Just-Eat: Klaus Nyengaard
The Just-Eat CEO on company growing pains, VC success and why he loves British drizzly weather
Few people actually look forward to bad weather but Klaus Nyengaard is one of them. For the CEO of online take-away service Just-Eat, stormy weather makes for plain sailing, and as the rain comes down, the orders flood in. The site, which allows users to browse and order from the menus of thousands of food delivery outlets, has grown steadily since its original launch in 2001. And with the take-away market said to be all but recession proof, growth looks set to continue for some time yet.
Given Britain’s drizzly demeanour, it should come as little surprise that half of the 6,000 take-away restaurants listed on Just-Eat are in the UK. Although originally started in Denmark, the company founders soon realised success was dependent on moving to a more fast food friendly location. The British penchant for having food delivered makes it the biggest market outside the US for this kind of service, a fact that hasn’t gone unnoticed by Index Ventures. While most of the venture capital (VC) industry is in a state of hibernation, Just-Eat closed a £10.5m funding round with them in July with the aim of reinforcing its market-leading position here and expanding into further European markets.
“We presented the metrics of the company and how it works very precisely to VCs,” says Klaus when asked why the company was such an attractive proposition for Index. “It was easy for them to understand our business model, and that the basic economics of it were scalable. Other models which are dependent on things like fluctuating advertising revenue aren’t even being looked at by VCs right now.”
While Klaus is keen to suggest the company’s successful funding round was down to the strength of the company and its team, he does admit there’s been some serious growing pains over its eight year lifespan. The original concept first made its mark when two rival companies merged in Denmark back in 2001. With six entrepreneurs at the helm for the first year passion for the project wasn’t exactly in short supply and Just-Eat was breaking even by 2004. The UK division launched a couple of years later and in 2008 the majority investor decided a more strategic approach, in the form of a CEO, had to be brought in.
Klaus had enough entrepreneurial spirit as a result of the mobile apps company he’d started a few years earlier, combined with the corporate experience gained while at several digital and consultancy firms.
“When I joined the company had to go through a big clean up,” says Klaus. “The core concept was great and there were some really good people in the team, but the product itself wasn’t good enough. It’s still not perfect but we’ve improved it a lot in terms of usability. There were problems but they were all fixable and a year later we have a platform we can really scale.”
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The company’s revenue model makes for easy growth too, according to Klaus. Payments are made directly to Just-Eat via the online payment service. The money is then paid to the restaurants twice a month minus Just-Eat’s 10% commission. “It helps with cashflow because typically we have quite a lot of money in our account. It also means we don’t have to send out invoices and chase payments which would be an administrative nightmare.”
A major marketing focus is now in the pipeline and Klaus says deficits are on the cards for the immediate future, but with a plan to double every year he believes growth will be so strong profits will soon be ‘unavoidable’. “We’ve grown 75-100% each year and with the team and fire power we have now, we should be able to exceed that going forward.”
A million orders go through the Just-Eat platform every month but with over a thousand take-aways opening in the UK every year, Klaus’ confidence that they still have a massive slice of the market ripe for the taking certainly has some weight behind it.