Why I invested in Cafe X

(I'm finally getting around to posting abbreviated deal memos for the investments I've made so far. I'm following Jason's advice from Angel about posting these online as blog posts. I'm doing this more for my own benefit of analyzing how I make investment decisions and tracking that over time. This also keeps me accountable and allows me to give a small shout out to the team I'm supporting. Below is the first such abbreviated deal memo post of several to come soon.)

I’m really excited to have been able to invest in Cafe X. Based in San Francisco, Cafe X designs, manufactures, and operates Robotic Coffee Bars that serve specialty coffee from local roasters.

The company was started by a founder who loves good coffee but hates waiting in line for it and inefficiency in general. He dropped out of college and sold his car to buy his first robot and start working towards what Cafe X would become. Since that time, he and his team have launched three live locations in SF that have awesome customer reviews. I’m proud to have invested alongside Jason Calacanis, LAUNCH, Khosla Ventures, Social Capital, Felicis Ventures, The Thiel Foundation, Innospring, and Base Ventures.

I’m personally excited about the company because I believe in the potential of robotics to automate work and produce a high-end experience for more people at lower cost. I like that the founder has been able to execute and bring to market a product that has been bringing joy to many repeat customers. It’s not that I believe that a robot is always better than a barista or that I don’t appreciate the craftsmanship of an amazing, handmade product; I just believe that there is great value in the technology that Cafe X is developing and that it can be a great fit in many situations.

Here is recent press coverage on the company:
Curbed, CBS SF, Fast Co. Design, ABC7 News, Barrons, SF Chronicle, MIT Technology Review

What I love:

• Launched real product
• Revenue and usage growth
• High number of repeat customers per day
• Good coinvestors
• Good press
• Good Yelp reviews
• Beautiful design aesthetic
• Addicted customers, high NPS
• Smart founder who can execute
• Smart real estate strategy to get good locations at affordable rent

Risks:

• Difficult to scale up robotic manufacturing
• Large scale business expansion plans will be time-intensive with long sales cycles

​Here is a video of the Robotic Coffee Bar 2.0 machine that Cafe X launched last week: