What Else Can DoorDash Deliver? | Summary and Q&A

Transcript

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Summary

In this video, Tony Xu, CEO of DoorDash, and Alfred Lin, Partner at Sequoia Capital, discuss the challenges and growth of the delivery service industry. They talk about how DoorDash is differentiating itself by focusing on the best customer experience and building a new type of logistics company powered by technology. They also address the issue of profitability and the importance of sustainable growth. The conversation touches on the future of the industry, potential acquisitions, and the pressures of valuation in fundraising.

Questions & Answers

Q: How is DoorDash ensuring it doesn't fail in a market with tough competition and many failures?

DoorDash is focused on building the best customer experience and offering selection that has never been delivered in the marketplace before. They have created a new type of logistics company powered by technology and software, which allows them to coordinate actions between consumers, dashers, and merchants. They constantly update and improve their software to provide a simple and best-in-class experience to customers.

Q: Is DoorDash personalizing its service based on individual preferences?

DoorDash is starting to personalize its service at the market level. They are learning about different habits and preferences in each city and plan to personalize the experience for consumers accordingly. They aim to offer a tailored experience to customers, taking into account their preferences, such as favorite types of cuisine or merchants.

Q: With hundreds of delivery companies out there, why did DoorDash decide to focus on this specific market?

DoorDash made a bet on the delivery market because of the founders' vision and their dedication to building technology for the space, rather than just delivering. Sequoia Capital was impressed by the consistency of DoorDash's mission from the beginning and their fearless approach to competition. DoorDash has shown excellent execution and is focused on becoming a leader in the industry.

Q: When will DoorDash shift its focus from growth to profitability?

DoorDash has always been focused on sustainable growth from day one. They have taken a measured approach to expansion and have become cashflow positive in their earliest markets. They have a playbook for achieving profitability in existing markets, while also funding new expansions. DoorDash aims to strike a balance between growth and profitability and does not rely on external factors to dictate when to shift their focus.

Q: How important is profitability to Sequoia Capital as an investor?

Profitability has always been a priority for Sequoia Capital when investing in startups. They look for companies that have a deep understanding of their unit economics and a clear path towards profitability. While they acknowledge the importance of growth, they believe great companies strike a balance between growth and cash flow generation, ultimately becoming enduring businesses.

Q: Can startups like DoorDash be profitable long-term or do they need to be part of a larger company?

While there is no guarantee of long-term profitability for any startup, it is possible for companies like DoorDash to achieve profitability. Sequoia Capital believes DoorDash has the potential to be a very profitable company due to its large market and excellent execution. They started later than some competitors but have quickly become market leaders in a shorter period of time. Profitability ultimately depends on a company's ability to build a sustainable business over time.

Q: What are the biggest challenges in running a delivery startup?

The biggest challenge for a delivery startup like DoorDash is keeping everything in balance. This includes effectively investing the company's capital, serving the needs of consumers, merchants, and dashers, and maintaining quality while growing quantity. DoorDash focuses on solving product-market fit across its three audiences and strives to provide the best possible experience for each while keeping all their needs in check.

Q: How does DoorDash navigate the legal challenges around contractor benefits in the gig economy?

DoorDash recognizes the unique nature of the work it offers, which is not a traditional nine-to-five job. They understand that people specifically desire flexible work, and DoorDash is dedicated to offering a flexible work environment. They actively seek input from dashers and make product changes to better serve their needs. While the conversation around benefits and safety nets in the gig economy is important, DoorDash is focused on finding the most attractive benefits for their contractors and continuously improving their offering.

Q: What is the next step for DoorDash and are there plans for international expansion?

DoorDash's immediate focus is on building and perfecting its core vertical, offering the best customer experience in the delivery market. They plan to expand their markets and product extensions to better serve different types of customers. DoorDash is also working on extending their foundation into other types of deliveries. However, international expansion is still in the early stages of consideration, and they will enter new markets when they believe there is a fantastic opportunity that aligns with their vision.

Q: Has DoorDash been approached for acquisition by larger companies like Amazon or Google?

DoorDash's focus is on building a long-term independent business, and they have no interest in selling to a bigger company. Tony Xu emphasizes the importance of building a unique point of view and focusing on their own path towards becoming a category leader. Alfred Lin believes that startups should not worry about competing against giants like Amazon and Google but rather focus on what they are authentically good at and continuously improve their offering.

Q: Do you have any advice for startups facing pressure on valuations in fundraising?

Tony Xu advises startups to focus on what truly matters, such as the rate of change in building their company and understanding their customers and product. Valuations should not be the ultimate measure of success, but rather the result of a company's authentic improvement and growth. Alfred Lin highlights the importance of setting realistic expectations and not getting distracted by leaked information or outside pressures. Startups should focus on building a sustainable business with a clear path towards success.