This Entrepreneur Raised $65 Million In 6 Weeks To Streamline Food Orders
As a child Xu was taught to be both resourceful and hardworking. He learned from his father’s enterprises and started building websites from an early age before turning entrepreneur.
Zhong Xu recently graced the DealMakers Show, sharing his experience in business and the lessons he has learned over the years. His story is about hard work and being able to seize the opportunity whenever you have it.
Zhong Xu was born in Shanghai but moved to Belgium early in his life when his father went to study for a Ph.D. The opportunity to join the hospitality industry was much of a calling. He used to work and develop systems for restaurants. In true enterprising fashion he learned to program in C++ and cranked out a Point-of-sale system in 30 days. Everything that happened from that moment is history. His father ultimately served 90% of the Asian clientele in Belgium.
Zhong’s father instilled the same values onto his son. Urging him to learn to work harder than anyone else. He obviously took the advice, and by age 16 he was designing websites for Chinese restaurants. He went on to build thousands of websites and improve through customer relations.
Based on his experience and university education, Zhong joined a couple of large firms building mobile applications and web apps. Just to put things into context, smartphones like iPhones were not invented until much later. So he had to build the apps himself. He built for the Nokia N95, Blackberry, and Symbian OS. When the iOS was released, it was a major breakthrough and an opportunity based on what Mr. Xu had learned in app development together with the platform he required in the cloud that the iPhone gave birth to.
The main challenge before cloud solutions was that if an app that they created for a restaurant developed a problem he had to drive to the restaurant to fix it. Sometimes late in the night. Through bootstrapping, Zhong and his partner decided to build a mobile app for the tablet that would allow restaurants to operate a point of sale on the iPad. Their solution was ahead of time and one of the first 3,000 applications on the Apple AppStore. He built the app on traffic jams while bootstrapping, highlighting how resourceful the team was.
POSIOS is revolutionary, Most POS is enterprise software that requires a purchase of $5k to $20k. Restaurants could purchase the software monthly at $50 to $100 a month and get the same functionality as the machine. The software was ready for distribution to thousands of restaurants but the team could not raise any cash from investors. So they had to bootstrap the whole thing to grow.
Having walked through many offices and with no finances to keep the business in motion, Zhong and his co-founder did the next best thing. The pair convinced their families to take loans out on their houses for half a million euros. They built offices globally in Singapore and New York. The decision was risky at the time, but fortune favors the brave, and the team was able to make through on their optimism.
Having gone global, they needed to keep an image of a large firm. During fairs in Las Vegas, for instance, they would try to give an impression of a very large firm by having families and friends wear their paraphernalia and walk around to intimidate other companies. They met representatives of Lightspeed at one of the events and the company proposed a deal. The decision was the most rational considering Lightspeed had also gone global meaning it was easier to leverage the resources of the two companies. Lightspeed gave the team the maturity to scale up and take on the market.
Any other entrepreneur would have rested and basked in the glory of their newfound success, but not Zhong. He missed being an entrepreneur, being in charge of the decision-making, and being just a manager to attend meetings was not his strong suit. He was able to observe a deficiency in the market, and realized that most restaurants needed to have a physical store to complete most transactions. With the inception of Uber, he felt that it was necessary for restaurants to take advantage of online clients and increase their market share.
The business model is SaaS just like POSIOS. Through diligence and good marketing, most restaurants increased their revenue by 50% in the first 6 months of using Deliverect. That, in turn, means that Deliverect can make 30% as more businesses are join their service. Takeaway and deliveries experienced so much growth throughout the pandemic as more people ordered takeout just as much as they stayed indoors.
Everything about Deliverect is revolutionary. They have over 250 employees in 14 markets, 11 offices, and 50 nationalities. Nothing is centralize. With the HR in Edinborough, the chief revenue officer in London, and so forth. The firm ran like a well-oiled machine with the hiring of 200 employees throughout the pandemic.
The firm has raised $90M in the last 2 years. With the last round generating $65M. Investing in Deliverect seemed to be the most logical thing with Zhong being able to raise the cash in less than 6 weeks over Zoom meetings. He credits the speed of raising funds to the networks that he has built over time. He says that they often have a potential list of the investors each round, and keeping the story consistent and open makes it a bit easier.
Consistency when things seem not to work out · How to merge two firms and become successful · Resilience and running a successful venture on bootstrapping · How to start afresh after creating a successful business · His top advice on working with naivety to success
