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The food delivery service chief is coping with huge demand — and criticism

William Shu’s love of convenience has been the making of him.

The concept for Deliveroo, the app-based takeaway food delivery service he started from his London flat in 2013, came to him after he left Wall Street in 2004 for London’s Canary Wharf.

The former investment banker missed the New York service culture, where the stress of working late on M&A deals was relieved by ordering in meals from local eateries. Mr Shu wondered whether he could get London’s new range of upmarket restaurant chains to do the same thing.

“I just knew it would work,” the 38-year-old American says. What Mr Shu did not anticipate was how popular the concept would be. That created huge challenges — both professional and personal — in leading this young business.

Mr Shu, who dresses casually in T-shirts and trainers, is serious about his task: “I’m a competitive person and I want to see growth,” he says.

Nearly five years after launch, Deliveroo bears all the hallmarks of hyper growth. It is lossmaking — £129.1m in 2016 — but the company has a $2bn valuation, making it one of the UK’s most successful tech start-ups. It raised nearly $400m in a September funding round and generated £128.6m in revenue last year, up by more than 600 per cent on the previous year. It delivers food to customers in 200 cities across 12 countries.

More than 1,500 people are on its payroll, 900 of whom work out of its London riverside headquarters. A further 35,000 freelance delivery riders worldwide tote meals around urban streets by bike. But it does not produce the food it delivers nor employ the riders who deliver it — it merely connects the two.

The scale of today’s operation is a long way from Deliveroo’s early days, when Mr Shu delivered food himself on a second-hand motorbike, while Greg Orlowski, his co-founder who has since left the business, developed the booking technology from his home in Chicago. For the first year Mr Shu processed every rider and restaurant bank payment by hand because Deliveroo’s IT system was not sophisticated enough to handle it. He seems to accept such drudgery as part of building a business. “Ability to improvise on the fly is exceedingly important,” he says.

Deliveroo’s business model is not unique — both UberEats, owned by US-based ride-hailing service Uber, and Berlin’s Delivery Hero launched similar services months after Deliveroo started. But the British company has been a vocal defender of gig economy working practices. In doing so it has attracted condemnation from policymakers, lawyers, activists and regulators — and legal challenges — for classifying its riders as self-employed rather than salaried staff.

The legal position on the status of delivery staff is core to Deliveroo’s business model, according to Mr Shu, and the complaints clearly irk him. “I am not a lawyer,” he says, crossing his arms. “I can just tell you what is most important to our riders, which is flexibility.”

Some riders disagree. Last month, Deliveroo fended off a claim from a group in London calling for union recognition and collective bargaining rights. Another case, brought by 45 London riders, will be heard in 2018. They claim their contracts, which pay them by the hour plus £1 per delivery, should give them the same rights as shift workers, including a minimum wage.

The legal case

Leigh Day is the law firm representing the group of 45 riders. Annie Powell, a solicitor in the employment team, says: “We are claiming that these riders are employees of Deliveroo. Our argument is that these riders ... clearly do not carry out their own delivery businesses, as [the company] argues.”

Deliveroo could continue operating if it lost the case, Mr Shu says. “It just would not be as flexible for the riders.” No one making deliveries is now covered by the contract at the centre of the upcoming case. Deliveroo made riders sign a new contract this summer, otherwise their account would be frozen.

“Everyone is now moving towards a fee-per-delivery system,” he says, adding that riders in the UK earn on average £10 an hour — 33 per cent higher than the minimum wage for over 25s.

Deliveroo is not the only fast-growing gig economy start-up facing legal challenges, but it has fared better than others. Uber, like Deliveroo, grew at an exponential rate. It has been ordered to give its UK drivers workers’ rights, such as the minimum wage and holiday pay, and has had its licence to operate in London revoked. It is appealing. Mr Shu, meanwhile, is attempting to forestall such measures. This month he launched an income insurance policy for riders that protects pay if they are injured or fall ill.

Communicating directly with staff is critical in a fast-moving business, Mr Shu says, although he admits he has needed “a lot of help” from team members. A confession of the importance of others in this does not surprise contemporaries at the Wharton School, where Mr Shu honed his business plan while completing an MBA. They recall someone more at home in finance classes than marketing himself as a founder.

Mr Shu watches the data, noting that in the early days he would only expand the Deliveroo service into new districts when the retention rates and repeat sales from customers in the places already served rose above 50 per cent.

And he was not averse to adopting dubious money-saving measures. When Deliveroo moved out of Mr Shu’s flat into a shared workspace, he tried to avoid paying for more desks by sneaking new recruits through the building’s back door. The owners eventually found out and Deliveroo moved elsewhere.

Hiring executives with the right expertise for growth is a perpetual challenge. Mr Shu used Gumtree, the classified advertising website, to save money on finding his first staff and he enticed several executives from Silicon Valley, by finding out which ones were keen to move to London. His vice-president of engineering, Dan Webb, an early hire at Twitter, wanted to raise his children in the UK.

“I consciously hired people that have been through scale before because I’m a first-time entrepreneur,” he says.

In many ways Mr Shu still acts as he did when he was starting out, such as trying to get to know his staff. He even claims to log on as a delivery rider.

Meeting the Deliveroo teams means much of Mr Shu’s time is spent away from London. “Making sure that everyone is on the same page is just a huge prerogative,” he says. As we are talking, his phone rings. A Deliveroo driver has arrived in reception with dinner.