot of people are good at it. I wasn't the best at it. And if you're just good at it, it's tough to make a living off of that. Because there's a lot of people there that can do it and the people that want those services can normally do it on their own, so that was out.

Mason Wartman:
I had to pick something, and if you make a mistake in pizza, it still tastes like cheese. It's still pretty good, right? I just thought it was a concept that I could make work back home.

Joe Taylor Jr.:
So what I'm hearing is you're not going to create a Lieman Brother's level calamity, get the balance of cheese and sauce wrong..

Mason Wartman:
Right? If there's a variable missing in your formula, if Excel is referencing the wrong cell, you can lose a lot of money very quickly. If you mess up a pie, if you burn a pizza, if you put too much sauce or too little cheese or whatever, people will still come back for a dollar.

Joe Taylor Jr.:
Did you come into this with any kind of family heritage in pizza or any just..?

Mason Wartman:
No culinary skills are in my family, my sister is the best cook of all of us. My dad can cook a few things very well, that's it. I came from a family of entrepreneurs, so my mom's father, my grandfather, owned his own business selling clothing, closed in like the 80s when he retired and it started way back in the 30s. And my dad owns his own business, he sells gold course supplies to golf courses, so things like getting orders out to customers, making sure they're happy, making sure you get your product in on time from your supplier, dealing with employees, this was all stuff that I heard at the dinner table and learned about.

Mason Wartman:
Especially at Rosa's, I see a lot of parallels between golf course supplies and men's clothing that many people that come into Rosa's and enjoy our pizza probably don't see. But, they're connections that have helped me make Rosa's I think successful.

Joe Taylor Jr.:
It's an interesting thing that comes up again and again on this series, when entrepreneurs grow up in entrepreneurial families, we see sometimes there's always that concept of the family business often struggles to carry on across say by the time they get to the third generation is usually when you have the generation that says, "I don't want to do that anymore! I want to do my own thing!" But they typically feel okay or feel like it's not as big of a risk to do something entrepreneurial because they've grown up with those experiences, those lessons.

Joe Taylor Jr.:
How did that inform your decision to just start opening up in a time where everyone is going nuts for technology businesses that scale really huge, you say, "Brick and mortar, cheese and sauce"?

Mason Wartman:
Yeah, you're right. I think you just have to start small and get started. And so when people come, now I hear a lot of business ideas all the time, and they're these kind of pie in the sky business ideas, and people want to be the next Microsoft and Google and Facebook, and I would love for Rosa's to be the next Chipotle or Facebook or Google or Microsoft, but I think that those businesses didn't start and think, "Oh, I'm going to be a billion dollar, hundreds of billions of dollar business."

Mason Wartman:
In valuation, Mark Zuckerburg started a cool website that he liked and Chipotle started with one Mexican spot and Bill Gates started with Traffo-data in the 80s and started playing with computers, and when I looked at the technology startups out there, you just have to be so able. Because the people that are now in that business aren't the people in the 80s that were trying to figure out how to create a word processing program or people in the early 00s that are trying to figure out how to build a cool website for people to interact on like Facebook. They're people that all that stuff is already out there and super commoditized and you really have to have some really brilliant idea there. And that's not me. Where as like food is just a much easier business. The people aren't nearly as educated for sure, they don't have support advanced science and math degrees, but also it's just easier work. People get hungry every day, they need to eat. It's partly just starting out small and trying to play a simple game. That's really what helped us sustain ourselves in the beginning.

Joe Taylor Jr.:
You're coming from New York back to Philly, these are both towns that are pretty finicky about pizza, and so another counter intuitive thing that you do is you differentiate on price as opposed to trying to build the fanciest brick over or get the char just right.

Mason Wartman:
Again, all that stuff is very complicated. You have to be good, you have to have experience, and all those things I had none of. And a dollar slice, that I get. I didn't have any relationship with the owner of 99c Fresh Pizza or Two Brothers Pizza, I just had a relationship with spending a dollar and getting a slice of pizza. And obviously, thousands, millions of people had that same relationship in New York and I thought the same people could have it back in Philly.

Mason Wartman:
It's about you do have to be different and you have to do something no one else is doing but also something that everyone else wants, and I thought this fit those criteria.

Joe Taylor Jr.:
And your next step after this is to investigate recipes or you buy Pizza Making for Dummies off Amazon? How did you get to the point where you felt comfortable that you're making a good product and building a system for people to make that product?

Mason Wartman:
This is something that isn't going to be on Ellen Degeneres or Good Morning America or anything, but we were making bad pizza for like six to nine months and also not getting much media attention because we weren't doing a very good job. It's scary at first, but it's trial and error. There's nothing like sexy about it where I came up with some special algorithm to calculate how to make the sauce, the dough, but that's all ratios right? That's easy. The baking is straight math.

Mason Wartman:
Sauce and cheese and the amount of everything and how to stretch it out and how to make a large amount of pizza quickly but also keep it fresh, all those things were trial and error. We tried tossing it out this way, we'll try the other way because the first way made it too thin or too fat or something, and that's how all products become products, right? That's how they all get created. I mean everything I eat didn't taste good the first time.

Joe Taylor Jr.:
It's the core definition of what technologists call the Lean Startup right? Over six to nine months, you're just iterating, you're just making new versions of the product, but you brought up Good Morning America and Ellen, and I think one of the reasons why not every pizza shop owner in Philadelphia for sure has been invited onto national media. And I think one of the reasons why is because you've taken a broader definition of customer into account when you think about who you're serving. If you're not already sick of telling the story, bring out listeners up to speed on why you'd be getting a phone-call from Ellen Degeneres.

Mason Wartman:
We opened up in December of 2013, about three months later, March of 2014, a customer came in after having read a little piece about us in the Metro. The piece said that the pizza wasn't very good, but now it's good, which was awesome to hear, and he asked if any homeless people came in because the article did note that we serve a lot of homeless people, and serving homeless people I knew would happen, so I had read articles about the dollar slice places in New York and they mentioned that a very rewarding aspect of the owner's life is that they get to feed homeless people for just a dollar.

Mason Wartman:
Homeless people still had to pay, but they could finally afford food on a daily basis. They said that that was rewarding and I was not being that emotionally rewarded back on Wallstreet, and I was like "Oh, you know, that could be a good feeling. We'll see what happens." I thought at least I would be providing like a substantial good, that's a noble cause, right? To provide affordable food. I didn't know how affordable it would end up becoming.

Mason Wartman:
The customer though, back to the story, offered to pre-purchase the next slice for a homeless guy that came in short because we would have to turn them away. And he referenced a tradition in Italy called Café Sospeso where you can pre purchase cups of coffee and the café will put an empty cup on a shelf behind the register and so people can very visibly see the status of the cafe's sospeso program. And people in need with complete dignity can ask to redeem it and they'll fill up the cup and go on their way.

Mason Wartman:
And so he suggested I use paper plates as a method of accounting, but they were a little too big and they didn't actual adhere to the wall so I got post it notes, and just put one posted up. Inevitably a couple days later we had told more paying customers and they bought more, and then a homeless person came in and only had a couple cents in his cup, but we told him to keep the change, it was already paid for and it's just spread through word of mouth. And then The Ellen Degeneres show found out about it cause we were on the local news for it, and they put us on and then this whole year has just been a total blast.

Joe Taylor Jr.:
And so one of the things I wanted to talk to you about is now on the back end of all of this media attention, all of the focus on the social impact element of the business that you've created, how's that informing or changing how you're operating the business day to day or how you're thinking about scaling or growing the business?

Mason Wartman:
I'd always want to grow this into a chain of pizza shops, now I'm looking to expand it in different ways that are probably a little bit better for society, people in need. We're starting to get into clothing where we sell hats, gloves, winter accessories, and we give away another one to someone in need. It's turning into more of a locally focused kind of poverty alleviation business where, in this day and age, people shouldn't really have to worry about basic needs like food or warmth.

Mason Wartman:
We're so good as a society of manufacturing items that fix those needs that we should be able to figure out a system to be able to get them into somebody's hands that needs them. We're starting to do that, I want to make something a little bit healthier than pizza and work that into the pay-it-forward so that it's a more sustainable business, it'll be a little more expensive, like a five dollar ticket item, but with that it'll be able to expand to other areas that aren't so urban or densely populated and we'll have a dollar to pay-it-forward item where you can buy food for the next person in need.

Mason Wartman:
Yeah, it's definitely morphed. The concept has evolved. You figure out what your customers want, what's been successful, and you try to do more of it and grow that way.

Joe Taylor Jr.:
How have you observed a shift in your customer base since getting attention this way? Do you see more people making a deliberate effort to come into your establishment, versus trying to just convince their local corner shop to adopt the same process?

Mason Wartman:
Oh yeah, absolutely. People always want to go to the place where they saw on T.V. you know? We first, of course, get a lot of homeless people coming in that need the free food and that's great, we serve like 100 homeless people a day. What's really cool though is, well two more things that are really cool, one is that we get homeless kids, which isn't cool but it's great to help people kind of in need that are just starting their lives. A lot of the older homeless people that we see have totally made some mistakes and their trying to get their life back together but a lot of the people that are born into this situation, all of the people that are born into that situation, through no fault of their own at all are totally victims. They are dealt a terrible hand of cards to start and it's just horrible what they A. Have to go through young in life and B. How little they're likely to achieve for the rest of their life.

Mason Wartman:
They're very crippled. Not physically of course, but throughout the rest of their life they're going to have to overcome that and so I would love if Rosa's could do something to fix that problem. And the second is that we see families come in from suburbs, trying to teach their kids about paying it forward, helping people in need, and it's great to be a part of that also, where we're kind of a symbol of helping people but also like the context in which someone can help somebody. A stranger really, and that's been a nice evolution that I've noticed.

Joe Taylor Jr.:
It sounds also like there's a friction-less element to it. For instance, I think about folks like Blake Mycoskie who founded TOMS and there's a guy that basically won a reality show, used the money he won from the reality show to invest in a business that was geared from day day one for social impact. And so now, you're in kind of the Philly flavor of that which is about a dollar slice, where everywhere else in Philly is probably at a $2.50 or a $3 slice, so if I buy at Rosa's I can just invest the difference and it becomes a very friction-less way to stay within my lunch budget, if my lunch budget is $2, I can buy a slice for me and a slice for somebody else, and not necessarily go through the process that professional, non-profit fundraisers usually have to go through where it's a lot of Sarah McLaughlin video, a lot of 'let's pull at the heart strings'.

Joe Taylor Jr.:
This feels like a very simple way for somebody to just say, "throw in an extra buck" in this moment.

Mason Wartman:
And I hate that stuff, so I get it. They have to do what they gotta do, I don't begrudge them for it at all and it's a non-profit, you've gotta do what you've gotta do, but I hate doing that kind of work. If I had to do that kind of work I would hate my life. They clearly love it and that's cool, they probably hate doing what I do, that's fine. Different strokes. Rosa's never asks for donations, basically. But we can help people. I never want Rosa's to ask for donations, I want them to ask for payment for sales like any business, but I specifically instruct all my cashiers that, there's one working there right now while we're talking, and she does not ask "and would you like to donate to Rosa's?" Because two reasons.

Mason Wartman:
A. I think that's incredibly annoying, when you're there like "no, I don't want to donate right now, I'm just here to eat" when you go to K-Mart and they ask you that question, I just want to "please don't make me feel guilty for coming in and just buying my vacuum cleaner that I needed." And B, we have a lot of people that don't have a lot of money and the dollar or two dollars that they spend on themselves for their own food is like a hard stop, they have a very strict budget they adhere to and I love apart of that and helping them make their budget, and I don't want to make them feel guilty for sticking to it and taking care of their own needs.

Mason Wartman:
Rosa's will never do the Sarah McLaughlin benefit concert or anything, and to sustain the program we got into branded T-shirts and summer time apparel and that kind of stuff so that we wouldn't have to always be sending out emails and annoying our followers to say we need more money, we need more money, we need more money. At Rosa's, you don't really have to give anything, you're buying something, right? And you get to enjoy it, and I want to provide that.

Joe Taylor Jr.:
And kind of along the way it's pivoted into somewhat of a lifestyle brand, to the extent that you've got all of this non-pizza merchandise. If you think about a retail operation, you now have all of these skews of things that are not cheese and dough and sauce that you probably didn't expect you'd be selling.

Mason Wartman:
And you don't need to get my started on all the headaches that come along with that that I have had to deal with especially over the past six to nine months. I love having problems to figure out and we've recently just sent out our first email blast piece of marketing material that raised interesting questions that we had, do we say this, do we want to say that, you know? What's the point of sending this one out? Should we send it now or later? All these questions that it keeps business and life interesting.

Joe Taylor Jr.:
Thinking now about coming back to the core of the business, dollar slices, store fronts, are we thinking about expanding? Are we thinking about additional locations? What kind of math do you have to go through to find out if that's viable or not?

Mason Wartman:
The math I'm good at now, the numbers, the costs, oh I'll spend x on rent plus, y on personnel, plus z on food, and then a little bit more on all the other stuff, insurance and all that, and then hm, can I sell more than this dollar amount? I think I can, lets go here.

Mason Wartman:
It's interesting though, you said that the core is dollar slices and store fronts, and I no longer think that the core is dollar slices anymore. If you asked me two years ago I'd be like, "Yeah I'm gonna tend to other pizza stocks, I'm going to be very successful" and now I think, I don't want to be pumping cheap pizza into people that have no money, I want to be providing them a wholesome meal, maybe a grain, a starch, a vegetable, protein, something like that. I think the core business is affordable, wholesome food, and helping people that need it, with the food and also with the apparel. You need a store front to do the food, obviously and to distribute the apparel.

Mason Wartman:
I'm looking to stay in Philly, of course, and I love the city so a different part of the tall building area. I just got off a call with my real-estate broker to see where we can go, talking about rental rates and pricing, square footage, and the economic area around it, we'll see where it is, but I want to do a second spot.

Joe Taylor Jr.:
What are the ingredients to go into that kind of site selection?

Mason Wartman:
I like to be near tall buildings. More buildings, more taller buildings, more floors of more people means more people to sell food to, 'cause everybody needs your product. Especially for a food business. That's what I'm looking for, I don't like parking garages, because there's no people in there it's all cars and I'm not crazy about schools, everyone says "oh pizza goes with schools", but really the most successful stuff is the least sexy stuff, I just want a bunch of office workers around that want to go out for lunch, you know 5 bucks, 5-6. That's where I'm looking to go.

Joe Taylor Jr.:
Do you deliver?

Mason Wartman:
We do deliver.

Joe Taylor Jr.:
And do you just deliver through your own phone, do you use an app, or?

Mason Wartman:
We're on Yelp!, And Eat24, and Caviar, and all those online ordering places. The best way to get to us though is to call us and yeah, we absolutely deliver on a bike.

Joe Taylor Jr.:
The number of those kinds of apps and services that are popping up, one thing I've heard from other food entrepreneurs is that it starts to put a little pressure on your ability to scale when you have a third party that's marketing on your behalf. Eat24, we'll pick on them for a second, sends out a blast to all of their members and says "everybody should order from Rosa's today!" And all of a sudden you get, what do you think is the maximum number of pies you can deliver in an hour if you got.

Mason Wartman:
We haven't seen much press that way, I don't really like these types of businesses, I'm only on there because it's better to be on there than not be on there, but they take a lot of money from the average check. And people don't order from Rosa's, they order from Eat24. I'm in business to build Rosa's up, and I understand the convenience that they provide to the end user, but I just don't really like them that much.

Joe Taylor Jr.:
And I think some of that comes from food entrepreneurs tell me all the time, food businesses margins are some of the tightest of any kind of business you can run. If you're working with a third party that says, "oh well we'll just take 5%", if your margin is 5.2%, which some restaurant folks I know say that's a great margin for the restaurant business, now you've got .2%.

Mason Wartman:
If I were them, I'd raise my prices online. I mean, it makes sense to me. If you want convenience, you should pay for convenience. If you have a very good, easy experience somewhere, you're likely to pay a higher amount of money then if you have an experience somewhere else where you have to do a lot of the work. I suggest that they raise their prices, but I really don't like those. And the worst restaurants do all their business on there, because you can't see the food, you have no relationship with the restaurant, with the people making it or taking your order, it's just like a food machine. And that's not how you make good food. People write in the little box extra crispy, lighter or whatever, or don't burn the chicken or something, and the guy who's making it just is interacting with a computer and it just is not a great way to order food.

Joe Taylor Jr.:
And the other thing that I heard and read recently was the situation in New York City, where the health department cracked down on a bunch of "restaurants" that were on I think it was Grubhub that weren't real restaurants. They were out of people's apartments, things like that.

Joe Taylor Jr.:
They basically had agents kind of tail the delivery person back to wherever it is that they were going and it was somebody's house.

Mason Wartman:
People in New York are smart though. That's clever.

Joe Taylor Jr.:
You've gotten give somebody credit for thinking, "well, people are ordering from the app, they don't know that this is not a real place, why not?"

Mason Wartman:
And the first person to do it is a genius. I guess they got caught because there are so many of them and it's a shame that's what happens, someone comes up with a brilliant idea and it gets arbitraged, all the profit gets arbitraged away.

Joe Taylor Jr.:
And now it gets regulated.

Mason Wartman:
Yeah, regulated and that's it. Wallstreet, food, it's all the same stuff.

Joe Taylor Jr.:
It all happens.

Mason Wartman:
Yes, see that's the other way, you could literally be buying stuff on Grubhub and it could be coming out of someone's garbage disposal. It makes no sense to me at all.

Joe Taylor Jr.:
Well, now that we're all terrified of ordering smoothies online. I think now to somebody that's listening that's thinking of starting up their own business, or they like you were in a job that they're thinking- I don't know, I think the cops are coming to get us now with all this fake food talk.

Joe Taylor Jr.:
But, you know, folks are thinking about this all the time. I'm in a job I don't love, where's my passion, what advice do you give to someone who's thinking about ditching their job and starting something new on their own?

Mason Wartman:
I would say, start out really small. When I started Rosa's I wasn't like, "Oh I'm going to be the next Google of everything in the world", I was just like, "I want to make good pizza and everything will fall from there" and that's, I think, what has been responsible for most of our success. I was there everyday, trying to make sure that the pizza was very good and that things were working well, and so I was there for when that customer came in with that brilliant idea to pay-it-forward. Starting out, I thought I would be a hands off CEO of just allocating capitol from day one. I'd just be able to be like Bill Gates and Warren Buffet from the rep and, "oh we're going to come up with this strategic vision and go with it."

Joe Taylor Jr.:
Yeah but Warren Buffet bought Dairy Queen and he goes there every day.

Mason Wartman:
I know! And Bill Gates started coding, he wrote the first operating system, that's what I didn't understand when I started is that. And now, of course, I make pizza two or three days a week, not today obviously, but all the super successful people were just employees of the business, and in many ways they still are I guess, right? They still draw salaries, and while Warren Buffet doesn't make any frosties?

Joe Taylor Jr.:
I think those are frosties.

Mason Wartman:
Or is that in Wendy's?

Joe Taylor Jr.:
No, that's Wendy's. It's uh..

Mason Wartman:
It's a Mr. Misty. He doesn't make any of those or any Sees Candys, and Bill Gates doesn't code anymore, but Mark Zuckerburg, you know that the Google guys came up with the algorithm and wrote the first thing with the websites linking up and everything? They just showed up to work and worked. They weren't in charge of anything except for the product, they made the product.

Mason Wartman:
And that's what I didn't understand to start. If you're looking to start something, you should be comfortable with actually making your product.

Joe Taylor Jr.:
So, ten years from now, you're going to bust into location 100, roll up your sleeves, and say "Hey! Get out of the way! I'm going to sling some dough!"

Mason Wartman:
Let me toss this one out for you, yeah! The CEO of Dominos, he tosses pizza all the time. Well, now he's like super old, he's like 80, but he had pizza making competitions, he loved making pizza. And, I'm not crazy about making pizza, I like running the business a little bit more and figuring out ways to help people more than actually just the process of making pizza, but he loved it and that's what Dominos is known for right? It's just pizza, pizza, pizza, that's the first thing you think of and I think he bought the first Dominos, but he worked there 12 hours a day making orders and then he went to the second one and made more orders and it wasn't until three or four that he was like, "I'm just a fulltime boss and managing people now." And that was years from when he started.

Mason Wartman:
Whether you're the Gimlick guys that we were talking about that edit podcasts, they don't tell people what to do, they do but most of their time is spent editing Startup and all their podcasts and you gotta be comfortable getting your hands into your own product.

Joe Taylor Jr.:
Fantastic. What are you looking forward to the most about the next year of the companies growth?

Mason Wartman:
I really want to build out the menu. If I can provide affordable, nutritious food, and there's nothing like super unhealthy about our pizza, we don't deep fry it or anything, there's just nothing particularly healthy about it, but if I can come up with like a five to six dollar meal item where it's some protein, some starch, some vegetables, and then you pay-it-forward for like a vegetable, protein, and a starch, that will be a really powerful concept.

Joe Taylor Jr.:
And if you do get an order from the online app that requests to deep fry the pizza, you'll know that they heard the show.

Mason Wartman:
Exactly. That's the other thing about these things, people ask for ridiculous stuff. Pepperoni costs two dollars, but in the special comments they'll be like, "oh and also, put a ton of pepperoni on the pizza." I'm like, "You didn't want to select the pepperoni option and be forced to pay for it, so now you're asking for it for free."

Joe Taylor Jr.:
You just failed at pizza.

Mason Wartman:
Yeah! The whole thing is just so imperfect is what I could say.

Joe Taylor Jr.:
Mason Wartman, founder of Rosa's Fresh Pizza, thanks for joining us on The Build.

Mason Wartman:
Thanks for having me.

Announcer:
Thanks for listening to this episode of The Build.