[News Inside] From Successful Wall Street Fund Manager to Pizza Delivery... Conquering Europe with Food Delivery

by Kwon Jaehee

Published 04 Apr.2021 12:00(KST)

Will Shu, Founder of Deliveroo

▲Will Shu, founder of Deliveroo

[Asia Economy Reporter Kwon Jae-hee] "Why is there no food delivery service in London?"

In the early 2000s, Will Shu, who worked 100 hours a week as a fund manager at Morgan Stanley in New York, ordered dinner delivery every night while working late. However, when he was assigned to the London branch in 2004, Shu couldn't find any restaurants delivering food late at night and had to settle for meals at Burger King every day. Eating the same menu repeatedly, Shu thought to himself,

"This is a goldmine."

Immediately, Shu quit Morgan Stanley and began to concretize his business idea while attending Wharton School. Thus, in 2013, 'Deliveroo' was born.

Deliveroo is a compound word of 'Delivery' and 'Kangaroo.' Just as a kangaroo carries its baby in its pouch, it means carrying food to deliver to customers.

Although he was confident that it was a winning idea, reality was not easy. In the UK, food delivery culture was almost non-existent, and even people around him discouraged him, saying, "British people probably don't enjoy delivery food as much as Americans." On top of that, competitors sprang up like mushrooms around the same time, which was another hurdle to overcome.

However, Shu had strong conviction. To verify his idea, he personally worked five hours daily delivering food during the early days of the business to conduct market research. As a result, he confirmed that there was indeed demand in the UK for ordering various foods for delivery, just like himself, and he also learned about customers' dissatisfaction with existing delivery companies.

[Image source=Reuters Yonhap News]

Being a CEO who personally delivered food led to some amusing incidents. Shortly after founding the company, unable to find delivery workers, he delivered pizzas himself and once ran into a senior colleague from his investment banking days.

Later, in an interview, CEO Shu recalled, "He looked at me with genuine concern, as if I had suffered a major setback and my life had fallen into ruin."

Deliveroo, which started delivery services by contracting with three restaurants near Chelsea, London, now operates in over 800 cities across 12 countries including Europe, Hong Kong, Singapore, Australia, and the United Arab Emirates.

Eventually, it attracted investment from Amazon, the world's largest e-commerce company, rising as a globally recognized startup.

Deliveroo's rapid success, surpassing many competitors and attracting investments from prestigious companies including Amazon, was due to its differentiated features such as a proprietary big data utilization system. It applies artificial intelligence (AI) and machine learning technologies to ensure customers receive accurate and fast service.

CEO Shu said, "It is very important to accurately communicate the delivery driver's arrival time to the restaurant. Neapolitan pizza takes 90 seconds, steak takes 10 minutes. To ensure the food arrives hot when the delivery driver gets there, we gather all our experience to find the best solution."

The subscription service called 'Deliveroo Plus' also differentiates it from other food delivery services. Customers can use unlimited delivery services for a monthly fee of $18.99. It gained explosive popularity with about 20,000 subscribers within a month of launch.

While building a successful model for the food delivery service industry one step at a time and raising expectations as a promising candidate for listing on the London Stock Exchange, Deliveroo suffered humiliation when its stock price plunged 30% on its first trading day last month on the 31st (local time). Accordingly, Deliveroo's market capitalization started at ?7.6 billion (about 11.8 trillion KRW) and dropped to ?7.32 billion, with an intraday maximum loss of ?2.28 billion (about 3.5 trillion KRW). The stock price volatility was so severe that trading was suspended twice.

[Image source=Reuters Yonhap News]

The Wall Street Journal (WSJ) reported, "Some investors are skeptical about Deliveroo's growth potential, anticipating a decline in delivery demand due to the rollout of COVID-19 vaccines."

Also, a recent UK ruling requiring Uber workers to be directly employed raised the possibility that similar business models like Deliveroo's might be affected, which discouraged investors from participating in Deliveroo's IPO.

One of the UK's largest asset management firms, Aberdeen Standard, and Aviva declared they would not participate in purchasing Deliveroo shares.

However, CEO Shu said in an interview with a media outlet, "The flexibility and stability of jobs have been treated as a black-and-white issue. But we will make various efforts, including collaborating with governments of different countries, to provide an environment where workers can enjoy flexible working hours while working stably."