Pod Insights The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch 20VC: The Insane Story of DeliveryHero: Losing $200M on a Gorillas Investment | Winning the Emerging Markets Delivery War with 35 Acquisitions | Competing with Uber and Doordash in a Capital Arms Race with Niklas Östberg About this episode Niklas Östberg is the Founder and CEO of Delivery Hero, a global juggernaut now present in over 70 countries across four continents. In Q4 2024, the company announced GMV of $49BN with $12.8BN in revenue and $750M in EBITDA. They have made an astonishing 35+ acquisitions including $2BN for Glovo. Before launching Delivery Hero, Niklas co-founded Pizza.nu, leading its expansion across Sweden, Poland, Finland, and Austria. In Today’s Episode We Discuss: 04:09 How Skiing Prepared Me For Life As An Entrepreneur 10:12 Losing $200M on Gorillas Investment 17:58 Quick Commerce: Does the Business Model Work? 25:09 How to Master M&A: Lessons from 35 Acquisitions 31:45 Evaluating Acquisitions: The Glovo Example 32:39 Cohort Analysis: Lessons from $49BN in GMV 34:35 Growth Strategies: What Worked? What Did Not Work? 38:27 Competing Against Uber and Doordash 41:40 Is Cash a Weapon in the War for Food Delivery 44:29 Why Are Emerging Markets a Good Investment? 48:21 Why Are European Markets Broken? Are Regulators Killing Europe? 51:57 Quickfire Round: Insights and Reflections
Transcript 11,655 words · 3 speakers
Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.
0:00 Speaker 00 What I've learned over the years is eighty percent of our own execution that is going to matter for how big we get and how much money we make. And then maybe twenty percent driven by competition. Yeah, we we put in close to two hundred million dollars. Most of that was lost. In the end, when you look at cohorts, user requisitions and the data in in depth. It's almost like gravity. It always works. Cohorts are incredibly strong. They don't change. If anything, they get better. With the only one exception, when you screw up.
0:31 Harry Stebbings? This is Twenty VC with me, Harry Stebbings, and today we sit down with one of the great entrepreneurs of Europe. He has built the juggernaut in food and logistics in Delivery Hero. Now, in Q4 2024, the company announced GMV of forty nine billion dollars, with twelve point eight billion dollars in revenue and seven hundred and fifty million dollars in EBITDA. They've made an astonishing thirty five plus acquisitions, including the two billion dollar acquisition for Glovo, through which we got this introduction for the show. But before we dive in today, here are two fun facts about our newest brand sponsor, Kajabi. First, their customers just crossed a collective eight billion dollars in total revenue. Wow.
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4:15 Harry Stebbings? Niklas, this is such a joy for me to do. I mean, when we look at Delivery Hero today, it is one of the generational defining companies of Europe. So thank you so much for joining me today.
4:24 Speaker 00 Thank you very much. Very kind of you.
4:27 Harry Stebbings? Now, I heard from some of your friends that you are the most resilient person they've ever met, and I heard stories of spraining ankles and cycling 100 kilometres the next day. I think that a lot goes back to our earlier years. Where do you get this unwavering determination and resilience from, do you think?
4:45 Speaker 00 I think some of it comes back to my childhood. I was a cross-country skier. And for anyone who's not a cross-country skier, it's exhausting. You train every day, you go out in the dark, two hours interval training in the dark forest of Sweden. That's kind of how a regular day looks like. And I think you build some resilience there that came from there. But I think the other thing that also builds resilience is if you feel like you have a purpose and you actually do something where you add value. And I think over the years, I've also learned to focus on what I can impact rather than all other things. And I know that is hard, but I really try to stop caring for what other people think or pleasing others. So that helps.
5:27 Harry Stebbings? One of my biggest weaknesses is I care far too much about what other people think. Does success help in terms of reducing the importance of others' opinions?
5:36 Speaker 00 Probably. It probably builds a certain confidence that what you're doing is right. And you have to be careful that it doesn't take you off your, I mean, your feet off the ground. But I do think that some level of success is probably helpful as well. Yeah.
5:53 Harry Stebbings? Can I ask, was there ever a time when your feet did get off the ground? Or, you know, we call it getting too big ahead. I remember when I was like 21 and I raised my first fund. I thought I was hot shit and Niklas, I was not hot shit. Did you ever have a time and how did that go?
6:09 Speaker 00 Yeah, probably was that many times. I remember back in the 99s, I was investing in the stock market. I thought it was amazing. I made a lot of money. I lost it very quickly and realised that maybe I'm not that great after all. I think we all thought that we were better than we are. Back in the Covid pandemic, business was going through the roof. Probably also time where we felt that we were better than we actually were. You constantly get reminders that maybe you have to like stay on the ground. You're not as good as you think you are in the good times and probably not as bad as you think in the bad times.
6:45 Harry Stebbings? What did you do in Covid that you wish you hadn't done?
6:48 Speaker 00 It's hard to say. Of course, it's easy to say with benefit hindsight because it was not only that Covid ended. It was also that the whole capital market and the interest rate and many other things that happened when Covid died out. That all came together at one point and that of course put a lot of pressure into companies to cut costs and so on. If we would have known that, we would have cut costs faster earlier. We would have probably taken down risk a little bit. We would have saved as much money as we can. Probably would have raised equity instead of debt during the time when we thought that we should be worth hundreds of billions. And we felt we were undervalued back then when we were at thirty five. So of course, it would have helped if we had taken on equity instead of that.
7:33 Harry Stebbings? Raising debt is not something that's spoken about a lot, but a lot do it. What's your biggest lessons or advice on raising debt and using debt as an instrument instead of equity?
7:44 Speaker 00 Yeah, I think the learning for me is that you have to be careful with it. Coming back to the point before, we thought that we were unbeatable, unstoppable. And therefore felt it was a clear path to being a hundred billion company. So why would we want to dilute on thirty billion? We get greedy and didn't want to dilute those couple of percentages that would have cost us to raise a billion or two. And we were about to do it, but then stock fell five percent and felt well now it's too late. Then the stock dropped around ten or fifteen percent and we felt now it's definitely too late. And then shortly after, the stock fell more than fifty percent and then it was truly too late. It's easy to get greedy in those times. You feel like you're on top of it and yeah, you have to be careful.
8:28 Speaker 00 It's better to dilute and not think too much about it.
8:31 Harry Stebbings? How do you maintain morale when you have stock drops as you did?
8:35 Speaker 00 I think it wasn't that hard in the beginning because I think everyone thought that it was just temporarily and it would come back and all the numbers, all KPIs were good. I think we took fairly fast action as well. Back in end of 2021, we felt a little bit worried about the market. We shut down Germany and Japan. We cut 100, 200 million out of our budget before the year even started. We actually came in and I think things crashed down in January, February, March. So a few months later after we did that. So I'm lucky we did that. But I think the morale of the company was that still very good. They felt it was temporary.
9:18 Speaker 00 They felt they had taken the action we should have taken already before, ahead of time. I think the hard part was to not grow valuation for another three years. And we're almost where we were three years ago, if you look at our stock today. And I think at some point, some people start to lose hope.
9:36 Harry Stebbings? Were you overpriced three years ago or underpriced today?
9:39 Speaker 00 I think it depends how you see it. I think what public market often, what it does is that it values things one or two years forward. And of course it compares with other companies. And I think, yeah, we were definitely overvalued if you just look at it from a couple of years down the line, a fast forward. For anyone who rather think of it as a DCF, cost of capital over X number of years. Maybe we were not that overvalued back then and we're probably undervalued today. Maybe truth is this little in between. I definitely think that we're undervalued today though.
10:14 Harry Stebbings? We mentioned confidence and having the courage of convictions. I do want to talk about something you said to me before, which is daring to be contrarian, making decisions not everyone believes in. Can you talk to me, how do you think about this specifically with regards to your leadership?
10:30 Speaker 00 Great leaders, they follow their beliefs and when they do, people follow them. That also means that they will be contrary, there will be occasions when they go against the stream. And if they have a good judgment and great leaders have good judgments, then they are usually coming out very strong afterwards. And every time they succeed there, they will build the follow base and trust. And I think it's very dangerous when leaders don't follow their belief. It drives skepticism in organizations, I think usually will not be getting the respect.
11:03 Speaker 00 It will be inconsistent, the leadership will not be consistent when they don't do what they think and what they believe in.
11:08 Harry Stebbings? When did you have the strongest belief that most people disagreed with you on?
11:13 Speaker 00 A few that comes to mind as big differences was around logistics. No one believed in logistics back then. This was back in 2015 and we doubled down on logistics. The first initiative we did, we lost 6 million, it looked terrible. And most people have probably given up there, but we shut down that company and rebuilt it again and invested tens and hundreds of million in logistics. And I think everyone say now that that is a better customer experience, it's clearly better for customers. And I had a strong belief that we just have to figure out how to make the economics to work. The same selling our home market was clearly a contrarian decision.
11:55 Speaker 00 Maybe some investors thought it was okay, but I think in the company, there was a very contrary view to sell your home market.
12:02 Harry Stebbings? Why did you sell your home market? It's a massive market in terms of population. It's not got the volatility that emerging markets do have. It seems from the outset bluntly, a very contrarian decision.
12:15 Speaker 00 Yeah, so in a back then, so this was 2017 and I felt that the market is not as big as it looks. It has a strong competitor there and there will be no way of consolidate that market later on, given a regulation around M and A and so on. So I think, I thought this is gonna be value maximizing. And then I did believe that. We could use that money to actually double down in markets which I consider to be much larger. And I think it turned out to be larger markets outside of Germany. I also believed in a different thing, which is I felt we will be a stronger operator internationally. If you are not getting distracted by our home market.
12:57 Speaker 00 Back then, everything we did, as soon as something happened in Germany, we will drop the ball on everything else. Because it's so close to our heart where we sit. So I felt we were very mediocre executor outside of our home market because of that. And once we sold Germany, there was no excuse for not delivering outside of, like in the rest of the world. So I think we became much stronger in our execution operations outside of Germany, once we sold Germany.
13:25 Harry Stebbings? It's so interesting you said that you didn't see a market where consolidation could happen. One of my biggest questions when investing today is bluntly, is this a winner take all market? And what does the distribution of gains look like in an eventual outcome in this market? Is this a market where you have to see consolidation as the ultimate outcome?
13:44 Speaker 00 No, I I I don't think it's winner takes all market. I probably changed my view there, proven wrong, frankly. And you see in US that there are two players making a lot of money. Look at UK, there are three players making a lot of money, all of them. France, two players making good money.
14:01 Harry Stebbings? When you say that, like, I don't mean to jump in, but the UK, who have you got? You've got Deliveroo, you've got Uber Eats and.
14:07 Speaker 00 Just eat them, just eat Deliveroo and Uber Eats. And they all make money in UK, I would say decently. So same with France, I think both Deliveroo and Uber is making money there. And Delivery Hero also operate a few markets where we have two or three players making money in that market.
14:24 Harry Stebbings? How do you think about the opportunity cost of being interesting enough? And I'm going to get in trouble for this because Will's a dear friend of mine at Deliveroo. But you know, delivery is valued at a billion five, I think it is. It's not a huge amount, respectfully. When you look at where Delivery Hero is today, that it takes a lot of resources, a lot of attention. Is that a large enough outcome for it to be interesting enough?
14:48 Speaker 00 So, and we can argue if Deliveroo is correctly valued today, I would argue they are too low valued today. I don't know, it's a profitable business, it's growing and will continue to grow and it will make more money. It's clear value in that business. You can argue, would it be even more valued if it would be possible to consolidate? Now, I don't think that it's possible to consolidate UK and a few other markets due to, and I trust a reason. So you can probably not consolidate Deliveroo and just eat the Ugr and Deliveroo and so on. So, anyone who would buy Deliveroo, they will still have a three market, market in, in UK. And it says it wouldn't really resolve, it wouldn't really change anything there.
15:30 Speaker 00 The only thing would be that someone else is operating than Deliveroo. That is more a question of can someone else operating better than Deliveroo themselves? Can someone else pay more money for it than what it's worth? Probably. Would it make sense for Deliveroo to sell if someone offers a higher price but still a lower price than what the business is long term worth? Probably not. It's a tricky question.
15:56 Harry Stebbings? Why is it not a winner take all market? When you think about like, you know, scale, really providing better, you know, unit econ, the density of drivers, density of customers. It seems to me like a winner take all market. Why, why is it not?
16:10 Speaker 00 There is a clear advantage. So the big advantage is being large. And if your large customers stay incredibly loyal to your product, they are not as price sensitive as people think. Uh, so we don't see that customers move because they get a five euro voucher somewhere or 10 euro voucher. They might do it one order, but then they go back to where they usually order and what is top of mind for them. Therefore, I, I do think there is a strong lock in on customers as long as you deliver a good service. The day you don't deliver a good service, yeah, well, then they can, it can be disrupted fast. And we have disrupted a lot of companies, I know in Spain, Italy, Poland, Norway. We entered as the number two and number three, number four player in those markets and we are now the largest.
16:54 Speaker 00 There are occasions when the leader is not delivering good quality. But if they do, it's incredibly hard to gain the customer base of someone else. I think there is important in the early stage that you get a strong lead. But then, once you get scale, it doesn't really matter if someone else also has scale. It's not that if a comparator is half our size or double our size, doesn't make it smaller. It doesn't make our economics worse if they're bigger or smaller. So it's more relevant that we have scale and that we deliver a good service. I think in the past, I saw it more as eighty percent competition, twenty percent our own execution. What I've learned over the years is eighty percent our own execution that is going to matter
17:37 Speaker 00 for how big we get and how much money we make. And then maybe twenty percent driven by competition is not vice versa. So, yeah, as long as you get scale, you will make money, regardless if you're number two or number one. Of course, if you're number two, you will have less scale, you will make less money. But you will still be able to make money.
17:55 Harry Stebbings? What else have you changed your mind on significantly? Where you did or didn't believe something that over time you have shifted your opinion on?
18:03 Speaker 00 I think one thing that I realised over time is the importance of simplicity. I think in the past, it was a tendency, I wanted to do more than what the organisation can actually handle. And I think focus on a few things and really doubling down on those makes a world of difference. So complexity is a killer of speed.
18:24 Harry Stebbings? I mean, that's such an interesting lesson because I always hear the statement that the best CEOs are the best resource allocators. And simplicity kind of boils into that. Do you agree with the statement that the best CEOs are the best resource allocators? And what have been your best lessons or most poignant lessons on resource allocation as a CEO?
18:43 Speaker 00 I do agree that the best CEOs are exceptionally good capital allocators.
18:49 Speaker 00 But I don't think it's the most important part of a CEO's job. I think it is an important job, but by far not the most important. I think more important is to drive the culture, to drive the speed of the organization. You drive the organization in direction of pace and data and direction. And if you do that right, capital allocation will be very easy. And capital allocation is also decision every day type of topic. Most decision capital allocation could be, should we invest more in this product? Should we invest more in this area? Should we invest more in this country? And if you have good data and if you have good culture, it will be obvious what is the right investments. You just have to look at the returns and so on.
19:30 Speaker 00 That's probably more important that you drive the organization, the speed of organization and the culture of it. It's more important allocation itself. Then, of course, it comes times when there are big decisions where you actually have to make a bet. You don't have the data, you don't have the information and you just have to make a bet. Are we going to go in this direction or that direction? That's what good CEOs have a good feeling. They know their industry, they know their organization, they know the strength of the organization. And they will dare to make sometimes the bold decision.
20:00 Harry Stebbings? When you think about those bold decision moments, when you're sitting there and you know it's one of those moments. Can you take me to a time where you got the decision wrong?
20:08 Speaker 00 I think, yeah, quick commerce is an interesting space. I think we have been exceptionally happy with the performance of how we have been able to scale the whole quick commerce side. And I was also contrarian, believe, to double down on this. It's not a very popular one. But we felt that if we want to build what the customers really want and what they're asking and demanding, then we have to be able to deliver groceries and other items in a short fashion. Now, that's a big part of our business and long term it's going to be more than 50% of our business. It's larger than food for sure. So that turned out to be a right bet. At the same time, we also did a bet in a company called Gorillas, because we felt we cannot do quick commerce ourselves in every geography.
20:53 Speaker 00 We can't afford it, it's too expensive to build up. So we rather felt, let's take some of the money, put it in another company and see how we can learn, and see how they can succeed and potentially certain opportunities in the future. Unfortunately, the business model probably could have worked out and also for Gorillas. But the challenge is that the market changed. There was not possible to raise capital anymore for these companies and they burned too much.
21:19 Harry Stebbings? How much money did you put in them? What did you learn from that going south?
21:23 Speaker 00 Yeah, we we put in close to two hundred million dollars. Uh, we got some of it back, a small portion back. But yeah, it was most of that was was lost. The big learning I've made there, as well as a few occasions before, is in in the end, when you look at cohorts, user requisitions and the data in in depth, it's almost like gravity. It always works. It's it's it always works. But for some reason, they kept acquiring more customers than I thought every month. They kept cohorts coming up every month and therefore also growth coming up faster than I expected. So when I looked at it a few months earlier, I felt this makes no sense. They will never make it.
22:05 Speaker 00 And then they outpaced the expectation I had and I felt, ah, maybe I was wrong. But now it's too late. And then they it happened again and again, and the next months and next months. And at some point, I felt maybe I'm wrong. Maybe my models don't work. Maybe the data somehow it it seems to work. Because I've been wrong so many times now that maybe I'm just wrong. And I and that's when we made the investment. In the end, it is, as I said, it's almost like gravity. In the end, cohort model work, acquisition models work, prediction there works. Temporarily, you can boost it through vouchers, discount and other means. But in the end, you you have to look at the core of the business and then see.
22:45 Speaker 00 And I've done that mistake many times, um, where also in some markets, we have a market in Asia where they beat their plan every month. And at some point, I realized like, may maybe I'm not a good forecaster. Maybe I'm just wrong. Maybe they are right. But then it turned out it was built on on a little bit light foundation. And eventually, what comes up needs to come down. I've I've seen the other way around. Sometimes you you keep investing, you feel like everything is right, but the business doesn't grow. And you feel like maybe maybe I'm just wrong. But eventually, that tailwind that you're building in, it's eventually kicking off. I think the learning there is to to stick to what you believe or stick to your core principle on investing.
23:27 Speaker 00 Stick to your core belief in what works and what doesn't work and don't get too excited by by the outside environment and getting dragged into something that that kind of goes against what you believe in truly.
23:39 Harry Stebbings? I always think back to John Maynard Keynes, the economist, who said, when the facts change, I change my mind. And I very often think about how long do you keep pushing on a belief where all of the data tells you otherwise? That is a very hard question.
23:54 Speaker 00 Yeah, probably shouldn't. And of course, you have a lot of momentum traders and they make a lot of money by just staying with the momentum. So if you're not part of that momentum, you're also going to lose out. So there are occasions when you also have to play along. When the music is there, you dance, but you gotta be careful.
24:14 Harry Stebbings? You mentioned that investing in gorillas as a lesson. You know, I spoke to so many of our friends who said, literally Niklas is the master of M and A. When you say about investing in gorilla sets, the extent that you did 200 million, it's a lot. How do you think about that buy versus build, given your incredibly effective M and A strategy as well?
24:33 Speaker 00 And of course, coming back to this 200 million mistake also done here that we were a 35 billion company. So this was back then, less than a percent. It was a half a percent of our market capital. We felt like we are willing to take this bet on this. Of course, if that valuation falls from 35 billion to five or 10 billion, then of course, losing 200 million is a lot, especially if you don't have the cash in the balance or have enough cash in the balance sheet. I think that is also part of the learning that you have to take yourself a little bit out of this speed mode and think it through on a more fundamental basis than getting too caught up with your current value or your current growth.
25:14 Harry Stebbings? Stick on that, sorry, before we do the buy versus build. You mentioned take yourself out of that speed mode. We chatted before and you said, speed of execution is the only thing that matters. How do you think about balancing speed of execution is the only thing that matters? With having the wisdom to remove yourself from the day to day speed mode for those decisions?
25:32 Speaker 00 Yeah, so I do think for an organization itself, speed is really what matters. And but the good part is that for most organizations, most decisions are reversible. So you move, you take a decision, you you get data and you change direction. And the faster you can iterate and do that, the faster organizations can move. And in the end, the reason for saying that that's the only thing that matters is that all the speed and all the things that you're building towards customers or other things that are priorities is compounding. If you can get 25% more of your organization in a year, that feels like, yeah, that's good, but it's it's not game changing. If you do that for 10 years, you're effectively compounding up a 10 times better product.
26:15 Speaker 00 So I believe in this moving fast and and driving organization fast and kind of compounding that is key. Then there are, of course, those non-reversible doors where you have to be very careful that you think it through and so on. And I guess making large investments is a non-reversible. So I think you you have to be a little bit more cautious there.
26:36 Harry Stebbings? How do you retain speed at scale? Delivery Hero is a monster of a business with a huge team. How do you make sure that everyone in the org feels urgency and there is not bluntly a little bit of European apathy and slowness?
26:51 Speaker 00 I think you have to divide the org and responsibility and ownership very carefully and making sure that everyone can see their impact very clearly. So it's a the setup we have, for example, we make sure that there's a clear ownership on the country level and making sure that they have that autonomy and that ownership. So for them, they can really make an impact in that country. It's very tangible what they do and the outcome. If you will set the goal of driving overall business to a size, then each individual cannot make really that impact and cannot be that visible what they do. So you have to find a way that you can actually divide the goals in a way that is clearly measurable what you do and every part of the organization or every person in that organization.
27:34 Speaker 00 And making sure that you drive that accountability and visibility and clarity. And if you do that, I think it's it's very easy to manage the organization. It's very clear who's a strong performer, who's not. If goals are very tightly aligned to what the people actually do and the organisation is set up such that you have that accountability, responsibility on a smaller basis and smaller buckets. What you see in many companies over time is that they get too big, they get the goals are too large, it's not divided in. It's very intransparent what everyone does and how they contribute to their goals. And they start getting inwards looking, they they don't look at what the actual output that they're driving, they rather look at
28:14 Speaker 00 how much they worked, what they delivered, but it can be for, not for consumer customers, but for maintaining the organisation or. So I think building a culture where output really matters and making sure that you divide organisations such that they have ownership and accountability on a very low level.
28:30 Harry Stebbings? We mentioned the buy versus build earlier, I do want to go back to that. As the master of M and A, how many acquisitions have you made, Niklas?
28:36 Speaker 00 I don't know, it's been a lot, but I think.
28:39 Harry Stebbings? Over thirty five though.
28:40 Speaker 00 Yes, yes, we have done a lot, but most of them have been very, very small. And what we believed in is that we believe in those local entrepreneurs who knows the market better than anyone. And we can leverage the fact that we know how to scale things and we know how to measure things and we know how to get good returns. So if I give some of the examples, Peridosia was acquired when the company did sixty thousand orders per month. Today it does maybe twenty million orders per month, or close to at least. So so of course it was very small businesses back then, or Talabat, I don't know, you you know Talabat is a
29:16 Harry Stebbings? They IPOs.
29:17 Speaker 00 Company. Back then, I think they did seventy thousand orders per month, so so literally nothing. But we were good at leverage what we were good at, which automate, drive efficiency, knowing how to invest, taking over, building on scaling that while we felt that we had a big benefit of having those local entrepreneurs and that we can plug into. And I think that has been a big success of delivery hero, but we rarely made big M and A, has been one or two big M and A like Global, but most M and A have have been rather small and and rather being like you're acquiring a team and you require yourself one year of head start.
29:56 Harry Stebbings? Is it easier to buy a company versus build a company?
30:00 Speaker 00 I think for most companies, it's harder to buy a company and be successful there. I think that the hard part is not buying a company, the hard part is to make something good out of that company. That's probably something delivery has been very good at. They have been good at fostering this entrepreneurship and getting them on board. And that's probably a success.
30:20 Harry Stebbings? We're going to get to how you retain entrepreneurs in a way that no one else manages to do. I just want to stick on the pre-buy process. Do you always like to invest first or will you buy straight? What's the preference?
30:33 Speaker 00 I think in the past, we knew that we had to build scale very fast, probably wrongly so. We looked at Just Eat back then. It was this huge company when we started. It had been operating for 10, 15 years. We had another company called Takeaway. That is now one company, Just Eat Takeaway. But that was the gorilla back then and we felt we will not stand a chance unless we scale fast. In order to scale fast, we just have to buy and have to build and we have to do that in aggregate. I think over time, the industry changed, logistic came, Uber and others entered the market and proved that it can start this business way later than we did. But we believe that the only way to build scale fast enough was to buy back then. I think if you look at things right now, we probably prefer to build.
31:16 Speaker 00 The main logic for that is buying something now will be, well, at the time would be extraordinarily expensive, given that we still consider delivery to be undervalued. But also, even if you buy ourselves another 3, 4, 5% business in size, if that distracts us with 2, 3, 4%, then effectively we didn't achieve anything and we only spent money on it. So in order for us to buy, it really needs to be something where we feel here we have a very strong team and we can plug it into a machine and it will make rest of delivery better too.
31:51 Harry Stebbings? To what extent do you let the attitudes of the street, public market investors, impact your buying mindset? When you're looking at an asset like Glovo, for example, I'm not picking on them. I'm just choosing it as a well-known asset that we got introduced through. The public market may love it or they may hate it, I'm not sure, but they will have a feeling. To what extent do you let that permeate into your buying mindset?
32:14 Speaker 00 I think we we can see the cohorts, we can see the acquisition growth, we can see the customer experience, we can see all the data in the world to know if this is a good acquisition or not. If you take Global as an example, it was very clear from us from the very first day that this will be a unbelievably profitable company.
32:33 Harry Stebbings? Why was that clear for you from the first day, respectfully? It is a expensive business to run, it's a tough business, we both know these businesses well. It's not obvious to everyone, why was it obvious to you?
32:44 Speaker 00 It is very simple, we we, as I said, we we see the cohorts, we see like what is the repeat rate of our customers? And then how many customers are requiring per month and how is that? Yes, how do the existing base evolve over time and how many do we add to that? And that that would very clearly give you a certain growth trajectory.
33:02 Harry Stebbings? Does that not assume that cohorts are identical? And what I mean by that is as you expand cohorts, you will get less and less close to your ideal customer profile. They will be further away from your target market, as naturally happens with customers. And so the cohorts may behave differently, how, do you see what I mean?
33:21 Speaker 00 Yeah, I I do, but but the benefit we have here is that we we we also own a assets in in delivery here with with more than twenty years of of cohort development, where we have enormous amount of predictability for seven to different markets. And we have seen in every single market, not a single exception, where it has deviated over time.
33:42 Harry Stebbings? What are the big lessons, I'm so sorry to interrupt you, Niklas, what are those big lessons from those cohort data behavioral trends?
33:49 Speaker 00 Cohorts are incredibly strong, they don't change, if anything, they get better. With the only one exception, when you screw up, when you start not looking at the customers or when you start missing a trend. So I mentioned logistics, so you've done a couple of mistakes, but we're not fast enough with our logistic implementing our own delivery fleet. And then someone else comes, then of course our cohort will deteriorate. Or multi-vertical, we have built out a very good multi-vertical offering to give further value to our customers. But we didn't do that fast enough in in Colombia, as a good example. And we get disrupted by Rappi. So then the cohorts deteriorated big time.
34:30 Speaker 00 Or if we acquired a lot of customer based on barges, discounts, promotions. Then, of course, we also see a deterioration in cohort. Once we start pulling that out of the system. But if you look at where we operate, where we do things right and where we care for the customers. And where the cohort, the strength of the cohort are not coming from barges and discounts. We have enormous amount of predictability. So if you take the example of Glovo, it was very easy for us to see how this business is going to grow over the next 10 years. And we are only a couple of years down the line here. So we still have many, many years of that growth trajectory. And we know how much margin we're going to make in an order. That's also very predictable for us because we set the price.
35:12 Speaker 00 So in the end, we know that the margin on the business is going to grow to 10, 10 to 13% over time. So based on that, you can very quickly calculate your gross profit. And you know your base cost, the marketing, as well as the overhead that you have to have in order to run a certain size of organization. So if you take Glovo. It's incredibly easy to see how profitable that business is going to be over the next 10 years. And for us, it was therefore clearly a good acquisition. For an investor, they don't see that data. The only thing they see is where's the top line and what is the bottom line and what the growth rate is. And of course, when we acquired Glovo, that was a bad timing, probably. It was the end of 2021, before the whole market collapsed. Where everything is about profitability.
35:57 Speaker 00 And Glovo lost 330 million when we acquired it. So of course, adding another negative 330 million getting into 2022 was not very pleasant. But in the end, that was painful, but I think everyone start realizing how much value Glovo is going to be worth. And how much it already is worth if we extrapolate where we stand now.
36:21 Harry Stebbings? Do you think 2 billion was the right price?
36:23 Speaker 00 Well, we paid with stock. So in the end, I think effectively, since our stock fell with 75%, but we didn't dilute that much. We bought it when our delivery was more like 30 billion. So the dilution for delivery was more like 5%, 6% maybe. So I think that was an incredible acquisition, only diluting a few percent, less than 10%, for a business that is clearly going to outgrow the rest of the business.
36:49 Harry Stebbings? When you look at cohorts, what is it that excites you? Is it like, because you could have like AOV size, average order value size, being super high. Twice a month, I spend a lot of money. Or it could be, I use it every single day, but for very small things. What is it in the cohort data that you've learned shows true cohort strength?
37:09 Speaker 00 Yeah, so in the end, you want to cater for customers being able to order as often as possible and as convenient as possible. If you set the basket, the minimum basket size such that you need to have two trends every time you order, well, that will take away a lot of occasions for you because sometimes you're alone or you cannot afford. So we have to find ways, how can we drive economics also for small baskets and make that work? However, if you do something that is not long-term sustainable, then of course, the cohort is also not going to be sustainable because the day I then, I'm moving from being able to do a five-year order and that's not economical, obviously, today. And suddenly you can only order if you order for 15 euro. Then you will start reducing your order behaviour and therefore the cohort is not sustainable.
37:52 Speaker 00 So whatever we do, and we always have to build on sustainable economics. Even if it's in the first instant, we might not have managed the business to get economics. So for example, with logistic, it took a couple of years before we broke even per order basis and the whole quick commerce. It took us a couple of years to break even per order basis. It was not because we charged too little, it was just because we hadn't optimised our own efficiencies. Therefore, you can maybe be ahead of time in terms of what you offer to the consumer, but you have to find a clear path, how your long-term can make it sustainable. Otherwise, they should never offer you to do that order.
38:32 Harry Stebbings? Speaking of long-term sustainable, what do you do, you mentioned Rappi and Columbia there. What do you do when you have competitors who suddenly raise or have a lot of money? And that could impact your cohorts?
38:45 Speaker 00 Thing is that it doesn't impact our core so much. And often the impact on the business may profitability is rather that you you get nervous and you start spending a lot of money and you start copying what they do. But I think our learning is that as long as we keep delivering good experience for our customers, keep pushing the boundaries for how we can make economics on every single order. If someone is willing to make a loss per order without that trajectory for getting profits, they might get some of the discount hunters, that the low value customer base might go to that comparator. But it's not sustainable. So eventually they will have to take away those vouchers, those discounts, and those customers will go to any platform then.
39:27 Speaker 00 So I think the core is to making sure that we we have a service where our good customers are loyal. That's what we see. Regardless of what someone invests, we see that our customers are exceptionally loyal.
39:40 Harry Stebbings? You mentioned the word good there. It made me think, you know, we saw this bubble of capital going into the space, whenever it was, two to four years ago now. When you get to my age, Nicholas, the memory goes. But my question to you is, was that a good bubble ultimately? That did produce advancements in logistics, consumer education, consumer awareness? Or was it a bad bubble that burnt a lot of investor money and didn't really progress the space forward?
40:07 Speaker 00 I don't think it moved the industry forward that much. I I I think it just drove some non-sustainable behaviour. Same here, if you look at the cohorts, we clearly saw a bump in the cohort up. We thought that we would maybe maintain it at that bump, that higher level. But it turned out it went back to the trend line. So if you have a trend line of this, it went up temporarily, but then it went back to trend line. So it it really didn't move much in the industry. It just created a little bit of a bubble where we we spent unnecessary money. So I think effectively in the end, COVID was not a good thing for us.
40:41 Harry Stebbings? Do you see DoorDash and do you see Uber Eats as your biggest competitors today? When you look at the capital that they have and the reserves that they have, is that the biggest threat?
40:51 Speaker 00 Not really. Coming back to the point around competition, I think it's eighty percent about what we deliver and maybe twenty percent what a competitor does. And every single time when I see here we haven't grown fast enough, it was not because of competition, it was because we didn't deliver a good service. We were not moving fast enough. So I think it's eighty percent us and twenty percent competition. I don't think that the balance sheet matters in the end. That is not what limits any competitor spend money. It's going to be the return that is going to limit a competitor's spend money. So it's going to be hard for a DoorDash or Uber or someone to sustainably make bad investments because they can. I don't think it's about
41:33 Speaker 00 balance sheet. They're all profitable entities. You can argue who is going to move that profitability up faster or slower. It's not going to be the balance sheet. It's probably more the what costs can you have a good return?
41:45 Harry Stebbings? Because we saw Getit scale inordinately, very quickly, and incredibly successful in Turkey, and then roll out across Europe, and then bluntly roll back with just the same speed. What did that teach you? What should we look at and learn from that?
42:01 Speaker 00 Yeah, that comes back to the thing. When you do something that is not sustainable and you get customers to order because to get the twenty bucks for free, of course, you're not building a sustainable business. As soon as you pull that twenty bucks back, you will lose a lot of customers. So it's a very expensive way of growing. The same, doing a lot of discount and vouchers. It can be good to do a discount for someone who's a good customer and getting them to try, but most customers who order with a discount is over proportionally coming to very cost sensitive customer. Customers are always looking for finding a deal. It's always going to drive a lot of fraud as well. So when you do too much of a voucher strategy, discount
42:44 Speaker 00 strategy, you are going to attract a bad customer base. It's going to be expensive and it's going to drive their little value. And I don't think it here is the only one. Let's speak about our mistakes. If you take our Thailand business, we scaled from a couple of thousand orders a day up to four hundred thousand orders a day in less than a year. This is faster than I think I've seen anyone scale a business, but it was not sustainable. The business is now back to doing way less. It's doing twenty five percent of that today.
43:14 Harry Stebbings? Was that predicated on a heavy discounting strategy?
43:17 Speaker 00 Discount, yeah, you drove, it was very cheap to order food in Thailand with us. We didn't care for that customer experience enough, it was just about price. And of course, when you you tried to move to sustainability, most of those orders would fall off. And I would say the value of our Thailand business is not very high. It's it's so you can scale very fast in our business. You can grow to 400,000 daily orders in this case, but it's not worth anything unless you're being self sustainable. So when we see other competitors do that, we we really don't mind that much. We know what it does over time. We saw the same in Turkey, we saw the same in a few other places.
43:58 Speaker 00 Those customers come back to us as soon as they stop giving the vouchers and discounts.
44:03 Harry Stebbings? Was there a market you launched where it just didn't go up? Like, it was actually just pretty dead, reception wasn't great.
44:09 Speaker 00 Yeah, you you it's always hard in the beginning to get that product market fit. But I don't think it's about a market. I think every market in the world will probably work with with this. It's just a matter of getting that product market fit right. And secondly, is it worthwhile having another country, another set of regulation, another set of. So a lot of markets might not make sense because it's not enough return, but I think they can all work.
44:34 Harry Stebbings? How do you think about how long you're willing to lose money in a new market before it turns good?
44:41 Speaker 00 I think you need to see that the fundamental of the business works. Coming back to that cohorts, are the cohorts good enough? Can we see enough lifetime value in this? And can we see that the acquisition cost is getting to a place where we can actually scale it? So you you need to get that to work maybe in a year or so. And if you get it to work, then of course you're going to spend money over the next couple of years. Because when you get it to work, you want to scale it. If you don't get it to work, well, then it's not going to cost a lot. Because why would you invest in a business that has a bad lifetime value return? So in the end, sometimes it could be that the best markets are the ones that's going to cost a lot of money for a number of years because you want to invest to grow it. So it's not necessarily that the best market will be fastest to break even.
45:26 Speaker 00 It could be that the worst market are faster to break even, but then they never get any value.
45:30 Harry Stebbings? How do you think about that never get any value with regards to emerging markets? One of the most important things I've learned is kind of pathways to liquidity. And actually, emerging markets are much more challenging to get liquidity from. There's just not much local liquidity. How do you think about that with emerging markets?
45:47 Speaker 00 And for us, it's not such a big difference. We would rather see, do we have a return when investing this customer regardless where they sit? And in some markets, you can just scale it in a certain way. You cannot scale it fast. And coming back to the point where I tried to make before, you can make this business break even on a year, after a year or maybe two in a country. But then you're going to not invest a lot of money and you're just going to gradually scale it. And in a small percentage every year, and then it kind of run and break even for 10 years. And I did that during the early days. I was part of starting also online pizza. It was a completely bootstrap, no investors at all. So we were break even almost on the first day of business.
46:31 Speaker 00 But of course, then it takes a very long time and you're not maximizing your business. If you have a good return on your customers, well, you want to buy as many customers as you can at the price at which you have a good return. And that doesn't really matter where they sit, if they sit in a developer markets, emerging markets. For us, it would be no big difference.
46:49 Harry Stebbings? Because ultimately, it all flows back to enterprise value of the entity. And actually, if people discount revenue from emerging markets, then that's going to take a hit on the multiple that your enterprise value of that core entity is going to be worth.
47:03 Speaker 00 Yeah, it depends a little bit. If you're building a business to sell it, then of course you will have to look at the multiple and how markets are valuing it and so on. If you're building a business because you want to drive shareholder return over time and driving cash flow and so on, then you might not care so much what investors think it's worth at a point in time. You would rather care for what is the value of the business that you're building? That's the difference between price and value. We try to be focused more on driving value than driving price.
47:33 Harry Stebbings? Totally understand that. A final one before we move on to Europe and then a quick fire. What's the single best M and A you've done from an ROI perspective?
47:42 Speaker 00 I think we had all of them because we bought them all very early. And I look at a period from Latam, what I mentioned before, there were maybe fifty, sixty thousand orders a month. That business would be huge. Look at Talabat, it was a little bit more expensive, but we were doing, yeah, seventy, eighty thousand monthly orders. And now that is a ten billion business. So there is a hundred times return or so. We have a lot of hundred times returns or even thousand times return, but most of them were small businesses. So of course, it's a high return on a small amount. Then if you take a business like Global might have an absolute term, long term, equally large. But on a multiple basis, of course, it's less, given that it was still a larger acquisition.
48:26 Harry Stebbings? I have to touch on Europe before we do a quick fire. We both sit in Europe and the world has never been so convicted in their doom around the future of Europe. How do you feel when you look at the negativity and skepticism around Europe today?
48:41 Speaker 00 There is some fair bashing, there are things that we surely could have done better and that I hope that we will do better. But in the end, I'm an entrepreneur, I'm an optimist. I believe we can do stuff. I believe we can build an amazing companies out of Europe. And I think there is a lot of strength in Europe as well. We are highly educated people, good infrastructure, welfare system, functioning democracy. We are a talent hub, decent balance, all of that. There is a lot of strength of Europe. There are also a lot of weaknesses of Europe and I hope we can address those. And if we can, I think Europe will be an amazing place for startup and companies.
49:16 Harry Stebbings? What would you most like to change?
49:18 Speaker 00 Yeah, make it easier, faster to get talent into Europe. Reduce some of the bureaucracy or certain regulation that can sometimes be a little bit overwhelming for a lot of companies. And we speak about GDPR, sustainability reporting, Pay Transparency Directive, Accessibility Act and so on. And they all make sense and they have good intention. But collectively, it's just a big burden on those European companies. And I think a little bit unfairly that they are not the same criteria for other companies competing in Europe. So I think this is proportionally adding to European companies. So if we can, if we can do that, then.
50:01 Harry Stebbings? I mean, listen, I had Oscar on the show and he mentioned, obviously, the intense regulatory pressure that he's under from the Spanish government and it not being applied to, you know, bluntly Uber and foreign competitors. To what extent is Europe regulating itself into oblivion?
50:18 Speaker 00 I do think that sometimes we are hard on European companies and European companies are, there's more scrutiny on us. There's a lot of regulation that is circumvented or ignored by Chinese and US companies. I do think that we have to truly level the playing field in many ways. I think a lot of US players also leverage the dominance. Yeah, we have to make sure the US and Chinese companies cannot circumvent regulation. We have to make sure that we are not going after European companies more than US companies just because it's easier to approach us and reach us. There are a few things that I think that we have to also work on to making a level playing field and I hope that that will also happen.
50:59 Harry Stebbings? What do you say to Oscar when he faces the pressure that he's under from a national and a government perspective? Is it like, hey dude, I'm here for you, call me? Is it like, oh shit, that's a big fine? What does one say?
51:13 Speaker 00 Generally, the principle of delivery here is that we are in the details and we are in the trenches in the details. So I will not step there and just not be helpful and not knowing the details. So I'll be in the details and the same thing, I expect Oscar to be in the details. Of course, we collectively try to find the best path forward and how we can solve it and be supportive and making sure we take the right decisions and operate in a good way. But in the end, we can only do so much. In the end, I cannot blame Oscar for challenges that he is not responsible for.
51:54 Speaker 00 That has affected him, but where we have collectively taken decisions that we think are right. Then of course, we also take shared responsibility on those topics.
52:03 Harry Stebbings? Can I move into a quickfire round? So I say a short statement, you give me your immediate thoughts. Does that sound okay?
52:08 Speaker 00 Fantastic.
52:09 Harry Stebbings? Amazing. What do you believe that most around you disbelieve?
52:12 Speaker 00 I think Gen AI or the largest beneficiary of AI is going to be the average company deploying it, but not necessarily the Mag7, the ones who are building it. I think that is probably contrarian, at least if I look at the stock market, we see they have done tremendously well, but other companies haven't. I do believe that the biggest beneficiary as a company is leveraging AI versus those building.
52:37 Harry Stebbings? Do you feel pressure as a public company CEO to have an AI story?
52:42 Speaker 00 No, but I feel pressure of making sure that we leverage AI to get more efficient, working really hard on that. If you have a story or not, that's a little bit cosmetics. I don't care for that cosmetic so much. I care for actually leveraging and truly make our business better from it.
53:00 Harry Stebbings? You can buy and hold one stock for the next 10 years, other than Delivery Hero. Which stock do you buy and hold?
53:07 Speaker 00 I like the philosophy of thinking 10 years and hold because I think it sets the right direction of what are the companies that cannot be disrupted over 10 years. And I was always a big fan of Amazon and so on. I'm still a big fan of Amazon, but of course the valuation of those companies have gone up a lot, so you cannot count on multiple expansions. So the growth in those stocks will only be, or the value growth of those stocks would basically only be the growth that it can generate. That's still probably going to be a fair amount, so maybe I stick with Amazon.
53:37 Harry Stebbings? What would you do if you knew you couldn't fail?
53:40 Speaker 00 Increase risk.
53:41 Harry Stebbings? How would you increase risk?
53:43 Speaker 00 Double down even more on things that are uncertain.
53:46 Harry Stebbings? What uncertain thing would you most like to double down on today?
53:49 Speaker 00 We are a brave company that do what we believe in, so I do not think that we're holding back too much. Of course, I mentioned before, we are big believers in the whole quick commerce, grocery shopping type of thing, other verticals that we're expanding into as well, health and beauty and so on. I mentioned before, I think that's easily more than 50% of our business long term. Today is only a small portion, a small fraction. So that's something we are doubling down on, but I don't think we are too afraid of taking risk. We are willing to take risk as long as we have good data behind it.
54:20 Harry Stebbings? Which other public company CEO do you most respect and admire and why them?
54:25 Speaker 00 There are many. You have Mark Zuckerberg and for having the bravery that he has had over the years, he's been criticised many times, but he stood by his beliefs. Jensen, of course, with Nvidia, he's been taking bold decisions and been right many times.
54:43 Harry Stebbings? When will drones take over deliveries?
54:46 Speaker 00 It's already reached a point where you can actually make it work economically. In some places, regulation is also a part of it. It will take time to scale it, but over time, around 25% of deliveries could be done by drones, but it might be 10 years, something to actually build out that network to be there. So we are, we are moving in that direction, but it's going to take a long time. I would say robotics will be faster and probably be able to cover a larger portion of business.
55:14 Harry Stebbings? What do you mean it'll be able to cover a larger portion? It does pick and pack or it does delivery? What is that? Where do they own that segment?
55:21 Speaker 00 Yeah, so, so of course the challenge with drones is that it's hard to do in the city centre of cities because of noise and regulation and a place to land on and take off from. It's a little bit harder to do that in city centres and so on. And the robotics you can do in small cities, big cities, city centres, you can do it everywhere. It's a little bit slower than drones. So if you look at an average drone delivery, it's happening in like three minutes plus loading, offloading. Robots have, they cannot do the shortest way. They have to actually take the road, they have to wait for a stop sign and so on, and they cannot drive in the same pace
56:05 Speaker 00 as you have a drone. So they're slower, but they can, they can get you almost anywhere. That will probably be large much faster.
56:11 Harry Stebbings? Does money make you happy?
56:13 Speaker 00 No, I've, I've never been thinking about it. I, I think having purpose and being in a team, having a shared experience that, that makes you happy. I've never been thinking about it really.
56:27 Harry Stebbings? What's the secret to a happy marriage?
56:31 Speaker 00 Conversation, honesty, understanding, forgiveness. Try to take your ego out and win every discussion and every argument. This is probably a good start and also try to see from every perspective. And I think there's a challenge we have overall that we have our point of view and we are not understanding enough that other people might have a different point of views and both being okay.
56:54 Harry Stebbings? When we look at the next 10 years, final one, what are you most excited for? Like for me with AI, you know, seeing the drug discoveries that will come for like MS sufferers, my mother's got MS is immensely exciting. What are you most excited for when you look forward over the next decade?
57:10 Speaker 00 For me, it's even more exciting with things where I can drive things forward. And of course, all AI space will make us more efficient, will make us better, will dramatically. So I'm very excited to see that adding out.
57:27 Harry Stebbings? Niklas, this has been so much fun. I'm sorry for going so off schedule with some of those questions, but this was fantastic. So thank you so much.
57:35 Speaker 00 Thank you so much and thanks for a fantastic podcast.
57:40 Harry Stebbings? I mean, that was a really special show for me to do. Niklas is such a hero of the European ecosystem and delivery hero has paved the way for so many others. Huge thanks to Niklas for giving up the time. And if you want to watch more, you can find it on YouTube by searching for 20VC. That's two zero VC. But before we leave you today, here are two fun facts about our newest brand sponsor, Kajabi. First, their customers just crossed a collective $8 billion in total revenue. Wow. Second, Kajabi's users keep 100% of their earnings with the average Kajabi creator bringing in over $30,000 per year. In case you didn't know, Kajabi is the leading creator commerce platform with an all in one suite of tools, including websites, email marketing, digital products, payment processing
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Previous 20VC: AI Chip Wars: How Cerebras Plans to Topple NVIDIA's Dominance | Why We Have Not Reached Scaling Laws in AI | What Happens to the Cost of Inference | How We Underestimate China and Shouldn't Sell To Them with Andrew Feldman Next 20VC: Why Traditional VC is Broken: How VCs Learned Nothing from 2021 | Why LPs are More Important than Founders & Advice to Emerging Managers | Bull Case for Bytedance & Why TikTok's Ban Doesn't Matter with Mitchell Green, Lead Edge Capital Page updated September 29, 2026 · transcript and summary are machine-generated
