‘I’m the IPO guy’: serial entrepreneur Marc Lore on his plan to take Wonder public

Shelly Banjo:
You are not the IPO guy. You are the convince a huge behemoth company to buy my super innovative startup.

Marc Lore:
I was that guy. I’m not that guy anymore. I’m the IPO guy now. We’re taking one to public...

Shelly Banjo:
So, there’s no one, no price that could come to you.

Marc Lore:
Honestly, there’s no price.

Liz Hoffman:
Welcome back to Compound Interest from Semafor Business, a show where we explore the ways that business and finance are changing. I’m Liz Hoffman, Semafor’s Business and Finance Editor and joined today instead of Rohan by my colleague, Semifor’s Deputy Editor-in-Chief, Shelly Banjo. Hey, Shelly.

Shelly Banjo:
Thanks. I’ll try to fill Rohan’s shoes.

Liz Hoffman:
They’re very nice shoes. I dragged into onto the show today because you know our guests really well. You covered him and the eCommerce industry that he helped build and poke and prod for a long time. So, you are perfectly positioned to tell our audience who Marc Lore is and why we’re talking to him.

Shelly Banjo:
Yeah, maybe more so than anyone else who’s not named Jeff Bezos. Marc Lore was ahead of the game on every single retail and consumer trend. He spent five years building Walmart’s eCommerce operations, which actually really worked somewhat and probably to some of us who were covering the rise of Amazon and the downfall at the time of Walmart. And then, he left in 2021 right as the pandemic had brought all these big changes about and launched Wonder, which is sort of this digital food hall. It’s like part restaurant delivery app, part ghost kitchen, part meal kit business, essentially try to do for restaurants what he did with retail, which is to hack the logistics of food delivery.

Liz Hoffman:
We both spent a lot of the 2010 as reporters just watching food delivery companies just incinerate huge amounts of money. DoorDash was unprofitable for like a decade. I think finally turned a small profit in 2024. Uber Eats still loses money almost everywhere. I’m very curious how Marc plans to crack the code here.

Shelly Banjo:
And we also want to talk to him about where eCommerce is right now. Where do the robots and the drones fit in? When are they going to start chopping the cucumbers faster than us? How we’re going to start getting these deliveries by drones and how he’s going to make this whole enterprise actually profitable.

Liz Hoffman:
We want to also talk to him about his side hustles, which include owning two professional basketball teams with Alex Rodriguez. And I think he is still building or planning to build this very futuristic walkable city somewhere in either Appalachia or the desert west. It’s designed to annoy Republicans on the internet. So, this will be a lot of fun.

Shelly Banjo:
Yeah, the Niam of the US.

Liz Hoffman:
The Niam of Appalachia.

Shelly Banjo:
We’ll take a quick break and we’ll be right back with Marc.

Liz Hoffman:
Marc Lore, welcome to the show.

Marc Lore:
Hi. Great to be here.

Liz Hoffman:
You are trying to do something that very few people have done before, which is run a profitable food delivery business, or at least get there in short order. Can you just start by telling us what is Wonder and how is it different from Uber Eats, DoorDash on the one hand and the proliferation of highly branded bougie companies on the other? What is this company?

Marc Lore:
So, there’s a lot of players out there doing the delivery piece of it. We actually own the restaurants and do the delivery and do the cooking and stitch it all together with tech. In a 2,500 square foot kitchen, we operate 25 different restaurants across every cuisine type from a high-end steakhouse, Bobby Flay steak to Jose Andres Spanish tapas to burgers, barbecue, Chinese, Thai, American, Middle Eastern, fried chicken. We’ve systematized cooking of just about every type of food you could imagine with no open flames or gas and very light training. We sequence the cooking so that all the food finishes cooking at the same time. Everybody in the family could order from a different restaurant and we set a really tight delivery radius six minutes in the city, 10 minutes in the suburbs so you get it faster, more on time, great quality food that is hot.
We’ve decoupled the restaurant from the kitchen. Our kitchen is called a programmable cooking platform. Think of that as a data center that is all the equipment and robotics to be able to cook across these cuisines and a 700 wide ingredient library. The ingredient library is fixed and then any restaurant that’s built on the platform is nothing more than recipes in a brand. That’s all a restaurant is in that world. Recipe is in a brand. And so, we envision in the not-too-distant future, one 2,500 square foot kitchen operating more than 1,000 restaurants out of the same 2,500 square feet. We’ll have 200 locations this year, approaching 400 next year and then a thousand locations in 2029.

Liz Hoffman:
You’re saying the difference is that it’s vertically integrated. Most companies go out of their way not to have a lot of employees, not to have a lot of physical assets. There’s a super capital light business and the one you’re describing is not that at all.

Marc Lore:
No, I’ve always built businesses that are capital intensive. I think that’s where you can build a real mode around the business and that’s where you can differentiate. It’s harder to replicate and capital becomes also a barrier to entry and helps build a moat. So, I do like to work backwards from the customer experience. How do you optimize customer experience? And I think the only way to optimize it in food is to do the cooking and do the delivery and own the restaurants.

Shelly Banjo:
Obviously this part of your whole shtick is how do you make this profitable, right? You’re doing algorithmic cooking in a way and we’ve seen food delivery just sort of light enormous amounts of capital on fire.

Marc Lore:
Yeah. So, it’s a very efficient model. You’re able to get more sales per square foot. So, your rent percent is lower, your fixed labor’s lower and we’re also investing aggressively in robotics in the back of the kitchen to reduce variable labor as well. We just bought Spyce Robotics, which was the Infinite Kitchen from Sweetgreen, which makes any bowl concept perfectly made with no labor. That machine obviously would take out 20 points of labor. We could put that back in a price and we also get an accurate bowl every time. That’s one example. We have an infinite sauce machine that’ll go live next year that could make 80% of all sauce recipes on the internet on demand, everything from an Arabbiata to a curry, to a guacamole, to a pesto.
And then at the end of this year, we launched one to create, which would give anyone in the world the ability to create a restaurant of their own that they own from just an AI prompt. So, you say, “Build me a fast casual Mexican restaurant for Gen Z.” It’ll build the entire restaurant, do the branding images, name it, come up with all the recipes, build a whole restaurant in under a minute. You could then publish it as the owner across all Wonder locations instantaneously for $10 a month per location. You make a 10% profit. We make a really nice profit as well, but imagine any influencer in the world that has a following could build their own restaurant.

Shelly Banjo:
But why do you need the other people to Vibe code the restaurant? Can’t you just vibe code the restaurants yourself?

Marc Lore:
We could, but we really like the fact that each influencer has their own followers that they’re sending to Wonder so we don’t have to do any marketing. So, if you’re a big-time influencer, you have a big following, you could spin up a restaurant and it doesn’t cost you any capital at all. There’s 750,000 roughly restaurant owners in America today, but in the future, there’s going to be tens of millions of restaurant owners because of the ease at which somebody could open a new restaurant.

Liz Hoffman:
Some of the pushback to sort of the AI proliferation and there’s content everywhere is you see people kind of returning to taste makers and gatekeepers. It sounds like you actually don’t want to be in that business. You’re not in the curation business. You are in the lit a thousand flowers bloom business.

Marc Lore:
Yeah. I mean, if you’re a customer on the Wonder app, it’ll be a very curated experience and we’re going to personalize the experience to you based on your food preferences based on the kind of things you like. We might have a hundred thousand salad concepts we can make available to you and you might only see five or 10 of them. But if somebody wants to search for my daughter Sierra, so Sierra’s grandmother can search for Sierra’s salads and buy salad from Sierra Salad. So, think that long tail of micro influencers.

Liz Hoffman:
And what does that do to your customer acquisition costs? How does it compare to maybe DoorDash?

Marc Lore:
Oh, it’s incredible. No acquisition cost if all the followers are sending customers to us. And remember, the more volume we do in a particular four wall box, the lower your fixed expenses as percentage of revenue are. So, we in the full automated infinite kitchen as we call it, we’ll get up into the mid 40s four wall margins including delivery, which best in class is call it mid to high 20s. So, it’s just way more profitable.

Shelly Banjo:
So, if you’re vibe coating the recipes and your robots are making the salads, then do you just take the joy out of food? I mean, how do you keep joy in the food?

Marc Lore:
You go to a restaurant and go out to dinner. We’re not trying to disrupt the experience of going out to dinner on a Friday night with your friends and having that social experience and order off the menu. We’re talking about how you eat on an everyday basis and we’re bringing down the price point on great quality food. It could be chicken skewers from a Michelin starred restaurant and bring that to suburbia. We’re open until late night so you can get a salad or a fast casual Mexican bowl, which is much healthier than fast food at 20 in the morning in the suburbs. We just started drone delivery so we could even bring it to even more rural areas now. Next year, half of our deliveries in Texas will be via drone. That’s really what we’re all about. That’s the mission, but it won’t replace, to your point, the going out to dinner.

Liz Hoffman:
I have a question about the drones. I live in New York and I’m like a little anti-food delivery just because I think a thousand e-bikes on all of the streets has just made the city sort of a worse place to be. But what happens when there’s a thousand drones in the air?

Marc Lore:
Yeah. I mean, there’s going to be a lot of drones in the air, no question. Now fortunately, they’re very quiet so you won’t hear them. They’ll just be up in the sky there. They stay at 300 feet up in the air and you can’t really see them that well. And then just a wire will just drop down with the food and then quickly the wire goes back up. So, I don’t think it’s going to be intrusive as people think. It’s going to be a long time before we have them in the city, but that will come as well. In China, I was just there and they had the drones flying around the city and going to buildings and things. The great thing about drone is you can deliver it to a boat; you can deliver it to a field campsite. You could be camping and just have your burger dropped in for lunch, your cookies and burgers.

Liz Hoffman:
Shouldn’t you be grilling the burger on the... Isn’t that the point of camping? Yeah. Amazing.

Marc Lore:
Camping, I guess, right? That’d be my kind of camping.

Shelly Banjo:
Speaking of other businesses that you’ve bought, it’s hard to sort of remember now, but Blue Apron was worth $2 billion at one point. You bought it for 100 million. What was the thinking there?

Marc Lore:
The crux of what we’re focused on today is food for now. Get your food delivered hot in 20 minutes, but that’s only a couple times a week that people are ordering cooked food. The vast majority of the time you want a much lower price, more convenient option. I think meal kits and more specifically oven-ready meals that you could just pop in the oven that are healthy, they’re a lower price point, the kind of things that you could eat many more times a week. We can cut down the cost by delivering your food for later with your food for now because you’re already paying for the delivery. So, I think there’s a big advantage. We can use the robotics off peak hours to create these oven-ready meals.
And then ultimately, we’ll have groceries on wonder as well. So, it’ll be a full mealtime platform with cooked food, meals and grocery. And we’re building and launching in the fall an AI wrapper. We’ll come to your house, we’ll take your blood, check your biomarkers, we’ll take your body composition. We set your health goals, you set a budget, and then we onboard you with AI to understand your food preferences. And if you want, once you set all that, you can just let it go and we’ll autonomously feed you 21 meals a week according to your health goals, your budget, and your preferences. And then you basically grade us on every meal or AI in every meal and tell us what you liked and didn’t like and it just keeps getting smarter. I’ve been doing this. It sounds crazy, right?

Shelly Banjo:
It does sound crazy. Also, are you going to put me on GLP-1s too while you’re at it?

Marc Lore:
Yeah, so why not? But the last year, I’ve been doing this personally. So, every meal I eat when I’m not eating at a restaurant, every meal I eat is AI directed. Breakfast, lunch, and dinner. It tells me exactly what to eat, keeps me healthy, keeps my blood biomarkers in check. Starting this fall, it’ll open in beta. And when I first started, it was weird because the thought of not thinking about what you want to eat is kind of strange. What happens after a while, AI is smarter than you. AI doesn’t forget. So, every meal now is like a nine out of 10. Every meal is absolutely incredible.

Liz Hoffman:
I love that. I’m this close to having one of those capsule closets where I don’t have to think about what to wear. So, I’m just going to slowly outsource more and more of my daily decisions to AI. See if it frees up to brain cells for other things. What’s the grocery piece of this?

Marc Lore:
Yeah. We have an exclusive deal with Instacart now. All the groceries are on Grubhub and then we’re going to bring those groceries onto Wonder as well. We’ll send you the groceries and send you the recipe for every meal and as long as you just replicate the recipe and cook the food, you know that all the ingredients will be in your fridge and AI will make perfect use of all your ingredients so you’re not wasting food. So, if we send you eight carrots, we know you used one at lunch, we know you used two at dinner, we know you have five carrots left and that will make 100% efficient use of every grocery that we send you without you haven’t even think about it.

Shelly Banjo:
Wait, how do you know I have five carrots left?

Marc Lore:
Because if I send you a bag of eight carrots and I gave you the recipe for lunch and for dinner and you follow the recipe, I know you have five left. Now don’t eat any carrots as a snack though. If you do, you got to tell AI. No snacking on AI.

Liz Hoffman:
You also bought Tastemade, not a deal people talk about it much, but it’s like a food streamer pretty far from logistics and delivery. Do you want to be a media company, a lifestyle company? What’s that about?

Marc Lore:
No, I think there’s a real benefit to getting exposure of the restaurant brands on Wonder. But also, when we have creators creating new concepts, they can plug into Tastemade to get more visibility for the concepts they create. So, it’s just a helpful marketing venue for brands.

Shelly Banjo:
You also bought an actual restaurant, Blue Ribbon Fried Chicken. Why did you choose that one?

Marc Lore:
So, it’s an iconic fried chicken place in New York City and has one location. It does phenomenally well. We plug it into what we call the data center, the programmable cooking platform, and instantaneously we’re able to launch it across hundreds of locations. So, you buy something for six million bucks and then next year it’ll be a hundred million in revenue brand. That is a really key part of our strategy is to go and identify some of the best brands and food out there to acquire them, including the brick and mortar and then blow them up on the Wonder platform.

Shelly Banjo:
So why do you need the brick and mortar?

Marc Lore:
We think of that as sort of a marketing billboard for the brand that pays us. And if it’s losing money, you’re right, then we would just flip it into a Wonder location, flip it into another brand or sell it or close it or whatever. But if you’re buying brand that has 20 locations and they’re all generating cash, great. That’s our marketing. We get cashflow and then we put it in hundreds of wonder locations and the arbitrage is absolutely incredible.

Shelly Banjo:
So, you have a restaurant, you have the app, you have the grocery, you have the media property, the meal kits, the blood testing, the blood testing. What’s after that?

Marc Lore:
Building out the robotic platform. We have talked about the sauce machine. We’ve got the infinite beverage machine that can do foaming and layering and blending and can make just about any coffee or cold brew drink you could imagine. We got robotic retrieval system that’s going live in the back of the house next year and then onto automated walks, automated oven, automated fryer. The goal is to have it completely automated.

Shelly Banjo:
Are the robots as good as chopping up cucumbers as the humans?

Marc Lore:
No. So the robots are not humanoid. Maybe that’s what people immediately think. The humanoid robot is very challenging. Anything that requires like the dexterity of a human hand, we’re still doing with humans like rolling a burrito, assembling a burger, that’s still done by humans. What we’re doing is we’re creating special purpose robotics that could eliminate the need for even needing a human. We’re looking at first principle thinking. So, like an automated fryer. You could get a kind of robot humanoidist to do what a human does and how they put the fries in the basket and drop the basket and pick the basket up and dump the basket.
Or you could think, “Okay, if we didn’t have any humans, how would we do automated frying?” Well, if you started with a clean slate, you wouldn’t use that fryer. If you want to automate frying, you wouldn’t use the fryer the way a human does. And I think we’re caught, because if you’re a McDonald’s, are you going to rip out 45,000 fryers and put in a new fryer that doesn’t involve human or do you just try and automate what you already have? And I think a lot of industries are seeing this play out where people are building robotics to replace what a human does because the infrastructure is already there.
What we’re doing is rethinking and saying first principle, not going to replace what a human does. If I was starting from scratch and automating this process, how would I automate it? And it’s never the humanoid. Unless you get to assembling a burger, maybe, but even that is so hard and so expensive, I don’t think it’s going to be worth it for at least the next 10 years. And when it is one day, we’ll be the first ones to adopt it.

Shelly Banjo:
Don’t tell Elon Musk that.

Liz Hoffman:
Yeah, exactly. How many humans are in your kitchen today?

Marc Lore:
We could operate all 25 restaurants and even a thousand restaurants in the future in one kitchen. We could operate with as little as three people if the volume’s low, like late night. And then when things really heat up, we get up to as many as 12 to 15 people.

Liz Hoffman:
We’re hearing a lot, I think from companies who are like, “I have X employees and I’m never going to hire another one. I have what I need and the robots or the AI is going to do all the incremental work.” Does that sound true to you?

Marc Lore:
Well, with the 12 to 15 people, we’re at seven million capacity now. We can go to 20 million with the Infinite Kitchen so the same workers could do three times the volume, but we’re also opening two locations a week now that’ll increase in every location we open, we still need to hire 12 to 15 people. So, we’re not going to be laying anyone off, but we will be getting a lot more efficient.

Shelly Banjo:
Marc, I’m old enough to remember when you sold Diapers.com to Amazon and then Jet.com to Walmart. You are not the IPO guy. You are the convince a huge behemoth company to buy my super innovative startup, but this one feels different.

Marc Lore:
I was that guy. I’m not that guy anymore. I’m the IPO guy now. We’re taking one to public. We’ll be prepared to go in about 11 months and we’ll see what the markets look like. But yeah, no, we’re taking this public. This is going to be a big public company one day. I’m committed to seeing the 2040 vision play out when we have 10,000 locations across the US. It’s just really exciting. I’m really driven by our mission of making great food more accessible.

Liz Hoffman:
Why not sell it to Amazon though? Prepared food is the one thing they don’t deliver. They’ve tried and failed a couple of times.

Marc Lore:
I’ve already done that. I already checked that off the bucket list, sold the company at Amazon. I’m done with that.

Shelly Banjo:
So, there’s no one, no price that could come to you.

Marc Lore:
No, honestly, there’s no price. I can see the path to this being one of those generational companies. And as an entrepreneur, it’s not always about just money and shareholders.

Shelly Banjo:
It’s not?

Marc Lore:
Building something that’s going to endure for decades or even potentially hundreds of years, that really gets me fired up.

Liz Hoffman:
Speaking of food cost, what have you seen on your inputs?

Marc Lore:
I mean, we’ve been seeing ingredients be inflated, but we’re more than making up for that with automation, the automated bowl machine, which will come this summer. That machine can do 14 million in revenue out of 300 square feet. You’re saving, call it $3 million of labor. So, we’ve actually launched two concepts, salad concept, pop salad in LDS, fast casual Mexican. It’s basically 30% cheaper than the competition. Same quality, same portion size. We just took the labor savings and put it back in a price.

Liz Hoffman:
One more here. There’s a truism in New York that a company is over the second it starts advertising on the subway. I’ve been seeing Wonder ads all over the subway. I’m curious, what is the ROI on a subway ad in New York City?

Marc Lore:
No, we don’t even look at ROI on the subway ad itself, but what it does is it ultimately increases your conversion on the channels that are easily trackable, whether it be direct mail, social, search, even just word of mouth. Maybe somebody got a direct mail piece and they were just throwing it away. They somehow don’t even remember seeing on the subway, but they did and they recognize it and it looks more familiar to them.

Shelly Banjo:
Its inception is what you’re trying to do.

Marc Lore:
Yeah.

Liz Hoffman:
I guess it’s working. We’re going to take a quick break and we’ll be back right after this. Let’s switch gears a little bit and talk about your roots in eCommerce. How did Walmart get so far behind in the first place? And so, what did that strategy look like when you joined in 2016 when you sold them Jet?

Marc Lore:
When I showed up, it was growing fairly slowly and the value prop was not at parity with Amazon. So, I think it is a commodity business Amazon, Walmart, Target, selling most of the same products. And so, I think it’s important to at least get to parity. You got to nail the fundamentals, get the two-day, one-day shipping, you need the assortment, you need to get the prices right. And then it was really, how do we play offense with the physical stores, which is a big advantage for Walmart over other eComm players and really leaning into that and then leaning into the fact that Walmart was the biggest grocer in the country.

Shelly Banjo:
I think at that time I wrote this column called Walmart’s $4 billion man when they hired you. It was like, “Could you do it?” And you did it. How did you do it? What did Walmart get right and conversely, how has Target gotten this sort of all wrong?

Marc Lore:
Yeah, I mean, I can’t take credit. It was a team, had an incredible team there. I think probably the one thing I did get right was helping change the narrative inside of Walmart and externally so that we were able to hire some of the best people in the world into Walmart, into eComm. I’m really amazed at the progress since I left there.

Shelly Banjo:
But you were hemorrhaging money. I mean, you guys were not profitable for many, many, many years. How did you convince the Walton family to just let you operate this thing unprofitably?

Marc Lore:
It’s a scale game. The bigger you get, the lower your delivery cost, the more SKUs you can carry, the more SKUs you can carry, the higher margin that comes with those SKUs because the longer tail SKUs have higher margin. In order to be able to sell that, you need to have enough volume and enough people to be able to sell those longer tail SKUs. We need to add marketplace, which also increases the assortment, increases the profit. There’s just, I guess, a playbook that we followed there in eComm, but you do have to believe, right? You have to believe the math, you have to understand the economics, you have to understand how things scale. And I think Doug McMillon and the board did a great job really understanding the nuances of the business, asked a ton of questions.

Shelly Banjo:
Jet was an early proponent of dynamic pricing, algorithmic pricing, whatever you want to call it. Now, it’s gotten a pretty bad wrap. How do you think about that now?

Marc Lore:
Yeah. Well, it’s interesting. At Jet, we were empowering people to save money by teaching them how to shop smarter and the dynamic pricing always went in favor of the customer. So it was, “Hey, you bought something from this warehouse. Now, all the products in that warehouse dropped in price because the marginal cost to ship is now very, very small because the box is already leaving that warehouse. There’s dynamic pricing where it leads to customer benefit and then there’s dynamic pricing where you’re trying to extract more money from the consumer based on the willingness to pay. That I’m not a fan of.
I’m always wanting to figure out ways to reduce prices for customers by teaching them how to shop in a way that pulls costs out of the system that we can share back with consumers. And we’re doing the same thing at Wonder. We have no delivery fees as a starting point. And then if you get the Wonder Plus membership, you have no service fees and priority cookie. So, we’ll cook your food first.

Liz Hoffman:
You mentioned that membership model. I’m obsessed with the idea that every company wants to be a membership club and everything has a whatever plus and some monthly fee. Do you think that consumers are getting tired of subscriptions? Is there a limited number of walled gardens that they want to live in?

Marc Lore:
It’s definitely getting harder. People don’t want to have ton of different memberships. They just want to have a few that are most important. The challenge is how do you add enough value into the membership where they pick you as one of the top two or three that they want to have? Fortunate for us, we’re in food, but I think food delivery alone is challenging because you have multiple delivery players. But when you start to layer on meal kits and oven-ready meals and grocery and you overlay with AI and you have priority cooking and you have no service fees, you’re trying to pull all these things together in a way that makes it a no-brainer for customers.

Liz Hoffman:
When you’re in Jet, one of the ways that I could get a cheaper order is if I promise not to return it. Is there a way that I can get money off my Wonder if I promise not to call and complain?

Marc Lore:
We haven’t gone there yet, but I think you’re onto something.

Shelly Banjo:
Be a less needy customer, Liz.

Liz Hoffman:
Yeah. I’ll take it, 50 cents off.

Marc Lore:
I like it. I like it. No, I like it.

Liz Hoffman:
Yeah, there you go. That’s an idea for free. Putting your eCommerce hat back on. I was looking the other day at eCommerce as a percent of retail sales over time and it was going up in the 2010s and then obviously it spiked massively during the pandemic. And interestingly, now it’s back to where it would have been on that trend line, maybe a little higher, but there’s a sense that the pandemic, which we all thought would maybe fundamentally reshape consumer behavior actually kind of just pulled it forward.

Marc Lore:
Yeah.

Liz Hoffman:
And I’m just curious as you look out where you think the natural endpoint of where eCommerce versus brick-and-mortar nets out, how much room there is to run there.

Marc Lore:
I don’t think we’re anywhere close to the end. I think we’ll continue to see penetration increase over the next decade. When do customers get to the point where they just are in the house all the time and they really enjoy the experience of going out? If you make retail or even food experiential, I mean, restaurants are already experiential, but you don’t really have the same thing on the retail side. Do you see a trend in future generations toward some more experiential shopping as something that’s fun to do in like a social event like a restaurant is? I don’t know.
But I do know in the next decade the trend we’re on and the generations that exist today, they’re going to do more and more shopping online versus in store. And it’s self-fulfilling because then brick and mortar stores can’t exist. They close, which just moves that volume online. So, I think we’re going to have at least another decade of that and then we’ll see when people get tired of staying home.

Liz Hoffman:
Yeah. We live in New York. You live in New York. What is the future of the New York City bodega?

Marc Lore:
It’s a good question. I mean, I haven’t been to a bodega in a while.

Liz Hoffman:
Well, they haven’t changed since you were there last, I promise you.

Marc Lore:
That’s tough. I mean, it’s always a need for convenience, but with some of these fast commerce players and things, being able to get stuff to you quick, that would likely be challenging for them. But honestly, I haven’t really thought much about it. As one of the reasons why I went into food, I was looking at these fast casual margins and comparing them to eCommerce and thinking, well, if there’s any business that has high margins but there’s really very little technological disruption or automation, that seems right for me.
On the eComm side, you have all this automation because you have to fight for every basis point. And then here in this fast casual, we have these nice fat margins and no automation because you’re like, “Well, we don’t need to. We got nice margins.” But if you think about it, really the high margin business with high labor, that should be the area to attack, right? That’s a big opportunity.

Liz Hoffman:
Well, there’s real resistance to the now $18 lunch bowl, so maybe people have to find some religion around costs.

Marc Lore:
Yeah.

Liz Hoffman:
Are you worried about Gwyneth Paltrow? Apparently, she just launched a... Shelly, what is it?

Shelly Banjo:
Goop Kitchen.

Liz Hoffman:
Goop Kitchen. Are you worried about Goop Kitchen?

Marc Lore:
No, I’m happy for her. She was on our board for a long time and I think it’s a great concept and would love to maybe one day get them on the Wonder platform.

Liz Hoffman:
You want to talk a little bit about your sports stuff. You and Alex Rodriguez obviously bought the Minnesota Timberwolves and the Lynx. In 2021, a deal that Glen Taylor famously immediately regretted and I think it finally just closed last year after a bunch of handwriting. We’re seeing more and more sports teams trade hands. Any lessons in franchise M&A that you took away from that whole thing?

Marc Lore:
I’ve learned this lesson that anything fun in life usually lose money on until sports. But I mean, I did the vineyard thing, that was a disaster. I’ve done horse racing, disaster, fun, both fun. And I just assumed if you’re going to have fun, you’re going to lose money. And then I thought, “Huh? Sports ownership, that’s very fun. And you’re telling me it goes up in value every year and it’s uncorrelated with every other asset class. Sign me up.” And so, when we had this opportunity to get the team and Alex and I met with Glen Taylor and he said, “This is my price. I want 1.5 billion.” And he had told us the story about the three previous people that tried to buy it that tried to negotiate and he didn’t sell it to them.
So, me and Alex caucused for a minute and said, “Hey, I think this seems fair, man. I think we should just tell him yes to everything and to just do it.” And Alex said, “Yeah, all right, let’s do that.” And so, we just said yes. And then he said, “Well, I want all these other terms.” And we’re like, “Yes, yes, yes, yes, yes, yes, yes, yes. Where do we sign?” And he literally said to us, “Well, I guess you’re not giving me a reason not to do this deal.” And we said, “Exactly. Yes.”

Liz Hoffman:
So, no negotiating at all?

Marc Lore:
No, nothing. Zero. I think sometimes the best negotiation is to know when to not to negotiate, you know what I mean? And so-

Liz Hoffman:
But then, why was he... What was he mad about later? He has some regrets about how that went down.

Marc Lore:
No, he was just mad because the team had gone up so much in value and the team had gotten so good. That was it. Definitely it didn’t have anything to do with us negotiating because we didn’t negotiate at all.

Liz Hoffman:
That’s funny. We had Mark Cuban on the show last week who also has some regrets about his basketball sale because he also didn’t negotiate and thought he would end up with more control over the basketball of it all with Mary Mendelson. So, it sounds like you cannot negotiate and end up with very different outcomes. You certainly got the better of Glen on that one.

Marc Lore:
Anytime it’s something that is a once in a lifetime opportunity, which I felt like it was and Alex did too, it’s not worth negotiating. If you think big picture, if you think the NBA is the right sport, you think the valuation, the team is right and you just hold it for a decade or two or more, it’s going to go up in value and you’re going to have fun doing it. I think there’s still undervalue in the sports teams because there’s still too much fun to go up in value. It’s got to go the way of vineyard and horse racing at some point where people buy it and then they sell it for a loss, but they had a lot of fun. At some point, it’s got to go there because it doesn’t make sense that something so fun would go up in value.

Liz Hoffman:
What do you think the teams are worth today?

Marc Lore:
Oh, I mean the Forbes valuation I think is four billion, four and a half billion, something in that range.

Liz Hoffman:
Are you a forever owner of that?

Marc Lore:
The Minnesota Timberwolves Lynx?

Liz Hoffman:
Yeah.

Marc Lore:
Oh, I mean, I’m having a blast. I couldn’t imagine selling it. And I think Alex feels the same way.

Shelly Banjo:
Though I guess you’d know now that if you put out a number and somebody says yes right away, you need to be asking for a higher number.

Liz Hoffman:
If they win this year, do you have a sense of what that does to the value, like a ring?

Marc Lore:
I mean, it maybe is over multiple years winning more fans, seat prices go up, could attract better players. Yeah, it would definitely help, but I don’t think it’s a step change overnight or anything like that.

Shelly Banjo:
How do you and Alex divide the work, this co-owner thing? Do you take one part of the business and he takes the other?

Marc Lore:
No, we’re both really good friends and we just talk about big decisions together and we’re almost always aligned. And if one of us isn’t, the other person will convince one of us. We both have different skillsets. Obviously, his career in sports and mine and entrepreneurship and we both want to learn from each other and stuff like that. I’m really focused on Wonder right now. So, he’s bearing the brunt of a lot of stuff with the Timbers and Lynks that could flip in the future. He could get busy on stuff. But any big decisions we talk about together and make decision together. And if we disagree, it’s more like we’re both no ego on. It doesn’t have to be my idea or his idea. It’s like, let’s just talk it through what’s the answer, the right answer, why, let’s talk.
And then every time we talk something through, we always seem to land on the same answer. Sometimes it’s not always the right financial decision and you make a decision that’s values oriented and not financially motivated, but we’re so aligned from a values perspective that we seem to come to the same answer every time with a smile.

Liz Hoffman:
What’s a decision you’ve made that you thought was probably a loser financially but was the right or the fun thing to do?

Marc Lore:
Paying $100 million in tax last year, luxury tax. It arguably didn’t help winning that much. I mean, I think it did, but certainly not $100 million worth.

Shelly Banjo:
One last one. You have this idea for a planned city of the future based on a reformed version of capitalism. A, what does that mean? And B, where are we on that?

Marc Lore:
Yeah, so it’s called Telosa from the Greek word Telos, which is the highest purpose. And really, this came out of just being frustrated with the polarization that we’re seeing in the US and thinking, is there a better model for society than capitalism? It’s great elements of capitalism and don’t want to lose that. But after reading the book Progress and Poverty by Henry George, this 19th century economist, I was sold on the fact that land ownership is basically a monopoly and there’s a finite amount of land. Soon as the workers start making more money, the landowners extract more value either by charging more rent to the businesses that then have to keep wages lower or however, but he proves it with economic theory. And so, he basically says it’s byproduct of capitalism. There’ll always be a class of people just getting by no matter how prosperous we get. And I thought, “That doesn’t seem fair.”
And so, I had this concept of equitism, like a more equitable form of capitalism where the land we would go and buy worthless land in a desert and we would basically have the Telosa Foundation own the land, build a city of five million people and the handshake with people, like why would people move there? You’d say, “Oh, listen, we’re all on this together. You move to the city.” The land is going to appreciate like crazy, desert land versus a city of five million people. All the appreciation of the land is going to go into this Telosa Foundation. You’d have an estimated 500 billion to a trillion-dollar sort of endowment that would earn 25 to $50 billion a year and then you’d just pump that back into these social services, free healthcare, free jobs training, free education.
And you would have all these incredible social services that are funded by the appreciation of land that was created by the people that moved there, which seems only fair. And then you create this incredible flywheel. So, the city would be run like a startup, but it would be open to anyone. You’d have the Telosa, hopefully pride and the hat and T-shirt. And yeah, we’re all for this mission of equitism and a better form of capitalism.

Liz Hoffman:
Have you picked a spot? Last night, I read it was maybe in the desert or maybe in Appalachia or something.

Marc Lore:
There’s a team. I’m so focused on Wonder, but there is a team that’s out there looking for land as we speak. That is a long-term legacy thing. I got to get through Wonder, get through the IPO, take this to 2040, but I still love the idea of testing a new model. America started out as a test and we just were so innovative and tried so many things in the early days and now we’ve gotten to be like big company. We’re not trying things. We’re not testing things when it comes to capitalism and society. I think more people need to take some shots here.

Shelly Banjo:
Mark, this sounds like a kibbutz. This is the Israeli kibbutz. Find a place in the desert, get some land, put all the stuff together. Everyone gets a share.

Marc Lore:
The thinking is to build a university class and have applications and say, “Okay, we’re going to build a class of 50,000 people.” And then on a certain day, the city opens, maybe phased like, okay, doctors show up, then teachers show up. It has to be all done at once because if it’s not 50,000 people at once, it has the problem with being a cult or a certain type of demo gravitates there. It needs to be really well-rounded, needs to feel like a normal American city.

Liz Hoffman:
But you know, every city of five million people needs a professional sports team.

Shelly Banjo:
I was going to say...

Liz Hoffman:
So, I have to have an idea for what you could donate to the foundation, the Telosa Timberwolves.

Marc Lore:
Yeah. And you gave me a lot of ideas and then be paid not to call customer service. I like that.

Liz Hoffman:
That’s a winner. And Samoa, go to a bodega. See how it feels. See how you would improve the experience. Just keep the cats. Listen, thanks a lot, Marc. This was really fun. Appreciate you coming on.

Marc Lore:
All right. Thanks, Liz. Thanks, Shelly. Bye.

Liz Hoffman:
All right. Shelly, did he convince you that this thing can make money where others have not?

Shelly Banjo:
I think so. I remain skeptical, but I got to say my mind was blown when he starts talking about counting calories and giving the AI, the meals and taking your blood and suddenly I’m like, “Wow, you are taking control of my entire life.”

Liz Hoffman:
Yeah. We’re going to have to go back and watch the video because I’m pretty sure my eyebrows went up here when he said we’re coming to your house to take your blood. But no, I mean, I think he talked about cracking the two biggest expenses that have really killed food delivery apps in the past are labor and marketing, acquiring customers and paying people to do it. And if he’s actually cracked both of those through, I guess, respectively robots and influencers, okay. I did like that he just totally anticipated our question. He was like, “I am the IPO guy now. I’m reinventing myself,” because he has just done this twice, just convinced huge companies to pay really big prices for businesses that he built into being just big and believable enough.
But actually, I have a question for you because you covered those sales and the companies after. Did Jet really change Walmart? Did Diapers.com really change Amazon or were they just acquired it at that key point of fear of being left behind, “We got to do something?”

Shelly Banjo:
There is no doubt in my mind that Jet.com was transformational for Walmart because like he said, you had to really change this culture of this backwater Arkansas. We don’t sell anything unless we have a profit to we are just going to hemorrhage money for a decade until we can make this thing profitable. I mean, that’s just such a mind shift and Walmart would not be where it was today without that.

Liz Hoffman:
I remember Walmart as being the one low price with the smiley face with the cowboy hat. Did they adopt that dynamic pricing? What are they doing now?

Shelly Banjo:
No, I mean they threw out Jet as a concept, but it was more of how do we operate eCommerce? How do we move fast? How do we sell stuff? How do we build a marketplace? All the things that they landed on. Jet as a concept died, but I think what he did was bring Walmart into this eCommerce era. But I mean, he does have something to prove, right? That was a staunch. I am the IPO guy and I couldn’t do it once. I couldn’t do it twice. This is third time. He’s a charm. And so, it showed that this is emotional for him.

Liz Hoffman:
Yeah. We’ll see if he takes the inverse of the Glen Taylor advice when someone shows up and just offers him like a bag of money for Wonder and he says no.

Shelly Banjo:
It’s pretty rare for someone to speak so publicly about a date, of an IPO date. Most founders are pretty coy about that kind of thing.

Liz Hoffman:
Yeah, no, this is legacy for him, this and the city in the desert. Well, that’s it for us this week. Thanks for listening to Compound Interest from Semafor Business. Our show is produced by Josh Billinson. With special thanks to Anna Pizzino, Katherine Bilgore, Claire Einstein, Rachel Oppenheim, Tori Kuhr, Valana Wang, Garett Wiley, Stephanie Chang, Rohan Goswami, and Daniel Hoeft. Our engineer is Bob Mallory, and our theme music is by Steve Bone. If you like Compound Interest, please follow us wherever you get your podcasts and feel free to review us. And if you want more, you can always sign up to get Semafor Business in your inbox, semafor.com.