Bill Gurley Leaves GrubHub, Stays With Uber: What This Means For The Sharing Economy

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NEW YORK, NY – Photo by Brian Ach/Getty Images for TechCrunch

Benchmark venture capitalist Bill Gurley recently resigned from GrubHub’s board of directors. This move is mostly related to Gurley’s relationship at Uber and the Uber’s fledgling food delivery service that is in competition with GrubHub. I think, Gurley’s decision is one signal of a turning point for the sharing economy.

In the initial excitement for the sharing economy, many entrepreneurs started a lot of companies in the space. In the food delivery segment, GrubHub, along with other players like Caviar (the app now owned by Square Inc.), Postmates Inc. and Eat24 have tried to be part of the trend. While the sharing economy still has some opportunities, the food delivery business has extremely limited potential.

Beneath the hype, food delivery is only about marginal convenience. Some delivery may make sense in major metro areas like San Francisco and Los Angeles, but not everywhere. How much Chinese food do you have to deliver for your service to become cash flow positive? How many hamburgers do people have to eat , so you can meet your revenue targets?

My son recently used Postmates food delivery. The food part of the bill was $32. He was charged 9% service fee, plus $6.50 for delivery fee, and then a 20% tip on top of the entire bill. Meaning, he paid $49.86 for $32 worth of food. The service provided him a marginal convenience and no economical value. Many people can’t afford the expense and many more simply won’t pay for it.

At the end of the day, food delivery is not a game changer business; it is simply just a flash in the pan. There are also other new ideas reflecting the basic Uber or sharing economy concepts that have saturated the market.

  • You want someone to wash your car – call Squeegy. The app even provides holiday specials and tiered pricing.
  • Your dog is lonely and you’re stuck at the office? Call Wag, the on-demand dog walking startup.
  • Family coming to visit unexpectedly and you don’t have time to clean? MaidsApp or Handy have you covered.
  • Don’t have time to go to the dry cleaner? Washio will do it for you.
  • Traveling and want to make money instead of pay for airport parking? All you need is FlightCar.
  • You want a nice meal for your flight without waiting in the lines at the airport? Call AirGrub.

There are a lot of great ideas, but not every idea equals a viable business. I don’t think the sharing economy is over, but a new phase is beginning where the market leaders are emerging and the small players are being defined. With Uber’s market position, and with Lyft’s recent $500 million investment from General Motors GM +1.74%, both companies have grabbed the leadership spots. They have solidified their position as the gorillas of sharing economy. The rest of the players will continue to struggle or be gobbled up.

So what does this mean for entrepreneurs? If you are considering starting a sharing economy company in 2016, here are a few things to consider:

  1. Be careful and focus on the economics. Just because Uber did it for transportation doesn’t mean the same concept will work for dog walking.
  2. Consider the end game. Position yourself for acquisition.
  3. Finally, look towards the next evolution of the sharing economy—where artificial intelligence, medical technology, sensors and more make new game changing ideas possible.

As for Gurley – he is putting all of his chips on Uber. He has the know-how to help solve Uber’s current challenges in operations, culture and expansion. I am sure he is also thinking about an IPO in 2016.

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Bijan Khosravi , CONTRIBUTOR I cover entrepreneurship and how to build successful startups. Opinions expressed by Forbes Contributors are their own. NEW YORK, 12/09/2017 (Photo by Erik McGregor/Pacific Press/LightRocket via Getty Images)