Food tech wasn’t a thing in 2006 when Just Eat set up shop in a one-bedroom flat in east London, writes James Silver in an edited extract from his book Upscale, about British tech entrepreneurs and investors
In 2005 David Buttress, then in his twenties, met up with Jesper Buch, Just Eat’s co-founder, for lunch in west London. Over a Nando’s, they had a conversation that would change their lives.
Mr Buttress was working for Coca-Cola UK (which was how he had come to know Mr Buch), but was itching for a new challenge. When he heard the Dane talk about the takeaway business he had co-founded in Copenhagen in 2001, Mr Buttress was intrigued. Within a year he had quit his job to launch Just Eat with Mr Buch in London.
Today the business is listed and worth more than £4 billion, but the early days of a start-up are rarely glamorous. Wedged in a one-bedroom flat in the capital’s Docklands with a couple of computers bought at Currys, Mr Buttress recalls a first day spent assembling desks. “All of a sudden you realise that the realities of starting a business are more humbling than you imagine them to be when you tell people you’re going to be an entrepreneur. When you start a company, you’re everything from sales to customer care to marketing and finance to putting desks together. And I’d come from Coke, a global organisation, where if your phone broke someone would appear with a new one.”
In its first month, March 2006, Just Eat, a platform for ordering takeaway food, had sales of £36. “That was 18 quid each —which we spent in All Bar One. “As humbling as that £18 was, the reality was that the business grew quickly. It went from £18 to £236 the second month, which doesn’t sound a lot, but then £700-odd and by the fourth month we were making nearly £2,000. Then by month six we earned about £6,000 to £7,000 a month and, as a result, we added a salesperson. That salesperson, within three months, paid for themselves and we were also making a small margin on B2B sales [by supplying restaurants with hardware].”
At that time Just Eat was operating in only a single London postcode — E14 in Docklands. “I did a simple back-of-the-envelope calculation: ‘If I take the number of postcodes in the UK and extrapolate this out — and of course you can’t do that because all the postcodes are different in size, but if I discount E14 by 30 to 40 per cent and say that’s the average — then wow! This business could turn over tens of millions of pounds.’ ” By the time Just Eat went public eight years later, it was the leader in every market it operated in, from Brazil to the UK to Australia, Canada, France, Spain, Italy and Denmark.
From the outset, “operational rigour” was key for Mr Buttress, now a partner at 83North, a venture capital firm. ‘Today food tech has become a sexy thing. But when we started Just Eat, I can tell you barely a venture capitalist would have heard of [the category] and probably wouldn’t want to have met us because what we really were was an online platform for local takeaway restaurants. And a local kebab shop is not your typical [investor’s] idea of a sexy industry.”
Operations for Just Eat meant sweating the small stuff. “With the restaurant owners, it was a case of: ‘Do they have a driver? Does their oven work? Do they have all the ingredients they need?’ And so on. On the consumer side, it was literally phone calls to our ‘customer care’ line that used to come through to my personal mobile in the early years because we didn’t have any customer care, and it was things like ‘They forgot my papadums’, or ‘I thought it came with fries’. So we’d then have to call the restaurants ourselves to sort it out.”
Mr Buttress left the company last year. Looking back over his time as chief executive, he admits that there were “a million things that we did wrong”. The one thing he thinks they got right, “other than being crazily ambitious”, was an insistence on technology. Everyone else was using fax machines to send orders to restaurants, which were unreliable. “Restaurants wouldn’t turn them on, or the paper would run out. Some of our competitors were even phoning orders through to the restaurant. What’s the point of being a digital platform if you’re having to get on the phone? That’s what the consumer does, anyway. So one thing we did right was to build this technology platform from scratch.”
Mr Buttress credits his co-founder for designing a box or terminal known as a Just-Connect box that was years ahead of its time — and a huge competitive advantage. “We put those boxes into every restaurant and we were very disciplined around it. The boxes used to cost £250 and lots of restaurants would tell us: “I don’t need the box. Just phone me the orders or send me them by fax.” And we would very strongly reply: “No, you need this technology.” And of course what that technology meant was that we scaled very efficiently because everything was fully automated, front and back end.”
This is an edited extract from the book Upscale by James Silver, published by Tech Nation, featuring leading British tech entrepreneurs and investors”