DoorDash - a podcast by Ben Gilbert and David Rosenthal

from 2020-12-10T05:56:57

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Live from the scene of its blockbuster IPO, we recount the crazy, roller coaster journey of this "Palo Alto delivery company". From Sand Hill darling during their Series A and B fundraises to all but left-for-dead during the great unicorn massacre of 2015/16, DoorDash has clawed their way back from the brink and emerged as America's dominant meal delivery service, and its only unit-economic positive standalone logistics player. Is this the dawn of the next great Amazon-like story, or is the company simply benefiting from temporary tailwinds due to the pandemic? As always, we dive DEEP to find out.

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Sponsors: 

  • Thanks to Tiny for being our presenting sponsor for all of Acquired Season 7. Tiny is building the "Berkshire Hathaway of the internet" — if you own a wonderful internet business that you want to sell, or know someone who does, you should get in touch with them. Unlike traditional buyers, they commit to quick, simple diligence, a 30-day or less process, and will leave your business to do its thing for the long term. You can learn more about Tiny here: http://tinycapital.com
  • Thank you as well to Bamboo Growth and to Perkins Coie. You can learn more about them at:

 

Playbook Themes from this Episode:

(also available on our website at https://www.acquired.fm/episodes/doordash )

1. Sometimes winner-take-all markets DO tip.

  • The end-state that Uber (and its global peers) spent the past decade chasing — that eventually it would outrun its competitors, tip entire markets in their favor, add multiple product lines and turn massively cashflow positive — has thus far proved elusive, leading many to believe that any such undertaking is a false dream. But, since 2018 China's Meituan appears to be doing just that, all while operating in an even more competitive environment than Uber. DoorDash may now be on a similar trajectory in the US.
  • That said, it's almost impossible to predict in advance how much time and capital it will take to get there, let alone any one company's odds of success. DoorDash benefitted immensely from their competitors' relative difficulties accessing capital post-2016, and was willing to sacrifice enormous dilution to outlast them. If you're going to play the winner-take-all game, you need to be willing to go all-in when others blink.

2. If you're going to fly low to the ground, you also need to operate at the lowest level of detail.

  • Flying low to the ground (i.e., sacrificing higher margins in order to share more value back to your customers and suppliers) is a great recipe for success in highly competitive markets like e-commerce and on-demand services. However when you do so, you need to be maniacal about squeezing every last drop of efficiency out of your platform: every 1% improvement in margins could mean a 20%, 30% or even 50% profitability increase and the difference between life (for you) and death (for your competitors). DoorDash clearly gets this and has embedded this ethos in everything they do at the company.

3. Focus on what you can control.

  • DoorDash had the capital markets turn against them HARD early on in the company's life. It would have been easy to lose focus, sell or give up, as did many of their competitors. To Tony and the entire company's credit, they kept moving forward and made decisions each step of the way that kept the company alive — even when those decisions came at a high cost. As a result they outlasted nearly all competition and were in a position to IPO at one of the highest market caps of all-time, all as an only 7 year old company.

4. "Why now" matters.

  • DoorDash had one of the best "why now" answers of all-time: mass-market smartphone adoption (not just high-end) made 3 things true that were never possible before: 1. average consumers could order online conveniently, 2. couriers could plug into the network via their own devices, and 3. restaurants (most of whom didn't have wifi or desk staff) could accept orders online. Before 2013 a business like this would simply have been impossible to build.

 

Carve Outs:

David:

Ben:

Sources:

 

Further episodes of Acquired

Further podcasts by Ben Gilbert and David Rosenthal

Website of Ben Gilbert and David Rosenthal