GrubHub: 7 delicious tips which turned two programmer’s $140 side gig into $3 billion

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Hey rebel solopreneurs 🦸‍♂️🦸‍♀️

You think you need to validate your idea extensively before starting.

This wrong belief keeps you stuck in research mode forever, never actually launching anything real.

But here's the crazy part - what if the best validation comes from selling something - anything - from day one?

Mike Evans and Matt Maloney from GrubHub discovered that making money immediately wasn't just about survival - it was the ultimate product validator.

Ready to crack their winning formula?

🍹 The humble beginnings...

Mike Evans was a web developer at Classified Ventures in Chicago, working on sites like Apartments.com and Cars.com.

One cold January evening, he took the packed 151 bus home after work.

The bus was late, crowded, and he found himself uncomfortably close to someone's armpit.

Nasty slush from recent snow covered the streets everywhere.

When he finally got home, exhausted, he barely had energy to pour himself lucky charms.

He cracked open the massive yellow pages book to find food delivery.

Seven phone calls later, he finally found one restaurant that would deliver to him.

The frustration of calling multiple restaurants and reading his credit card info every single time was a total pain.

He knew there had to be a better way to order food delivery.

After thinking about this for a couple of days, he called his friend Matt Maloney.

They met at Moody's Pub over burgers, fries, and a few beers to talk about this idea.

As software developers working on geographic lookup searches for real estate, they wondered why nothing like this existed for food delivery.

They took out a napkin and started drawing their business plan.

Mike says that original idea went through refinements, but it's still at the core of what they do today.

The plan was simple: list restaurants that deliver to specific addresses and charge willing restaurants a small subscription fee.

Premium placement and email promotions would help paying restaurants get more orders.

But first, they had to solve a massive chicken-and-egg problem...

1. 🛡️ Don't keep your idea secret when the real moat is execution

But here's the thing - he worried about competitors stealing their idea, especially Google.

But then he analyzed what it would actually take to execute this vision.

Get this - he realized nobody else would be crazy enough to call 20,000 restaurants manually.

That's a lot of work that most people simply won't do.

When he thought about Google becoming a competitor, he knew they don't like calling people.

"They'll ask us for the data, but they're not actually going to do it themselves," Mike realized.

This insight gave them confidence to move forward, but the real work was just beginning...

2. 📞 Start selling before your product is perfect

But here's the crazy part - when they called restaurants, they collected intricate local delivery data that no database could provide.

They found exact delivery boundaries down to ten feet - which neighborhoods, which streets, even boats on lakes.

Wild, right?

This hyperlocal knowledge became impossible for competitors to replicate without doing the same manual work.

When someone placed an order, they had to figure out how to get it to the restaurant.

They let each restaurant choose their preferred method: phone, fax, email, or web-based systems.

They also built confirmation systems to ensure orders reached restaurants within three minutes.

But Mike was about to make a decision that would change everything...

3. 💰 Quit your job only when you commit to making money from day one

Mike's advisor told him to quit his job and focus fully on GrubHub.

He felt ready to transition from hobby to serious money-making business.

The first month, he made only $140 - but that didn't stop him, it motivated him to make more the next month.

But that didn't stop him - it motivated him to make more the next month.

He decided this wouldn't be a hobby he'd do for free for two years.

"If I can't support myself within the first 2 months, I was going to quit," Mike says.

This deadline focused him on doing only the important stuff that would actually generate revenue.

Getting customers to pay validated that he was building something people actually wanted.

Now came the challenge neither programmer was prepared for...

4. 📚 Learn sales by doing, not by avoiding it

Matt and Mike were software developers, so technical challenges weren't their biggest issues.

Sales and marketing were completely foreign territory they had to master.

They needed to convince restaurants to use their system for accepting orders.

Mike bought "Sales for Dummies" because he knew coding but had never sold anything.

The book taught him to reach restaurant owners through the back door from the kitchen, not the front entrance.

He learned that sales success comes from walking in and simply believing in your product.

Can you imagine?

But Mike was about to discover the dangerous side of enthusiastic selling...

5. ⚡ Promise features you don't have yet, then build them fast

Mike walked door-to-door, meeting restaurant owners and selling them on his system.

When owners asked if specific features existed, Mike would say yes even when they didn't exist yet.

He knew he'd have to work 20-hour nights coding features he'd just promised customers.

One restaurateur asked for email marketing to previous customers - a complete CRM system that didn't exist.

Mike said yes, then he and Matt coded it up in a couple of days.

Wild, right?

Being so close to customers in those early days meant he understood exactly what restaurateurs found valuable.

This approach was working, but they needed to solve the bigger challenge of getting customers...

6. 📢 Build word-of-mouth by obsessing over the customer experience

After signing up restaurants, they needed to get customers to actually use GrubHub.

Their biggest growth driver was word of mouth from people who loved the website.

Their Net Promoter Score was very high, meaning lots of users recommended them to friends.

They based their entire marketing plan around building a great product people would love on first use.

The goal was creating something users would return to repeatedly and tell their friends about.

That was literally their entire marketing strategy in the early days.

Success was growing, but Mike was about to make a controversial business decision...

7. 🚀 Bootstrap as long as possible to maintain control and focus

For the first three years, they bootstrapped without taking any outside funding.

While other startups focused on grabbing market share first and revenue later, GrubHub was different.

Mike wanted to build something people would pay for from day one, not chase vanity metrics.

He had a unique skill of creating valuable products people would buy using just his existing abilities.

"Going all the way back to the Industrial Revolution, this probably hasn't happened in history before," Mike says about bootstrapping a tech company.

Can you imagine?

They didn't even have an office until they grew to seven employees.

Their revenue model was about to get a major upgrade...

💰 The epic win

GrubHub grew 100% year over year while staying profitable.

In their second year, they processed $70 million in food sales.

Some restaurants were making close to $1 million annually just from GrubHub orders.

But wait, there's more - when they went public in April 2014, shares opened at $26 and jumped over 50% on the first day.

Boom! The company was valued at more than $3 billion at IPO.

🥂 Your turn to shine bright!

That's it, my fellow rebels!

You think you need to validate your idea extensively before starting, spending months researching instead of selling.

Mike went from overthinking his food delivery idea to building a $3 billion company by making money from day one.

"Making that first dollar was really hard because we had to make a product that was worth people paying for," says Mike.

"Getting repeat business was the thing that really made it not just a business but a supercharged engine for growth," adds Mike.

Stop researching and start selling something - anything - today, even if it's not perfect yet.

You know what I mean?

I'm betting you're gonna surprise yourself with what you're capable of.

Keep rocking 🚀 🍩

Yours 'making success painless and fun' vijay peduru 🦸‍♂️