Madrid In 2017, the US magazine “Forbes” included Oscar Pierre in the list of the 30 most influential young people under 30 years of age. In interviews, however, the 29-year-old directs the focus away from himself to his team, which, with Glovo, has created one of the biggest growth stories in the globally booming delivery service industry.
He is the CEO and face of the Spanish start-up. Just two years earlier, at the beginning of 2015, Pierre and co-founder Sacha Bichaud launched the Glovo delivery service. The rapid growth of the Spaniards, who are currently active in 25 countries and have a leading position in 16 of them, has now led to the German industry giant Delivery Hero taking over the majority of Glovo.
The Germans, who previously owned 44 percent of Glovo, agreed last week to buy another 39.4 percent of the Spaniards and pay 780 million euros in their own shares. Glovo is valued at 2.3 billion euros.
The trained aerospace engineer Pierre has prevailed against giants like Uber Eats or Just Eat with a mixture of shirt sleeves, flexibility and an aggressive growth strategy. Sales were last at 800 million euros, but Glovo has not yet made any profits. Both companies stated that the Glovo brand will continue to exist after the acquisition, as will the platform and management team.
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Pierre is a multiple founder and had already indicated before the takeover that Glovo might not be his last entrepreneurial project. While studying at the Polytechnic University in Catalonia and at the Georgia Institute of Technology in the USA, he founded ‘Zikkomo’, a platform for scholarships to try to reduce poverty in Malawi through education. After graduating, he created a marketplace for local craft businesses with ‘Fuo Concept’, but it no longer exists.
After six months, it threatened to end for the first time
He only lasted six months as an intern at the aircraft manufacturer Airbus. Back in his hometown of Barcelona, he founded Glovo with his partner Michaud in 2015. But the project didn’t get off to a good start either. The company was on the verge of collapse three times, says Pierre in a podcast by the Spanish start-up accelerator Itnig – the end was looming just six months after it was founded.
“At first we thought we had the magic button on offer,” says Pierre. The business model was the promise: Order what you want and we will bring it to you. But that didn’t work, the free choice overwhelmed the customers. “The key to attracting users is making specific choices,” explains Pierre. In addition, the original price of five euros per order was too high.
Pierre lowered it to two to three euros and signed contracts with restaurants and shops. He frankly admits that he also presented those restaurants as partners at Glovo that weren’t at all. “Our designers copied their logos and the users didn’t notice anything,” he says in an interview with Itnig.
“That was a huge competitive advantage for us.” Glovo then wrote to the restaurants and shops in question and told them that they had been accepted as one of the most popular restaurants. “That was fine for nine out of ten,” says Pierre.
What sounds bold is apparently no exception in the delivery industry. “Working with fake logos is relatively common, and there are examples of this in the USA too,” says Enrique Dans, an expert in new technologies at the IE Business School in Madrid.
MC Donald‘s as an exclusive partner
But Pierre has success with very real – and above all exclusive, partnerships. An exclusive contract with McDonald’s in Spain was groundbreaking in 2017. Pierre’s team had found that McDonald’s was one of the most popular restaurants among Glovo users.
The agreement with the fast food chain said that anyone who wanted a Big Mac brought to Spain could only order it through Glovo. That gave the platform a huge boost, Pierre tells the authors of a study for Harvard University, from which the Spanish newspaper “Business Insider España” quotes. Pierre’s success story is now a case study in the American elite study.
For Pierre it is “the adventure of my life”. Nevertheless one that costs him a lot of strength. “I strongly believe in the effort,” he says. “I’m not one of those people who think that you can create something unique and very big in 40 hours a week. That is why there have been many sacrifices and will continue to do so. ”He spends most of his little free time with his girlfriend. Otherwise he loves sports in nature, such as cycling or hiking in the mountains.
The exclusive partnership with the Carrefour supermarket in Spain was just as popular as the cooperation with McDonald’s. It has led to other supermarkets opening up to Glovo as well. From the very beginning, Pierre did not only want to rely on deliveries from restaurants and food, but on everything that fits in the small square box that the Glovo cyclists carry on their backs. They also transport a key from A to B. But the food area still makes up the majority – the most frequently delivered item is a cheeseburger.
Pierre is currently expanding the business in this area – with its own warehouses for groceries, so-called “dark stores”. In this way, he can control the stocks, the freshness of the products and the delivery speed himself. However, this market is also highly competitive and has produced providers such as Gorillas or Flink who focus precisely on this. Last year Glovo took over two of them – Lola Market in Spain and Mercadão in Portugal.
Pierre’s own warehouses enable very fast deliveries within 15 or even ten minutes, in the technical jargon quick commerce. For example, if someone wants a fresh baguette for breakfast, they don’t want to wait half an hour for it. For Philip Moscoso, retail expert at the IESE business school, on the other hand, the further development of our own warehouses is a logical consequence. “Glovo has the algorithms and the know-how for deliveries of food, which can easily be transferred to food,” he says.
Another new branch is the “dark kitchen”: kitchens in which the restaurants cook the food for the delivery service. “As a result of the pandemic, some restaurants generate 20 to 25 percent of their sales with food deliveries, which they do not have to prepare in the restaurant’s kitchen, but can do it at cheaper locations that are optimized for delivery services,” says Moscoso. He expects that this trend, like the home office, will continue after Corona.
But Pierre by no means only has admirers. As with Uber and other platforms, his bike deliverers mostly worked exclusively for Glovo, but were not permanently employed. “Much of Glovo’s growth is based on the exploitation of drivers who have no health or social insurance and who have to work long hours for a decent income,” grumbles technology expert Dans.
Close cooperation with Delivery Hero
The Spanish government saw it similarly and last year passed a law against bogus self-employment, also known as the “Rider Law” in Spain, alluding to delivery and driving services. Glovo, on the other hand, claims that 67 percent of its drivers were previously unemployed.
Even with the expansion of Glovo, not everything went smoothly. In Latin and South America, for example, the Spaniards were unable to gain a foothold – they had tried eight countries there, but sold the business to Delivery Hero last year. In contrast, Glovo had bought the Germans’ business in several Central and Eastern European markets a few months earlier.
“Glovo and Delivery Hero have complemented each other in different markets – the merger was therefore foreseeable,” says retail expert Moscoso. It is becoming increasingly clear that the market will be dominated by only a few big players in the future. “It’s better for Glovo to be with a giant like Delivery Hero.”
In the financing rounds of recent years, Pierre and co-founder Michaud have issued more and more shares to several small investors – they never had a large anchor investor. Pierre therefore now owns less than ten percent of Glovo. Last October, he told the start-up accelerator Itnig that he had already lost control of the company. “It’s a reality – we are no longer independent.”
He also said at the time that he “ideally wanted to continue to be innovative at Glovo and learn for many years to come”. After that, there might be other entrepreneurial adventures. “But to be honest, I don’t think we will have one that’s this big again.”
More: Delivery Hero completes U-turn in Germany – share increases significantly