this week on case studies with the biz
doc it’s GrubHub you get home at 6
o’clock there’s nothing in the fridge
you don’t feel like going out or the
weather is bad
that’s who you call and you’re not alone
Ford and fifty thousand people a day are
calling GrubHub and it’s a company that
the market seems to think is worth nine
billion dollars but I’m going to tell
you what I think I’m going to take you
through three parts of the GrubHub story
first
the founders where did they come from
where’d they get the idea and raising
early venture capital part two their
growth strategy including roll up which
was the key to where they are today and
lastly what I think the future has in
store for GrubHub let’s dive in so you
have Matt Maloney and Mike Evans they’re
developers and they were working for
apartments.com
smart guys they were working on
geolocation what geolocation is is
wherever you are and you look on your
app you look online it senses where you
are and gives you choices around there
to make it more efficient for you to use
a particular app there a service product
and they looked at that and they said
Wow
could this technology be adapted for
food we’re developers we work late we
get home hungry it’s a pain in the neck
to call a restaurant give them your
credit card ask him what’s on the menu
and they notice that when they went to
restaurant websites they were really
terrible
who knew that restaurant website was
there our restaurant is born they make a
website but they don’t advertise it it’s
a word-of-mouth but if there’s word of
mouth and he know about the restaurant
you just go there or you call him and
they said wow what if we could make this
easier and people would actually be able
to find a selection of restaurants order
what they want and maybe we could
arrange all that the birth of GrubHub
there they are oh 506 and they did it
with fax this is a archaic machine where
you put a piece of paper in here and you
call somebody and then a piece of paper
comes out the other end for those you
they were born after 1995 you can find
them in the Smithsonian the early growth
was in Chicago they knew the
neighborhoods they knew the restaurants
they went door-to-door and started
asking them say hey we could do this for
you we could do that for you you could
get more results than what you’re
getting on your website and people said
no no no I’ve already spent a lot of
money and my website I’m not getting out
of it I’m not gonna spend anything with
you and then they had a thought and they
came back and he said well what if you
gave me 10% of extra meals that I can
get people to buy from you and
restaurant said that’s fine I’ll do it
that way you give me more meals I get
more revenue I’ll give you 10% and the
GrubHub business model was born they
went to Chicago they expanded to a whole
lot of restaurants and as you’re growing
what do you need venture capital so here
they were in 2007 and as the CEO Matt
Maloney tells it it takes a long time to
raise venture capital he’s absolutely
right
venture capitalists never say no they
say we’ll get back to you we’ll see what
we think every now and then you may get
a hard no from one of them but most of
time it’s an elongated process and you
really don’t have firm answers and he
was very frustrated by that so he said
you know what we just have to
bootstrapped it and do it ourselves and
that’s what they did and then they did a
little piece of guerrilla marketing they
said why don’t we make our next market
San Francisco there’s a lot of investors
out there venture capitalists out there
so they went out there started
advertising and did some things and
guess who notice the venture capitalist
GrubHub isn’t that those guys from
Chicago that came to us with that idea
about you know facts and then things to
the restaurant making more money for the
restaurant raising awareness yeah maybe
we should talk to them again and in 2007
they raised a 1.1 million dollar series
a taking little bits of money keeping
control and keeping ownership of the
company I think that was smart that was
followed by more growth and then a
couple years later oh 9 they raised two
million dollars in venture capital in
the B round a B just the letters that
signify the order of the tranches of
money that you raised then came
something very very big and that was in
2010 they got the attention of benchmark
capital one of the top two or three
venture capitals firms in the world and
they raised 11 million dollars now they
were off and running about that same
time in 2010 they introduced their
mobile app although that says mobi so
now all pretend were from Australia I
got my mobi with me they move forward in
2011 and they raise another 20 million
and what this really shows you is
traction the traction was here expanding
city to city and they had really
perfected the business model their main
group and their main management team was
in Chicago but now they were putting
people in each city who understood the
demographics and what’s hot what’s not
of the local restaurant scene at the
same time they also came
conclusion we don’t have high barriers
to entry what’s a barrier to entry
those are things about your business
that make it hard for somebody else to
copy it or jump into the same market and
open a business of their own this very
low barriers to entry we could make a
mobile app go talk to restaurants in our
own city as many other companies we’re
already doing and we can be off and
running so they looked at it and said
this is going to be all about scale what
scale scale was assimilating things the
same way Amazon did so as you grow big
you are actually have lower costs and
things because you’re replicating all
the services or cost of your business
over a larger revenue base and that’s
called scaling the business as they
looked at scaling being successful they
set aside their ego about GrubHub the
only way to do it and said now wait a
minute maybe we should be acquiring some
of these other companies that are
similar to us we’ll achieve scale let’s
be selective and careful about what we
do and careful about how we spend the
investor’s money but that’s the way they
did it along comes the pac-man phase in
2011 they erased that 20 million dollars
in the series Di mentioned then late
2011 they raised 50 million dollars in a
series II those are big dollars how are
they able to do that well in 2011 they
actually had 60 million dollars in
revenue that’s their share of the
revenue of what they get so that was
probably four five hundred million
dollars of the meals that they were
facilitating but that was their cut by
the end of 2012 they got that up to 82
million so right here you see the
investment community saying wow you guys
are on a roll you guys are hot we’re
putting in real money then comes this
phase now let’s take a look at what
happened I got friendly pac-man here and
I got a bunch of dots because over time
they would buy all menus seamless those
of you in the Northeast United States
know who seamless is well guess what
today it’s a division of GrubHub all
under the same family they also bought
delivered dish restaurants on the run an
LA bite they would buy in 2016 for 65
million dollars
everybody in LA on the other side knows
what la bite is and there are thousands
of restaurants already connected to la
bite so GrubHub if they said we’re going
to get people and money and we’re going
to invade LA
we’re gonna take the turf no that would
have taken too much time they bought the
turf as long as the price of what you’re
buying is reasonable and you get the
payoff and it’s early enough that the LA
buy people say well let’s take sixty
five million dollars and we’ll become
part of GrubHub and they don’t change
the name to GrubHub why because people
in LA know who la bite is just like
everybody in New York and New Jersey
know exactly who’s seamless is that led
to seventeen on this pac-man path here
where they bought eat24 for two hundred
eighty seven million dollars that’s a
big stack of money but guess what eat24
was actually owned by Yelp and Yelp two
years prior had actually bought this for
a little over a hundred and thirty
million dollars so Yelp sells it for 287
makes a little bit of profit and a
technology handshake was made where
GrubHub will use the Yelp technology for
identifying making restaurant reviews so
suddenly now they have a theater system
through the relationship with Yelp to go
with what they’re building a nationwide
roll-up why is that important now you’ve
got something that helped differentiate
them and if you’re like me
I’m always yelping my favorite
restaurant reviews and ones that are not
so favorite that I don’t go back again
and restaurants are starting to take
notice any of you who use Yelp know that
if you put a particularly bad review as
long as you’re being tasteful and polite
about your review and say hey this
didn’t work for me this wasn’t so good
restaurants are actively trying to come
back and say listen we’re really sorry
about that I’d like to take care of you
on your next visit because they can tell
people that are just you know flaming
them versus people that are given an
honest review nonetheless
Yelp technology through a handshake
agreement as part of the eat24
acquisition is now inside GrubHub as an
important differentiation point so that
in summary is a rollup strategy buying
things that are like you as long as the
price is right that helps you get bigger
or expand your footprint this is a
footprint play now let’s step back and
see what the revenue line look like and
how they ultimately went public when I
left off there at 82 million dollars
here well the following year 137 million
and they made six million of net income
then 253 million in 2014 and that was
their IPO that’s when they went public
and since going public their stock has
been on a progressive terror there’s a
little dip
spook that happened between now and then
but it were covered quickly and it’s
moved forward how had they delivered for
people who have invested well in 2015
they went from little over quarter
billion to 361 in top-line sales then 38
million dollars that’s a little more
than 10 percent the net income compared
to the revenue 2016 493 and 49 sitting
right about there at about 10% and then
2017 683 million dollars in revenue and
98 million dollars in that income in
2017 ground August a report came out and
said they were number one in nine cities
now what did that do that really painted
a picture for everybody says wait after
all of this roll up and all the success
they look like they’re doing good the
revenue looks like they’re doing good
and they are doing good you’re telling
me they’re number one in only nine US
cities yes and that’s adding all of this
up which shows you how low those
barriers are entry and this is not the
last time they’re gonna be making
acquisitions nonetheless they had eight
point eight million total unique active
visitors you know over the course of a
quarter or a year as they measure that
and three hundred and twenty four
thousand daily average grub’s called a
dag that’s the average number of meals
per day that are ordered through their
service through all the brands that
comprise grub hub and now grub hub is
more of a parent company with brands
underneath putting its culture and
technology and philosophies through
everything then we have here 900 million
in gross food sales in other words
that’s the ticket that’s the bill that
the customer paid not their part so in
other words they’re now causing
restaurants across the United States
not from sit-down diners but from the
people that are taking out through the
grub hub services and all the brands
nine hundred million dollars of
restaurant revenue what’s caused by grub
hub because you and me got home the
weather was bad there’s nothing in the
fridge we call grub hub 2018 q1 this
shows what a roll they’re on after the
eat24 acquisition and the Yelp
integration which happened at the end of
17 q1 two hundred and thirty two million
dollars and 30 million dollars of net
income when you put that together
where’s my producer what is that per
920 million dollars so now there have
created a company that’s generating over
one point two billion dollars in gross
food sales to all the nation’s
restaurants so in other words this is
working for restaurants it’s working for
GrubHub and you know it’s working for
you and me and they’re up to four
hundred and thirty six thousand daily
average grubs and they have 15 million
active members so with all those stats
what’s this company worth well now we’re
gonna get to something I want to dive
into a little bit GrubHub it’s about a
hundred and five to one hundred and
seven right now on the stock market
that’s the price per share early June
2018 as we film this that translates to
a valuation of nine billion dollars so
if you wanted to buy all the stock of
GrubHub and own GrubHub yourself you
need a dump truck full of nine billion
dollars with you to pull that off what
we do in the stock market is we have
what’s called the p/e ratio it’s a way
you can compare different companies to
each other you look at the price of
their stock compared to the earnings of
the company think of it as a temperature
you take the temperature of five people
doesn’t matter how tall how short or
what they weigh the temperature can be
compared that’s really a way to compare
companies their p/e right now is 85 I
think that’s kind of high the p/e I
think would be much lower for what
they’re doing a service business where
other people can easily compete with you
by opening up shop getting a mobile app
and a collection of restaurants in some
local city where they know the playing
field so at 85 I think that’s a little
rich let’s compare it to some companies
that we know Google p/e of 47 Apple p/e
of 18 now let’s go to the pure internet
side because Google is definitely a
multi division ad company and Android
company very very mature Apple we know
what they are you go to Amazon and
Netflix internet-based Internet growth
companies Amazon’s at 212 and Netflix is
242 now everyone is saying about Amazon
they’ve been saying for years oh my gosh
Amazon’s p/e is too high but they keep
going up and prove that they can live
with that p/e Netflix at 242 a lot of
people say oh my gosh means their price
is pretty high for what they’re
delivering but they keep growing and
driving so you’ll watch over time as
they do what’s called growing into their
PE what does that mean well that means
the stock may be flat for a little
– even as they grow revenue and what
that really means is they’re growing
into their PE because PE users usually
forward there’s a lot of anticipation
and future in the price of any stock so
what do I see in the future for GrubHub
well we had pac-man on this side and
we’ve got evil pac-man on this side uber
eats Amazon and door – are three very
significant competitors I’ve pointed out
that they’re only number one in about
nine to twelve cities right about now
which means that Amazon door – and uber
eats are number one in other cities
Amazon flat-out owned Seattle and
they’ve been experimenting with meal
delivery they deliver products they do
same-day delivery of many things to your
door so what would keep Amazon from
going out to a large set of restaurants
and saying hey be part of the Amazon
family you know I’ll deliver for you the
same way I deliver everything else
barriers to entry low brand recognition
of Amazon hi big big barrel of people
like you and me and Amazon knows what we
order and what we’ve been doing a lot of
customer data would be very easy from
them to move from Seattle and go to many
other cities uber eats they already have
fleets and fleets of drivers and
reliable drivers is one of the things
that the GrubHub guy said gave them a
headache early on lastly door – what’s
very very similar to GrubHub so
nonetheless you’ve got a lot of
variability in the market share on
cities let’s take a look at some of
those here in Dallas uber eats it’s got
like 30 percent market share they’re
also number one in Houston Court Worth
and San Antonio in Chicago grub hubs got
like sixty percent market share they’re
the home team that’s where they grew up
but you go out to someplace like
Charlotte its door – with almost 30
percent in Indianapolis door – is also
number one Philadelphia GrubHub is
number one in Los Angeles it’s post
mates something that hasn’t been bought
by anybody just yet but probably will be
you go to Phoenix and postmates sits in
a dead tie with ubereats and in Seattle
it’s Amazon down in San Diego its door –
I think there was several things I like
to point out that the GrubHub team did
very well number one they were adaptable
they adapted to the market remember they
started with faxes and they didn’t get
their mobi technology until 2010 they
also adapted to competition they
understood that it didn’t have to be
their brand you know why they did that
no hubris hubris is being
very cocky and arrogant they didn’t have
hubris they said well if we have to roll
up and buy other people and other brands
let’s do it if that’s the right thing
for the business very smart they also
weren’t about NIH which stands for not
invented here anybody who is an engineer
knows how that goes we can make it we
can do it we don’t need to buy anything
not invented here it can be a killer
because it takes you time to do things
that maybe you should just buy these
guys were smart about hubris and not
invented here number three speed within
strategy look how quickly they were
raising money look how quickly they were
making acquisitions they knew that speed
was everything and they executed on it
and lastly they clearly know that this
is about market share and scale as these
giants come into the picture and they’re
worth nine billion dollars with the
market watching and asking them
questions every quarter they know
exactly what they need to do I happen to
think Matt and Mike were very very sharp
about the way they went about it so I
think the future of food delivery for
you and me is very bright and tremendous
and we’re gonna watch a war unfold will
there be more acquisitions the way
GrubHub grew themselves what uber eats
go after door – or hosts mates or
someone like that time will tell but the
wonderful thing is this business model
is emerged and you and I have diversity
of choice and a great opportunity in our
busy lives to have technology and
service come together and the market
seems to think that these businesses can
be worth billions and billions of
dollars
I think grub hubs got a great chance to
lead as all this comes together for you
and me the beneficiaries of these great
service products that’s the grub hub
story and we’re all gonna see what the
future holds what do you use when you’re
hungry leave me a comment below and tell
me about your experience with grub hub
or door – or any of the competitors and
chime in if you don’t think they’re
worth nine billion dollars or maybe you
think they’re worth more you can also
follow me the Biz doc on instagram or on
facebook i’ve come to the dark side and
I finally have a facebook business page
I’ll see you next week with another case
study
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I’m Tom else with the biz doc and I hope I left you better than I found you
doc it’s GrubHub you get home at 6
o’clock there’s nothing in the fridge
you don’t feel like going out or the
weather is bad
that’s who you call and you’re not alone
Ford and fifty thousand people a day are
calling GrubHub and it’s a company that
the market seems to think is worth nine
billion dollars but I’m going to tell
you what I think I’m going to take you
through three parts of the GrubHub story
first
the founders where did they come from
where’d they get the idea and raising
early venture capital part two their
growth strategy including roll up which
was the key to where they are today and
lastly what I think the future has in
store for GrubHub let’s dive in so you
have Matt Maloney and Mike Evans they’re
developers and they were working for
apartments.com
smart guys they were working on
geolocation what geolocation is is
wherever you are and you look on your
app you look online it senses where you
are and gives you choices around there
to make it more efficient for you to use
a particular app there a service product
and they looked at that and they said
Wow
could this technology be adapted for
food we’re developers we work late we
get home hungry it’s a pain in the neck
to call a restaurant give them your
credit card ask him what’s on the menu
and they notice that when they went to
restaurant websites they were really
terrible
who knew that restaurant website was
there our restaurant is born they make a
website but they don’t advertise it it’s
a word-of-mouth but if there’s word of
mouth and he know about the restaurant
you just go there or you call him and
they said wow what if we could make this
easier and people would actually be able
to find a selection of restaurants order
what they want and maybe we could
arrange all that the birth of GrubHub
there they are oh 506 and they did it
with fax this is a archaic machine where
you put a piece of paper in here and you
call somebody and then a piece of paper
comes out the other end for those you
they were born after 1995 you can find
them in the Smithsonian the early growth
was in Chicago they knew the
neighborhoods they knew the restaurants
they went door-to-door and started
asking them say hey we could do this for
you we could do that for you you could
get more results than what you’re
getting on your website and people said
no no no I’ve already spent a lot of
money and my website I’m not getting out
of it I’m not gonna spend anything with
you and then they had a thought and they
came back and he said well what if you
gave me 10% of extra meals that I can
get people to buy from you and
restaurant said that’s fine I’ll do it
that way you give me more meals I get
more revenue I’ll give you 10% and the
GrubHub business model was born they
went to Chicago they expanded to a whole
lot of restaurants and as you’re growing
what do you need venture capital so here
they were in 2007 and as the CEO Matt
Maloney tells it it takes a long time to
raise venture capital he’s absolutely
right
venture capitalists never say no they
say we’ll get back to you we’ll see what
we think every now and then you may get
a hard no from one of them but most of
time it’s an elongated process and you
really don’t have firm answers and he
was very frustrated by that so he said
you know what we just have to
bootstrapped it and do it ourselves and
that’s what they did and then they did a
little piece of guerrilla marketing they
said why don’t we make our next market
San Francisco there’s a lot of investors
out there venture capitalists out there
so they went out there started
advertising and did some things and
guess who notice the venture capitalist
GrubHub isn’t that those guys from
Chicago that came to us with that idea
about you know facts and then things to
the restaurant making more money for the
restaurant raising awareness yeah maybe
we should talk to them again and in 2007
they raised a 1.1 million dollar series
a taking little bits of money keeping
control and keeping ownership of the
company I think that was smart that was
followed by more growth and then a
couple years later oh 9 they raised two
million dollars in venture capital in
the B round a B just the letters that
signify the order of the tranches of
money that you raised then came
something very very big and that was in
2010 they got the attention of benchmark
capital one of the top two or three
venture capitals firms in the world and
they raised 11 million dollars now they
were off and running about that same
time in 2010 they introduced their
mobile app although that says mobi so
now all pretend were from Australia I
got my mobi with me they move forward in
2011 and they raise another 20 million
and what this really shows you is
traction the traction was here expanding
city to city and they had really
perfected the business model their main
group and their main management team was
in Chicago but now they were putting
people in each city who understood the
demographics and what’s hot what’s not
of the local restaurant scene at the
same time they also came
conclusion we don’t have high barriers
to entry what’s a barrier to entry
those are things about your business
that make it hard for somebody else to
copy it or jump into the same market and
open a business of their own this very
low barriers to entry we could make a
mobile app go talk to restaurants in our
own city as many other companies we’re
already doing and we can be off and
running so they looked at it and said
this is going to be all about scale what
scale scale was assimilating things the
same way Amazon did so as you grow big
you are actually have lower costs and
things because you’re replicating all
the services or cost of your business
over a larger revenue base and that’s
called scaling the business as they
looked at scaling being successful they
set aside their ego about GrubHub the
only way to do it and said now wait a
minute maybe we should be acquiring some
of these other companies that are
similar to us we’ll achieve scale let’s
be selective and careful about what we
do and careful about how we spend the
investor’s money but that’s the way they
did it along comes the pac-man phase in
2011 they erased that 20 million dollars
in the series Di mentioned then late
2011 they raised 50 million dollars in a
series II those are big dollars how are
they able to do that well in 2011 they
actually had 60 million dollars in
revenue that’s their share of the
revenue of what they get so that was
probably four five hundred million
dollars of the meals that they were
facilitating but that was their cut by
the end of 2012 they got that up to 82
million so right here you see the
investment community saying wow you guys
are on a roll you guys are hot we’re
putting in real money then comes this
phase now let’s take a look at what
happened I got friendly pac-man here and
I got a bunch of dots because over time
they would buy all menus seamless those
of you in the Northeast United States
know who seamless is well guess what
today it’s a division of GrubHub all
under the same family they also bought
delivered dish restaurants on the run an
LA bite they would buy in 2016 for 65
million dollars
everybody in LA on the other side knows
what la bite is and there are thousands
of restaurants already connected to la
bite so GrubHub if they said we’re going
to get people and money and we’re going
to invade LA
we’re gonna take the turf no that would
have taken too much time they bought the
turf as long as the price of what you’re
buying is reasonable and you get the
payoff and it’s early enough that the LA
buy people say well let’s take sixty
five million dollars and we’ll become
part of GrubHub and they don’t change
the name to GrubHub why because people
in LA know who la bite is just like
everybody in New York and New Jersey
know exactly who’s seamless is that led
to seventeen on this pac-man path here
where they bought eat24 for two hundred
eighty seven million dollars that’s a
big stack of money but guess what eat24
was actually owned by Yelp and Yelp two
years prior had actually bought this for
a little over a hundred and thirty
million dollars so Yelp sells it for 287
makes a little bit of profit and a
technology handshake was made where
GrubHub will use the Yelp technology for
identifying making restaurant reviews so
suddenly now they have a theater system
through the relationship with Yelp to go
with what they’re building a nationwide
roll-up why is that important now you’ve
got something that helped differentiate
them and if you’re like me
I’m always yelping my favorite
restaurant reviews and ones that are not
so favorite that I don’t go back again
and restaurants are starting to take
notice any of you who use Yelp know that
if you put a particularly bad review as
long as you’re being tasteful and polite
about your review and say hey this
didn’t work for me this wasn’t so good
restaurants are actively trying to come
back and say listen we’re really sorry
about that I’d like to take care of you
on your next visit because they can tell
people that are just you know flaming
them versus people that are given an
honest review nonetheless
Yelp technology through a handshake
agreement as part of the eat24
acquisition is now inside GrubHub as an
important differentiation point so that
in summary is a rollup strategy buying
things that are like you as long as the
price is right that helps you get bigger
or expand your footprint this is a
footprint play now let’s step back and
see what the revenue line look like and
how they ultimately went public when I
left off there at 82 million dollars
here well the following year 137 million
and they made six million of net income
then 253 million in 2014 and that was
their IPO that’s when they went public
and since going public their stock has
been on a progressive terror there’s a
little dip
spook that happened between now and then
but it were covered quickly and it’s
moved forward how had they delivered for
people who have invested well in 2015
they went from little over quarter
billion to 361 in top-line sales then 38
million dollars that’s a little more
than 10 percent the net income compared
to the revenue 2016 493 and 49 sitting
right about there at about 10% and then
2017 683 million dollars in revenue and
98 million dollars in that income in
2017 ground August a report came out and
said they were number one in nine cities
now what did that do that really painted
a picture for everybody says wait after
all of this roll up and all the success
they look like they’re doing good the
revenue looks like they’re doing good
and they are doing good you’re telling
me they’re number one in only nine US
cities yes and that’s adding all of this
up which shows you how low those
barriers are entry and this is not the
last time they’re gonna be making
acquisitions nonetheless they had eight
point eight million total unique active
visitors you know over the course of a
quarter or a year as they measure that
and three hundred and twenty four
thousand daily average grub’s called a
dag that’s the average number of meals
per day that are ordered through their
service through all the brands that
comprise grub hub and now grub hub is
more of a parent company with brands
underneath putting its culture and
technology and philosophies through
everything then we have here 900 million
in gross food sales in other words
that’s the ticket that’s the bill that
the customer paid not their part so in
other words they’re now causing
restaurants across the United States
not from sit-down diners but from the
people that are taking out through the
grub hub services and all the brands
nine hundred million dollars of
restaurant revenue what’s caused by grub
hub because you and me got home the
weather was bad there’s nothing in the
fridge we call grub hub 2018 q1 this
shows what a roll they’re on after the
eat24 acquisition and the Yelp
integration which happened at the end of
17 q1 two hundred and thirty two million
dollars and 30 million dollars of net
income when you put that together
where’s my producer what is that per
920 million dollars so now there have
created a company that’s generating over
one point two billion dollars in gross
food sales to all the nation’s
restaurants so in other words this is
working for restaurants it’s working for
GrubHub and you know it’s working for
you and me and they’re up to four
hundred and thirty six thousand daily
average grubs and they have 15 million
active members so with all those stats
what’s this company worth well now we’re
gonna get to something I want to dive
into a little bit GrubHub it’s about a
hundred and five to one hundred and
seven right now on the stock market
that’s the price per share early June
2018 as we film this that translates to
a valuation of nine billion dollars so
if you wanted to buy all the stock of
GrubHub and own GrubHub yourself you
need a dump truck full of nine billion
dollars with you to pull that off what
we do in the stock market is we have
what’s called the p/e ratio it’s a way
you can compare different companies to
each other you look at the price of
their stock compared to the earnings of
the company think of it as a temperature
you take the temperature of five people
doesn’t matter how tall how short or
what they weigh the temperature can be
compared that’s really a way to compare
companies their p/e right now is 85 I
think that’s kind of high the p/e I
think would be much lower for what
they’re doing a service business where
other people can easily compete with you
by opening up shop getting a mobile app
and a collection of restaurants in some
local city where they know the playing
field so at 85 I think that’s a little
rich let’s compare it to some companies
that we know Google p/e of 47 Apple p/e
of 18 now let’s go to the pure internet
side because Google is definitely a
multi division ad company and Android
company very very mature Apple we know
what they are you go to Amazon and
Netflix internet-based Internet growth
companies Amazon’s at 212 and Netflix is
242 now everyone is saying about Amazon
they’ve been saying for years oh my gosh
Amazon’s p/e is too high but they keep
going up and prove that they can live
with that p/e Netflix at 242 a lot of
people say oh my gosh means their price
is pretty high for what they’re
delivering but they keep growing and
driving so you’ll watch over time as
they do what’s called growing into their
PE what does that mean well that means
the stock may be flat for a little
– even as they grow revenue and what
that really means is they’re growing
into their PE because PE users usually
forward there’s a lot of anticipation
and future in the price of any stock so
what do I see in the future for GrubHub
well we had pac-man on this side and
we’ve got evil pac-man on this side uber
eats Amazon and door – are three very
significant competitors I’ve pointed out
that they’re only number one in about
nine to twelve cities right about now
which means that Amazon door – and uber
eats are number one in other cities
Amazon flat-out owned Seattle and
they’ve been experimenting with meal
delivery they deliver products they do
same-day delivery of many things to your
door so what would keep Amazon from
going out to a large set of restaurants
and saying hey be part of the Amazon
family you know I’ll deliver for you the
same way I deliver everything else
barriers to entry low brand recognition
of Amazon hi big big barrel of people
like you and me and Amazon knows what we
order and what we’ve been doing a lot of
customer data would be very easy from
them to move from Seattle and go to many
other cities uber eats they already have
fleets and fleets of drivers and
reliable drivers is one of the things
that the GrubHub guy said gave them a
headache early on lastly door – what’s
very very similar to GrubHub so
nonetheless you’ve got a lot of
variability in the market share on
cities let’s take a look at some of
those here in Dallas uber eats it’s got
like 30 percent market share they’re
also number one in Houston Court Worth
and San Antonio in Chicago grub hubs got
like sixty percent market share they’re
the home team that’s where they grew up
but you go out to someplace like
Charlotte its door – with almost 30
percent in Indianapolis door – is also
number one Philadelphia GrubHub is
number one in Los Angeles it’s post
mates something that hasn’t been bought
by anybody just yet but probably will be
you go to Phoenix and postmates sits in
a dead tie with ubereats and in Seattle
it’s Amazon down in San Diego its door –
I think there was several things I like
to point out that the GrubHub team did
very well number one they were adaptable
they adapted to the market remember they
started with faxes and they didn’t get
their mobi technology until 2010 they
also adapted to competition they
understood that it didn’t have to be
their brand you know why they did that
no hubris hubris is being
very cocky and arrogant they didn’t have
hubris they said well if we have to roll
up and buy other people and other brands
let’s do it if that’s the right thing
for the business very smart they also
weren’t about NIH which stands for not
invented here anybody who is an engineer
knows how that goes we can make it we
can do it we don’t need to buy anything
not invented here it can be a killer
because it takes you time to do things
that maybe you should just buy these
guys were smart about hubris and not
invented here number three speed within
strategy look how quickly they were
raising money look how quickly they were
making acquisitions they knew that speed
was everything and they executed on it
and lastly they clearly know that this
is about market share and scale as these
giants come into the picture and they’re
worth nine billion dollars with the
market watching and asking them
questions every quarter they know
exactly what they need to do I happen to
think Matt and Mike were very very sharp
about the way they went about it so I
think the future of food delivery for
you and me is very bright and tremendous
and we’re gonna watch a war unfold will
there be more acquisitions the way
GrubHub grew themselves what uber eats
go after door – or hosts mates or
someone like that time will tell but the
wonderful thing is this business model
is emerged and you and I have diversity
of choice and a great opportunity in our
busy lives to have technology and
service come together and the market
seems to think that these businesses can
be worth billions and billions of
dollars
I think grub hubs got a great chance to
lead as all this comes together for you
and me the beneficiaries of these great
service products that’s the grub hub
story and we’re all gonna see what the
future holds what do you use when you’re
hungry leave me a comment below and tell
me about your experience with grub hub
or door – or any of the competitors and
chime in if you don’t think they’re
worth nine billion dollars or maybe you
think they’re worth more you can also
follow me the Biz doc on instagram or on
facebook i’ve come to the dark side and
I finally have a facebook business page
I’ll see you next week with another case
study
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I’m Tom else with the biz doc and I hope I left you better than I found you
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