It was another hungry late night at work, but Matt Maloney sensed a new opportunity. In 2004, Matt Maloney and his co-worker Mike Evans launched GrubHub, an online food-ordering service in Chicago. After making 500 in 2010 & 2011, GrubHub hit $137 million in revenue in 2013.
GrubHub, later on, merged with its competitor Seamless. In April, Maloney, who becomes CEO of the combined company, managed to make GrubHub a successful IPO. And if he managed to get his way, no one would need to call for pizza, Maloney says to Liz Welch.
Innovation works well when it solves someone problem. The idea of GrubHub came up when Mike and I were working as a developer at Apartment.com. We were frustrated with the diner options, calling restaurants, and swiping our credit cards. When we were working on lookup searches for rental real estate. That's where the idea of screeching wheels for food delivery came up in my mind.
Mike and I started collecting menus around my neighbourhood in Chicago and wrote some codes. We thought restaurants would pay for the ability to capture the attention of hungry people. We initially started charging $140 for premium placement on our website. But when we asked for money, restaurant owners didn't see value for their investment.
They already spend thousands of dollars on crappy websites investing in another website wasn't appealing. Finally, we offered them a 10% commission on whatever we sell for them. And they loved that!
Soon we realized that the product was really scalable. The next step was to expand in another city. We tried to raise venture capital, but it was taking too long. VCs are too slow, but they never say no. The longer they take time; the more options they keep open. We flew out to San Francisco to sign up restaurants there and do marketing. The restaurants were responsive, and orders started coming aggressively. People of San Francisco loved it, and soon investors noticed us. In 2007, we opened in San Francisco and closed our capital round that November.
We wanted our business to be a National Company, but we couldn't afford to put an office in every city. We had to figure out a way to build a market, create awareness, and sign up restaurants without having a pay rent. We soon hired a manager in San Francisco, who visited every restaurant, signed up them, and grow our network.
Seamless was our biggest competitor, so we were aware of what it was doing. Soon, we announced the merge of Seamless and GrubHub and keeping both brands. Though GrubHub was doing really well, Seamless was like religion in New York. We constantly improved our technology to promote our brands.
In 2010, we launched our mobile platform, making it easier for people to make orders. We realized some restaurants were overwhelmed with a large volume of orders. So we built a tablet app to make it easier for restaurants to confirm and complete orders, change timings, and change a menu item. The order process becomes faster and easier, making everyone happier: people, restaurants, and us.
The Growth of GrubHub
GrubHub quickly becomes a popular app for diner options for harried workers. Only 50% of orders are placed using mobile phones. GrubHub is tied up with 30,000 restaurants tie-up, 700 U.S. cities, 175,000 Orders per day, $1 billion Gross food sales via GrubHub in 2013.