- Zume Pizza, the pizza-making robotics startup, spent its early days pitching investors and the public on an AI-powered robotic revolution at the hands of its robot fleet.
- But the revolution hit a snag, and in January, Zume announced that it was permanently shuttering Zume Pizza, the robotics division of the company, and laying off roughly 360 employees across multiple offices.
- Now, Zume is looking to sustainable packaging to stay afloat as its cofounder and CEO Alex Garden struggles to right the sinking ship.
- In interviews with Business Insider, more than a dozen current and former Zume employees described Garden's aggressive and erratic management style that many attribute to the company's struggles.
- Insiders say that Garden had a tendency to over promise and under deliver. As hundreds of millions of dollars from SoftBank and other investors flowed in to the company, Zume grew its ranks and ambitions.
- But flaws in Zume's business and operations doomed Garden's robot revolution and have left the company's future in question.
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Alex Garden pulled into the Silicon Valley VC firm's parking lot in a Ford Raptor pickup truck.
The massive $90,000 truck looks straight out of a Mad Max apocalypse scene, with rugged tires and an impressively lifted body. It boasts the ability to navigate rugged off-road terrain with state-of-the-art shocks and engine capacity. If you were preparing for the end of the world, you would be in the market for a Raptor.
"There was always a nice car," one Zume investor recalled when asked what stood out about Garden.
The truck didn't last long. Soon, Garden abandoned the apocalypse-mobile for his preferred method of travel - his motorcycle. He was commuting to his company's Mountain View, Calif. headquarters from his home in Tiburon, a bayside town north of San Francisco where the average price of a home floats above $2.3 million. The freedom of navigating the Bay Area's highways on a bike would no doubt have appealed to Garden, who sources said wasn't one for rules or restrictions in other parts of his life.
But that was Garden's way. The always confident, fast-moving entrepreneur stood out among his founder peers as much as his mode of transport stood out among the Bay Area's homogeneous fleet of Teslas and BMWs. In an industry marked by brainy engineers and Stanford MBAs, Garden was cut from a different cloth, despite having spent most of his adult life immersed in the video-game side of the tech industry.
What he shared with some of the most famous, and infamous, names of Silicon Valley lore, from Steve Jobs to Elizabeth Holmes, was a knack for being a "storyteller" - someone capable of inspiring employees, investors and the media about an electrifying idea, no matter how far-fetched. Garden's story involved robots, and pizza. His startup, Zume, was going to change the rules of the food industry by unleashing armies of pizza-making droids that could pump out pies faster, more economically and with a wow factor that was way beyond anything a human dough-hand could do.
Investors, including Japan's SoftBank, and SignalFire, ate it up.
But the the robo-pizza revolution that Garden promised never came.
Problems with the bots became evident early on, with the machines creating metal shavings that risked contaminating the food, according to one witness, and failing to meet performance requirements. Even as Zume raised hundreds of millions of dollars and staffed up with hundreds of employees, doubts about the viability of the business and Garden's leadership pervaded the operation.
Employees noticed that Garden had a tendency to overpromise, underdeliver, and overpromise again. What started as a mission to build robots gradually became an effort to deliver pizzas baked on-the-go. By January, the robots, the pizza and, half of Zume's employees were summarily discarded in favor of new bet to make compostable food packaging.
Business Insider spoke with more than a dozen current and former Zume employees who provided a first-hand account of the startup's erratic trajectory over its five-year history and Garden's at times controversial role at the helm of the company.
A Zume spokeswoman declined to comment for this article.
An early success in video games
Garden's life as a Silicon Valley entrepreneur started with video games. Garden started a game studio in Vancouver, Canada, called Relic Entertainment, and in 1999, at age 23, he had a hit on his hands.
"Homeworld," a real-time strategy game set in an alternative universe with warring planetary factions, was considered one of the first breakout desktop games of the genre and was praised by critics when it launched. The game even caught the attention of the Brithis prog-rock group Yes, which collaborated with Garden's company and wrote the music for the game, according to a video about the project on YouTube.
By the time he founded Zume in 2015, Garden had added high-level roles at Microsoft and Zynga to his resume, and he was not shy about highlighting his industry credentials during meetings with early investors and employees, sources told Business Insider.
When he started talking to investors, his reputation as a gaming industry personality and Microsoft senior employee came up often in glowing terms.
"Investors thought he was the next Zuckerberg," the investor told Business Insider.
At Microsoft, Garden served as the director and general manager of Xbox Live, the Xbox console's online player network, according to press reports from the time. When Zume investors tried to learn more about what the role entailed however, during the traditional vetting process, they were unable to confirm details of his employment or departure from Microsoft.
In 2014, Garden joined Zynga as the head of game studios. Garden joined the San Francisco company along with Don Mattrick, the former head of interactive entertainment at Xbox, who had just been hired as Zynga's new CEO. About year later, Mattrick was out, and so was Garden.
Virtually all of Garden's experience was in video games and entertainment, not robotics. But to investors, his background mattered less than his pitch. Garden was going to unseat Domino's and Pizza Hut to become the biggest pizza brand in the world. He dropped in the buzz words - artificial intelligence, robotics, machine learning - that brought in the big valuations.
A fateful meeting with "Masa"
The pitch appears to have struck a chord with Masayoshi Son, the head of SoftBank, and controller of the $100 billion Vision Fund.
Garden met with Masa, as the Japanese billionaire is regularly referred to in Silicon Valley, in 2017 ahead of a planned Series B fundraise. Garden liked to tell employees that "Masa invested in me," implying that he personally was the driving force in securing the Series B and subsequent Series C investments, a former Zume employee told Business Insider.
When the SoftBank deal closed in September 2017, Zume was valued at $218 million - a nice step up from Zume's first round of funding in 2016 which valued it at $50 million and included investors Kortschak Investments, AME Cloud Ventures, SignalFire, and Maveron.
By the time of the SoftBank deal, Zume was starting to get some name recognition even though few people had actually tasted the pizza (and among those who had eaten the pizza, several sources described it to Business Insider as mediocre).
Garden hit the media circuit hard in 2017, appearing on CNBC and This Week in Startups to discuss how Zume was not only saving the world from environmental disaster, but also paving the way for the future of work for millions of low-wage earners across the world. Pizza was just the start. The entire food preparation industry would be unseated by automation, Garden claimed, and his startup was going to make it happen.
The startup even made an made an appearance in HBO's tech industry satire show "Silicon Valley," which featured a cameo of Zume's pizza with reference to its pizza-making robots.
But Garden was struggling financially, the Zume investor said, and was starting to look for other ways to boost his personal income. SignalFire stepped in and made Garden a venture partner with a salary of roughly $250,000, plus the usual deal carry incentives.
SignalFire cofounder Chris Farmer confirmed that Garden served as a venture partner on the firm's Fund 2, but said that Garden stepped back over a year ago and is not a venture partner on the current fund.
"Given his obligations to Zume as the company scaled, he asked to step back over a year ago," Farmer said. He also disputed the accuracy of Garden's compensation when he was a partner, but declined to provide clarification.
Garden was listed as a partner on the SignalFire website as recently as Wednesday, but his name disappeared after Business Insider inquired to SignalFire about his role.
Fancy robots and metal shavings
As investor capital flowed in, Zume quickly put it to work, hiring experts in robotics and engineering from universities and other buzzy startups.
Business Insider toured Zume's production area in Mountain View in August 2018, prior to SoftBank's investment in the company. At the time, the robots were essentially mechanical arms that "press mounds of dough, squirt and spread sauce, and lift pizzas in and out of the oven, in a fraction of the time it would take human workers to do the same."
It's not clear how many of those robots were in existence and how that figure has changed in the years since, but a Zume spokesperson told Business Insider in 2018 that its Mountain View production facility was capable of churning out about 370 pizzas an hour.
Behind the orchestrated photo-ops, the real picture was not as pretty.
A former employee told Business Insider that the robots on which Zume, and Garden by extension, had built the entire business were inherently flawed and could not clear food safety inspections because they produced metal shavings, which could end up in finished pizzas. Business Insider confirmed the shavings were present in the food preparation area in a series of photos provided by the former employee.
"They had hired many people who had no idea what kind of equipment was supposed to be used in food, and many engineers were not food hardware engineers," the former employee said.
SoftBank invested in another $375 million funding round in November 2018 that catapulted Zume to unicorn status with a valuation between $1 billion and $2.25 billion, sources said. The private valuation could not be confirmed by Business Insider.
SoftBank, now Zume's largest investor, wanted growth at all costs. Having little background in the technical aspects of robotics and food preparation logistics, Garden struggled to keep the business focused, multiple sources said.
"Pieces of information would come in from a single source or customer and the overcorrection to that one data point was incredible," another former employee told Business Insider. "That was the case from the beginning, and when you add $375 million it's like pouring gasoline on the fire."
A $1 million truck and broken ovens
With the robotics division struggling to live up to expectations, Garden came up with a new solution: delivery trucks that could bake the pizzas while in transit so as to cut delivery times and improve the finished product showing up at customers' doors. The "baked on the way" trucks as they were called, made appearances at corporate campuses and on Jim Cramer's "Mad Money" TV show on CNBC.
But at least five former employees cited issues with the startup's famous trucks. The main truck, nicknamed "Martha," cost the startup over $1 million, but lacked the technology to adequately bake pizzas, sources said.
Photos of the trucks' interiors provided to Business Insider show broken glass, insufficient refrigeration, and pizza boxes stacked on the floor. Delivery and catering crews often resorted to cooking pizzas at the startup's Mountain View warehouse and delivering orders in personal cars, sources said. But the quality assurance team was personally directed by Garden to keep all 11 trucks in service "until something major happened," one source said.
Another former employee recounted a disastrous catering experience in which the team had to resort to cooking the pizzas in a toaster oven for over 100 people when the ovens in two separate trucks didn't work.
"It was all really reckless," one of the former employees said. This employee left Zume after voicing concerns with the machinery, specifically the metal shavings and malfunctioning blade, to Garden, and threatened to alert the FTC to misleading advertising since Zume was still marketing the pizzas as baked on the way.
Like pouring gasoline on a wood-fired oven
Every former employee that spoke to Business Insider spoke of an argument or disagreement with Garden that contributed in some way to their departure. From executives to hourly staff, multiple sources spoke of an unpleasant workplace, led by Garden, that pushed employees to their breaking points.
Multiple former employees said that Garden directed hiring managers and recruiting to hire young, attractive women for entry-level roles, including his own executive assistant. Many of these women were recent college graduates or had yet to land a full-time job. Several sources called Garden's hiring process "misogynist."
Garden's cofounder, Julia Collins, left the company after taking maternity leave in November 2018. Collins had overseen the robotics division of Zume Pizza, which had rebranded to Zume, Inc. while she was on leave. Her departure coincided with the SoftBank investment, but several employees cited her departure as the sea-change with Zume's internal culture.
"The whole tone of the business changed without her guiding and steadying influence," one former employee said.
Multiple sources said Garden changed the business direction often, and had a habit of talking over women employees and executives during meetings.
"It seemed like it was hardest for women to be successful under Alex. Women that have been successful before and after Zume just couldn't be successful with Alex," one former employee said.
Several high profile executive departures, including CFO Meredith Whitney and General Counsel Kira Druyan, involved women with established careers in their respective fields. Some faced Garden's wrath after voicing dissenting opinions about the business or Garden's personal conduct, sources said.
"He doesn't handle people who question his authority well," the former employee said. "He likes to dress people down."
As of January, following layoffs at the company, Zume no longer has a woman in its C-suite.
A bitter pill for "Juiceranos"
With the January layoffs and reorg, Zume has once again shifted gears to pursue a new business plan, and Garden is almost completely alone at the steering wheel.
The layoffs were hidden from employees until a Business Insider report shed light on the company's plans, and several employees that were affected said the promised severance has yet to materialize. One employee said they were given "Alex leave," an internal joke that employees could not show up to work for several months and still collect a paycheck until severance kicked in a few months down the road.
The startup's remaining employees will focus on compostable packaging, a business Zume acquired when it purchased its pizza packaging partner Pivot Packaging in February 2019. Although Zume's website indicates a nation-wide test run of the packaging with Pizza Hut, Business Insider confirmed that the test is currently on hold after concerns were raised at the single location in Arizona that had used Zume packaging.
Pizza Hut was not immediately available for comment.
Employees are scrambling to make the manufacturing process function, sources said, as a contract between Zume and members of the Saudi government is pending.
Garden's Hail Mary comes as Zume-backer SoftBank is retrenching and taking a harder look at money-losing startups in the wake of struggles at Uber and WeWork, two of SoftBank's biggest bets. In December, SoftBank declined to move forward with planned funding for Zume, according to documents viewed by Business Insider.
Meanwhile, the 360 Zume staffers that were terminated in January were told they could apply for 100 new open positions at the startup, but as of press time, those roles were not publicly listed on Zume's site or other employment sites.
Prior to the layoffs, a lack of transparency and a steady trickle of worrisome information about the business led some employees to humorously refer to their employer as "Juiceranos," a combination of famously defunct startups Juicero and Theranos.
For the hundreds of people who signed up for Garden's revolution, the nickname seems more apt everyday.
Do you work at Zume or another SoftBank-backed startup and want to share your story? Contact this reporter via encrypted messaging app Signal at +1 (331) 625-2555 using a nonwork phone, email at mhernbroth@businessinsider.com, or Twitter DM at @m_hernbroth_hernbroth.