Deliveroo Plus with Rob Cooper (Big Bets 2)

This is a newsletter about big bets, explored through conversations with the product leaders who worked on them. For this one, I met with Rob to talk about Deliveroo Plus, a big bet that turned into Deliveroo’s biggest ever growth lever. Deliveroo is an on-demand food delivery company, which serves more than 6 million customers and has seen revenue growth of an astounding 650% year on year since its founding in 2013. They went public last month.

Team brainstorm

The idea for Deliveroo Plus came from a brainstorm by the 7-person growth team at a quarterly offsite, when Deliveroo was still a small start-up. This takes me by surprise - I’ve almost never heard of a successful idea that came from a group brainstorm. Rob, the PM for Deliveroo’s Growth Team at the time, tells me they were sticking post-its with ideas on the wall, when someone suggested a ‘Proomium subscription’ (people at Deliveroo love ‘roo’ puns, I’m told). They were doing the exercise more to get ideas flowing among the group, he said, rather than in the hope that they’d come up with the next big thing for the company. But the idea of a subscription - where users would pay a regular fee in return for limitless free delivery - seemed intriguing, so after the offsite was over, they took it away to investigate.

Before seeking buy-in from the rest of the business, they wanted to run a low-key, undercover test. The most important thing to validate, they decided, was the idea that if people had made an intrinsic upfront commitment to Deliveroo, they’d be more likely to make additional food orders.

The test they designed was clever and, on the surface, quite different to their bet. They offered users free delivery in return for filling out a survey. The thinking was that, similar to a subscription service, users would feel like they’d given something (in this case time, rather than money) and would want to get the most out of that investment by receiving more deliveries. They built the test in a matter of days, choosing to run the survey in Manchester. The results were overwhelming: there was a 4x increase in orders among the test group.

Persuading the leaders

The second surprise for me in Rob’s story is the fact that, at the start, this bet didn’t have a leadership sponsor. The team came up with the idea, and they were the ones who gave it energy and momentum. Full of new confidence after their test, they took the idea to the executive team, but given that this would represent a major change to the business model, they were met with a sceptical response. But they persevered: having modelled out the potential P&L impact, they pitched a pilot in 7 cities. 

Despite some lingering nerves (but an appetite to go big), they got the go-ahead. They also got good advice about what to do if the bet failed. The Growth Team were worried about the impact of taking the subscription away from people who’d signed up for it during the trial, but the exec team reassured them that this wasn’t an insurmountable problem. If they cancelled the subscription service, they could always keep a small number of people grandfathered into it for a year, at a relatively minor cost.

I mention to Rob that it’s unusual to have a successful bet without a senior champion. He actually sees this as a reason for its success: ‘If an idea comes from an executive or has their strong backing, it can balloon into a company initiative without ever being properly validated. Someone who’s less influential has to build up their proposal iteratively, and prove its value along the way. It’s vital that the team working on an idea believe deeply in its potential.’

Running the trial

It took 5 months from that initial offsite to launching the trial of Deliveroo Plus (they abandoned the original pun). They were able to move this quickly because they didn’t wait until they’d finished building the product. In fact - get this for hustle - they launched a subscription service with only a sign-up feature, not the ability to take any money from people. 

One of the hard things about bets is working out how and if to market them and entice customers to sign up. On the one hand, you’re only in the validation phase, so you don’t want to make too much noise; but, on the other, you’re not going to learn anything if no one knows about your bet. Rob and team thought carefully about how to present Plus to users within the product. The main entry point was within the existing flow: when someone was ordering their take-away, next to the delivery fee was a button saying ‘get it free’ which led to information about Plus. They made no reference to it being a beta, worrying that might give misleading results because users would respond differently to something temporary. Conversely, in the PR and comms they felt they had to make it clear that this was only a pilot, so users wouldn’t get confused if they couldn’t see the Plus option in their app. 

The results of the trial were incredible: they saw order frequency increase hugely within the first month, and remain constant at that level. Presumably that convinced the leadership this was an idea worth pursuing? ‘The numbers were irrefutable,’ agrees Rob. ‘In fact,’ he laughs, ‘they were then keen for us to move as fast as possible, and we had to slow them down slightly to make sure it could technically scale.’ Over the next few months Deliveroo Plus was launched across the whole of the UK, where it proved to be phenomenally successful for growth, and then shortly after that in five other countries.

Reaching maturity

Plus was not the only thing in the remit of the Growth Team, but it began to take up all of their time, despite the fact that the team had grown from 7 to nearly 70 people over that year and a half. Their purpose had originally been to take on a series of exploratory bets, with the motto: ‘find, test, grow, repeat’, and they were also responsible for the company’s performance marketing tools. But it became hard to prioritise anything but Plus: ‘Working on anything else just seemed like it would have less impact,’ Rob said.

So they started ‘graduating’ ideas out of their team to become stand-alone products. This applied both to Plus and another successful bet they had incubated to enable partner-led promotions.

Competition for priorities wasn’t the only problem they’d introduced with the runaway success of Deliveroo Plus. It was also costing the business a lot of money. As a growth lever - its original purpose - it was phenomenal, but when the company started shifting towards optimising for profitability rather than growth, it became clear that they needed to fix Plus’s impact on their margins.

Suddenly the fact that Plus had grown to be a double digit percentage of the total business looked like a liability rather than a triumph. ‘It was a crisis moment,’ says Rob. The now much larger, standalone Plus Team, had to dive into the numbers and come up with a strategy to ensure the programme was about more than just growth. They created a more robust method of measuring its impact on the business’ economics and then came up with a framework for evaluating the programme by market. This provided them with a plan to get Plus to profitability in each geography, including making the difficult decision to shut the programme down altogether in some markets. It took a lot of effort by the whole team (Rob in fact describes it as a ‘hell year’) to make sense of it and persuade all the different stakeholders within the business that this was the way forward, but eventually they reached consensus and built it into a sustainable subscription scheme.

‘Because we’d moved so fast, we hadn’t actually clearly outlined a strategy for the product,’ says Rob, looking rueful about the pain the team had gone through to fix the programme. With hindsight, did he wish they’d planned for profitability from the beginning? ‘Not really - we were moving so fast and optimising for what was important to the business at the time, which was growth.’ And - despite the problems - Plus had quickly become a differentiator for the business and a big part of their investor story in fundraising rounds.

There’s a more general lesson here: some of the most successful bets don’t have a long-term strategy worked out - and doing that work up front slows you down, and could be a waste of time for an unvalidated product. But once a bet starts to take off, it’s worth asking yourself what problems will come with success and putting your mitigations in place.

My top takeaways

• You can start a bet without leadership buy-in, but you’ll need clearer and faster validation of your idea than you would otherwise. This is probably no bad thing.

• Be scrappy to get your idea out to users quickly. Don’t worry about rolling it back if you need to.

• Don’t overthink the long-term strategy at the start of the bet, but if it goes well, be alert to the risks you’re creating.

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