Restaurants Become Delivery Machines

Shaan Puri discusses how business leaders often underestimate market sizes, particularly for disruptive technologies and services, and how this creates opportunities for optimists while cynics miss out.

• CEOs who drastically underestimated their market size:

  • Jan Koum (WhatsApp CEO): "We're just trying to make messaging better not build some big business" - sold for $20 billion
  • Sarah Blakely (Spanx founder): "I thought I'd make a little side money enough to quit my job" - became one of the first female billionaire entrepreneurs
  • Nokia's mobile gaming division head: "I think mobile games are just a small add on it's not a real market" - mobile gaming became a $120 billion market
  • Domino's CEO (2010): "Delivery is a convenience not a game changer" - food delivery grew from $10 billion to more than 15x that amount

• The restaurant industry transformation:

  • For most local restaurants now, 70% of order volume comes from delivery
  • They've become "delivery machines that also happen to have a restaurant table"
  • Sam Parr confirms: "I go to restaurants all the time where I feel like I'm the only person there and drivers are coming in and out the whole time"

• Market sizing philosophy:

  • Aaron Levy (Box founder): "Sizing the market for a disruptor based on the incumbent's market is like sizing the car industry based on how many horses there were in 1910"
  • Tech investing is a hits-driven game: "You can be wrong eight or nine times out of 10 as long as you get the one right in a really really big way"
  • Unlike other businesses where consistency matters, in tech/entrepreneurship you only need one big win

• Optimism vs. cynicism in business:

  • "In our business the cynics get to be right and the optimists get to be rich"
  • Cynics will be right 8 out of 10 times, but optimists are the ones who get rich
  • Different mindset from traditional investing (Warren Buffett's "rule number one: don't lose money")