20 for 20 — Episode 1: GrubHub and the Spurs
In 2019, we celebrate our firm’s 20-year anniversary with 20 short stories
and lessons learned by investing over $150M in more than 70 companies
and the entrepreneurs behind their origin. These are their stories.
GrubHub and the Spurs
Today marks the 5-year anniversary of Grubhub’s 2014 IPO on the NYSE. Origin Ventures was the first investor in the company, leading the Series A financing in 2007.
NEW YORK, NY – APRIL 4: CEO Matthew Maloney of GrubHub rings the opening bell at The New York Stock Exchange on April 4, 2014 in New York City. (Photo by Ben Hider/NYSE Euronext)
Looking back on the day that GrubHub went public, it was a very successful IPO from the very start. The market cap increased 31% on day one as a public company and stood at $2.7B; a very healthy increase from the valuation after the Series A financing we led in 2007. Since going public, revenue has increased almost 300% to over $1B annually; active diners have increased more than 250% to 17.7 million; and the market cap has increased 233% to $6.37B.
Grubhub’s performance since their 4/4/14 IPO
Fifteen years after founding the company, Matt Maloney continues as the company’s CEO, while co-founder Mike Evans has gone on to start Chicago-based handyman service Fixer.
While Grubhub has enjoyed spectacular growth over the last fifteen years, the NBA’s San Antonio Spurs enjoyed their own fifteen year run – winning five NBA championships.
Here’s a look at how Grubhub and the Spurs managed to build winning teams.
Leadership continuity:
When Grubhub won the University of Chicago’s New Venture Challenge in 2006, Maloney was a 29 year old first-time CEO. Now he’s a 42 year old running a $6B+ public company with thousands of employees. He’s an example of the rare founder-CEO who could “go the distance” in a high-potential venture.
While Maloney was building Grubhub, Spurs head coach Gregg Popvoich – who joined the franchise in 1997 and is now in his 23rd year (an eternity in the NBA) – was building a winning tradition in San Antonio. After a losing record in his first season, Coach Pop and the Spurs have enjoyed 22 straight years with a winning record. Research suggests that coaching tenure is worth, on average, 2 more wins in the regular season – often the difference between making or missing the playoffs.
Assembling the pieces:
In May 2013, Grubhub and Seamless pulled off a rare, pre-IPO merger of the two leading private companies in the category. Maloney continued as CEO of the combined organization, with large offices in Chicago and New York. The combined company never missed a stride, combining their restaurant networks and customer bases seamlessly (sorry) in advance of their IPO less than a year later. Private company mergers aren’t easy, and failure rates are high. The company has gone on to make more than eight significant acquisitions.
Meanwhile, in Texas… Popovich began assembling the roster that would deliver five championships and 22 straight winning seasons by drafting Tim Duncan with the first pick in the 1997 NBA draft. Popovich would go on to surround Duncan with other future Hall-of-Famers Tony Parker and Manu Ginobili, and free agents like Avery Johnson and Robert Horry.
Meeting the competitive challenge:
Since going public, Grubhub has faced increased competition from new food delivery offerings from Amazon and Uber. How did the company respond? Maloney doubled down on the company’s efforts to build a proprietary delivery network at scale, and signed a partnership with YUM! Brands.
Popovich and the Spurs faced a wave of competition during the 15 years between their first and fifth championships. They had to get past the Lakers with Kobe and Shaq; past the Mavericks with Dirk; and past LeBron James with the Cavaliers and later the Miami Heat.
Getting a lucky break:
On June 29, 2007 Apple introduced the first iPhone. With its app marketplace, the iPhone gave companies the opportunity to offer website functionality on the go. In 2010, Grubhub announced its first iPhone app, thus becoming one of the earliest beneficiaries of the new on-demand economy. Cowen & Co. estimates that mobile ordering today accounts for 68% of Grubhub’s total.
What lucky break did the Spurs get? There are likely many important shots that the Spurs made… or that opponents missed. But NBA fans point to a break the Spurs caught on the way to their 2007 NBA championship. In a second-round series with the Phoenix Suns, and with the Suns about to tie the series at 2-2, a late game melee resulted in Suns star Amare Stoudemire being suspended for the next game. The suspension of Stoudemire seemed to be the rallying event for the Spurs, who went on to win games 5 and 6 and win the series 4-2, advancing to the finals where they swept Lebron and the Cavaliers.
Over the past 20 years Origin Ventures has learned the value that a strong management team has on the outcome of our investments. We learned a lot working with Matt and Mike on GrubHub and witnessed how Coach Popovich’s leadership brought great success to the San Antonio Spurs.
As we reflect on the 5 year anniversary of GrubHub’s IPO we congratulate Matt, Mike, current President/CFO Adam, and the team at Grubhub on this great milestone. Additional congratulations to the Spurs on their NBA-record 22nd-straight (!) playoff appearance.
