Cantaloupe Systems Names Sarah Rankin President And Chief Operating Officer
Even though Cantaloupe Systems has only been around this decade, vending is a long-time family business for the Berkeley-based company.
That’s because co-founder and CEO Mandeep Arora learned about the industry from his parents, the founders of Vend Mart, a San Leandro vending machine supplier.
Cantaloupe Systems gives machine owners and re-stockers the ability to track their products in real-time to see what’s being bought and what needs to be refilled.
Since 2006, Cantaloupe Systems’ revenue has grown to $2.92 million in 2008 from $1.01 million. And the company is projecting an even larger 2009 — $8.43 million. Though they’re not profitable yet, they expect to be in the first quarter of 2010.
Arora and fellow co-founder Anant Agrawal, the firm’s chief marketing officer, met while at UCLA and knew that they wanted to start a business together. Agrawal was working on two degrees — electrical engineering and economics — and Arora was working on one in computer science. They decided on vending partly because of Arora’s familiarity with the industry.
After bringing in three more friends to help, they aggressively interviewed different companies in the vending industry, machine operators and product suppliers, about what they needed. They talked to smaller firms as well as big companies like Frito Lay.
“We went to a trade show, and we saw several other technology providers that were not thinking along the same lines as we are,” Agrawal said. “We didn’t feel like the value proposition was there. We thought we could do a better job.”
Through Arora’s parents, the pair was able to talk to Frito Lay in 2002, which was putting a new type of vending machine on the market, about monitoring the new machines that were serviced by North County Vending, a Vista, Calif., company.
Cantaloupe’s software addresses a big headache for vending machines operators — figuring out when to re-stock. John Sewell, the owner of North County vending, said that when Arora and Agrawal first approached him, he was skeptical. But he said that the pair listened closely to the problems he needed solved and gave him a solution. Gone were the days when drivers would get to a machine to re-fill based on historical data, only to find that it was only short one candy bar. Operators can set the system to send them detailed sales reports (what’s been sold and when) as often as they want — although the more frequent the reports, the more money they have to pay.
“That was the main thing that I wanted, and that’s what other operators wanted also,” Sewell said. They provided that — they reduced the number of services required.”
But Sewell said that their technology also helped in one other way — it gave operators marketing information in real time. They would know exactly when dark chocolate Milky Way bars stopped being popular, and that way they could replace them with milk chocolate bars on the next servicing, for example.
But even after the early successes, the co-founders still had more to learn. They lived at Arora’s parents house for a year and a half, with one requirement.
“We had to have dinner with them every night,” Agrawal said. “We would talk about vending pretty much every day with his parents.”
They got a year-and-a-half long crash course in vending and some seed capital, and in 2005, they started hiring a support staff, as well as sales and marketing people. In 2006 they raised a $5 million venture round led by the Global Environmental Fund. Now they have 22 people. They’ve hired three so far this year, and said they might hire as many as three more.
The founders said a secret to their success is not just letting the technology drive their company.
“The tools (we created) worked for proactive and visionary customers, but for a wider market they needed a little more hand-holding,” Arora said. “We created a team of consultants that go in and help vending companies figure out the technology and how they may need to change their warehouse, etc.”
The company is now in 20,000 vending machines — a small fraction of the country’s 5 million — but they say the technology will work in 70 percent of the machines on the market. They’re not feeling the effects of the downturn because their market share is so small that they’re able to find companies who want to invest now to be better positioned when the economy rebounds.
Arora and Agrawal are keeping tabs on competition. They said Cantaloupe was the first company to offer real-time vending tracking, but other firms are poised to compete with them. Crane Merchandising Systems, which makes vending machines, and Mars Electronics, which makes bill validators for machines, are working on similar systems that will be on the market within 18 months.