Deliverance with DoorDash’s Tony Xu | Disrupt SF (Day 1)
3:09AM Sep 6, 2018
We've always had to eat. We know that. But also, we love delivery. We've been in love with delivery since on just in time. And real time delivery was invented a few years ago. And one of the greatest proponents of that, of course, is doordash. And so to interview doordash to interview, the CEO, Tony shoe is one of our greatest and most fascinating interview is Ingrid London, from London
to talk about the future for food delivery. What happens next lady doesn't give them a big round of applause for the afternoon. Come on up. Ingrid and Tony.
Hi, Tony. So much bigger. Yeah,
thank you so much for for coming and speaking with me today. It's great to be here. And he's coming at a really important time. His wife is just about to give birth. So he's about to become a dad. So luckily, she hasn't gone into labor, so you're able to make it. So thank you very much. Maybe
we'll get a real time notification. Yeah,
um, that would be exciting. Okay, so doordash, you guys are doing very well, everybody. I hope everybody knows what doordash is. food delivery. Yes, everyone knows, you guys have raised nearly a billion dollars now in funding, you've had 250% growth in the last year, you're nearly going to be in 2000 cities. By the end of this year, you've got new business doordash Drive, or you're working with Walmart done lots and lots of stuff. So we can just get right into it. Very, very important business. And now let's see. Let's talk first about your funding. Now. You guys recently it was just a few weeks ago, really, you announced them like 250 million round
from from a couple of investors. And you said, I believe at the time that you didn't actually need to raise the money. So why did you What are you guys doing? Yeah,
it was an opportunistic financing. And it really came as a result of the strong performance of the company. You know, the company, we've been the fastest growing service in the US, you know, for the past year, and we're actually the largest west of the Mississippi and most of our launch efforts that you were alluding to earlier, actually happening now on the east coast. And I think investors started paying attention. And, you know, folks from co two and DST who co led the round reached out and we were really looking for the financing of the time, but I've known the the folks at those firms for a while now. And it was a great way to, to formalize the relationship. Yeah, I mean, do you think that like it helps shore yourself up for competition going down the line and so on to just have that money in the bank just in case or are you using that money? Well, we're not spending it all at once. Yeah, but but it certainly allows us to be a lot more flexible and aggressive, and how fast we want to accelerate we have, we have a lot of plans, you know, launching the 2000 cities in the US is no small feat. And that's already 400 ahead of the milestone we laid out in March, which was when we announced the series D. Yeah, we have a lot of new products we want to add to connect merchants and consumers. We launched our subscription program about a month ago, a pickup service to connect the hundreds of thousands of merchants to the consumers and, you know, 2000 cities. And we have a lot of work to do on our logistics platform. So there's, there's a lot of work ahead.
I'm just looking at the clock. Okay. One of those things is, I think doordash Drive, right? Yes. Now, you're working with Walmart now. And you're doing more than just food delivery. Now, I mean, you're doing rather than restaurant delivery, or doing other kinds of products, other kinds of food?
Why did you decide to do that? Is it because food is too hard, too competitive, or what? Well, it's always been the ambition of doordash to build the most sophisticated and the broadest logistics platform of any kind, really, if, and we've always had the belief that if you can deliver ice cream in 10 minutes, or sandwiches in 30 minutes, you certainly can deliver, you know, things like groceries, which is the partnership that we're that you're alluding to, with Walmart in an hour. And, and it was a very natural extension of the work. You know, actually, doordash Drive really came about a couple years ago, when the restaurants on the doordash platform started calling us and asking, Is there a way that we can actually build our own delivery business? And so yes, we partnered with Walmart and launched, you know, grocery across 20 states in 300 stores. We've also done this with the restaurants on the platform with people like Chipotle a for example, where they just rolled out their nationwide app update that allows you to order delivery through their own app. And we power all those deliveries.
Okay. Now, if you're going to be doing restaurants and Walmart, with doordash Drive, what other kind of businesses do you think you might move into? Or areas could could use doordash drive? Like, what what Where were you going next?
Well, we're building something that's never been done before, which is we're removing the idea of location from retail, you know, including restaurants, it used to be that, you know, you'd have to be on Main Street USA in order to get enough foot traffic, so that people would pay attention and care about your store in the future, as we think about the two types of things that stores will be selling. One of which is the experience. But the other which, which is growing very quickly, is the convenience, something like doordash Drive allows us to work with all of these different stores. And our goal is to open up to the consumers in every city, all of the different merchants side where they live, do you
think that that might translate into you guys doing other kinds of things, too. So I mean, I think about fashion. So. So fashion, retail has largely been banked around going into physical stores. Now, companies like Amazon are really moving to push it online. But you have all these really interesting markets, you know, like India and so on, where people actually get these things delivered. They try them on and the guy or woman who's delivering will actually wait and see how the the outfit looks. And if it's no good, they can take it back. Would you guys ever move into that sort of thing? Do you think or try to push out new new sorts of models out of this whole thing? Yeah, I
mean, I think one of the things that having a logistics platform that enables a 32nd interaction at the door, you know, in every household is really the reinvention of different types of businesses. And I think when you think about the future of retail, in the example you gave, or in the future of food, you're really going to have it, you know, these two bifurcated experiences, you're always going to want people who want to go inside of a store, we're still social creatures, we're still going to hang out with her co workers and our friends and our families and eat out, we're still going to go try on things at the mall. I think people forget that the offline world is actually a 10 times larger or as large as the online world. And it has been that way for a period of time. And I think that's still because we're social creatures. And I think the other thing that's growing very, very quickly is, well, how do we actually meet consumers, where they are, whether it's in their home and their office, at a park, wherever, and really, you know, deliver upon that. And I think the most forward looking retailers and restaurants are already doing this. They are redesigning their kitchen so that more of that space is dedicated to production of food versus, you know, seating, there are retailers out there reinventing the layouts of their stores, so that they can both serve and in store showroom experience, like the one you described, as well as offering convenience at a scale and at a level of quality that's never been delivered before. So
I live in London, and we've got
another food delivery company, their delivery. And they have started doing this interesting thing where they've got these kitchens that where they make the food for their various restaurant customers to kind of speed up the efficiency and basically to separate the restaurant kitchen to serve the restaurant itself, and then to outsource the food making into their delivery kitchens. Is that something you guys do now? Or would you ever move into that sort of thing? Or what do you think about that we have been testing doordash kitchens to allow merchants who have run out of capacity effectively to keep growing
for us. However, you know, our vision has always been, you know, from day one, and remains to be today to be the last mile network for all businesses. And so our primary focus is less really around the production of the food. We want to leave the awesome merchandising as well as the inventory that all the makers and the builders across, you know, the many cities in the world to keep doing what they love while we can bring their products back and forth to the consumers.
Okay, okay. You mentioned last mile now, you guys have been doing a ton of expansion. I think you're in you're going into lots of Florida this week. Is that right? Yeah, what
we're in 1200 cities today, and two, and today, we launched 60 cities in Florida. Congratulations.
Thank you. I'm Tallahassee, thanks, you
should thank the team do work. And now I thought I was thinking a lot about that. So you about the money raised and about how you get all these other companies like yours is very capital intensive business generally,
how are you guys doing this? I mean, it is it does it cost you an arm and a leg, every time you expend Is it a very capital intensive process are you guys finding it getting more and more efficient in take us through how you do how, how you manage it without, you know, spending all your money.
So we've always had a belief at doordash that you first have to start small before you can scale very quickly and very big. And in fact, that's the practice and the approach we take to any practice at the company, including launch. So you know, at first it was really the core team, myself included, you know, launching markets to market to market. And in fact, we found just about any market would actually work for the business. And soon we developed a set of practices and was able to formulate it into literally a list of, you know, 50 activities of what to do to launch a market so that we can do it in our sleep. And now, we've actually been able to automate a lot of that activity. So our launches are actually getting faster, we're getting more capital efficient, so, and we're getting to profitability faster. And each one of those markets, Okay,
I'm gonna come back to profitability. And we're gonna come back to this in a minute also, but you're basically doing it on your own steam you're not ever looking to just acquire to move into markets. Right, our primary
focus has always been launching on our own. Okay. And and I, you know, look if if there were
acquisition opportunities that are truly accretive to the business and move the needle for doordash, we certainly would be open to it right, that opportunity we haven't seen, but, you know, who knows in the future? Okay. Well, you know,
there's been one acquisition that you guys have been connected to just a rumor, but I'm gonna have to ask you about.
So I've read and, you know, there have been murmurs that, you know, you guys have talked Postmates, which is a, you know, company, the very similar to yours, doing very similar delivery of food and so on having any comments on that,
again, you know, I think if there were opportunities where there were businesses that can be very creative to our we certainly would be interested in taking a look, we haven't seen the opportunity to date and as a result, you know, we've been very heads down building our business, is it
true that you guys were talking or your investors are trying to get you to merge or anything? Well,
I think conversations, you know, among investors happen quite often. But, you know, for the folks at doordash, it's always been heads down building the business, right. So,
was that a yes,
we've been just focused on, you know, making sure that the, the merchants, dashes and consumers
Okay, so no comment on whether Postmates and doordash have ever discussed a merger or anything like that,
I think you should speak with investors about that.
Well, on the subject of that, I mean, there have been actually I, you know, I heard a million times about all of these rumors of, you know, acquisitions and mergers between companies. Another one that constantly gets mentioned is, is delivery in London. So,
have you guys looked at, you know, either trying to merge or partner with companies to move internationally, it's very notable that you're totally just stayed in, in North America, really? So where are you going? internationally we are. So today we are alive in the US and Canada. And we have a lot of work to do in both markets, you know, North North America is a very large geography and the business is very hyper local. So just because we launched in city a, and Canada does not mean that city be knows about us. And similarly here in the US, and so our primary focus has been really on North America remains to be the focus for the next 12 months. So no, no, no plans to try to go abroad beyond beyond North America, then we're will look, we've always been preparing ourselves both from an operational perspective as well as a technology platform to be able to go global anywhere, okay. And so you would like to eventually consider that. Sure. Yeah. And, you know, again, though, in this business, where you have to both think about the top line and the expenditure very, very carefully, the sequencing of the activities are very important.
Okay, so you guys have got, you know, Postmates, I mentioned, deliver, there are some pretty big competitors in the space, there's, Uber Eats, there's Amazon seamless, what is your who, who do you see as your biggest competition and you're not allowed to, say, going to eat at the restaurant itself? That is
not you're not allowed to answer that. So. So I think, I think it's important to know where we are in an industry whenever we talk about competition, because I think otherwise, it's very easy just to look at whatever's around us. And then just deem that as the, you know, competition in 40 years ago, in this country, only 4% of pizza sales are delivered today, if I asked you to, you know, have pizza with me, delivery probably is the first thing that comes to mind today, about, you know, almost half of pizza sales are delivered today. But 4% just 40 years ago. And if you look at where non adhesive only 4%, four years ago, and so can even. And so, today, you know, if you look outside of pizza, you know, about 6%, you know, by certain people's estimates between five and 8% are actually delivered. And so, we are in a super early phase of the markets life. And, and I know, it's, it's tempting to talk about, you know, all of the peers, but, you know, there's a lot of market out there. And I think what's happening to both restaurants and retail is very transformative. Yeah, it's
kind of interesting, because in the European market is, there's been a, like, a ton of consolidation, but you get, you get these, like, companies like delivery hero, you know, and they, they basically chomp up gobble up all of their competitors, and all the different markets, they become these kind of like huge Leviathan covering lots of territories, and so on. It's very different approach to you guys, which is a quite organic growth, you know, well, I
think you see the leaders emerging in the US and doordash now works with more of the top 100 restaurants than all of our peers combined. And, and spent, you know, and again, being the largest, you know, west of the Mississippi, we certainly arm on that set. And, and I think, you know, you're going to see a very small handful emerge, just as you saw in other parts of the world,
how are you guys I'm getting the upper hand in those two partly deals and so on? Well,
we've always had you give them cuts, and is it about commissions that you guys gave, or I think if you're making everything just about price, you probably don't have a business, you know, for us, it's always been about how do we deliver more service and more more value to these businesses. And, you know, I think one of the things that might be helpful to explain is that these these larger restaurants that you're referencing, they're very sophisticated companies, you know, public businesses that do 10s of billions of dollars of revenue, not just market cap, but revenue. And, you know, they effectively run, you know, their own diligence processes, where they have mystery shoppers, across various cities, that will make thousands of orders across the list of criteria amongst the companies here in the US and make their decision. And, you know, 70% of the time they've chosen doordash, and and, and so I think these decisions are, are really based on the quality of the service. And so I think it starts there. And then further, it's really about the different other services that we help these businesses with, whether it's going to market adding other ways and connecting them to their own consumer, as well as new consumers acquired from the doordash platform. Okay,
so you mentioned something first, which was the quality of the service you guys are giving. Now, you guys are like a lot of these organizations that do delivery and other logistics services, you work with a lot of countries, tractors, now, contractors, there's been, you know, different disputes and so on. I know that you guys did a settlement 2017, which was a significant settlement that you've done over some of the labor disputes, would you say that all of that is now behind you guys? Are you guys moving ahead? Or
Yeah, I, I think, you know, the, the partnership with a hundreds of thousands and soon millions of dashes on the platform is very, very important. And I think, you know, all of the companies not just actually in the quote unquote, gig economy, but also in many industries, whether it be insurance, restaurants, warehousing, retailers, any any industry that have had work and partnerships with contractors are all going through this phase of figuring out how to co create the future of work. doordash is, you know, doing this with a coalition of companies actually, right now, with
local officials, regulatory bodies, and figuring out how do we keep the flexibility that all of these contractors love? And at the same time, make sure that there's a security for them in a way that makes sense for all parties. So you
think longer term, it's never going to evolve into employees? Do you think this there's a place for long term contract in this sort of business model? Well, I
think that the data suggests the vast majority of the dashes on the platform and folks who participate in other gig economy work, they love the flexibility, they already have a daytime job, right? They're looking to augment, you know, other opportunities. The question is, how do we take some of the, you know,
legislature that was written a long time ago when a lot of these companies and industries again, and in many sectors, not just tech, having it and figure out the path forward because now we have something that didn't exist, you know, many decades ago? How do we actually make it work forever? Yeah, and I think, you know, we're talking about 10s of millions, maybe hundreds of millions of opportunities. So this is a very, very important topic. Yeah.
Okay. So I know, one of the things that happens when you have employees versus contractors is it definitely impacts the margins of the business. Speaking of margins, are you guys profitable? You said you're profitable in some markets? Yeah,
earliest or earliest markets have been profitable for a while now. And, you know, every market that we've launched, you know, sense, really, in the last three years, I've gotten to profitability way sooner, the company as a whole has been contribution margin positive for six straight quarters. And so we've figured out how to scale model and get the unit economics right, in one market. And we did that before actually raising any of our financing, including both the series D answer easy, right? That must be one of the reasons why I think a lot of the investors are coming at you guys. Well, I mean, you have to, you know, understand that these investors have the pic of a lot, you know, the Yeah, exactly. I mean, there's so many coming have looked at every single company in the world in this space, and the Jason spaces and in orthogonal spaces. And, you know, they believe that doordash has the most capital efficient metrics and also have grown the fastest at the same time, that's great.
Does that mean you guys will go public sooner or stay private? Well,
the goal of the company is always tell us right, to become an independent business, and we are today and and, you know, to us, whether it's, you know, public offering
or staying private, as long as we can maintain that state of independence? I mean, do you think you have to go public eventually? Do you think that's the natural progression of these things? Or I do think that's a part of the journey. And I think the timing for that really doesn't change. I mean, the ambitions for the company are very, very long, in many ways. They're much, much longer than, you know, any state of financing, right. So,
but this probably means you would go public, I mean, your habit, what's the series you've done now? Was it Series II, we
did a Series II II. Yeah,
so it's I mean, you've been around since 2012 or 13,
we were founded in 2013, five years old.
Okay. So would you say that your revolut relatively mature company at this point getting ready for IPO? Or would you say you're still some years away from it? I
would say we're a company where the business metrics are far ahead of where we get our organizationally You know, I think we're still you know, formulating, you know, many of the teams, many of the teams at doordash that will exist in the next couple years, you know, aren't even there yet? My, you know, one of the biggest things that we're trying to do right now is really to build the team. Yeah, we were an ad 300 people this year in terms of corporate stuff, so we have law building to do
Okay, thank you. We're out of time. But thank you so much. Really cool of you to come, especially with your wife just about to of course, I'm a mom. So again, anyway, yeah. Thank you. Thanks very much, everyone.