A Conversation with GrubHub Founder, Mike Evans on Turning $140 Into a $7billion Business.

A Conversation with GrubHub Founder, Mike Evans on Turning $140 Into a $7billion Business.

Mike Evans is the founder of GrubHub. Hungry and tired one night, Mike wanted a pizza, but getting a pizza was a pain in the neck. He didn’t want to call a million restaurants to see what was open. So, as an avid coder, he created GrubHub in his spare bedroom to figure out who delivered to his apartment. Then, armed with a $140 check from his first customer and ignoring his crushing college debt, he quit his job. Over the next decade, Mike grew his little delivery guide into the world’s premier online ordering website. In doing so, he entered the company of an elite few entrepreneurs to take a start-up from an idea all the way to an IPO. In 2021, JustEat acquired GrubHub for over $7billion.

In his new book, Hangry, Mike Evans chronicles his journey from bedroom to Wall Street. He details the step-by-step grind of building an innovative business, from eighty-hour work weeks through to finding his first customers, cliff-hanger acquisitions, the near collapse of his marriage, a brutal merger, and moments where he was faced with the ultimate quit/don’t-quit decision.

In this interview, I speak to Mike Evans, Founder of GrubHub. We talk about the brutal realities start-up life, what it takes to lead an innovative, scaling, consumer focussed business and how he took a $140 cheque and turned it into a $7bn+ business.

Q: How did you take the leap into the world of entrepreneurship? 

[Mike Evans]: I saw something in the world that was done poorly and thought it could be done better. The difference between a miserable, crank grump and an entrepreneur? Both are unhappy- but the entrepreneur says they can make it better… that they can fix it… and they follow the spark. Initially I thought I was going to make some delivery guide as a hobby, but when I saw how many people experienced this as a real pain-point, it turned into a real business.

I also liked the idea of working for myself, I mean who wants a boss, right? It turns out however, when you’re an entrepreneur, you end up with a million bosses from your customers to your investors. So that is one bullet I didn’t manage to dodge.

Q: How do entrepreneurs cope with impostor syndrome? 

[Mike Evans]: How do I get over impostor syndrome? I’ll let you know when I figure it out! I still feel impostor syndrome! It’s part of the human condition to be anxious about whether we’re doing enough… whether we’re accomplishing what we need to… whether we’re leaving the legacy we want to. Everyone has moments of self-doubt; you can’t silence those voices, and they can’t be ignored. You must give yourself credit- and a little bit of grace- and just carry on doing the work you need to do. You need to make sure you’re doing everything you can to make your business grow, and you ought not to spend too much time thinking about the competition to a degree that’s unhelpful. Maybe they (your competitors) do something that you think is a good idea too… but beyond that? Focusing on your competition only adds stress to your life.

We were the winner in our space, so it’s easy for me to say that. If someone else was serving us our lunch, it would have been harder. It wasn’t till after I left that UberEats and DoorDash really caught up with GrubHub. At the time I was running it, it was helpful to say, ‘we’re the fastest-growing, biggest player in the space…’ that helped silence the self-doubt.

Q: How do you deal with competition?

[Mike Evans]: We always had competition. In the latter part of my tenure, UberEATS and Door Dash, but prior to that Groupon and Living Social were pushing hard to do online ordering and they were very well funded. This is going to sound trite, but we had the best customer experience and the best product. We weren’t the first or the fastest. Every competitive differentiator you come up with decays over time. Everyone can copy everything you do. The only real competitive advantage that’s durable is cost and innovation – as long as innovation happens along the trajectory that takes into account stakeholders, not just shareholders. Your customers, employees, shareholders, and communities in which you operate are all stakeholders. If you innovate, you need to think about all these groups – and then, guess what, the shareholders will benefit. If you think about shareholders first, like public companies do, it always creates an inferior product.

In our case, the key moment in our journey was when people would get their food and say, ‘wow, my Grub Hub food was great!’ or they’d get onto us and say, ‘My Grub Hub food was bad…’ – Rather than try to educate customers on the very reasonable idea that we’re not responsible for the food, I decided we ought to be responsible for the quality of the food through sharing best practices, statistics and tracking which restaurants drove repeat purchases and satisfaction. That was the secret – that’s how we ended-up growing so fast and beat the competition, the food literally tasted better if you ordered from us.

Q: How did you avoid burnout as an entrepreneur?

[Mike Evans]: I didn’t avoid burnout! I got burned out! For me, the finish line was the IPO, and then I took a ride into the distance. I literally rode my bicycle across the United States, and that was part of me getting back to some work-life balance. When you’re running a startup, you can’t maintain work life balance, it’s very hard. I’m not trying to glorify hustle culture, we have too much of that in our world already- but there’s elements of being intentional and goal-oriented which help to run a successful business. I managed to keep at-it for 12 years before burning out, and a big part of that was having intentionality about what I wanted to accomplish.

Q: How do you temper your greed from success? 

[Mike Evans]: Certainly, with venture and private equity backed companies, the more successful the business, the more it matters to their portfolio. If you’re in the middle of the portfolio, you don’t experience the level of attention and intensity from investors. If you’re successful, and make a return for investors, guess what… your investors care more about you… they micromanage… and the greed is real, they want you to return a lot of cash. It’s easy for leaders of a business, directors and investors, to forget that every business makes money as a secondary purpose. It’s the coincidental result of creating customer value and changing the world in some way that people are willing to pay for and find valuable. That is the primary activity of a business – and you happen to get paid for it.

When your business becomes a unicorn and heads for the stratosphere, there’s a temptation to slide into the primary activity of the business being turning capital, and so customer focus can get lost. Once you stop putting customer first, the competition will destroy you.

On a personal level, the best defense against materialism and greed is to give money away. You need to be charitable, engage in philanthropy…. Of course, I have had some spending creep in my life, but those things are bulwarks against greed.

Q: How do you engage in social change?

[Mike Evans]: There’s a debate raging in the United States right now over the idea that over the last hundred years, we’ve had a philosophy where you make money in your business and then give it all away through philanthropy. It’s a much healthier approach to say that businesses are huge levers for social change, whether good or bad. They change things by their nature. Being intentional about making change positively during the course of life of a business is perhaps a better third path than giving money away.

There’s a strong tradition of philanthropy in the United States, but let’s turn to my latest business, Fixer.com which is an on-demand handy-person business with a full-time workforce. We train people from scratch and the idea behind the business is that the social benefit it creates, and the economic benefit it creates, cannot be divorced. There aren’t enough tradespeople in the United States, and so by training them from scratch and retaining them as full-time employees we have a competitive differentiator and benefit our community.

Q: What do you wish people knew about the IPO process?

[Mike Evans]: The best analogy I can give for an IPO is that it’s like a wedding. There’s a whole lot of attention directed toward the wedding, and less toward the 20 years of marriage after the wedding. IPO has the word initial in it, it’s the starting line for being a public company. I cashed out and sold my shares shortly after the IPO, so it was the end of the line for me, but it created a new version of the company.

The nature of the company changes after it becomes public, you’re beholden to investors who care about financial return more than anything else. Private equity and venture capital care about creating products that customers want and creating efficiency. Public markets just want public investors, and whilst they may be lovely people, all they care about is financial return.

For someone going through an IPO, you have to understand that you’re either going to fight and say, ‘no, we care about being more than just return…’ or, you sell your shares and walk away. People had always told me that public companies only care about quarterly earnings, but when I saw it for myself, I was like, ‘oh my goodness, that’s a really strong difference from the private world where yo spend a lot of time thinking about customers, competitors, the future, and the long-term…

The process of the IPO surprised me in terms of its secrecy and how everybody else involved has done about 50 while you, as the entrepreneur, typically have done zero. Everyone is negotiating for themselves – and for the entrepreneur, you are going into a high-stakes negotiation with the least knowledge of any party. It’s dangerous. As executives, we decided to hire our own lawyers to advise us (beyond the organisation’s lawyer). Bill Gurley is one of our investors, he wrote about how the IPO process is not good for companies because of the huge increase in price that happens on the day of the IPO. The beneficiaries of this price spike are clients of the investment banks, share purchasers, and not the company or the individuals who created the company. You’ve seen a lot more direct listings and other alternative vehicles in the past few years – investment banks drive a lot of value, and don’t get me wrong, they do deliver value, but not as much as they get paid for.

Those were all things I learnt, and I learned them as I went along. There was no primer, there was no book that would tell me all these things. It was a very experiential, in the moment kind of a thing that I was learning.

Q: What has been the role of mentorship in your journey?

[Mike Evans]: Chuck Templeton is the founder of OpenTable and he mentored me on a lot of things in the food space as his business was adjacent to ours. He’s a great guy, and I found it incredibly helpful. The other group of mentors we had were our directors. The investors we brought on board also taught me a lot from the various businesses they’d been involved in – those that did well – those that failed. They knew the pitfalls, what worked, and were able to see my blind spots – whether it was having a temper in meetings, or how I led people. Being mentored was incredibly useful, and it was a whole group of people who did that for me.

Q: What do you hope your legacy will be?

[Mike Evans]: We no longer live in a society where people stay at companies for 30 years. It’s important that every person you work with, all your colleagues, all your co-workers, leave a company with more skills and economic mobility than when they arrived. Further, it’s important the time they spent with you wasn’t miserable, that it was great, good, enjoyable. You can make a real impact on people’s lives as a business owner, and I’ve had a lot of employees tell me over the years that their lives changed as a result of being on this journey with me.The second part of legacy is perhaps more long-term. For the people who get value from your product, are they getting durable change? Are their lives improving? Are you helping them succeed? We kept thousands of restaurants going during the housing crisis, and that felt great. With our new business, we’re creating an inclusive path into trades education that works for everybody not just a select group of people. That in itself is going to be a huge legacy – if we have 40,000 employees and train 10,000 people a year, imagine the impact that has on GDP. We’re creating jobs, creating autonomy.

Thought Economics

About the Author

Vikas Shah MBE DL is an entrepreneur, investor & philanthropist. He is CEO of Swiscot Group alongside being a venture-investor in a number of businesses internationally. He is a Non-Executive Board Member of the UK Government’s Department for Business, Energy & Industrial Strategy and a Non-Executive Director of the Solicitors Regulation Authority. Vikas was awarded an MBE for Services to Business and the Economy in Her Majesty the Queen’s 2018 New Year’s Honours List and in 2021 became a Deputy Lieutenant of the Greater Manchester Lieutenancy. He is an Honorary Professor of Business at The Alliance Business School, University of Manchester and Visiting Professors at the MIT Sloan Lisbon MBA.