. this week, what happened to all that stuff we returned to the store? he has most of it. >> meet a young entrepreneur helping restaurants survive the pandemic. and a startup that's bringing live music back, mandolin ceo. that's this week on "press: here." good morning, everyone. i'm scott mcgovernment's exhi m. i didn't know that my favorite restaurant makes less money if i

buy it off door dash because door dash not only upcharge me but the restaurant as well. which is why you may find a flier promoting the restaurant's own delivery service. they don't want you to door dash if they can deliver it themselves. now, this flier is fictional to protect the name of the real restaurant because honestly what they're doing displeases door dash. to walk us through the economics of this is adam build, the ceo of a company called profit boss. his software powers some of the independent delivery services. adam, thanks for joining us this morning. we are used to young entrepreneurs, but you are one of the youngest. you recently landed $3.5 million, so you must know what you're doing. >> i'd like to think so, scott. i hope i know what i'm doing. but i was really motivated to ask when i saw how these restaurants that have such tight

margins already being exploited by these third-party platforms and having more and more profitability taken away to the point that running these businesses on just online orders wasn't profitable. >> walk me through that. what is the economics of door dash that this is hurting restaurants? >> so the numbers that you need to know to fully understand the picture are that independent restaurants, that is mom and pop shops, have an average net margin of around 5%. for every $100 they get top of line in revenue, they end up netting $5 in profit. but the issue with the third party platforms mike grub hub, like uber is day take 20% and 30% of each transaction that flows through the restaurants and that is a cost that the restaurants then don't have enough margin to occur. their profit margins are 5% but they're losing 20% or 30%. independent restaurants are

actually losing money on these transactions and that's what i thought was unfair. >> because door dash is charging the restaurant money as well for the honor of picking up that hamburger and sending it to me. >> exactly. so in addition to charging the customer, which is typically a really high fee. >> really? yeah. >> we have noticed between 7 slr and $11 on the average $40 transaction, they are also charging the restaurants themselves more money than they even have in profitability on that transaction. and the restaurant themselves feels trapped. they feel like their customer relationships have been stolen by these third party companies and they need a way to fight back and to restore that relationship that they had with their customers so they can again operate their business responsibly. >> if the restaurant had its own delivery service, it would save money because it wouldn't be paying the door dash fee, but it would have to pay to create a delivery service either through you or doing it yourself. you kind of split the difference on this, right?

you offer the delivery service, but you're not actually charging a restaurant a fee? >> exactly right. so what's really interesting about the economics of these delivery service companies is that the majority of their cost is actually coming from the marketing side of things because they have to spend so much money in social media advertisements in order to acquire users to use their platforms. and if you remove that from the equation, we're actually able to utilize their drivers via an api call so that when an order is placed directly on the restaurant's website, we can have one of their drivers fulfill it but a far lower cost structure that most of the time the customer ordering can incur entirely, but a lot of times the restaurant does choose to put a little money towards that delivery cost so that the customer already pays less. but either way, it saves both parties a lot of money on each transaction to the point where

we have several restaurants in the bay area that's generating over $10,000 a month in direct sales now and saving over $2,000 a month in fees that we would otherwise have to pay to a third party to his bottom line profitability. it makes a huge difference in the pandemic. >> i want to make sure the user understands what you said about the api. we started outed with idea that door dash is overcharging and you have this delivery system to offer restaurants where they would save money. but you are using door dash to do it. >> that's exactly right. in the same way that a lot of e-commerce vendors use amazon fulfillment centers to go from point a to point b, door dash built a network that's fast and reliable and there is economically more fair way to all parties involved to use that network. that's by using the restaurant

website. that is more economically viable because there is no marketing cost associated with getting the customer to use the restaurant's website. the restaurants promote that to your customers so they don't have to incur dozens of dollars in marketing to get that transaction to their platforms and that's saving across all three parties to that transaction. >> i had noticed i got a sachway delivery recently where it wasn't delivered by safeway. it was delivered by doordooash. but explain to me why would doordash open up its api so that you could use it to undercut doordash >> i can only guess here but i have imagined that the reason they opened up their api because this is their long-term vision of a company. they said that since day run, they want to become the ups, fedex for local. and, so, the reason that they're doing it is they want to build

an ecosystem of oerth technologies that utilize their driver in order to fulfill deliveries. maybe that's more profitable than their core business itself. their core business itself is actually struggling in the marketplace because there is so little differentiation between doordash, ubereats and grubhub. so nay'they're trying to prop u this business which has always been aligned with their vision by offering the ability to use their drivers. it turns out if you use their drivers in a white label capacity, they have a built in margin and i believe each net transaction is profitable because they get to determine the terms and they don't have any marketing costs associated with having produced that transaction. so it is a higher margin form of revenue. >> to use an analogy, when we thought amazon was a book seller, they weren't really into

books, they were weren't we're going to sell everything. doordash may say we don't want to deliver tacos, but that's what we're doing as we learn how to deliver everything. >> exactly right. from reading about doordash's history, i realized that is their long-term vision and that's why they're willing to do it because that is a more profitable market opportunity and that's been their vision since day one. >> let's go back to what i started with, and that is you are a young entrepreneur. how did you get started doing? >> i'm 21 years old. >> okay. how did you start this? >> very weird life, very weird journey. i have been building technology projects since i was nine years old. i built my first project at 12. i had this whole random series of events over the next several years. building my own games, and what inspired me to start focussing

on how to service the local business market was an experience i had in working with my mom, specifically she pursued her lifelong dream of opening up a dog grooming store. when she first opened up, she was really challenged and devastated because it was difficult for her to get new customers in initially. so she came to me for help because she knew i was her nerdy at that point 17 or 18 years old son. the solution that i ended up building for my mom had a lot more utility in the restaurant market. i went to the restaurant market for years. i went to pj chang's. what happened was coronavirus fully wiped out our business at the beginning of this year. i had not raised capital or very much capital at all, just a very small amount. i almost ran out of money and a bunch of other things went wrong. in that time earlier this year where the company was being challenged, i started to ask myself how could i add value?

our old product was good at driving traffic, but that wasn't a thing anymore. so i ended up after talking to hundreds of restaurant owners realizing there was a way to help them save money and increase sales during this incredibly desperate time while solving a lot of their other operational challenges as well. >> well, i wish you the best of luck in the future. adam build, the ceo. and "press: here" will be right back.

the first full week of 2021 may start out a bit rainy. we're tracking a possible messy morning commute. >> plus, san francisco wants to

help you get rid of your christmas tree. the program launching monday. welcome back to "press: here." it was hard enough to buy christmas gifts this year. it will be equally hard to return what you don't like. it would probably be safer to just stay out of the store. but it didn't stop us from wondering what happens to all of those returns? do they go back on the shelf? do they end up in the trash? where does that blender you didn't like go in the end? they probably end up in a warehouse run by marcus shen, the coo of a company called v stock sourcing that auctions off literally tons of return merchandise. he says the amount of stuff they have to deal with jumped 30% in the first quarter the month following the holidays. marcus, welcome. let's start with where all this

stuff comes from. how did it get to you? >> so we're a marketplace. so on both sides of the marketplace, we have sellers. those typically are retailers, brands, manufacturers who have this type of excess merchandise. so it won't be returns like you were talking about or even overstock inventory. >> so what is in it for the companies that are sending it to you? do you pay them upfront, or do you give them a cut of the auction? >> yeah. no. the great thing about our model is we're a marketplace. so our primary role is to use technology to match sellers with buyers. and, so, the benefit to them is that they are able to sell to a huge network of buyers who are, you know, ultimately going to sell this inventory downstream to consumers like you and me. >> i was just kind of looking through the site. this is from your auction site.

five palates of target music return, retail value $158,000. 7,900 items. we are talking about palates and palates of cds, movies, x box games and whatnot. somebody will buy that and resell it? >> that's exactly right. we focus on a handful of categories, certainly consumer electronics is a big category. home goods, home furniture, appliances and apparel. those are kind of our major categories. but to your point, sometimes, you know, we see returns of all kinds of sorts and, so, it is a great opportunity for entrepreneurs and buyers to resell this stuff. >> you also have 11 palates of just my size two pack bras. so two to a pack, that's 60,000 bras. i'm assuming that's not a return.

>> i hope not. a lot of this stuff, like you said, is likely overstocked inventory, things that, you know, whether it didn't sell as much as they expected or they may have ordered more than they anticipated. >> so i can see that people could make money, you know, telling downstream, as you say. there are nest thermostats on your site. with the current bid, by the way, of $10 a thermostat, a unit. that will obviously bid up. but a nest thermostat is hundreds upon hundreds of dollars that someone will buy them. to be clear to the viewer, you can't go on his site and buy a $10 thermostat. you have to buy basically 100r o 1,000 of them. but at some point, someone will buy them on e-bay and they could make a nice little profit off that. >> that's exactly right. what we're really empowering entrepreneurs, folks who, you know, probably are part of that gig economy that we talked about

so much that may have, you know, run in vbs or driven for uber. i think what they're doing here is taking advantage of a similar problem. there is excess inventory. there is excess supply. and we're using a marketplace to create more efficiency with this inventory. >> they could do that on e-bay. they could even do that through amazon through their small business marketplace. it would be strange to think, but i think it's possible that somebody buys a nest thermostat on amazon. returns it for whatever reason. they then sell it through you to somebody else who puts it back on amazon. >> that's right. it happens more than you think. and there is, again, it creates a really interesting opportunity for entrepreneurs to buy this inventory and resell it. it might be in an underserved market. it might be an underserved geograp geography. it might be overseas. those are the interesting nooks

and crannies that these side s hustlers play in. >> not just anyone can go on there and get themselves a palatethermometers. you have to be a business, right? >> that's right. so the buyers of this inventory are typically -- they could be bricks and mortar shops. they could be online stores that are actually selling this direct to consumers. what they need to be successful, you know, certainly they have to have the licensing to sell goods and some of them have software that sells online and manages this inventory. but probably more importantly than anything, they got to have a little hustle. they have to have a little grit. >> thank you for being with us. and many happy returns. "press: here" will be right back.

welcome back. live music is probably not something we will see for quite some time again. unless you are lucky enough to have a talented musician in your own home.

much like your boss figured out how to connect with you on zoom, a startup like mandolin is having great success with concerts over the internet. here is a socially distanced band playing on mandolin.com. ♪ i feel like an old soul ♪ i feel like a sinking ship ♪ can't get no sleep ♪ can't just let it be ♪ like walking on a tight rope. >> mandolin founder, marykay hughes just raised $5 million, including money from her former boss of salesforce. she left salesforce to make mandolin happened. that's a big move. you were a highly placed executive at salesforce and now it's sink or swim for you. >> that is very true, but i'm

six months in and not looking back. >> what led you into music? >> it was really just the pain point that was exposed when the pandemic started. it didn't take long to realize that fans and artists were struggling by the lack of live music and they needed a way to connect without the in person shows happening and the opportunity seemed very exciting and the music industry, it didn't take me long to investigate it and realize that the ability to leverage technology and digital transformations and many things i have learned at salesforce, the music industry wasn't taking of fully yet and, so, starting with live streaming but then digital engagement beyond that was a big market opportunity and the time we have spent so far has made the opportunity very large. >> it is amazing, you know, the established industries that still weren't taking advantage of tech. a lot of med tech i think of. even uber and taxicabs.

that there are opportunities still in the world to create a startup where an established industry has not thought through its answers to technology and the internet. >> it's so true. i had spent the last 20ish years on digital marketing and digital transformation, and i talk about data collection and how you use that in the content and personalizing experiences and the whole rise of both the direct to consumer relationship as well as the digital economy itself. and those are the same conversations i'm having now with many people of the industry and we're only touching the surface. >> so what are you doing for an artist that couldn't be done on youtube live or facebook live or twitch or all the other established organizations that already do this for a living? >> yeah. really early on, many people were going on facebook, many artists were going on facebook

and instagram. and a couple of the biggest challenges they had, one was around montization and another was just some of the -- you know, an artist that makes music like that, that is their art, quite literally, and mechanics around production and the platform itself and the stream keys and all the technical mechanics of putting on a show and having that confidence is worse. it will up yield their credibility and image. it started to make people feel uneasy. and none of those platforms oh ole there are still many amazing platforms out there. very few have focussed exclusively on the live streaming concert experience, and that is exactly what we have done. >> i was going to ask you about production because, you know, people don't realize -- although i think during the pandemic they are beginning to realize how difficult video production really is. taking a look at some of the

concerts you have done, they are high quality video productions. this doesn't happen by magic. you have to either contract out or send a crew out ere.th this is not some guy playing guitar in his living room on facebook. >> absolutely not. i mean, we focus on premium experiences that would warrant ticket prices at $15, $20, $25. the average ticket price is $20 and it's doing really well, but it did not take long for me to realize the component of just the production side. and what's the role of services, professional services and customer success and it is no different here. we have built a venues and studios and production teams and have made sure that some artists come to us and have all of that lined up and they just need our platform. that's great, too. but many times, especially with the market so early, we had to establish best practices and

thought leadership and a comprehensive solution to make sure the experience they want their fans to feel good about paying for is a quality they feel good about. >> yeah. i think that's where your future lies, is that turnkey. you know, that just take care of this for me. i'm an artist. i want to play my music. i want to reach my fans. you figure out everything else i think is a great solution. >> it's definitely been one of our differentiators in a market that's gotten extremely crowded very quickly. >> so live stream explodes during a pandemic when we're all stuck at home, including you, including me. but then the pandemic will eventually go away, and concerts will come back. and where does that put you? >> we're actually very excited about it. the more recent news of the vaccine progress has led some of our conversations to lean more towards, hey, maybe some limited touring can come back in the second half of 2021, and what

does that look like? and that's where we focus first on a very premium live streaming experience. that's where our product strategy and vision that goes beyond live streaming is so exciting. we are already doing hybrid show today like with limited capacity. but the opportunity to create more continuous digital engagement between the artist and fan and album releases and things as well as the increased montization. i mean, the concept of capacity and a venue really can be no longer. >> right. >> we need to mitigate with geofencing and interesting marketing tactics, but there is an entire incremental fan base that can be accessed now that don't want to go to crowded clubs and theaters are experiencing really high-end live experiencing streaming at home and want to continue that. we really see the digital engagement and live streaming itself as incremental revenue

and they're able to start to access it. >> i think there is a parall there with the movie industry. warner brothers saying it was going to release movies like wonder woman and whatnot directly to video feeds while also playing it in the theater, giving people the chance to do it at home. here is a chance where obviously everyone likes live music in a concert hall. but there is the option to do it at home. >> absolutely. i think sports is another good analogy. think of all the montization opportunities that are created for backstage access, exclusive content, putting it on your big screen at home, having a front row seat at a very different price. it doesn't take anything away for the people that want to be in that room or in that arena or whatever the case may be. but there is so many other ways to create a very unique experience around something so special like live music. >> mandolin founder may kay huse, thank you for being with

us this morning. and "press: here" will be right back.

that's our show for this week. my thanks to our guests and thank you for making us part of your sunday morning.

hello and welcome to comunidad del valle. today the legendary little joe and his new book on "comunidad del valle." ♪ ♪ >> oh, man. there he is. legendary little joe. we miss those days when