Will Shu was once an New York-based investment banker at Morgan Stanley dealing with mergers and acquisitions. He worked very long hours, seven days a week and was used to getting decent food delivered to his office. “Then I was transferred to London to work in Canary Wharf in 2013,” Shu says. “It was the first day in the office and we were eating Tesco microwave meals, which are actually ok, but I wanted something better. I looked for delivery options and there weren’t any.” Then Shu had his lightbulb moment. His one lightbulb moment. “I didn’t have a hundred ideas. I had one.”
That idea was the food delivery service Deliveroo. Six years after its launch, and following a recent $600m investment from Amazon and others, Shu’s idea is worth somewhere north of $2bn, possible another $2bn north, operates in 14 different countries and employs (on somewhat controversial terms) 60,000 delivery riders and drivers. In its last set of results, global sales were up 116 per cent to £277 though after ploughing £106m back into the business, pre-tax losses were up to £185m.
That focus on one simple idea, rather than a non-specific entrepreneurial urge, was crucial to his success argues Shu. “There are probably two reasons why you should start a business. One is that you feel personally passionate about a particular thing. And although it’s a weird thing to say, I’m really passionate about food delivery. And the second is you work in an industry and you understand there are inefficiencies and something can be done a lot better. I don’t think it’s wise to start a business just for the sake of starting a business. It’s just too hard.”
For Deliveroo’s first year, Shu kept the day job and delivered food at night. His first customers were his friends. “I would just ask them to order all the time. Because that’s what you do. They would order and then think it was really funny that I was one delivering the food. But then they kept ordering even when it wasn’t me who necessarily going to be doing the delivery so I know we had a product.”
One of the first investors in Deliveroo was Martin Mignot of VC Index Ventures. Mignot put his faith in the business despite, or perhaps because of some design issues with its first website and app. “I thought ‘if people are still ordering, despite this shitty website, this thing is going to be huge’.” It was a smart insight. Mignot has watched and helped the business grow from eight employees when Index Ventures took its stake to 2,500 now and joined Shu on stage at Second Home Clerkenwell to talk through Deliveroo’s remarkable growth.
Shu is now in a position of successfully driving an international business that started as one man on a second-hand motorbike, moving at a speed he couldn’t have imagined and fundamentally shifting food culture and food business. ‘I didn’t anticipate the size of the market. I started out just thinking that people in central London want better food delivered quickly. Now it’s a huge mainstream product.”
Shu admits that scaling up at that speed is not easy and can leave a little blood on the carpet. Taking the people you started the business with you – or not – as it grows and becomes a different type of business is particularly tough he says.
“That is really the hardest part because you have people who have helped you scale your organisation, to get it to where it is today. And you know, some people aren’t going to scale with you. In the beginning you want individual problem solvers. You want really scrappy people that get stuff done. And then if suddenly you’re 2,000 people and growing, you’re looking for a different profile. That’s really, really hard to say to someone but it’s also the right move. And finding the right new people is tough. When your company grows 100 per cent a year for seven years straight, the amount of people who actually been through that is zero.”
Shu admits that the some of his more recent appointments, particularly at a senior level, have not always worked out. And that he has been quick and almost ruthless in cutting his losses. “It’s hard because you spend a lot of time recruiting people and you think you have a pretty good sense of how things are going to work out. When it doesn’t work out you question yourself. Did I give it enough time? But it comes down to intuition and instinct. And I think the more you hire people and see them develop, the more you get a sense of how they will develop. Or not. I think I can probably still get a lot better at interviewing!”
That rapid growth has had a knock-on effect on the restaurant business says Shu. “When I started I viewed Deliveroo as an interesting side-income for restaurants. They’ve already paid the staff, already paid the rent. It’s just a matter of cooking a few more meals. But the success of delivery means that the successful restaurants have really had to think about their physical setup, the technology, the packaging they use, their staffing and on.”
Now Shu is forcing more change on the industry, opening delivery-only restaurants or Editions as he calls them. The mix of tenants at these multi-occucpancy kitchens is fine-tuned around Deliveroo’s ever expanding data-reserves. “We know in any particular neighbourhood what cuisines are going to do well and at which price points and then we ask invite our restaurant partners to take up occupancy.”
Other’s have dubbed them ‘dark kitchens’, suspicious of the working conditions within. Shu just sees it as a new model that reflects the demand for good delivered food. And presents an opportunity for young chefs and food entrepreneurs. A couple of years ago Deliveroo bought Maple, a New York-based operation which sourced, prepared and delivered food, moving its senior staff (and software) to London. And they have been key in developing the Editions concepts.
“We’ve experimented with chef’s at Editions who don’t have the capital to open their own bricks and mortar restaurants yet. But based on their success there they have managed to get a loan to open a restaurant. It could be someone straight out of culinary school, it could be a street vendor. The possibilities are endless.”
And Shu says other there are other smart uses of the data it collects that it is still to explore. “We are a food company and at the moment that food delivery but it could become other things. How can we use that data to help restaurants improve their menus or reach new customers in ways they hadn’t thought about? Restaurant reservations and payment might make sense.” It has recently added a click-and-collect service and is rolling out an option which allows customers to mix and match dishes from different restaurants in one order.
Shu is the first to admit that building Deliveroo has been far from easy. But that focus on one simple idea kept him going. “I didn’t have a choice but to grow the company so I just had to figure it out. I didn’t sit around thinking what else do I do. I was just, ‘I’ve got this problem, I’m gonna figure it out.’ That may not be the greatest advice for people but that’s how I think about it. “
Written by Nick Compton
Will Shu was speaking at Second Home Clerkenwell Green as part of our Breakthrough Fortnight, where together with Index Ventures and Sifted we brought the entrepreneurs and innovators behind now famous companies like Deliveroo, Farfetch, Mumsnet and Bulb together to reveal the stories behind their world-changing businesses.