Interview Transcript

What was the impact of DoorDash and Uber entering the market?

In 2017, Uber Eats really started to gain ground. At the time, Uber had over $7 billion in VC money waiting to be spent, and the only company Uber was running besides Uber itself was Uber Eats. They were able to invest a lot of money, and they did a really good job putting a big team together that would go from city to city curating restaurants. They would do research to find the most attractive restaurants and go hard to bring those restaurants on. And they had a nice advantage — they already had their delivery network in place. Drivers would take Uber Eats orders mixed in with their rides.

When Grubhub started trying to build that up, they had to build it from scratch. They didn’t already have people giving rides that could take on meal orders as well. They had to build up supply and demand at the same time, and it’s difficult to get that balance. Uber Eats had a nice advantage, and they moved into some markets in a much bigger way. Grubhub had been in Miami for some time but hadn’t focused hard there because it wasn’t doing super-well. Uber Eats went in and created a great experience in several Florida cities, but Miami is a good example where they became ubiquitous. Everybody knew Uber Eats. They were able to go in and win some markets where Grubhub hadn’t focused.

We had maps where you could see who was number-one in each state. Early on, in 2014-2015, Grubhub and Seamless owned most of the map. Then, as these other competitors came up, you’d see it start to shift. The first to market was often the winner, so it was interesting to see that evolution.

Then DoorDash took it up a notch. They did a great job of building up their delivery network. Their twist was not necessarily having a contract with a restaurant to put them on the network. Grubhub’s CEO really cared about restaurants. He wanted them to be successful. He felt it was disrespectful not to create a contract with a restaurant. He wanted something that would work for the restaurant, Grubhub, and the consumer.

DoorDash didn’t care about that. They were just adding the very best restaurants that consumers wanted. If they didn’t have a contract with them, they would just stand in line and buy an order like a normal person and then deliver it, without any kind of relationship with that restaurant. That opened a lot of doors and let DoorDash scale much more quickly. They could then focus on getting that delivery network right, getting enough dashers in place, but they didn’t have to spend as much selling restaurants. They could just add whatever restaurants they wanted and move ahead quickly. So, a hardcore Seamless or Grubhub fan moves to the suburbs, there wouldn’t be nearly as much selection. Then they see adverts for Uber Eats or DoorDash with free money to try it out, they go on there, and there’s serious restaurant selection. You’d see these companies start to grow in those areas especially.

Were Uber Eats and DoorDash scaling in more rural areas where Grubhub didn’t have the density of orders?

I would say Grubhub was especially effective in the biggest markets. It had focused efforts in the biggest markets. Uber Eats moved out into some of the smaller markets like Miami. It was what we would consider a tier-two market. They really started to target the tier-two and three markets. But DoorDash took it to another level; they just wanted to go everywhere. Anywhere they could add a great restaurant, they would add it to the platform and get dashers in place to support it. They went an extra level deeper, for sure.

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