Speaker 1: You're listening to Bloomberg Business Week with Carol Messer and
Speaker 1: Bloomberg Quick Takes. Tim Stinovic on Bloomberg Radio. Very pleased
Speaker 1: right now to be joined by Mike Evans. He's the
Speaker 1: founder of grub Hub. He's got a brand new book out.
Speaker 1: It's a memoir. It's called Hungry, a Startup Journey. Mike.
Speaker 1: Good to have you with us. How are you? I'm great?
Speaker 1: How are you? We're doing well? Thanks. Really like to
Speaker 1: go with the startup theme that we have at the
Speaker 1: NFL program today. Just speaking with a venture capitalist who
Speaker 1: raise more than one million dollars to deploy and now
Speaker 1: we got you who has some real experience, uh, founding
Speaker 1: a company, which we're gonna talk about in just a second.
Speaker 1: How did you turn a pizza craving into a hobby
Speaker 1: and then a business? Yeah, you know, it started out
Speaker 1: like you said, it was a craving and I ended
Speaker 1: up quitting my job just after the first restaurant was sold,
Speaker 1: and I really had to sign up restaurants so that
Speaker 1: I could eat because I wasn't making any income. And
Speaker 1: so it very quickly developed from an online or from
Speaker 1: a delivery guide to an online ordering platform. Uh. And
Speaker 1: I was trying to pay off my school debt and
Speaker 1: I overshot. It got a lot bigger than that. The
Speaker 1: debt got a lot bigger. That is everything, everything got bigger, Mike, No,
Speaker 1: the no, I'm sorry, I overshot. The business got a
Speaker 1: lot bigger. Uh. And then I was able to pay
Speaker 1: off my student loans obviously, and then ran the company
Speaker 1: up through the I p O UM And there was
Speaker 1: a lot of twist and turns as it happened. I
Speaker 1: mean it was it's the nature of innovation. Let's get
Speaker 1: into the twists and turns the time before the I
Speaker 1: p O tell us about uh, just getting from start
Speaker 1: A to that ultimate point B. Yeah, you know it was.
Speaker 1: It was not a straight line from A to B.
Speaker 1: And that's the nature of startups, you know, every time
Speaker 1: that you you innovate something and you create something new.
Speaker 1: So at start, it was just finding all the restaurants
Speaker 1: that delivered to you. And then it became online ordering,
Speaker 1: and every time we did that, there was all sorts
Speaker 1: of other companies that copied us, and so we the
Speaker 1: only true competitive differentiator is to keep innovating, to sort
Speaker 1: of stay ahead of that curve. And so ultimately we've
Speaker 1: really doubled down on customer service, and by the time
Speaker 1: of the I p O, we had eighty thousand restaurants
Speaker 1: on the platform, and uh, and it was it was
Speaker 1: homming along. Mike. You're no longer involved in grubhub. You
Speaker 1: started another business since then. But I want to talk
Speaker 1: about the food delivery food delivery as a business because
Speaker 1: with the likes of Uber Eat, with the lights likes
Speaker 1: of you know, so many platforms that restaurants can choose
Speaker 1: from right now, um, and also the way how much
Speaker 1: it cost restaurants to actually make food. I'm wondering looking
Speaker 1: back about the business if if there is a chance
Speaker 1: for this type of thing to become profitable on a
Speaker 1: wide scale. Yeah, I think so. Grohub was profitable before
Speaker 1: every financing we took. We started it without investment money
Speaker 1: and bootstrapped. It was profitable at the I p O
Speaker 1: and for eight quarters before and after the I p O.
Speaker 1: And that was at scale. And so I absolutely think
Speaker 1: that it's possible to run these companies at at problem.
Speaker 1: Why isn't that happening now? Really? Two reasons. One is
Speaker 1: there's certainly there's there has been pressure from public markets
Speaker 1: for companies to show growth as opposed to profitability. And
Speaker 1: so when everybody's banging that banging that drum as loudly
Speaker 1: as possible, eventually companies listen and uh. And so there's
Speaker 1: there's certainly no motivation to drive for profitability within within
Speaker 1: pull market markets for startups, they don't get a market
Speaker 1: cap as a result of being profitable. But maybe more importantly,
Speaker 1: as competition has entered the space, the differentiation between the
Speaker 1: different entities has really decreased. And so because of that, um,
Speaker 1: the companies have to spend a lot more on marketing
Speaker 1: and re marketing back to customers that they already had
Speaker 1: instead of enjoying loyalty and frequency um like you do
Speaker 1: when you really have a differentiated product. So well, I'm
Speaker 1: just gonna say, taking an outside view of from where
Speaker 1: you're sitting today, and you look at the different business
Speaker 1: models that are out there when it comes to delivery,
Speaker 1: which one is the best in your opinion? I mean,
Speaker 1: is it the ones that take a portion of the
Speaker 1: order price and in charge the restaurants? Is it ones
Speaker 1: that uh have an additional fee for the person who
Speaker 1: orders it, like that delivery fee that goes on there,
Speaker 1: Like we see with with some of the platforms now,
Speaker 1: which one is. I think that the models as they
Speaker 1: exist right now are not all that dissimilar from each other,
Speaker 1: and I think the one that really is going to
Speaker 1: stand out is going to be the one that gets
Speaker 1: customers diners to repeat purchase frequently because it's a better product.
Speaker 1: And that means that the product that actually those companies
Speaker 1: delivered to the drivers and to the restaurants has to
Speaker 1: be the best, and that drives differentiation, and then you're
Speaker 1: not wasting as much money on marketing and those things
Speaker 1: become profitable. I don't think that charging like crazy to
Speaker 1: the customer or to the restaurant is the solution. It's
Speaker 1: about differentiation. Yeah, it's incredible because you were so early
Speaker 1: in on this business and it's it's changed quite a
Speaker 1: bit too, and investors have certainly treated it differently in
Speaker 1: the past couple of years. We're talking with Mike Evans.
Speaker 1: He's the founder of grub Hub. He's got a new
Speaker 1: book out. It's a memoir. It's called Hungry, a Startup Journey.
Speaker 1: We talked a lot about the business models of the
Speaker 1: different delivery services that exist out there. Now. When we
Speaker 1: come back, we're gonna talk more about the journey of
Speaker 1: getting Grubhub from a startup to an I p O
Speaker 1: that valued it at about two billion dollars. I want
Speaker 1: to get right back to Mike Evans. He's the founder
Speaker 1: of grub hub and also the author of a new memoir, Angry,
Speaker 1: a startup Journey. Mike, Um, I want to go back
Speaker 1: to the early days of grub hub and the idea
Speaker 1: of toiling away for eighty hour weeks and the startup
Speaker 1: story there. Um, when you look around the landscape today
Speaker 1: and you see so many the idea that like, so
Speaker 1: many people are interested in doing startups unless it's you know,
Speaker 1: it's it's fewer than there were. I don't want to
Speaker 1: say a fewer because I don't know the actual data here.
Speaker 1: But it's not getting as much fun. They're not getting
Speaker 1: as much funding as they did last year because of
Speaker 1: the way that the economy has been this year and
Speaker 1: the way that we've seen ventures spend come down. But
Speaker 1: I'm wondering when you look at the landscape this year,
Speaker 1: like what you're optimistic about, what you're excited about in
Speaker 1: terms of startups. Yeah, you know, there's this narrative that
Speaker 1: people have this go to go and get a business
Speaker 1: plan and they um. Then they get this friends and
Speaker 1: family money, and then venture capitalists throw millions of dollars
Speaker 1: at them, and then suddenly their idea is a real company.
Speaker 1: And that is the extraordinarily like small percentage of businesses
Speaker 1: that are started in the United States. Um grub hub
Speaker 1: was started. We bootstrapped. We we had no investment for
Speaker 1: the first four years, and we got all the way
Speaker 1: up to just just about half a million dollars in
Speaker 1: revenue before we took investment. And so, you know, I
Speaker 1: always suggest to other entrepreneurs just start like you don't
Speaker 1: need a ton of investment. You can. You can learn
Speaker 1: almost every skill that you need to know to do
Speaker 1: is start up and do it yourself, which does take
Speaker 1: a lot of work. It does take. It is a
Speaker 1: bit of a grind, um, but it's a lot more uh,
Speaker 1: it's a lot more controllable output than sort of hoping
Speaker 1: that a VC will invest in you. And so I
Speaker 1: think there's still plenty of UM start up activity, entrepreneurial
Speaker 1: activity happening in the very early seed stages right now
Speaker 1: that doesn't necessarily have to depend on venture capital investment. Mike,
Speaker 1: you touch on something I actually think about a lot
Speaker 1: because obviously on Bloomberg Radio we off to a lot
Speaker 1: of the successful founders, the successful entrepreneurs. We don't talk
Speaker 1: to a lot of people, you know, who have tried
Speaker 1: to start something new, to create a business and it
Speaker 1: ultimately didn't work out. And I'm curious. I mean, in
Speaker 1: those four years, for example, where you didn't have necessarily
Speaker 1: investor funding, I mean, did you know that grub hub
Speaker 1: would be a success? Talk us through some of the
Speaker 1: self reflection that you went on. Yeah, I was pretty
Speaker 1: clear with my goals. Early on, I wanted to make
Speaker 1: it a puny to pay up my school det and
Speaker 1: then later on I wanted to create a business that
Speaker 1: really leveled the playing field for independent restaurants and its like.
Speaker 1: As I was going through that, I tried things that
Speaker 1: didn't work right, I tried things that did work, and
Speaker 1: I tried things that it didn't. And because of that,
Speaker 1: because it's the nature of innovation is experimental, you have
Speaker 1: to be willing to quit the things that aren't working.
Speaker 1: You have to put the work in on the things
Speaker 1: that might work and that are working. But it's really
Speaker 1: important to not get a blind spot and just get
Speaker 1: stuck in beating your head against something where it's it's
Speaker 1: just not working out, and and that like that was
Speaker 1: the nature of the thing that I really learned in
Speaker 1: those first few years. Um and in venture capital can
Speaker 1: hide that if you have enough cash to not make
Speaker 1: tough choices, then you don't you don't necessarily have as
Speaker 1: much motivation to stop the things that aren't working well.
Speaker 1: You write in towards the end of the book about
Speaker 1: how in the later years when you were with the company,
Speaker 1: how you engineered yourself out of a job knowing that
Speaker 1: you'd be leaving at the I p O. What happened then?
Speaker 1: So uh, I then rode off into the sunset. I
Speaker 1: took I took a bike ride, a bicycle ride from
Speaker 1: Virginia to Oregon. I literally rode off into the sunset
Speaker 1: to sort of reflect on what I was gonna do
Speaker 1: and then think about what came next. And ultimately what
Speaker 1: came next is my my new business, which is an
Speaker 1: on demand handy person service called fixer dot com. And
Speaker 1: it's a lot like any of those other businesses you
Speaker 1: see thumb tack, Range's List or home Advisor, with the
Speaker 1: very significant difference that we employ the workers because we
Speaker 1: don't think there are enough skilled workers around to go around.
Speaker 1: That's very different. It's very different. That's not gig work, No,
Speaker 1: it's it's about as far away from big work as
Speaker 1: you get. It's a it's a very uh. It's it's
Speaker 1: a high income career with economic mobility. But it creates
Speaker 1: great experiences for customers in the home. And so ultimately,
Speaker 1: since we're providing great experience, we can charge a premium
Speaker 1: for it. Uh. And we can pair pair workers a
Speaker 1: great living wage. Um. And so it's both creating impacts,
Speaker 1: but it's also a profit. It's a profitable business. Well,
Speaker 1: let's talk about scaling that, Mike, because and and maybe
Speaker 1: this is maybe maybe you're onto something with you know,
Speaker 1: because gig work is so hard to to scale and
Speaker 1: actually make profitable, as we've learned. When I'm talking real
Speaker 1: profits here, not you know, adjusted eve profits. Um. When
Speaker 1: we talk about uber and left and other services that
Speaker 1: employ gig workers, how much do you have to pay
Speaker 1: uh the workers you employ that end up being handy people.
Speaker 1: You know. What blows my mind about this debate is
Speaker 1: that everybody says that it's hard to scale a W
Speaker 1: two workforce, and for like what five six thousand years
Speaker 1: of human history. It's like ten of it that we
Speaker 1: had gig work, and suddenly everybody's well, that's the only
Speaker 1: way you can do it. Uh. Yes, there are plenty
Speaker 1: of businesses have ten fifty employees and are doing just
Speaker 1: fine for both growth and margin. And so we think
Speaker 1: that we can do that by by virtue of the
Speaker 1: fact that we're hiring people who are who we're in
Speaker 1: retail or work at a grocery store or something like that,
Speaker 1: and then we're giving them a career path. The economic
Speaker 1: mobility is so so fast that um that people people
Speaker 1: sign up for opportunity. You don't have to outpay those
Speaker 1: other roles. You just have to give people the training
Speaker 1: so that they can ladder themselves up into uh those
Speaker 1: higher income roles. I didn't hear a number though, Mike,
Speaker 1: eighteen fifteen an hour. Uh No, we paid thirty. We
Speaker 1: paid thirty an hour. So much, especially when you think
Speaker 1: about it from the context of gig work. Yeah, with benefits,
Speaker 1: by the way, and and and to be clear, it's
Speaker 1: still a great, great experience in the home and you
Speaker 1: and and it's not like it's crazy expensive for the
Speaker 1: for the homeowner, especially when you consider it. You know,
Speaker 1: we clean up after ourselves. The quality of the work
Speaker 1: is good. We show up and we say we're gonna work.
Speaker 1: Show up. You know, when we're all working from home,
Speaker 1: it's so hard when somebody doesn't actually show up at
Speaker 1: the right time, and then you have to leave it
Speaker 1: like a zoom call to like go, uh, you know,
Speaker 1: go work with Go work with somebody who showed up
Speaker 1: at the wrong time. And so ultimately we're creating such
Speaker 1: a good experience in the home um that the economics work. Yeah,
Speaker 1: I've definitely had a few zoom calls over the past
Speaker 1: three years where I've had to evacuate to a bathroom
Speaker 1: or something because there's someone in my apartment. But in
Speaker 1: any case, I want to go back to the current landscape.
Speaker 1: I want to talk about the I P. O market
Speaker 1: because obviously that has just fallen off a cliff. Maybe
Speaker 1: there's a lot of companies in the pipeline, but they're
Speaker 1: not leaving the pipeline. What would you say to a
Speaker 1: company that's considering going public right now? Would you ride
Speaker 1: it out or do you think they should just you know,
Speaker 1: come out of the pipeline, let's go. I would say
Speaker 1: that financing finance doesn't drive strategy, and timing drive strategy
Speaker 1: even less. If you're building a company that has great fundamentals,
Speaker 1: that's growing and isn't burning cash like crazy, it doesn't
Speaker 1: matter if there's a slow spot or a slow time
Speaker 1: in the middle of the I p O market, You
Speaker 1: just ride it out. If you're building a company that's
Speaker 1: trying to get rich quick and just trying to like
Speaker 1: fleece investors by being high growth, but can never be profitable,
Speaker 1: then the timing really hurts you. And so I would
Speaker 1: just suggest build a company that has good fundamentals. What
Speaker 1: are some of those companies with good fundamentals that you
Speaker 1: see out there? Um? Oh man, I'm stumped. Well, Fixer
Speaker 1: in the company I'm running right now. Well that's okay,
Speaker 1: So we only have a minute left, or actually thirty
Speaker 1: seconds left, but talk about scale there, I mean, how
Speaker 1: how where are you available with Fixer and what's your
Speaker 1: growth plan? Just thirty seconds left. Yeah, we're in Chicago, Phoenix, Denver, Dallas,
Speaker 1: and Seattle. We planned to launch anywhere from two to
Speaker 1: ten more cities next year. New York on that list. Yeah,
Speaker 1: hopefully the regulatory situation in New York makes it's a
Speaker 1: big investment to do it, and so when we do,
Speaker 1: we want to do it right. All right, Well, I
Speaker 1: mean there's no there's a demand for that, at least
Speaker 1: in my apartment building. Hey Mike, it's really great to
Speaker 1: have you. Got to get you back on the program.
Speaker 1: Really appreciate you taking the time this afternoon and joining
Speaker 1: us on a Bloomberg Business Week. Mike Evans is the
Speaker 1: founder of grub Hub. He's also got Fixer as well.
Speaker 1: He joined us this afternoon via zoom from Chicago. He's
Speaker 1: got a brand new book out. It's a memoir about
Speaker 1: his time building grub Hub. It's called Henry A Startup Journey.
Speaker 1: I really appreciate you taking the time, Mike,