I often hear stories of companies being started based on a good idea drawn up on a napkin and no real business plan to document what will happen next. Maybe there is a back-at-the-envelope calculation of money needed the first 12 months, but there is none of the kind of business plans, that many of us learned to write when attending school. Just-Eat is also on this dimension very different: there was a very elaborate business plan. I don’t think that is a recipe for success in it self, but it is fascinating reading. Very interesting to go back 10 years in time to read what Christian Frismodt & Co. were planning back then and see their perspective on how to achieve success. Some things are wildly off, but some of the fundamentals are spot on or at least very close.
If you like that kind of company archaeology, then keep on reading, if not then close down the browser window. You will notice, that I actually don’t have a digital-digital copy of that business plan, but last summer I got Christian Frismodt to take picture of every single page of the physical copy he had, so some of content might be a bit difficult to read. I read it back then and took a few notes, which I never managed to get on the blog, but for a review of a select number of pages, here we go!
The front page shows the original Just-Eat logo that Christian and his partners drew up back then. I never liked that logo, it does stand out for sure, but it does come across as too down market.
The table of contents shows that this business plan is very MBA like, there are the usual SWOT analysis, description of core competencies and market forces, etc. This rigid structure is probably because around the turn of the last century Christian was taking his MBA degree in Copenhagen while working for Coca-Cola.
The impression it leaves the reader with all these standard analytical tools, is that the process is rigid, but not with a genuine sparkle. I don’t think a rigid business plan for this type of ground breaking e-commerce start-up is a recipe for success. It can help, but big, new ideas are seldom flowing out of a rigid, consulting like business plan. It doesn’t harm to write a business plan because the structure forces you to think through all the known’s, but usually what really makes the difference is a couple of powerful ideas which are being executed with energy and creativity as the entrepreneurs encounter new unknown’s all the time. The ability to improvise and be flexible because things turned out to be very different is the real test. A long business plan can create a false sense of safety. It is not very difficult to write a standard business plan based on an idea, it is much harder to implement it with all the unexpected stuff coming your way. But again; Christian was doing his MBA, so it made sense to use this project as part of his exams. And I am sure that Christian agrees with my view on the role a business plan plays in a new venture (he has established a couple of successful companies since he left Just-Eat in 2002).
The first chapter is called “business proposal”, and it lists the financial promise to potential investors. And this is one of the areas where the original team got it very wrong. They state that they will have revenues of DKK 94 Mio. (i.e. £10 Mio.+) in year 3 with a profit margin of around 50%. They did not get funding for Just-Eat back then (.com bust in April 200om probably played a role in that), so investors didn’t believe in these numbers. But so what: Today Just-Eat is much bigger than those numbers – it just took a few more years. The ambition and vision was right.
Talking of vision, then the following chapters have the mandatory statements. The way the guys formulated it is however not very catchy. Today’s “takeaway the smart way” is a bit more to the point -;)
Later they describe the key guys’ backgrounds. As everybody that has been in funding processes know, the most important thing start-up investors are doing due diligence on is “people”, and this point was not missed on Christian & Co. who give a solid description of their backgrounds and what they are bringing to the table.
Well into the business plan we finally get to some of the interesting details on how they actually wanted to execute and build a success. The key idea of establishing a market place for delivery food was not completely new even in 1999-2000, so why is it, that they should become a success? I haven’t published the whole chapter on this, but Christian had identified two key challenges and for each defined a way to overcome the challenge:
1. Why should restaurants sign up to Just-Eat, when Just-Eat had no track-record, no credibility and was basing the transaction on the internet which was very much an emerging technology? Solution: make an alliance with Coca-Cola, leapfrog on their reputation and visit restaurants together. This model worked really well, and the first couple of hundred restaurants was signed up using this model. The alliance was made possible by the fact that Christian was already a Coca-Cola manager.
2. How should orders be sent to the restaurants with the least possible operational hassle? Solution: make a GPRS based terminal that allowed for two-way communication between the restaurant and the Just-Eat back-end systems. Eventually, this proved to be a winning concept, but Christian and his team never saw it happen, since they ran into some patent problems. They were later resolved (after a lot of trouble, but that is a separate story), and finally in 2o05 another Just-Eat team got the terminals out, and they are today an important part of our concept.
Chapter 8.2 below I am showing, not because the revenue definitions in them selves are important, but because I got a bit of an aha-experience when I read this part of the business plan. These definitions are exactly the same definitions that we use today! We are in the middle of the 2011 budgeting process, and I can see that concepts like “connection fee” goes all the way back to something written into a plan 10 years ago.
I also found a long list of features the team wanted to add to the website. One of them I found is a bit funny: “a virtual assistant”. We have actually recently discussed turning Belly & Brain into our on-site helpers, so maybe we will get there.
Later in the report, there is a list of new products and revenue streams, most of which have been implemented or which are still on the table for evaluation, but there was one that stood out: “pet food”. Not sure how they came to that idea.
And then to finalise the 70 page business plan, they had several very detailed GANTT charts which showed how they planned to roll out the venture in all its aspects. Very well-thought through, but probably more precisely wrong than approximately right.
I have always had a fondness for history, and there are maybe not many outside the Just-Eat sphere of people who see this as special, but I find it super interesting. There was one guy who got an idea in 1998, one or two years later he sat down with his newly formed team and made a detailed plan. Then a lot of stuff happened (incl. that whole team leaving Just-Eat and another team running the company for a handful of years), and 10 years later there is a very tangible company with millions of customers and thousands of restaurants in 10 countries. From paper to success. It is a good story, and it will continue for many-many years.