Prompt Cast
The Rise and Success of DoorDash in the Food Delivery Industry
TLDR DoorDash, originally founded by Stanford students in 2013, has become a major player in the food delivery industry, raising billions in funding and experiencing rapid growth. They differentiated themselves by building a logistics network, expanding into new markets, and offering affordable convenience to consumers.
Timestamped Summary
00:00
DoorDash, originally known as Palo Alto delivery.com, was founded by a team of Stanford students in 2013 and has since become a major player in the food delivery industry, raising billions of dollars in funding and experiencing rapid growth.
08:20
DoorDash started as an app on the iPad that allowed local merchants to track their customers and market to them more effectively, but then pivoted to focus on solving the problem of delivery for businesses like Chloe's macaroon shop in Palo Alto.
16:09
DoorDash started as Palo Alto delivery, a service that allowed people to order food from local restaurants and have it delivered to them, using tools like Google Voice, Square, and Find My Friends to coordinate the process.
24:07
DoorDash started as a food delivery service that partnered with restaurants to bring incremental orders and revenue, and differentiated itself from competitors like Grubhub and Seamless by building a logistics network and learning from companies like Domino's and FedEx.
32:41
DoorDash started as a meal delivery service, but now they want to expand into other areas like flowers and groceries, while still focusing on improving their logistics network and offering affordable convenience to consumers.
41:22
DoorDash was able to deliver a higher quality of service at a lower price point by operating at the lowest level of detail, focusing on individual customer experiences, and quickly expanding to different markets through partnerships with national brands like Yum Brands.
49:53
Uber launches a version of UberEats where they partner with restaurants and have Uber drivers deliver food, but it is not as successful as DoorDash's model; Square's IPO is perceived as a failure, which affects the perception of DoorDash; DoorDash faces its first major lawsuit for delivering In-N-Out without permission.
58:25
DoorDash faces lawsuits and negative public narratives from Uber and Square, but continues to grow rapidly and secure funding from Sequoia and other investors, despite facing challenges in fundraising and a down round.
01:07:02
In 2018, DoorDash secures a $535 million series D funding round led by SoftBank, resulting in a 1.4 billion dollar post-money valuation and a 38% stake in the company, allowing DoorDash to expand its operations to over 3000 towns and cities in the US.
01:16:16
DoorDash quickly becomes the fastest growing food delivery company, overtaking Uber for the number two spot behind Grubhub, and raises additional funding, allowing them to expand and consolidate their position in the market.
01:25:26
During the pandemic, DoorDash experienced significant growth, with a 20% increase in March alone, and by the time of their S-1 filing, they had captured 50% of the food delivery market in the US, surpassing Uber Eats and other competitors, potentially due to their willingness to spend on customer acquisition and their transparent pricing structure.
01:34:17
DoorDash achieved positive contribution margin in Q1, marking a significant milestone for the company, and continued to accelerate in growth and contribution margin throughout the pandemic.
01:43:45
DoorDash has introduced Storefront and DoorDash Drive as part of their strategy to compete with restaurants that are building their own ordering websites and delivery services, allowing them to address a larger market and leverage their existing assets.
01:51:57
DoorDash's CAC to LTV ratio is 10 to 1, it takes about 16 months for them to recover the $6 they earn from an average order value of $30, and their contribution profit margin is about 80 cents, highlighting the need for high transaction volume and value generation in order for the business to be profitable and successful.
02:00:47
DoorDash's bull case is that they have the potential to become a dominant super app, similar to Meituan in China, by expanding beyond food delivery and offering a wide range of products and services, while their bear case is that the current surge in demand due to the pandemic may not be sustainable in the long term.
02:09:20
The bear case for DoorDash is that they may not be able to expand beyond the restaurant category and the market size may not be as big as expected, while their main power lies in economies of scale.
02:18:01
DoorDash's success can be attributed, in part, to the fact that they were able to tap into a different supply base than Uber by offering delivery options beyond cars, such as bicycles, e-bikes, and scooters.
02:26:58
DoorDash is able to maximize the value it captures from consumers and restaurants, but there are concerns about the exploitation of gig workers and the potential negative impact on local businesses.
02:35:15
The future of the restaurant industry may involve a combination of cloud kitchens and virtual kitchen companies partnering with local brands, leading to a more consolidated marketplace similar to Amazon, and it will be crucial for restaurants to differentiate themselves and build customer loyalty in order to thrive independently.
02:43:19
DoorDash's decision to continue operating during a period of uncertainty and potential risk was a high-stakes move that has paid off so far, leading to a successful IPO and a $70 billion market cap, making it an A decision.
02:52:30
The hosts wrap up the episode by mentioning the death of Tony Shea and thanking him for his impact on the tech industry, and they also mention that they have started codifying the playbook from each episode and are offering it to listeners who sign up via email or join the Acquired community Slack.
Categories:
Technology
Business
