Swedish Startup Space

From student dorm to 250 MSEK acquisition – the Online Pizza story

Written by on December 17

Online Pizza is one of Sweden’s biggest internet hits of the last few years – taking an idea from a student dorm (literally) to a reported 250-500 MSEK acquisition – just a handful of years later.

I caught up with co founder Erik Byrenius for a chat about the early days, scaling the company and the emotional rollercoaster of selling your company.

Tell me a little about the early days – why pizza, why a platform?

Like many startups, our idea came from a personal need. We were studying in Linköping 2005 when we woke up one Sunday with a hangover. We really felt like ordering some pizza but we didn’t feel like going there to pick it up, or calling different restaurants trying to figure out which ones offer home delivery. Also, we were out of cash from the night before so we needed to find a restaurant with a portable card reader. We decided to search for this information online and we found a lot of scanned pizza menus but no one offered online ordering or card payment. At that moment, we realized that we would love to be able to order online and pay by card and get the food delivered.

We didn’t think so much about the idea for a month or so, but when semester was about to end we decided to try to realize this idea instead of taking a real job during the summer vacation. There was no plan to start a big company; we just wanted to learn a lot of new stuff like web development, sales, bookkeeping and so on.

There was no plan to start a big company; we just wanted to learn a lot of new stuff like web development, sales, bookkeeping and so on.

At this time the only restaurants with home delivery were pizzerias, so we decided to focus on pizza. We spent one month learning web development and coding the platform, one month visiting pizzerias in Linköping and two days handing out flyers in student areas, before going back to school in August. We started receiving a few orders every day and after a few weeks we heard students talking to each other about that cool new service OnlinePizza. It went viral and we just watched it grow.

This was very lucky for us because we didn’t have any budget. The three of us invested 1000 SEK each the first year, which was just enough to cover registration fees with the authorities, domain names, bookkeeping software etc. We couldn’t afford printing color flyers so we used our printer credits from the university and printed lots of black-and-white flyers that we cut by hand. When school started in August we had to ask our friends to print the literature for us since we were out of credits.

The first phase was pretty tough – given that most pizza places weren’t even online. Tell me about that and how you solved it?

It wasn’t too difficult to convince restaurants in Linköping to join. A few of them could join for free and they wanted to support the local student project. We could also help them buying computers and getting online. It was much tougher the next summer when we decided to try to expand to other cities. The service was not for free anymore and the “please support our student project” approach didn’t work outside of Linköping.

After two months of sales tour, sleeping in the car, eating pizza and kebab for breakfast, lunch and dinner, I think we in the end could put one single restaurant online. We were pretty close to giving up at this point. We heard all kinds of arguments form the restaurants why they didn’t want to join, but no explanation was plausible to us.  One thing we learnt was that if you mention the word “Internet” during the sales pitch, you could just as well walk out the door. Probably many restaurants had previously been convinced to buy a static web site and paid way too much for it, while never seeing any new customers from that investment. At this time the restaurants were required to have a computer and Internet connection in order to received the order. We realized that many restaurants probably considered this to be a big problem even though they didn’t want to admit that to us.

We now had two options – either we give up or we find another way to submit the orders to the restaurants. We really wanted our hobby project to continue so we decided to try other solutions. We tried lots of channels, like fax machines, SMS and Java applications in mobile phones, but nothing was good enough so we decided to start developing our own hardware. You may think it’s a pretty crazy road to take for a food ordering website, but we had nothing to lose and we were willing to work hard and wanted to learn a lot more. On Google we found some components such as GPRS modem, speaker, buttons, microprocessor and a small receipt printer. We ordered one piece of each and a soldering station. Nine months later our first order terminal was born.

We put a SIM card inside and the restaurant just had to provide some electricity. Luckily for us, this solved all our problems when approaching the restaurants. Now they even started calling us asking for “one of those boxes printing orders”. They probably had no clue how it worked and that’s just how we wanted it to be. We wanted “get an OnlinePizza box” to be a synonym to “more orders” and that is exactly what happened.

It grew pretty quickly – how quickly did you have to scale up the team and operations?

Yes, when we saw how much the restaurants loved the box, we tried to finish our studies and work full-time with our hobby, which finally happened in 2008. This helped us to focus better and we realized that the business could grow pretty big. We all wanted to move to Stockholm so we found an office and moved here in 2009, convincing our only employee in Linköping to move with us. At the same time we made our first financing round for expanding to other markets and started hiring aggressively. Two years later we were about 100 people in four countries and already profitable in three of them.

At what point did you start to receive potential acquisition offers – and how did that make you feel?

Our primary focus was always to build a great business that would generate a lot of profit in the long term, rather than preparing for an exit. This strategy turned out well.

The online food ordering industry was heating up in 2011 and there were two other players in Europe who were focusing on growing faster and becoming the world leader. In order to conquer the world they had to first show that they could win Europe, their home market. We were the dominant player in all our four markets and we were profitable. This put us in a very lucky position and we took the opportunity when the German player Delivery Hero wanted to strengthen their position in Europe.

We always had a relation to the other big players in Europe so this was never a huge surprise, even if the timing can never be planned. We had received more or less serious offers before which we rejected, so we had played with the thought before. Of course it feels very special when someone gives you a concrete offer to buy your baby. It both makes you very proud but also bit scared: Will the deal close? What if they change their minds after the due diligence? What will everyone in the company think? What does this mean for me? Am I really prepared to sell my baby?

A few entrepreneurs I’ve spoken to speak of the weird depression they felt immediately after selling their company – how was your experience?

I never felt a depression, but of course things changed. Not because my bank statement showed more digits than before, but because you start thinking “and now what?”. If the company is your baby, your passion, your life, your work and your hobby, it’s really a big step to not owning and running that company anymore. In my case the transition went smooth but I can understand why some people feel depressed. It’s like when you’re leaving school in summer and you’re starting a new school after vacation – you feel empty. You’re happy to have accomplished something and you know that things are going to change, but you don’t know exactly what to expect. If you’re an optimist you can look forward to the change and see it as yet another opportunity to learn something new.

I know this is a cliché but it’s true: It’s not the money or the goal achievement that makes you happy – it’s all those days taking you there that matter the most, so make sure you appreciate them!

I know this is a cliché but it’s true: It’s not the money or the goal achievement that makes you happy – it’s all those days taking you there that matter the most, so make sure you appreciate them!

  • Selluno.com

    Awesome story!

  • Abdullah Moai

    Great story

  • http://blog.systemsthoughts.com/ Zhe Li

    Really love how they solved the problem using that ordering box.

    • jamespember

      Yep, especially given they had no experience building hardware!

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