Looking back on Olo
By: Jason Black
Tags: IPO, Venture Capital, NYC

In hindsight, Olo is a rather obvious business. “Why didn’t I think of that?” is a common refrain for some of the most iconic and influential companies across the tech industry and Olo is no exception. Online ordering? It doesn’t take a visionary to figure out the potential of that market these days. But Olo wasn’t started yesterday — it was started in 2005, the same year YouTube was founded, two years before the iPhone was introduced and the smartphone revolution put a computer in the pocket of nearly everyone, and back when telecommunications companies used to charge for text messages. From that vantage point, it’s pretty remarkable what Noah Glass saw as the future of online ordering.

Rather than adding to the long list of articles looking at Olo’s future and all that’s still to come for the company in the public markets, we’re going to rewind to the critical junctions in the history of Olo that turned it into the multi-billion dollar company it is today.

Text “3”

Noah Glass dropped out of Harvard Business School in 2005 before it was en vogue to drop out and start a company. In fact, nearly no one did at the time. But with an idea so simple, yet powerful, he was determined to have a crack at it. He founded GoMobo, the company we know today as Olo, with a vision of a restaurant ordering service that leveraged modern technology to deliver a unique and unprecedented experience.

Noah saw an opportunity to streamline early generation feature phones (at the time, over 95% of the US population were not smartphone users) and turn them into ordering devices for customers who frequented independent coffee shops and delis. The setup allowed customers to place quick, predetermined orders that were mapped to the number pad on their flip phones. Customers could simply text “3”, for example, to allow them to order their “usual” turkey sandwich with no cheese and a coke from the bodega down the street from work. Texting “4” would send a message to the burrito place near their apartment so they could have their chicken burrito and chips and guac ready by the time they walked in to pick it up.

In the early days of the company, Noah and his team would approach independent restaurant owners just before the busiest hours to pitch their new text ordering business. While the hit rate was low, those that became customers quickly saw the benefits of faster, more efficient service for their best customers.

“Maybe Next Year”

After a couple of years of one by one, independent restaurant sales, the traction still wasn’t picking up enough. Customers were happy, but the business was slow to grow. They heard “maybe next year” a lot, and over time, it was clear to Noah and his team that they needed a new strategy. Selling to independent restaurants and even small regional players wasn’t a scalable enough plan. So they decided to go after chains and to fully embrace a white-label approach.

Chains had always been obvious big customers — they would enable mass distribution, buy “in-bulk”, remain very sticky customers, and had little in the way of innovation or tech teams to speak of. Both Chinese food and pizza chains had already figured out the value of efficient off-premise dining, and had built their own support systems: Pizza chains learned way back in the ’60s that delivery was where the most business was (giving us the pizza delivery vehicles that we still see today), and Chinese food chains capitalized on takeout starting back in the ’50s (which is where we got the iconic Chinese takeout container).

But the rest of the chains hadn’t really caught on. At first, when Noah decided to go after that market, the going was slow. Chains presented their own difficulties due to complex internal bureaucracies and inconsistencies across franchisees. Many of the corporate teams liked Noah and thought his ideas were interesting, but weren’t ready to buy in just yet. Thin margins contributed to a culture of reluctance towards implementing expensive tech tool implementations.

But because he was seen as a futurist and an innovator, Noah kept being invited back into those rooms that he wouldn’t otherwise have been invited into. Over time, he was able to prove, despite some middling pilot results, that the chains were a viable vector for growth. When GoMobo, by now called Olo, scored pilots at Subway and Dunkin’ Donuts, the team discovered that even if the corporate high-ups liked the product, it didn’t mean there would be widespread adoption across a chain unless the individual managers and franchisees also signed off.

While chain sales progressed in typical enterprise fashion, it wasn’t until one new entrant — heralded as one of the fastest and most innovative new chains on the block — signed a chain-wide deal with Olo. The dominos began to fall.

Looking Up to Five Guys

When Olo signed its chain-wide Five Guys deal in 2015, the team finally got the market validation it needed to set them on a path for “overnight success”. Initially reluctant to adopt Olo’s platform due to thin margins, management teams at other chains saw how transformative the deal with Five Guys was in expanding channels of revenue, and wanted to keep up.

After their Five Guys agreement was in place, chain sales started to progress much faster as incumbent restaurant chains looked to keep up with more nimble, digitized chains that were rapidly scaling.

Mad Dash to Digitization

By the time the pandemic hit, there was already fast-growing adoption of digitization within the restaurant industry, such as digitized off-premise orders. Covid-19 unleashed a new scramble towards innovation, requiring almost every industry that hadn’t yet adopted new technologies to operate within a digital sphere just to keep things running.

Restaurants served a critical role through the pandemic. Many of us couldn’t have gotten by without the safety and comfort of dinner from our neighborhood Italian restaurant, and maybe didn’t see anyone except the person at the coffee takeout counter for months on end. Without Olo, many of these companies might not be here today. Olo became a lifeline for many who had yet to adopt digital models. But necessity is the mother of invention, and these trends are here to stay.

What we now see is a market validation of Noah’s core idea from 15 years ago, and so much more possibility; from ushering in “Table Service 2.0” with dine-in QR codes for ordering and payment to better utilize customer data to bring in key demographics. Olo will always be there to support the places that keep us happy and well-fed, and to bring dynamism and innovation to the restaurants that serve us.