This Guy Needed To Pay His College Debt. So He Built A $4.3 Billion Empire Named GrubHub
This guy was in a loom of college debt. To help pay it off he started GrubHub. Here's how.
Matt Maloney and Mike Evans
Founder Mike Evans shares the story:
“Well, I was sitting in my bedroom, and I wanted to order a pizza. The problem was to get one, you had to go through the Yellow Pages, which are not organized in any meaningful way.
So I had a list of all these restaurants, but many of them didn't deliver to me. That was a terrible way to discover who delivered to my address.
My original plan was to build a website that just listed the restaurants that delivered to my zip code, not even my address. When my business partner Matt received a $140 check from signing on the first restaurant, I quit my job two weeks later to go full-time on the business. At the time, the goal was for it to pay off my college debt. But for the first 3-4 weeks, I couldn't sell the restaurants to join GrubHub. What I had was a dinky website that was a delivery guide, and I wanted restaurants to advertise on the website.
I tried everything. Printouts, pitching the idea to restaurants, advertising, and none of it worked.
What actually ended up working was a relationship pitch. I pitched them on this idea like, ‘Hey, I'm an entrepreneur. You're an entrepreneur. Take a chance on me.’ It's not too dissimilar from how you pitched me on being on this podcast. It turned out that sales is all about relationships first.”
From those first steps, how did you get GrubHub to be profitable?
“I started the business out of my apartment. There was no outside investment involved. This idea of friends and family money, I didn't have that. So, I just started writing the software myself.
Partly because of that and the relationships we developed, the business was profitable up until we took the first round of financing.
From there, we grew into four more cities, and we were profitable again. We took a second financing, and that's the same thing happened. We kept going through this process until, eventually, we went public on the stock market. One of the reasons we won was because of a key factor. The service was different from everything else out there.
The food was just better.
We didn't cook the food. We didn't even deliver the food at the time.
It sounds crazy, but we made sure through statistical analysis that we understood how the experience went for customers and that the best restaurants were the ones delivering the food.
Because of that, we had customers who continued to order with us again and again and again. They would order twice a day all year long, a hundred orders per year. And when that's how we were profitable, we didn't have to keep spending money to acquire customers. We had loyal, frequent customers. That's not true for any of the large players right now.”
Listen to Mike Evans’ full story on Apple Podcasts below.
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