GrubHubMike

Opportunity vs Focus

Much has been said about the importance of staying focused in a business.  This has been one of the elements of success at GrubHub.  But I’ve always been a little bit uncomfortable with explaining this concept to colleagues.  Occasionally, someone will propose a great concept of a flanking product at our business with solid metrics and unit case analysis.  Often my response to the idea is “well, sounds good, but isn’t in our sweet spot”.  Yet it feels intellectually dishonest to dismiss a potential cash cow on a weak philosophical position.  On the other hand, we can’t evaluate every single idea, so where is the balance?

(Over)compensating with equity

I've been asked recently about how to compensate non founder employees at the beginning of a venture.  But there is a lot of confusion on whether to make everybody involved on day 1 a founder.   Most folks agree there is an upper limit on the ideal number of founders.  So taking that for granted, how do you motivate non founders with equity before you have cash? 

The usual method is to just give them a big chunk of equity  But that can get real hairy because you don't always know how to differentiate quality people vs total hacks.  So don't "give" equity to anyone.  Everyone should earn equity over time.  If you grant it all up front and then find out somebody is a lazy bum the company gets bogged down by a cap table with dead weight. 

GrubHub closes an $11 million round, and we learned something

GrubHub recently closed an $11 million funding round. Check out our official post here.   This is the third VC financing we’ve gone through, but it was the first time I’ve done the Sand Hill road show.  The process of seeking investment is incredibly valuable for a growing business.  It forces the executive team to take a step back and evaluate their business, progress and future plans.  Then you take those things and expose them to the scrutiny of very intelligent, engaged and motivated skeptics.  It's the best consulting money can't buy!  During the course of talking to some of the sharpest minds in Silicon Valley, Chicago and Boston, a number of themes came up repeatedly:  

Mobile is the future king

The growth in the late 90s and early 00s in web adoption is happening in a compressed 2-3 year time scale right now.  If you’ve got an investment pitch that doesn’t mention mobile before the 4th slide, you’ll walk away empty handed.  This goes both ways; investors that showed no interest in mobile were filtered out of the process very quickly.  

Lean Startup Economics

 Creating a startup is best done by jumping in with both feet.  Building a minimal product and finding customers early in the process is a great way to create a company from scratch.  The idea of WRITING A BUSINESS PLAN is such a daunting task that most reasonable people aren’t going to go tackle it head on.  

But there is an alternative, take it out one piece at a time.   The central piece of the business plan is the financial model.  The central piece of the financial model is the unit model:  a fancy term for the expenses and revenues associated with producing and selling a single item.  

A Practical Guide to Writing Your First Business Plan

 So you want to start a business.  You’ve heard that you should have a business plan.  You’ve got a vague idea that you should get started on that sometime.  That vague idea has been sitting in the corner getting grumpy as you’ve neglected it.  And now the idea is a mean looking little monster with big pointy teeth.  The best way to get that sucker is to take a step by step approach that breaks down this big “MAKE A BUSINESS PLAN” task into a bunch of smaller pieces.

Top 6 boneheaded misconceptions of first time entrepreneurs

 I’ve had some pretty boneheaded ideas since I started grubhub.com.  As I’ve shepherded my idea to a hobby and then to a real business I’ve had the fortune of being able to recognize some of those mistakes.  Actually, I’ve had the fortune of being surrounded by folks who can point out misconceptions and who have been upfront with me.  This process of learning from bumbling mistakes investors like to call seasoning.

I have noticed that some of these ideas have come up repeatedly.  Many of the other entrepreneurs and would-be CEOs I’ve met have struggled with these same ideas.

1. I have no competition

When I first thought about competition, I had a mental image of a rival gladiator.  Somebody out to get me. This foe will stop at nothing to steal customers that should rightly be mine.  They will woo investors with false tales of better products and superior talent.  Jerks.  

Marketing Competency Matrix

 This matrix was created while to put some thought behind what makes a great VP of Marketing.  It was inspired by this programmer's competency matrix

There are many different types of Marketing folks for different stage companies. This chart is based on my experience at stable, yet early stage internet startup. 

Founder Competency Matrix

 This matrix was created while to put some thought behind what makes a great entrepreneurial founder.  It was inspired by this programmer's competency matrix

There are many different types of entrepreneurs for different stage companies. This chart is useful to me in trying to raise my own game at stable, yet early stage internet startup.  I hope to continually improve towards level 3 on this chart over the coming years.

A Quick Interview

 A student sent me some interview questions for his entrepreneurship class.  I only had about 5 minutes to shoot off some answers. So, this is what popped off the top of my mind:

9 tools for growing a startup from 1 to 50 employees

 Here is a roundup of 9 tools for growing a company from 1 to 50 employees:

Tool #1: Revenue.  Apparently there are business models that are proponents of not making money right away, but I don't get them.  Cash allows an entrepreneur to hire people and resources to get things done.  At first it is all about increasing velocity on the sales -> product -> sales cycle.  Successfully executing that cycle then requires supporting activities... billing,finance,IT infrastructure, etc

The Third Office (50 employees)

 This is the eighth installment in my series on going from 1 to 50 employees.

We outgrew our 2nd office in 18 months when we went from 15 people to 50.  Two things have changed about the nature of the business during this latest evolution.  First, instead of being very scrappy with cash, we've loosened the purse strings.  Second,  vendor relationships have become much more important.