Inside the trend of tech ‘spinouts’ solving real-world problems

Development team

Although Robinson had built up some decent tech chops, and his team had built its own click and collect – as well as pay-at-table – services, the Openr data platform required bringing in a development team with the capabilities to scale and bring to market. The company has since gone on to supply its offering to the likes of Stonegate, Caffé Nero and Burger King.

It has been a similar story for Andrew Xeni, co-founder of Nobody’s Child and Fabacus, who gained experience in the retail and manufacturing sectors from working at his family’s business, Europride Ltd, producing and supplying value womenswear to big high street retailers. During this time, he discovered the opportunities to create both the fashion brand Nobody’s Child and tech business Fabacus.

He describes the latter as a trusted system of record for the products of large brands and retailers. It comprises all the product data to meet companies’ ESG reporting needs, and provides the infrastructure for implementing digital product passports.

“I did a lot of the ground work early on, speaking with most of our then retail customers – including New Look and Asos – to build a product lifecycle management [platform] for the family business, but the data aggregation platform – Fabacus – was always intended for go-to-market [spin-out], as I realised it was solving a common problem,” says Xeni.

Having scanned the landscape, he discovered that no-one was addressing the fundamental challenge of siloed and fragmented data across products. With his fashion experience, he says: “The main ingredient I brought to the table was the business logic and understanding of the problem and the solution needed. Anyone can build technology, but it’s like letting an architect build and decorate your home, expecting it to meet your needs.”

Xeni says Fabacus was initially a passion project that he self-funded, but as he discovered the common challenges across the clothing sector, he needed to source external capital and sell the product to third parties.

“It’s tough, so make sure you’re addressing a real problem,” he says. “We developed a solution architectured by a team of experienced execs that understood the problem intimately, and knew how to articulate the solution and plan an implementation succinctly. Nothing we have built to date is a challenge I haven’t operationally faced in to personally.”

Fabacus is currently working with a myriad of brands and retailers, including Nobody’s Child, Paramount, NBC Universal, Hasbro, Fanatics and Tesco. Across brand licensing, Xeni says the business has reached a critical mass of customers, while in the retail sector, there is “very exciting early engagement”.

Like Xeni and Robinson, there was recognition by JP Then, founder of Crosstown Doughnuts and Slerp, that fundamental change was happening to his business through structural change in the wider sector. As a very early user of Deliveroo and UberEats, he found a need for an e-commerce platform to host the growing volumes of online orders for his doughnuts.

“I had 10 locations with click and collect and on-demand delivery, but they all had different attributes (such as opening times),” he says. “I did not want to build a platform – I wanted to find something, but there was nothing out there. Slerp was born out of my need to solve a problem.”

Separate business

During conversations with other operators in the sector, Then found they were also experiencing online sales growth, so there was recognition of the opportunity to ultimately sell his offering to others in the industry. He incorporated the business in 2016 because he understood being separate was important: “A bakery running a tech company did not make sense!

“By 2020, there was enough proof from Crosstown that it could be important enough for other companies [to use],” he says. “By then there was also more sophistication in last mile logistics so Slerp could work with various delivery providers.”

The product gives hospitality companies greater control over their margins for delivery orders and ensures they have a direct relationship with the customer. This enables them to avoid having to rely wholly on the delivery marketplaces – Deliveroo, Just Eat and Uber Eats.

As the delivery marketplace model has developed, the Slerp platform has ultimately been able to plug into the network of delivery riders at these companies while still owning the customer relationships and the associated data.

Being an operator has been massively important for the development of Slerp, according to Then, who says: “Having operator domain knowledge has been pivotal to building out an operator-first view. Slerp solved a genuine operator problem.”

He believes this is in contrast to the technology firms that find there is not a market for their products and make radical changes to their propositions – hence the frequent use of the term “pivot” in the tech world.

Although Then left Crosstown in 2020, amid the tough times of Covid-19, he continues to run Slerp, which has gone on to work with many hospitality companies, including Nell’s, Zia Lucia, Dom’s Subs, Sourdough Sophia, Chicken Cottage and Chopstix.

Enterprise resource planing

Ed Brown, co-founder of Double Puc and Percy Labs, is also aware of the tough nature of the hospitality industry. He co-founded healthy food chain Friska, which reached eight sites before it hit difficulties in 2021 and changed hands. During his time at Friska, he had created a dedicated enterprise resource planing system for hospitality – to handle the likes of purchasing, supply chain and ingredients – that was not tied into a point-of-sale system.

This became RocketOS, and was an early product in the field as a software as-a-service offering for the hospitality industry. Brown now acknowledges it would have been a better business decision at the time to have focused on this technology and spun it out to sell to other operators rather than put more money into Friska.

Armed with this experience, he now operates Double Puc Café & Catering – with four units in the Bristol area – along with the fledgling Percy Labs, an artificial intelligence-powered purchasing platform that consolidates baskets of product orders across wholesalers to save on the purchase cost, built with a view to spinning it out and selling it to other hospitality businesses.

Although there are third-party group purchasing organisations acting as middlemen, Brown believes they do not benefit the hospitality companies nor the wholesalers. The advent of ChatGPT and its ability to accurately match food product data has enabled the creation of Percy Labs to provide a more efficient service that he says could save businesses 10% on their ingredients costs.

“We know it is a challenge to build a product, but we’ve done similar with RocketOS and Friska,” he says. “We know that these solutions will be easy for operators to use. Every feature we build, we can see it’s useful.”

Building it from within Double Puc means the product can be prototyped very quickly. “We know how it needs to work. It’s all customer-centric. Everything has been tested in a real environment,” says Brown, adding that building the service in-house also helps with conversations with wholesalers and operators. “Coming from us builds trust and confidence,” he adds.

As technology becomes an ever more important part of the operations of retail and hospitality businesses – and they have increasingly tech-literate workforces – the appetite for implementing real problem-solving products is likely to grow, thereby providing a fertile ground for in-house developments and potential spinouts.