April 9, 2013 By: Mark Glennon
How did two young guys with a business plan become a two billion dollar public company in eight years? GrubHub had some unsung champions on its side during its formative stage who deserve special credit, not just for their role at GrubHub but more broadly for what they’ve done to make Chicago the startup hub it has become.
I served on GrubHub’s board and with a firm that funded part of its ‘B’ round of venture capital, but that was after the die was cast, as I see it. Primary credit obviously goes to the founders and their initial hires. Matt Maloney and Mike Evans, the founders, had talent and judgment far beyond their years, and were able to manage it initially as a capital-stingy startup and later as a high-growth enterprise, which requires a highly unusual mix of talent sets.
But here are a few others who quietly helped them set the scene early on:
First, Steve Kaplan and the University of Chicago’s Booth Business School are both jewels in Chicago’s startup community. Kaplan’s exalted title does him an injustice, because he’s much more than just the first rate scholar it implies: Nebauer Family Distinguished Service Professor of Entrepreneurship and Finance at University of Chicago Booth School of Business. Kaplan gets much of the credit, people at the U of C have told me, for the remarkable bridge the business school has built from its long-standing academic excellence into the practical world of entrepreneurship.
Dozens of successful startups have been sprung from that effort. Kaplan has been at the center of the school’s New Venture Challenge, which GrubHub won in 2006 and helped put them on the map. Others from that program have raised over $300 million and created thousands of jobs, including Braintree, the local payments processor that recently sold for $800 million. It was through that program that Kaplan helped build GrubHub’s initial model and strategy, with input from many others at Booth, including Ellen Rudnick, who runs the school’s Polsky Center for Entrepreneurship.
Second, Northbrook-based Origin Ventures was the first institutional investor to see GrubHub’s potential and led its ‘A’ round. Origin has long been locally known as everybody’s favorite venture capital shop, and for good reason. Bruce Barron and Steve Miller, its founders, earned their reputation over thirty years of integrity and hard work. There’s nobody in town more pleasurable to work with. Origin was instrumental in recruiting Chuck Templeton to join GrubHub’s board. Chuck was founder of OpenTable and his arrival brought a whole new level of experience and credibility to GrubHub’s team.
I first looked closely at GrubHub in late 2008 while I was at Leo Capital, when GrubHub began looking for its ‘B’ round. GrubHub, with notable help from Kaplan and Origin, had already established and proved up an elegant, sound and profitable business model — the same one it maintains today. GrubHub was growing fast in Chicago, had just launched in San Francisco, and it was apparent that the model could be scaled in other cities. While I’m proud we saw that at Leo Capital, it’s quite another thing to have seen the potential earlier, before the model was functioning. Concept stage companies are entirely more challenging to assess, in other words. Kaplan and Origin Ventures had made that early assessment correctly.
Tens of millions of dollars will flow into Chicago out of GrubHub’s IPO that will be recirculated into other local startups and philanthropy. To Steve Kaplan, Booth and Origin Ventures, our community owes special thanks.