Thirty Minute Mentors Podcast Transcript: Grubhub Co-Founder Mike Evans

I recently interviewed Mike Evans on my podcast, Thirty Minute Mentors. Here is a transcript of our interview:

Adam: Our guest today founded a multibillion-dollar business that has changed the way that millions of people order their meals. Mike Evans is the co-founder of GrubHub, and the rare entrepreneur to take a startup from idea to IPO. Mike is also the author of the new book, Hangry: A Startup Journey. Mike, thank you for joining us. 

Mike: Thanks for having me on. 

Adam: Mike, you grew up in a small town in northwest Georgia and were raised by a single mom before going to MIT where you earned undergraduate and graduate degrees in engineering. And then kicked off your career working as a software developer. Can you take listeners back to your early days? What lessons and experiences were most instrumental to shaping your worldview and shaping the trajectory of your success?

Mike: I grew up the youngest kid, four kids in the family with a single mom, and my mom was working two jobs to keep food on the table but wasn't great at getting food on the table. So she probably would not appreciate that observation. But we did a lot of delivery food. And so it's not terribly surprising to anyone, my family, that if I was going to pick a business to innovate, it was going to be delivered food, because we had a lot of Domino's, like a lot of Domino's, like they gave us free pizzas, we got so much stuff. So I mean, obviously just that was instrumental. I learned from an early age that the challenges associated with getting food there, it's not about putting things in the pan in the right order and heating it up the right amount. It's the mental load that's associated with shopping. And with putting together a plan and trying to worry about health and nutrition and all that work that goes on before anybody even starts cooking, which I think is a lot of time discounted. And so that was a lot of the insights that I brought to the early days at GrubHub. Because building a system that allowed for online ordering, really lowered the barrier associated with trying to order food and so that all of that came from observations I made when I was like, seven, because it's not like I made it at a business school when I was trying to figure out my next market case or anything like that.

Adam: And it was after you went to MIT, and you're working as a developer, you're sitting in your apartment in Chicago, you're hungry, in the mood for pizza, not sure what restaurants are open and able to deliver the pizza that you want to you. Can you describe that aha moment, and what gave you the confidence to go all in on it?

Mike: So the aha moment was, I was hungry, and I was sick of the same food. And I didn't want to order from the same three menus that just someone had happened to litter on my front doorstep. It was just really hairy at the time, this is 2002, you couldn't go online and just find every restaurant that delivered your address. You had to open up Yellow Pages, and therefore the entire city of Chicago, it is huge. Chicago is 27 miles from north to south. And just because the restaurants are there doesn't mean they deliver to you. And so the information just wasn't really personalized. And that still left me just hungry, and without a choice about what to do. And so it was like, I have a problem I want to solve for myself on money, write a website that makes me do that. That was the aha, the genesis of it. What came out of that was a hobby. And I make the distinction in the book about the difference between a hobby and a business as a business earns money and a hobby doesn't. And that's how GrubHub started out as a hobby. It was just a website for myself and for my friends. But then as it started to get traffic as people started finding it or telling their friends or it showed up on Google or whatever, I kind of realized that there might be something there. And so not long after my business partner, Matt sold the first restaurant, I quit my job and went full time and tried to figure out how to do sales and start signing up restaurants. I think that that's that transition more succinctly, the transition from idea to motivation, to build something, and then a little bit later becomes a business. And then I went full time with it. I think that that's not all that uncommon of a transition. And it works. It builds real businesses in a way that I think the MBA business school competition pitch plans might not.

Adam: And that's really a focal point of your book. In business school, they teach you one thing in the real world. It doesn't necessarily work out that way. And oftentimes we're taught that there is this moment whether it's the aha moment when a light bulb goes off and this billion dollar idea just emerges, or there was that one pivotal moment where you realized that I have to leave what I'm doing, and go all in and it sounds like in your case, it was a much more gradual process where there were small steps that gave you the confidence to realize that I actually have something here.

Mike: Yeah, I think I was certainly not the first person to think of online ordering. If you go back to 1988, and you watch the movie, The Net with Sandra Bullock, and that she actually ordered a pizza online five years before I actually started this business. So the idea was nothing special. And that's true for most businesses, the idea is not actually all that unique or interesting or defensible, for that matter. And so what really makes a business thrive is innovation over time, because any competitive differentiator, any advantage that you can build, someone can copy, but the thing that people can't copy is the tendency to innovate, that has to be intrinsic to the business or the individual. And so I think that departs from the narrative a lot of people would like to believe is true, which is I had an idea, a VC put some money into it. A couple years past, I was a millionaire, like that narrative doesn't really work. This idea generates a wealth narrative doesn't work. And so I think this concept is like, it takes a lot of cycles and a lot of iteration and a lot of learning and a lot of innovation and follow through and tenacity and pivoting and all that stuff. I think that that's really what drives success over time, as opposed to the aha moment.

Adam: What are the keys to driving innovation?

Mike: So there's a paradox in entrepreneurship. And that's that the entrepreneur has to look at the world and say, it's broken in some unique way that only I can perceive. And I have to divine from just the universe, that I know the way to fix it, nobody else does, which is an incredibly arrogant perspective. But the entrepreneur needs to have that perspective. But they simultaneously have to have this perspective of when my customers tell me, I'm doing something right, or I'm doing something wrong. I need to listen to them and change my behavior based on what I'm hearing from my customers. And so the arrogance of I can change this, and I have the right idea, combined with the humility of other people are telling me that my idea is wrong and needs to be tweaked in some way. Those two things have to come together in some really hard-to-pinpoint way. And it has to happen again and again. And again. And basically what I'm describing right there is that creates the fertile field for innovation. And then what happens over time, is that you start out with a problem, like, it's really hard to get food delivered to me, the first solution to that was, okay, well, I want to show people the restaurants that deliver to them. So I solved that first problem. But then that created the next problem, which was okay, it's still hard to order. And so I had to solve that with online ordering. And so each problem comes with a solution, but that solution creates new problems. And there's a book called Innovation Stack that explores this idea that this problem, solution, problem, solution, problem, solution, it's like turtles all the way down, it just keeps going forever. And so those two things, that attitude of humility/arrogance, and that iterative approach, that is innovation. Those two things together are what really builds competitive differentiation in a business.

Adam: And, Mike, what's striking to me is, as you're describing what it takes to innovate, I'm really thinking about what it takes to be a great leader, which entails those very same characteristics. It's this balance of belief in yourself, understanding who you are, having a code of values, that you believe in so strongly that you're not going to compromise those values for anything, but at the same time, having humility, being not only willing to but eager to listen, wanting to go out and seek contrarian perspectives. Great leaders ask great questions, great leaders go out and try to gather as much information as possible, and want to challenge their assumptions. And that's what it takes to be a great leader. That's what it takes to be a great entrepreneur. That's what it takes to be a great innovator.

Mike: Yeah, I think that's true. I think this idea that a person needs a strong sense of self, that's certainly a critical piece of being a good leader. And that's different from looking like what everybody else thinks a good leader should be, right? Like some people tend towards, well, leaders should be self-controlled and not super emotional and a very professional workforce. And some people would prefer more passionately or it really for each person, they have to decide for themselves, what they bring, but like any of those temperaments can be a good leader. I think balancing that sense of self, whatever it is, not comparing it to some absolute ideal, which doesn't actually exist, and balancing that against really empathy for the people that you work with. And the belief that you need to be their strongest advocate, I think those things come together to create an environment where everyone can thrive. And so, in one of my definitions of being a good leader is, is everyone at the organization thriving? Right? It's not about me being a good leader, it's about everyone pointing in the same direction. Do they know what they need to accomplish? Do they have the resources they need? Do they have the support they need? Do they have the empathy and trust and empowerment of their co-workers? So all those things coming together in an environment might define what a good leader is.

Adam: I cannot agree with you more, setting up the right environment, to allow everyone around you to become their best selves, and to allow your team to perform to the best of its ability.

Mike: Yeah, that's it, 100%. What I believe, yeah, that's what leadership is.

Adam: Mike, what have you found are the best ways that entrepreneurs can assess whether they have a real business, whether they have a viable business idea and ultimately a viable business?

Mike: I think the sharpest razor for determining whether or not your business is a real business is, do you have a customer who's purchased something from you once, who comes back and purchases it from you a second time? Because if they do, it means to get to that point, you, first of all, had to create a product and you had to sell it to someone, and they had to pay you real money for it. And that's all sort of the initial heart of it. But if you delivered enough value for the right price, that they want it a second time, you're really onto something. So I think that's probably the sharpest razor for determining whether or not your business is real. Now, combined with that are a couple of understood givens, one of which is to cost you $1.07 to generate $1 of revenue. That's not a real business, right? You have to generate more revenue than it costs you to deliver the product that you're creating. And so that's a given. I think most people assume that that's the case. Maybe not everyone, I'm not sure we work a certain way things were supposed to go. Yeah, I mean, I think that those are some pretty fundamental rules, repeat purchasers and positive margin are good indicators that you have a real business.

Adam: And you mentioned that first sale as being a pivotal moment, if not the pivotal moment, to give you a sense of understanding that this isn't as much of a hobby as you thought it was, this might be a real business. Can you go back to that moment? What went into that first sale? What went into those early sales? And what advice do you have for all entrepreneurs on how to close early sales? How to close early customers?

Mike: Yeah, I think so. The first few weeks of sales were a bit of a roller coaster. So I had built this hobby. It was a website, it didn't have online ordering yet, it was just a delivery guide. And then Matt Maloney the guy who ended up becoming my business partner, he actually sold the first restaurant. And shortly after that, I was like, this is it, this is a real business, I'm going to quit my job and go for it. The roller coaster was like, well, I gotta make my first sale. And it took weeks to get that first sale, I was into dozens of restaurants, I could not figure it out. And I was reading and talking to mentors and trying everything. And as you read the book, you'll see where this process ends up. The thing that really ends up helping that thing that gets that first sale is a relationship. I built a relationship with the person I was talking to, I started by listening to them, and I built a relationship and then my sales pitch wasn't this whiz-bang product is going to make you sell and get you so many more orders. The thing that sold that first restaurant was, hey, I'm an entrepreneur, you're an entrepreneur, take a chance on me. And then he said yes. And so that was a pretty shocking departure from what I assumed sales were early in the process. And so it was great to go all in. And then it was terrifying that I couldn't find any sales, and then it was really satisfying to get one sale. And then it was really, really satisfying to get like the next 20. And then once I broke into the sales process, they started coming much faster. And so the whole thing was super emotional. But I think if I were to suggest to someone what they could do to learn it, there's a theoretical framework, you can read some books, read some articles online, watch some YouTube videos, talk to a mentor. And then there's you got to go do it. You just got to get the reps in and practice and then you get better at it.

Adam: You learn by doing and it all comes down to building relationships. You're selling to a fellow human being, and you're selling to a fellow human being who you probably have something in common with. So rather than focusing on what you think you believe that other person wants, take the time to get to know that person and take the time to figure out what that common bond is, build that relationship and the sale will come.

Mike: Yeah, really practical evidence of that idea of working. So later on in the business six, seven years in, we ended up hiring a lot of multilingual salespeople. So some people who spoke Spanish and some people who spoke Polish and some people who spoke Italian and people who spoke Cantonese, Mandarin, and Korean. And so we hired all of these different salespeople who have had different languages. And so when they started the sales conversation with a person who was their native language, or their first language, it just immediately created a connection. It's no secret that independent restaurants across the United States are often run by people who are first-generation or second-generation immigrants. And that connection that we created through our sales team was really valuable. And also, whenever anything went right, or whenever anything went wrong, it gave us a chance to have meaningful conversations with people. And so we got really good feedback from restaurants because that too,

Adam: And a big part of it is about building trust. If you trust the person who you're speaking to, you're gonna be a lot more likely to do business with them. And if the person speaks the same language as you whether it's literally or metaphorically, you're gonna be a lot more likely to trust them.

Mike: It's amazing. So there's like a whole psychology around websites and products and sales and all of this around trust. And it's amazing how much we actually thought about trust and how much it mattered for diners and how much it mattered for restaurants. So certainly, it was true that having a really established brand, and really sharp presentation materials and a really thought through sales process. And like all of those things, certainly encouraged trust. But also the product itself encouraged trust, because we only made a percentage, if the restaurant actually sold, they actually had to get in order for us to get a percentage. And they could pick what that percentage was. It was all very transparent to the restaurant. But there were some other things that went into that too. One of our core values was honesty, right? And one of the things I discovered over running a company for 12 years with like 4000 employees that I hired, was that honest people trust honest people inherently. And the people who display dishonesty were quick to assume other people were being dishonest as well. And there was something here around this idea of, if you trust people, then people trust you. And so and certainly if you are worthy of trust because you act with integrity, then people trust you. And there was something very transparent about that. And then that actually went all the way through too, this is gonna sound totally off the wall. But the conversion rate on the website, the number of people who came and looked at the website, then actually transacted, that percentage was really important. And it turns out that one of the things on a website that makes people trust it the most is how fast the page loads. So this was an entirely unexpected learning that we got that if we had a website that took three seconds to load, people assumed that their credit card would get stolen. But if it only took 30 milliseconds to load, they would assume that it was trustworthy. The two are not related at all, but in people's perceptions, it mattered a lot. And so integrity became a big thing because it was entirely a transparent and authentic thing where we were trying to act in a trustworthy way. But we were also trying to give off the perception of trustworthiness at the same time, which took some intentionality like it didn't just happen automatically. And so I think that's true. Just to get back to what you asked originally. I think that's true in sales as well. It's good to be trustworthy. It's also good to think about how to appear trustworthy when you are not disingenuous.

Adam: Yeah, what you say makes perfect sense. You need to authentically be a trustworthy person. And additionally, as we were talking about earlier, you need to listen, you need to be empathetic, you need to put yourself in the shoes of the person who you're focusing on. And that takes a lot of effort that takes real work.

Mike: And it takes personal work. It takes individual, personal, self-focused work to become trustworthy. So fast forward to my current company fixer, which is an on-demand handyperson service within a W-2 employee workforce. And we have our core values and their skilled listening, learning. And one of them is honest. And every one of our core values we say that we can teach we can teach someone to be a better listener. We can teach somebody to be a better learner, we can teach someone to be more skilled. The one thing we can't teach is honesty. If your mama didn't teach you, we can't. I think there's something about this issue of trust and authenticity and transparency. That's intrinsic to the individual it can be learned. But it can only be learned by a person who wants to learn it, you cannot teach it to someone.

Adam: How can anyone become a better listener?

Mike: So there's lots of ways to practice becoming a better listener. Anything from practicing active listening, repeating people's questions back to them, confirming that you understand what they're saying, trying to be empathetic and put yourself in their shoes. We all process what each person around us says through our filters. But being mindful of those filters, and trying to understand what the person is actually telling you makes sense, not just waiting till they stop talking to you, but actually listening to everything that they say, all those things. There's hundreds of books written on this. All those things help you become a better listener. And we teach those things in Fixer, in one of our training classes. 

Adam: We're going to talk more about Fixer, but first, I want to ask you a little bit more about GrubHub. You were able to take GrubHub from idea to IPO, something that very few entrepreneurs are able to do. How did you do it? What are the keys to growing and scaling GrubHub? And more broadly, what are the keys to growing and scaling any business?

Mike: So in the specific case of GrubHub, certainly started with an idea. And then there's this idea of constant innovation. And we were constantly trying to build a product that worked better for customers. And we had a lot of competition along the way, right? Groupon started their own online ordering, LivingSocial, there were 100 different businesses. We kept focusing on this idea of how do we get the best product to the customer? How do we make sure that the food is the highest quality that the diner gets, and we didn't actually cook the food? So that takes a lot of analysis and process and technology to make sure that the right restaurants are getting the orders so that the food going to the customer is good. So we just kept doubling down on that idea. And I'm making long-term investments on customer service and on the quality of the product. And so that's why we grew faster than any of the other competitors. But it wasn't just that, right? We also found investors which were introduced to us through people that we had met in networking, and I had great employees who came to us because they believed in what we were doing. And a lot of them were foodies, they wanted to be in a startup that was related to food. And if you look at all the software we built, it was built on top of open-source software and other technology stacks that other people had built before us. And even the delivery drivers were made by construction workers. And so I guess my point of this is that I didn't take an idea from idea to IPO, it was a team effort, there's this quotation that we stand on the shoulders of giants who have come before us. And then on top of all of that, it took some luck. And this is a thing that I think a lot of business schools, and a lot of times when I talk to people about what it takes to be successful, there is an element of luck in it. And people don't want to hear it because they want to believe that the results of success aren't entirely a function of their own effort. But actually, once you accept this idea that some of it's outside of your control, and that you're going to rely on people around you and you're going to do your best to pivot or change or adapt or whatever to the current situation, it really does increase your probability of making it happen. And the only way that you can be in the way of getting that luck is to actually start the thing. You can't get lucky with the business if you don't start the business, right? And so all of those things came together. And I think it's true for any business, there's no one specific formula that works for any business. But the combination of being not so self-centered to believe that it's all me, I think that that really increases success in terms of looking around and being able to adapt to the environment and with the people that you're with so that you can really find the opportunities that do make you successful. And then there's a second piece to answer that question, which is, one of the ways that you become successful is by having a definition of success. So I was successful by certainly a lot of people's definition of success in terms of the wealth that GrubHub generated. But that wasn't my own definition of success. My definition of success was I wanted to pay off my school loans first. And then the second time that I did that, I adopted a second goal: I wanted to make a very large business that helped independent restaurants. And so I thought it was a success because regardless of the IPO and the proceeds of the IPO because I had a personal definition of success. And so being successful, you have to define what the word success means to be able to reach that level.

Adam: And, Mike, I could not agree with you more, particularly on that last point. Something that I tell audiences that I speak to is you have to have a definition of success. And your definition could be different from my definition. It could be different from the definition of the person to your left and it could be different from the definition of the person to your right. The most important thing is that you have one because if you have a goal that you're working toward, you're going to be a lot more likely to get there. If you're shooting in the dark if you don't know what you're shooting toward, what is this all about? But if you have something that you're laser-focused on, and guests who I've interviewed have emphasized the importance of writing it down. Setting a goal and writing that goal down. And if you have that goal, whatever that goal is, you're going to be a lot more likely to get there.

Mike: Yeah, and I think that idea extends beyond what's the goal for the business too? What's my goal for my life, right? What level of what amount of time do I want to devote to relationships versus business? What energy do I want to devote to health as opposed to just generating wealth? There is certainly a vein of toxicity within the startup world around this idea that I'm going to defer the good life so that I can work right now. So that once I'm rich, I can afford a good life. And it doesn't work. Because if you're not mindful about having the life that you want, while you're trying to achieve your goals, you're not going to suddenly get good at that if you have some certain dollar amount in your bank account.

Adam: I want to probe that topic with you because it's a focal point of your book Hangry: A Startup Journey. And your book is really a story not only about GrubHub but about your personal journey to find happiness, to find fulfillment, and to find balance. And you built this incredibly successful company. But along the way, your marriage almost collapsed. And right when you were at the very top, you walked away, you were completely burned out. And you embarked on this bike ride across America. But you didn't become a professional cyclist. You left this, we'll call it a cycling career, to start another company Fixer.com. What have you found are the keys to attaining happiness and fulfillment? And to the extent it's possible, attaining balance?

Mike: Yeah, I mean, I say in the book, that I'm not a content person, that my malcontent was one of the things that drove me to actually start GrubHub in the first place. And to some degree, that's still true. I mean, I won't say that I figured out the keys to happiness, I don't know that I can share them completely. But I will say that, first of all, let me just talk a little about why I left GrubHub. And this is a key point of the book. And the reason I left was because my goals for the organization, my goals for my life, no longer aligned with what the organization was capable of giving me. And so I left for that very intentional reason, not just because I was tired. And so when I started my next company, I was just very explicit about what it is I wanted to accomplish. I wanted to create a business where the profit that we generate, and the impact we have on the community can't be divorced. And so the reason that we started fixer was because it's really hard to get somebody to come do work on your home for two hours, like, fix a hole in the drywall, or unclog a toilet or fix a running toilet or, or a leaky sink or whatever any kind of handy person work. And the reason behind it is that there just aren't enough skilled tradespeople to do the work to go around. And a lot of that is because it's gotten very hard to get into the trades, as many of the trade schools have closed. And so the business that we created, creates a great customer experience in the home. But we do it by creating an entry path into the trades, and by training people from scratch. And so the profit that I'm generating and the value that I'm creating for the community around me around the business, they're the same thing. It is an impactful business. It's a social impact business if you will. And so for me, the key to happiness is, I'm doing meaningful work. And I think this is true for a lot of people. Doing meaningful work is really important. I'm doing meaningful work. I'm putting the right amount of effort into it. It's hard work, but it's not excruciatingly hard, I have some time to focus on health. And so all those things give me on a day-to-day basis, a temporary contentment. I'm still a pretty malcontent, cranky person. But with all those things in line, I can keep that beast at bay and focus on the day-to-day.

Adam: Mike, regardless of what one's definition of success is, what can anyone do to become more successful personally and professionally?

Mike: Well, first of all, they have to explicitly define it. So you said write it down. That's certainly explicit. I mean, I typed it, hopefully, that's the plus on that. I don't know if I get an A plus, but I don't write anything down. I type it, I type everything. But yeah, I mean, the very first thing is you just have to be explicit about it. And then the second piece is to start. Perfect can be the enemy of good enough. And you don't have to have a perfect plan to start on a business idea or whatever workout plan or whatever the case may be. That is a step along the ladder of your definition of success. But what's more important than having the perfect plan is to just start, just do it. It's way better to have the end in mind, the goal, the finish line in mind, and kind of a crappy plan on how to get there than it is to have a great plan without knowing where you're headed. Define your success and then start working towards it. That's it.

Adam: I asked Evan Goldberg, the founder of NetSuite, what is your single best tip for all entrepreneurs? And he said, start, start, start. Get started when you start, you're halfway there.

Mike: Yeah, that's funny. I was exactly what I've said a few times. I usually say 51% say more than halfway. But I think that that's an academic distinction.

Adam: Mike, thank you for all the great advice and thank you for being a part of Thirty Minute Mentors. 

Mike: Thanks for having me. I really appreciate it.

Adam Mendler is the CEO of The Veloz Group, where he co-founded and oversees ventures across a wide variety of industries. Adam is also the creator and host of the business and leadership podcast Thirty Minute Mentors, where he goes one on one with America's most successful people - Fortune 500 CEOs, founders of household name companies, Hall of Fame and Olympic gold medal winning athletes, political and military leaders - for intimate half-hour conversations each week. Adam has written extensively on leadership, management, entrepreneurship, marketing and sales, having authored over 70 articles published in major media outlets including Forbes, Inc. and HuffPost, and has conducted more than 500 one on one interviews with America’s top leaders through his collective media projects. A top leadership speaker, Adam draws upon his insights building and leading businesses and interviewing hundreds of America's top leaders as a top keynote speaker to businesses, universities and non-profit organizations.

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