Table of Contents
Niklas Östberg, Delivery Hero’s founder, shares detailed insights on resilience, strategic decisions, and how the company navigates fierce competition against Uber and DoorDash.
Key Takeaways
- Delivery Hero scaled rapidly during the pandemic, with Thailand’s business jumping from a few thousand to 400,000 daily orders in under a year, but such growth was unsustainable.
- Östberg stresses resilience rooted in his cross-country skiing background and a focus on purpose-driven work.
- The company’s biggest leadership lessons came from pandemic-era overconfidence, debt vs. equity decisions, and learning when to cut costs faster.
- Delivery Hero’s contrarian moves include doubling down on logistics in 2015 despite initial losses and selling its home market Germany to sharpen focus on larger emerging markets.
- Östberg believes this is not a winner-takes-all market; customer loyalty and service quality outweigh sheer scale advantages.
- Cohort analysis and deep data insights guide investment decisions and acquisition targets, ensuring sustainable growth rather than chasing vanity metrics.
- Strategic acquisitions of small, local startups allow Delivery Hero to scale rapidly while retaining entrepreneurial spirit and operational autonomy.
- Quick commerce and multi-vertical expansion (grocery, health, beauty) represent future growth drivers, potentially comprising over 50% of business long term.
- The company prioritizes sustainable unit economics over growth fueled by discounts or heavy subsidies, learning hard lessons in markets like Thailand and Turkey.
- Delivery Hero balances speed with thoughtful decision-making, recognizing when to pivot or slow down to protect long-term value.
- Östberg advocates authentic leadership aligned with strengths, driving culture, speed, and data-informed capital allocation over micromanagement.
- Despite public market pressures, Delivery Hero focuses on long-term value creation rather than short-term stock price fluctuations.
- Europe’s heavy regulations and bureaucracy challenge startups, but Östberg remains optimistic about European entrepreneurial potential with reforms to ease talent access and regulatory burdens.
- AI is expected to be a major equalizer for average companies leveraging it, rather than just the large tech giants building AI platforms.
- Drone and robotics technologies will evolve delivery logistics, but regulatory and practical challenges mean robotics will likely scale faster than drones.
Resilience Built from Early Challenges
Niklas Östberg credits his unwavering determination to his childhood as a cross-country skier in Sweden, training long hours in tough conditions. This background instilled resilience that proved crucial through Delivery Hero’s rollercoaster journey. Purpose-driven work and focusing on impact rather than external opinions help maintain this resolve.
The early 2000s investment wins and losses, plus pandemic overconfidence, reminded Östberg and his team to stay grounded: “You’re not as good as you think in good times and not as bad as you think in bad times.”
Pandemic Lessons: Capital, Costs, and Valuation
During COVID-19, Delivery Hero’s business boomed, but the capital market environment rapidly shifted. Östberg reflects that if they had cut costs earlier and raised equity instead of debt at high valuations, the company might have preserved value better. Greed to avoid dilution at a peak $35 billion valuation led to missed opportunities, and stock prices dropped dramatically afterward.
He advises caution with debt, noting it must be carefully managed. The lesson: “It’s better to dilute and not think too much about it.”
Maintaining morale during steep stock drops was helped by early proactive cost-cutting and employee belief that downturns were temporary. However, the long recovery period tested faith.
Contrarian Leadership and Bold Bets
Östberg highlights the importance of following one’s convictions even when unpopular. Great leaders must have good judgment and be willing to go against the stream. Delivery Hero’s early and persistent investment in logistics infrastructure—initially losing millions—paved the way for superior customer experience and market dominance.
Selling the home market Germany in 2017 was another contrarian move. Though large and stable, Germany had strong competition and regulatory hurdles limiting consolidation. Divesting allowed focus on larger emerging markets with more growth potential and freed the company from distractions that hampered execution abroad.
Market Dynamics: Not Winner-Takes-All
Östberg challenges the notion that food delivery is a winner-takes-all market. Customer loyalty runs deep where service quality is high. Even in competitive markets like the UK and France, multiple players make good profits. Scale matters but does not guarantee winning all customers.
He emphasizes that 80% of success depends on execution and only 20% on competition. Maintaining service quality and speed is more important than outspending rivals.
Data-Driven Growth and Cohort Analysis
Acquisitions and growth strategies rely heavily on detailed cohort data. Delivery Hero studies customer retention, order frequency, and lifetime value to predict long-term profitability, ensuring sustainable unit economics before scaling.
Östberg warns against growth driven by unsustainable discounts or heavy subsidies, which attract cost-sensitive customers who don’t stick around. Markets like Thailand and Turkey showed how rapid discount-driven growth collapses once incentives end.
Buy vs. Build: Leveraging Local Entrepreneurs
Delivery Hero prefers acquiring small local startups early, then scaling them by injecting capital, technology, and operational expertise while preserving founders’ autonomy. This “plug and play” model taps entrepreneurial talent while building global scale.
The company has completed over 35 acquisitions, most small but strategic. Big deals like Glovo stand out but are rarer. Östberg notes it’s harder to integrate and make acquisitions successful than to make the initial purchase.
Currently, the company favors building new ventures internally over costly acquisitions due to high market valuations.
Quick Commerce and Multi-Vertical Expansion
Quick commerce—ultrafast delivery of groceries and essentials—is a major focus, expected to become over 50% of the business long term. Delivery Hero is expanding into health and beauty verticals, aiming to meet customers’ demand for convenience and multi-category shopping.
Building sustainable economics in these new verticals takes time; operational efficiencies must be optimized before break-even per order.
Speed, Accountability, and Culture at Scale
To maintain agility in a large global organization, Delivery Hero clearly defines ownership and accountability at country and team levels. Goals are split into measurable parts so every employee sees their impact, which drives motivation and performance.
Östberg prioritizes culture that values output and impact over internal busywork. Avoiding bureaucracy and fostering autonomy supports fast execution.
Authentic Leadership
Östberg found early leadership challenges stemmed from trying to pretend to be someone he wasn’t. Embracing authenticity built trust and stronger followership. He advises CEOs to double down on their strengths and lead genuinely.
European Optimism Amid Regulatory Challenges
Despite skepticism around Europe’s startup environment, Östberg remains optimistic about the continent’s potential, citing strong talent, infrastructure, and democratic stability. However, he urges reforms to ease talent immigration, cut regulatory burdens, and level the playing field with foreign competitors who avoid EU regulations.
AI as a Broad Equalizer
Östberg predicts that average companies deploying AI will be the biggest beneficiaries, not just tech giants creating AI platforms. Delivery Hero is focused on efficiently integrating AI to improve operations, not marketing a story for investors.
The Future of Delivery: Drones and Robotics
Robotics will likely scale faster than drones due to regulatory and practical challenges of drone delivery in urban centers. Robots can navigate roads and deliver in dense areas despite being slower than drones.
Final Thoughts
Niklas Östberg’s story is one of relentless resilience, bold contrarian moves, and a data-driven approach to sustainable growth. Delivery Hero’s competitive edge lies in execution excellence, deep customer loyalty, and smart capital deployment — essential factors to thrive alongside Uber and DoorDash in a fiercely capital-intensive market.
