After $81 million in investment, some things are the same & some things are different

Keep-calm-and-carry-on-21-500In our first seven years, GrubHub went from 1 employee to over 70. During that time, we raised a total of 3.1 million in venture capital and launched our service in 13 cities.  However, in 2011 alone, we raised 84 million dollars, tripled our headcount, acquired a major competitor, and managed to catapult into 300 cities.

I intentionally  scaled back my business related posts on my personal blog during this time.  Not because I’ve been too busy or too lazy, but because of the inherent risk that would come with added exposure during this busy year.  There is a lot of potential downside to blabbing about our business, but not a lot of upside.  So, I’ve had to be  much more careful about what I say and write.  And I gotta say, for a blabbermouth like me, that sucks.

Well, it’s high time I share some of what I’ve learned over the last year, 81 million million dollars, and 200ish additional employees.  And here it is: some things are different; some things are the same.

Some things are different

Scale: the size of problems and the resources to fix them

We’re coming up on 15,000 restaurants in our network.  Any small change we make now has the potential to impact a significant percentage of the restaurant industry.  This means that  as we hold true to our company’s core value of effectiveness, we have the potential for being a strong force for economic growth in our restaurant network.  And we also have the resources to  turn that potential into a reality.

This plays out most obviously in our products.  The old way of doing things was to take an idea, toss it on the wall, and see what sticks.  The new way takes longer, but the innovations scale over a larger set of customers.   Now we frame changes in a long term scope, do significant research to understand the issues our restaurants and diners are facing,  prototype our ideas, test our prototypes, build a roll out plan, and then intentionally go through a warranty and issue resolution period to make sure it all works.

All that stuff sounds really ponderous.   But,  solid design and execution iteration can still be done in an agile style.   Sure, any single project may take longer from idea to execution these days, but we have a lot more of them in the pipeline.  We also have made fewer missteps from a strategic perspective as we’ve taken more time to understand our customers’ needs before we start coding.

Communication is harder

While the difference between 70 and 280 employees is an increase of 300%,the number of possible interpersonal connections goes up exponentially… like a million percent.  Simple ideas can morph into a corporate version of the child’s game “telephone” that is astounding to behold.  Complex ideas have no chance of being communicated en masse.

In addition to being harder to communicate among such a large group, the frequency of good ideas generated by that group also increased.  I credit that with hiring competent and effective people.   But it is almost too much of a good thing.  Everybody has good ideas, and the number of interesting and valuable projects is still ballooning past my wildest expectations.   Focus has gotten even harder than it was before.

Our saving grace was that we managed to hold onto our culture.  The core values and goals we stood for at 25 people continued to be prevalent all the way to the present day.  This surprised me.  Let me illustrate by paraphrasing a heated argument with an entrepreneur at another company about mission statements:

Him: Yeah, that stuff is important so that when the company gets so big that you can’t control everything people still have a context to make decisions without your input.

Me: No! That is absolutely not the point!  Values for a business are not a means to an end, but an end in themselves.

Turns out we were both right.

Expertise in specific domains

Back in the day, we were all generalists.  Now, we have individuals who are masters of the specific.  As a result, we’ve gotten really good at a whole pile of things.  Combining a steady commitment to learning with a talent for hiring really smart people has resulted in a group that really gets it.

The GrubHub team has gotten pretty awesome at the following things: the mechanics of customer service execution, a robust ability to prototype new products, the ability to setup facilities and programs to serve our employees, the ability to work on 4-5 major technical products simultaneously, proficiency at sales at volume, data operations, brand marketing, ROI marketing, and partner relations.

By getting very good at a clear set of things, it frees us up to intentionally disengage on the things that are not in our wheelhouse.  It took us seven years before we finally got good at using partners for the things that didn’t build long term enterprise value.  Sometimes we even pay more for these things,  because it isn’t about saving cost. It’s about choosing what we want to be good at, and finding other smart companies to help us with the rest.

Employees are paying more attention to potential for exit

One of the things that has been historically frustrating about hiring people for a startup based in Chicago is the generally low level of understanding about stock options. As a company, we’ve always had a commitment to issuing options to employees, but we were often chagrined that our newest folks didn’t understand why they were valuable.

Well, that changed in a hurry as our company really hit our growth stride.  Suddenly everybody was interested in understanding the mechanics of the options, tax strategy, risk/benefit of exercising, and all that good stuff.

Honestly, it can be a big distraction.  We’ve had to work hard to make sure that everybody continues providing value to our diners and restaurants first, as our shareholder value derives from that.  In other words, focus on the business and don’t stress about fluctuations in stock price.  I think it is as valuable a lesson to learn for a private company as  it is for a public company.

Some things are the same

Excellence keeps getting tougher to hit

Growing at 100%ish per year has meant that the bar for excellence and execution is always rising.  And fast.  Every single position in the company has evolved as the scale has increased.  Thinking about details is no longer enough for anyone.  Strategic thinking  is necessary because nobody wants to work twice as hard for the same pay every 12 months!

We’ve had a ton of promotions,dozens of employees have gone to conferences and seminars,and Learning Lunches have helped keep people informed.   Sometimes we’ve needed to make tough decisions about hiring new employees with expertise we can learn from instead of doing promotions and learning on the job.

But none of this is any different.  We’re pretty used to this level of challenge.  All of this change makes innovation necessary and also blatantly exposes stagnation.  I’m pretty sure that the day that complacency goes unnoticed is my signal that we turned into a “big” company.

The importance of (mostly) ignoring competition

Every year there is some new kid on the block that is our big time competitor.  Sometimes it isn’t a new company, but rather an old company that we passed up in scale and now sees us as a threat.

Blah blah blah. Whatever.  The appropriate response is to (mostly) ignore them.  We focus on what we do well, innovate to do it better, and then measure the results.  How does the activity of another company have any influence on our own commitment to excellently serving our restaurants and diners?  It doesn’t.

I say “mostly” only because completely ignoring competition is like sticking our head in the ground.  Of course we understand the strategies they have, and the execution they implement.  We learn from them and adopt their good ideas.  We understand how we are similar and different.  But we don’t worry about it.  All we can do is the best we can do.

Need for focus

Do one thing and do it well.  That never changes.  I recently read an article that NASA has 16 top priorities…which means they have none.  We help get food from restaurants to hungry diners. That’s it.

And, we have almost 300 employees constantly thinking up crazy ambitious ideas about how to do this better. Frankly, I think delivery is still broken.  We fixed discovery and ordering, but there is still lots of room for improvement on the service, fulfillment and follow-up  of orders.  I think this idea has a good 10-15 years worth of innovation left in it before we’ve really optimized everything.  


Published by Mike Evans

Founder of Founded GrubHub in 2004. Rode my bike across the US. Wrote a sci-fi novel.

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