DoorDash S-1 | Hacker News Reader

DoorDash S-1

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Can't help but think of this article[0], which summarizes the food delivery market pretty nicely.

"You have insanely large pools of capital creating an incredibly inefficient money-losing business model. It's used to subsidize an untenable customer expectation. You leverage a broken workforce to minimize your genuine labor expenses. The companies unload their capital cannons on customer acquisition, while this week’s Uber-Grubhub news reminds us, the only viable endgame is a promise of monopoly concentration and increased prices. But is that even viable?"

[0] https://themargins.substack.com/p/doordash-and-pizza-arbitra...

That's what I've always thought as well, but the financials look to be pretty good here. The CEO states their main differentiator is their culture so I wonder what the actual landscape looks like

> The CEO states their main differentiator is their culture so I wonder what the actual landscape looks like

That's an alarm bell if I ever heard of it in an industry famous for losing money.

"We can't really tell you why we'll make money and nobody else will, other than that our culture is better!"

Is it? Obviously the hard numbers take precedence but I wouldn't necessarily hang up the phone.

There was a talk at [Guess the programming language]-conf last year, where a director at a pretty big investment fund was talking about how their choice to use said language (as opposed to being another C++/Python shop) has very much effected their approach to finding solutions to problems for the better.

It's probably impossible to measure, but the confidence to do things differently company-wide could set you in good stead asymptotically. Even if culture just means not being Uber e.g. no "a very, very strange year at [CompanyName]" blog posts or similar.

That doesn't in any way explain how culture leads to profits. The strongest argument you're making is "better culture means better performance" but that's incredibly hand-wavy in this context, and performance isn't even tied to profits in any way in your example.

It might be why you'd want to work there, but it's not a reason to invest there.

Was it Ocaml and Jane street?

https://www.youtube.com/watch?v=1rMq-4rWgis

The data from this filing doesn't seem to back this sensationalized sentiment up at all.

In the first 3 quarters of 2020, Doordash has $131 million loss on $1.9 billion revenue, and they spend $610 million on sales & marketing alone. So if they cut their sales & marketing budget 21% without doing anything else they'd be breaking even.

This seems like a healthy business that is using available VC money to grow faster rather than an inherently a money-losing business model.

Are the subsidies a part of "sales & marketing"? I remember the Uber IPO doing some thing similar, as the subsidies were "promotions".

Subsidies and promotions generally fall under marketing.

generally in business management practices, not necessarily in financial reporting.

We're talking about financial reporting right now so the statement in your comment is pretty misleading.

There are two ways to lower price. Via a promotion, it falls under "Sales & Marketing". If you just show a lower price without any indication of sale/promotions/coupon, it does not.

The question is, does the decrease in marketing spend increase or decrease the los.

There was an interesting section in Risk Factors, on pages 39 - 40.

>> Our marketing efforts currently include referrals, affiliate programs, free or discount trials, partnerships, display advertising, television, billboards, radio, video, direct mail, social media, email, podcasts, hiring and classified advertisement websites, mobile “push” communications, search engine optimization, and keyword search campaigns. Our marketing initiatives may become increasingly expensive and generating a meaningful return on these initiatives may be difficult.

I think you implied that marketing is expensive for them and I think you're right. And I think the commodity job that DD does is pretty dangerous since there isn't a lot of brand power to be had. I could be wrong there since I only order delivery once every few months.

True it depends on what their churn looks like and how long it takes to pay back customer acquisition costs.

But if they have some amount of organic growth that is close to or higher than their rate of churn (which is not too crazy an assumption) then they could cut marketing spend and they would grow slower but not start shrinking.

A large proportion, if not the majority of my doordash orders include some sort of promotion. They're everywhere and at this point I almost have an expectation that doordash will always have a promotion that lets me order at a discount.

I think that these effective consumer subsidies are included in their "sales and marketing" budget.

ah, ok that might be true. I was thinking most promotions go to first-time users but maybe that's not the case.

Pretty much every item I buy at Safeway is "discounted".

Promos and discounts are a core component of many (not all!) businesses.

Safeway is sort of extreme. Many grocery chains do have some sort of loyalty card discount. But Safeway has huge discounts all over the place to the point where I make a point of slipping a loyalty card in my travel folder when I go somewhre that Safeways are common.

> slipping a loyalty card in my travel folder

Serious suggestion: try (your area code)-867-5309 and it will probably work.

people are so strangely pliant about these loyalty programs.

Safeway discounts on many items can be 25-50% off. Normally I don't but some stores make it quite expensive not to use them.

That’s why I like to use the meme card number to at least mix my data with as many other people as possible.

If you don't use a card at Safeway you are way overpaying. It isn't a "discount", the list price isn't competitive. But the phone number I give them is one that I had 20 years ago, so it's of limited use to them.

I actually think Safeway is getting exactly what they want from you. They don't care to know who you are, they just want to know the frequency and correlation between the items you buy.

That's not to say it's a bad thing that they are getting what they want. Not all data collection is an evil surveillance problem. Data can be useful for society too.

I refuse to shop at Safeway if I have any other choice. The Safeways I've seen display their discount as $1.00 off their (excessive) price, and then expect me to believe that I'm getting a discount instead of getting the real price that they artificially raised by $1? Feels pretty insulting and manipulative.

(444) 444-4444 also works

10-4

(000) 000-0000 also worked last time I checked. It frequently has gas rewards as well.

You can just use 555-555-5555 at Safeway and it works, I've never owned a card.

That's a valid and interesting point, but they are also swallowing the competition. If you believe their chart on page 3, uber actually lost marketshare over the last 22 months while DD grew 33%. I imagine at some point the industry matures and S&M budget subsides.

The core business model is they pick the food up in one place and put it down in a different place. "Market share" is not meaningful, there is about as low a barrier to entry for competition as it is possible to get.

It isn't an achievement to gain 100% market share if each transaction makes a loss. If they try to raise prices to neutral or profitable levels it is likely that the market will shrink and competitors will charge in.

It may be that the equilibrium market is restaurants and food outlets do their own delivery for free or at cost. Then there isn't much of a market for a service like DoorDash to make a profit in.

It is possible that there is a market there and DoorDash will one day, somehow, make more money than they spend. But having a high market share is not much compensation when it requires constant losses to maintain.

Market share is absolutely meaningful here. You are assuming that Doordash is losing money on each delivery. They do not in most markets.

They're excluded from revenue - i.e. $40 order that is $5 discounted is $35 revenue.

Disclaimer: I haven't read the article.

My understanding is sometimes companies fudge the numbers though. If a $40 order has a $5 discount, they might consider $40 as revenue and put the $5 discount under a marketing expense

This is absolutely incorrect. You cannot take a discount as marketing expense and claim the full revenue. That is basic accounting that is not up for interpretation. If done intentionally it’s fraudulent.

This comment was downvoted, which seems to imply that it's false. Is it? I know nothing about the laws of accounting and I am curious if you can truly offload discounts into marketing expenses.

So there's two kinds of accounting, GAAP and non-GAAP.

A great example of non-GAAP accounting was WeWork's "community-adjusted EBITDA." When you use non-GAAP metrics to measure your business, you get to kind of define the standard by which you're measuring yourself. You get to do things exactly like the parent suggested, where you count 100% of the income as revenue and all your incentive spending as "marketing expenses."

Uber does this too, for instance (back when it was a thing) 100% of the sticker price of an Uber Pool ride was reported as revenue while only the 30% cut of an UberX or Uber Black was reported as revenue, and yes, they would list driver incentives as marketing expenses.

What Uber did is standard GAAP. Educate yourself on principal vs agent model.

Revenue is a well defined term and you can’t change the term just because you say “non-GAAP”. The SEC would step in because it’s obviously misleading.

Out of curiosity, which part, the Pool vs. X, or the driver incentives are marketing? Also, always happy to do some more reading especially if you have some references.

To be clear, Uber does use non-GAAP accounting in the form of both EBITDA and "segment-adjusted EBITDA", the latter of which excludes stock comp, platform operating expenses, corporate expenses, accounting, lobbying, etc.

Regarding the SEC, they are actually quite upset about the use of non-GAAP accounting, and have begun taking enforcement action against companies which give prominence to non-GAAP numbers.

Non-GAAP numbers are allowed when it helps clarify financial numbers for investors. The SEC will not allow anything to be called non-GAAP if it’s misleading. Saying revenue is $100 and shoving a discount as a marketing expense is fraud and accounting 101. There’s literally no room for interpretation. What Uber does with non-GAAP ebitda numbers has no bearing on this conversation. We are talking about straight up revenue recognition and the example given in the original post is well understood.

In terms of X vs Pool, it depends on the risk that the company takes. If Uber advertises a fixed price for the customer but they pay their drivers a variable cost (time and distance) then there is risk that Uber takes less money than they predicted or even a loss. That is the Principal model and they take the gross. To be extremely clear, this is what they are supposed to do under GAAP. If you look at their 10K which I’m guessing you haven’t, they don’t call the driver payouts a “marketing expense.” They call it “Cost of revenue”.

If they charge a % on the ride and there is no risk of revenues changing, it’s an Agent model and they take the net. I don’t know what the current model is, but I believe in California it’s the Agent model now. Pool used to be Principal a few years ago but again I think things have changed in California. Other countries will have different models so it’s on Uber to make sure their accounting is correct in all jurisdictions.

The fact that there are different models and reporting options, and that those options vary across space and time, as well as that the average retail investor and news report lack any real insight in to what's going on plays in to the whole obfuscation, melodrama, and financial hype.

Whether one believes this is ok or nor, or a good to necessary is, I guess, an ideological persuasion.

The SEC steps in typically when they're certain of a ruling in their favour and when it is politically expedient to do so.

In order for regulators to proactively prevent all misbehaviour such organisations would need to be impractical huge and financially inconvenient to tax payers.

Rather, society generally tolerates some level of fraud / crime / misbehaviour, probably because the benefits out weigh the costs to liberty.

You can, if you charge the full amount and then refund via a voucher or similar.

No. Again this is wrong.

If you sell something for $100 and give a future voucher for $80, you recognize $20 in revenue for this quarter and $80 liability on your balance sheet. In the next quarter when that voucher is used on another $100 purchase, you can claim $100 revenue this quarter and remove the $80 liability. But you already took the $80 hit to revenue from the voucher on the previous quarter.

If you sell something for $100 and immediately give a $80 refund then you only take a $20 revenue.

People think the SEC and accountants are dumb or blind but they aren’t. They have seen all of these tricks before and act very quickly if they see new ways to mislead.

What if you flip the order and give someone $10 in credits, expiring XYZ, and they use it on a $40 order?

Here's from the S-1:

> >> Our marketing efforts currently include referrals, affiliate programs, free or discount trials, partnerships, display advertising, television, billboards, radio, video, direct mail, social media, email, podcasts, hiring and classified advertisement websites, mobile “push” communications, search engine optimization, and keyword search campaigns. Our marketing initiatives may become increasingly expensive and generating a meaningful return on these initiatives may be difficult.

$10 credits in this case is a discount, or free service. Customer still only pays $30 revenue.

That’s only sort of true, depending on how they do it. They advertise “promotional credits” which I assume do fall under the category of marketing expenses. Yesterday, I saw an ad that gave me a code for a $100 delivery credit from DoorDash. If I use it, my receipt will show a charge for delivery, and then a promotional credit that offsets that. I believe those credits can be reported as marketing expenses, and revenue would be the gross amount of the charge.

And we know with absolute certainly that fraud is occurring at scale and rarely prosecuted, so it doesn't follow that illegality results in absense of activity.

Uber is famous for such shenanigans.

One data point. Doordash gives an annual $60 credit to Chase's credit card members for using it services. I used it to order food but I picked them up myself since I was usually on the way to somewhere. When the credit exhausted, I stopped using Doordash and ordered directly from the local restaurants.

I worry a little that their plan is to get big enough that restaurants need them then squeeze restaurants for that shortfall.

Restaurants are, by and large, already low margin businesses, so I’d like to see what they manage to squeeze.

Restaurant margins are fat compared to DoorDash's. :)

So you're assuming that the marketing has zero effect on the revenue. If that's the case why not cut it to zero? While you're at it you could probably sue the marketing department for defrauding the company. /s

It’s a rapidly growing company.

How does the recent Caviar merger with DoorDash factor into the assessment?

I wouldn't value this company based on 2020 numbers at all. Almost no chance that pandemic numbers hold post-pandemic

> 3 quarters of 2020

So they can barely be profitable (assuming they don't die overnight if they reduce marketing spending) during the out-of-this-world perfect scenario for their business caused by the social isolation? ...notice that the article didn't even bring the "perfect" situation 2020 brought them to also be able to squeeze the restaurants for insane margins.

Did you forget any disclaimer about being involved in the deal? because that was a stretch to paint it in a good color.

> if they cut their sales & marketing budget 21% without doing anything else they'd be breaking even

Not at all. If they cut this budget by 21% they would likely lose even more money. Business isn't a game where your competitors are like posts buried into the ground that can't move. All of these companies are battling for the same slices of pizza. If one backs off the others take more slices.

As a related thought: This is one of the things that lots of people don't understand about outsourcing and the migration of manufacturing to China.

One of the narratives is that companies are greedy and they went to China to lower their costs and take advantage of consumers. That couldn't be farther from the truth, which, in reality, tragic.

In any given industry there as a first mover who thought they could grab greater market share if they could lower their COGS by manufacturing in China and beat their competitors in pricing. What they did not foresee is that they triggered a chain reaction: After their move every single competitor was forced to move manufacturing to China because it was impossible to compete given the regulatory and labor constraints in places like the US and Europe.

And so, one after the other, they all followed each other off the cliff. Very soon they all found themselves manufacturing in China. They also woke up to having to sell their products at about the same prices, which means their margins were now really slim.

Years later, the factories where they all made their products decided they would now sell direct in the US and Europe and eliminate the foreign middle-men from the equation. And that's what you call being in a pickle.

Food delivery is an arms race. They are burning cash like it's free. I have no clue how it will all shake out. I don't think the math supports a business that isn't subsidized by money that is willing to burn in huge piles quarter after quarter.

Much like the migration of manufacturing to China, if one competitor turns-up marketing campaigns the others are forced to burn even more cash for even more negative returns.

Somehow we live in a world where this is called "investing". What do I know?

If they spend less on marketing and their business shrinks as a result, they could have potentially never be profitable.

That is wonderfully brutal. Beautiful.

Except that it's entirely wrong and cost a lot of people a shot at building their own DoorDash before someone else did it. DoorDash will still face many regulatory challenges, but none of the points made in that parent statement are reflected in the S-1.

This type of statements and the type of people behind them are the only reason why startups are successful. On paper, two people in a garage have no chance against a multi-billion dollar conglomerate. Except that in many of those companies, there's a dude walking around and sharing those wonderfully brutal views.

Let's get very specific - why didn't Amazon launch food delivery? Clearly, they are keeping an eye on the space and are trying to make Instacart's life as difficult as possible. There's a very good chance that there's someone at Amazon who at some point said a bunch of rubbish about this idea and slowed down their expansion into this space, which is now going to be extremely expensive. But it will certainly come, and that dude will have cost his employer billions of dollars.

The same way that we drag people over the coals when their startups fail and burn millions of dollars, I think we should do the same with the people who cost their employers the same amount of money.

Amazon actually launched restaurant delivery 5 years ago, and shut it down last year.

I didn't know that, thanks for sharing. A quick Google search reveals that in that same year Amazon led a $575 round in Deliveroo. Seems like I picked the wrong example, and in this case Amazon correctly identified the opportunity but failed in the execution. Makes me just realize how much credit the DoorDash team really deserves.

> Amazon correctly identified the opportunity but failed in the execution

Everyone failed in execution because nobody has done it profitably yet. Maybe the opportunity doesn't actually exist?

From elsewhere in this thread:

> In the first 3 quarters of 2020, Doordash has $131 million loss on $1.9 billion revenue

If a startup starting from 0 can pull that off, Amazon should have been able to do (even) better with their customer base and logistics know-how + infrastructure.

I don't see how Amazon's logistics and infrastructure translate to restaurant delivery. They can't stock orders in their warehouses.

Amazon has built a delivery network that is almost on par with DHL and others. I would say that's not only a pretty good starting point to get involved in restaurant delivery, but would also increase the utilization of the delivery vehicles (think Uber Eats).

Amazon's delivery network is built around pre-optimized multi-hour routes. Like DHL and others it's completely unsuited for restaurant delivery.

How is losing money a positive? Amazon should have been able to lose even more given more of an investment? Amazon realized its bound to be a big loser and left it.

Even the most conservative investors will look at a loss as a percentage of revenue and not in isolation. Decades of business experience have shown that a low loss ratio in a fast growing business is a good investment opportunity.

I never saw how you could make a defensible monopoly though.

As a consumer, my cost for using ten different delivery providers is nil. If there's a constant trickle of new entrants always giving away the store to attract me to sign up, I'd be stupid not to use them all.

As a restaurant or driver, they'd have to offer some very expensive incentives to make me say "DoorDash only, no UberEats/etc."

I feel like there was a large bet made on autonomous vehicles being ready before the music stops. Once you no longer have to hire human drivers, the "big ball of capital" model works better-- buy a million robovans and you can provide a service level or geographic scale no new entrant can match without a similar up-front spend..

IIRC (from what I've heard from friends/acquaintances, so I can't guarantee this) the way that (at least some) have enforced "X only, no UberEats/etc." is by putting it in their contract and saying "we control 75% of the ordering traffic in your market. If you want on our app, it has to be exclusive".

Ssh, don’t tell the VCs. They’re subsidizing my pizza.

In the age of deeply unprofitable (as in, they lose more money than they grossed in revenue) tech companies going public, DoorDash actually seems pretty okay.

In the 9 months ended 2020-09-30, DoorDash had a net loss of $149 million on $1,916 million in revenue (see page 93). Which implies if they can raise their revenue by ~7.78% while keeping costs steady, they can break even. Given their rate of revenue/cost increases (in the same timeframe as above compared to the 9 months ended 2019-09-30, revenue grew 326% while costs grew 192%), they could very plausibly do so within the next year.

Hats off to you for actually reading the S-1 and not just coming to this thread to drop an opinion about the industry or VCs.

In a pandemic where people can’t eat out.

Yeah there's no better time to go public than now for doordash. The pandemic has boosted their revenue and I suspect it will never reach these all time highs (which is still not enough for them to make profit). So go public and let retail investors hold the bag.

Yeah, the numbers are not terrible given other companies in a similar vein. However, as you say, we're in circumstances where a lot of people want prepared food but don't want to go out and pick it up. Or, at least, can mentally justify spending money they wouldn't normally spend given the current circumstances.

Yes, but humans are creatures of habit. Now that we are used to all of our food showing up to our house, I don't expect that many people, especially those that are past the 'lets go out with our friends 3 days a week' stage of their life will continue to order in more than they go out once restrictions lift around the country.

This doesn't line up with what I'm seeing locally at all. Almost immediately after restaurants were allowed to have dine-in customers, I started to see them packed any time I came to pick up food. Obviously there still aren't as many people dining out as before the pandemic, but most people I know couldn't wait to start going out on a regular basis again.

With that said, I do think food delivery and pickup will be more popular in general after the pandemic, but I highly doubt it will ever be as commonly done as it is now.

For the record, I'm in the US; I can't speak for other countries. Notably, I was in London about a year and a half ago, takeaway and delivery already seemed to be extremely commons way to dine.

I'd be those people just needed to get out of the house. But over the long run will revert back to their new normal of ordering in.

I don't think so. We're not talking about a week-long or even month-long surge that's starting to fade; it's been like this since the dine-in ban was lifted in early summer, and has only gotten worse now that the weather has turned. If this generalizes to the rest of the country (which is obviously not a given, but I think rather likely), we'll be back to pre-pandemic levels of dining as soon as restrictions are lifted.

Also, delivery is only a replacement for dining out if your reason for going out is the food/drink. If, on the other hand, you dine out for the social aspect, then delivery is never going to be a replacement for you. My hunch tells me that the latter is more common, but I'm not as confident in that prediction.

Nobody showed them more love than I did. Just because it felt like such a fun way to get food while still supporting the gig-workers. Until, I started noticing the huge markup on sides/entrees that I recall costing way less on the restaurant menu.

Did prices go up? Nope, it was doordash.

A side of garlic sauteed edamame is $4.75 on the restaurant menu, but $7.85 on the delivery app. $7.85 isn’t too much for a good tasting side, but I am not a fan of being lied to about pricing. Felt like getting ripped off.

It obliterates my trust in today’s delivery apps and damages the value proposition.

One wonders: How much of the revenue is coming from markup in menu prices? What happens to this revenue when the average consumer grows wise to these markups?

Re: https://www.forbes.com/sites/suzannerowankelleher/2020/02/27...

I just noticed it this weekend. Side of egg rolls on Doordash is $10, additional egg roll $2. On menu $6.50 and additional egg roll $1. When I noticed that, I immediately removed the order and called the restaurant directly.

The markups for ordering through doordash are ridiculous. I can afford to pay $25 for a burrito, but I'm not going to do that. That's a ridiculous price for being lazy/greedy.

$12 for some egg rolls is just way too much!! Oof.

My first thought was that's like Monster Cable margins.

On the other hand... the materials cost of an egg roll in quantity 10 is $0.51 based no some research I just did. In general a restaurant should expect to price a menu item at 4X food cost, so right around the $2.00 mark.

And when I’m sitting at a restaurant table enjoying at least decent service and atmosphere I don’t even bother to price out the difference because its paying for and different product. But grocery vs delivery its much more relevant.

Did you have it delivered for "free"?

Can you calculate how much the delivery person got out of that trip?

Yeah I go to order a burrito at a local cheap burrito place and it no longer is a "cheap burrito place", then I have to add on the extra fees from DoorDash. It is annoying to me that these delivery companies will take around 30% of the cut from the restaurant, and then also are taking fees from me. Pick one, but don't screw over both sides. I want to support local, but sometimes they are too far for me to be able to get versus a big chain. So I'd like to order delivery, but at the same time I don't feel like it is supporting them when a massive cut is taken out of their profit.

I don’t understand how taking a fee for a service which both sides agree to can possibly be ‘screwing them over’.

Because they act like they support local businesses but then take a 30% cut out of their profit despite not doing anything remotely close to justifying that price.

This forces local small places to have to raise their costs whereas the big chains cut deals with these platforms and don't have to raise their prices as their cut is much smaller.

So now if I want to buy local I am paying more for the food than I would if I went into the place. But that doesn't even then account for me having to also pay a delivery fee and a service fee. Oh and if my order is under $12? They'll slap a "small order fee" on. If I am already paying a fee to use the service on every single order, then why is the restaurant still getting screwed out of 30%? I just paid the company a fee for the service. That service fee and that cut from the restaurant is not going to the person doing the delivery work. I'm already paying for that in the delivery fee and tip.

> despite not doing anything remotely close to justifying that price

What ever justifies a price apart from what people are willing to pay?

If the restaurants are willing to pay their part and the consumer is willing to pay their part, then the price is right. If anyone was getting 'screwed' and the price wasn't worth it they'd walk away. We're talking delivery of junk food here as well - it's not like it's an essential service.

For some people delivery is quite useful and essential in their lives and gives them some independence. During some of the lockdowns in Canada drive-thru and delivery were some of the only options for getting food. And places without a drive-thru were forced to rely a lot on delivery apps.

Unfortunately you'd think it is a choice, but in today's day in age a restaurant cannot afford to skip being on the delivery apps. People are lazy and are likely to just not order from a place if they don't see it on a delivery app. No one I have talked to has ever been happy with the way the apps work. However part of the problem is that most people don't know how much these apps are screwing over the restaurant. I have talked to people who were happy to have so many options of local places on these delivery apps and were happy to be able to support them. But they did not even know that these companies were taking such a huge cut of the money that it meant those local companies often weren't making profit on the orders at all.

Even various leaders in different provinces were making statements publicly asking food delivery companies to not be greedy and to lower fees: https://mobilesyrup.com/2020/10/16/premier-ford-food-deliver...

> A side of garlic sauteed edamame is $4.75 on the restaurant menu, but $7.85 on the delivery app. $7.85 isn’t too much for a good tasting side, but I am not a fan of being lied to about pricing. Felt like getting ripped off.

p100 of the S1 explains their business model. DoorDash charges both the consumer and the merchant based on the order amount.

That is literally how all major services operate.

I work at a restaurant with door dash and grub hub. Unless there is something I have missed about doordash raising the prices, it’s the restaurants who are raising their delivery prices to stay profitable right now. Where I work every menu item has a .50$ to 1.50$ markup for delivery to make up for the some of what delivery services take from the restaurant.

I wish I could be more specific but I’m just working here while in school. I don’t really know the full detail of what doordash charges us.

Sushi restaurant I just ordered from paid 15% to DoorDash.

It really depends on what the restaurant wants to do.

If a restaurant is just present to get existing customer orders - then they pay little, but if they want to expand their user base... marketing isn't free.

Doordash charges the restaurants a percentage of the order, so a lot of restaurants increase their prices on Doordash to recover the cost. I've seen the same thing on other platforms. If you are ordering for pickup, it's usually a lot cheaper to order by phone or through the restaurant's website (if you can).

A sushi order I made last week would have been $77 (delivered) on Postmates. I ordered the same items from the restaurant directly and picked it up myself for $36. The restaurant is a 10-minute walk away.

This makes me skeptical of the business model. Those margins will absolutely get whittled down over time and these companies are already unprofitable.

Well... It's what - $36 for the food, $10 delivery fee, $10 Postmates fees and 20% tip on top = $68(rounded up)...

Truth is - if you're paying $36+tip for the same food delivered, you're literally enabling underpayment of the delivery person.

I tend to pick up, because I really don't want to enable abusive relationship that restaurants have with their drivers.

$77 didn't actually include a tip. The prices were high because of a large markup on Doordash prices compared to the restaurant's takeout menu, as well as the explicit fees you mentioned.

The $36 was specifically for pickup, the restaurant doesn't offer their own delivery service as far as I know.

So you guys in America pay 77$ for takeout sushi? Fascinating

Well, in the end I paid $36 for takeout sushi for two people... which is, I guess, not an unreasonable price in America. $77 is getting pretty high even for a big coastal city, although I'm sure there are people who happily pay that.

How much would it cost where you live?

Yeah, if I went to my local grocery store which has a sushi counter, for two people I'd be about $12/main + $6/side (e.g. seaweed salad or Gyoza), so ~$36 for two people. I'd generally pay more in a restaurant even for takeout.

For 2 people, expect sushi delivered to your door in SF to be $50-100 depending on how hungry you are.

Keep in mind 2 pieces of salmon belly nigiri will be $6-9 depending on the restaurant. And this excludes taxes, driver tip, delivery and service fees, etc.

This is the part that makes me bitter about doordash. The fee's, tip, yearly subscription – all fine. Marking up random entree's $3-10 is when I get frustrated. It's criminal imo.

p129

> On a quarterly basis, our revenue increased for all quarters presented as a result of increases in Total Orders. The increase in Total Orders was primarily driven by an increase in new consumers acquired as a result of our continued expansion in our existing markets and expansion into new markets, increased engagement from existing consumers, and growth in orders completed through Drive. In the second and third quarters of 2020, these trends accelerated in part due to the effects of the COVID-19 pandemic, which resulted in in-store dining shutdowns and the adoption of shelter-in-place measures.

The pandemic has helped DoorDash. There's an increase of revenue from $362M 31.03.2020 to $879M 30.09.2020 (p128). This has also led to an increase in Working Capital $1156M at 30.09.20 from $616M (31.12.2019).

If the pandemic continues for another 9 months probably if not things are going to get worse, because people are going to go out a lot more when the pandemic is over and order delivery’s much less.

My toothbrush breaks even but its not worth $25B

Under Risk Factors Summary:

"We have a history of net losses, we anticipate increasing expenses in the future, and we may not be able to maintain or increase profitability in the future;"

"We have identified a material weakness in our internal control over financial reporting and may identify additional material weaknesses in the future or otherwise fail to maintain an effective system of internal controls, which may result in material misstatements of our consolidated financial statements or cause us to fail to meet our periodic reporting obligations;"

the first part feels standard to me.

can anyone clue me in on whether that second part is as batshit crazy as it sounds?

I have only read a handful of these in my life, but the material weakness does sound strange, but the rest of it just sounds crazier and crazier

That probably means they are cooking the books for the pre IPO investors and don't want to go jail after public listing.

Seems nuts, but sections like this can be a bit "out there" occasionally since risks not covered can technically be grounds for an eventual lawsuit. I wouldn't take this as an expectation, but if you do decide to allocate $ towards them I would definitely pay attention to the notes in every 10k/10q. But you should be doing that anyway, imo.

Relatively recent guidance on that section: https://corpgov.law.harvard.edu/2020/09/11/sec-changes-rules...

> may result in material misstatements of our consolidated financial statements or cause us to fail to meet our periodic reporting obligations

This part makes it sound (especially the "fail to meet our [...] reporting obligations" part) like they should get their shit together before going public, and even if they didn't plan on going public, fix that right away.

Imagine if any other small company approached the government and said "Hey, we might be breaking the law, we're not fully sure. That's alright with you?". They would get the IRS after them so quickly, how come DoorDash can be open about maybe breaking the law? Bigger companies seem to constantly be above the law.

In today's world, every medium to large company in the world breaks at least a law a day. It's simply literally impossible for a single human to comprehend all the laws and regulation: the internal revenue code itself contains 3.4 million worlds.

This is just CYA.

Isn't that their point though - they know it will hurt the earnings they present, and they don't want to hurt their IPO?

Former auditor here:

The first one is standard.

Second one is also a standard statement, but not standard to actually see. Honestly I don't know that I have ever seen that statement out in the wild. It's like something you study about in school - but rarely see.

It could mean anything, with regards to discrepancies found in the financials. The main thing is that, what was found is material - and when you are talking about numbers this big - the discrepancy must have been significant.

Would you say this is CYA by finance when forced to go public by those with a controlling interest in the company? Because it definitely has that CYA vibe.

One doesn’t admit to a material misstatement if it is at all possible. It is a HUGE deal because it admits that someone fucked up and the error wasn’t caught until the audit.

Auditors typically work with a firm to iron out any issues so as to avoid material statements. The fact DoorDash and the auditor weren't able to resolve this issue/these coming issues and resorting to writing it up definitely is a big deal. But business-wise, yea losses forever isn't what you want to see.

This thread has been really informative, thank you for your comment in particular! This tidbit is fascinating.

It is also possible that there is nothing wrong with the financials, but there is wrong with the controls over the financials.

IE, can the entire finance department sign off on checks? Or something along those lines.

But with the above example, say anyone can process process orders without any oversight (ie no sign off by 2 VPs or something like that) What is potentially stopping some AP clerk from setting up a fake company, and then paying them for services every month?

These are also the types of things that controls over financial reporting could mean.

> It is also possible that there is nothing wrong with the financials, but there is wrong with the controls over the financials.

Is it possible to have one without the other?

Yes. It's like finding a security vulnerability without any evidence it was exploited.

Just because an AP clerk could embezzle money that way, doesn't mean that they've identified evidence of that happening. But now they've reported that lapse in financial controls (which may or may not have been addressed), and warned that there may be others.

It's actually incredibly common. If a company has ever had an issue around reporting, they need to include that. See here how many companies use the same exact language:

https://www.sec.gov/edgar/search/#/q=%2522we%2520have%2520id...

Isn't it more the second part of the statement that is shocking, that is "may identify additional material weaknesses in the future" rather than "we have identified a material weakness".

If so, that cuts the results down from 684 to 205, of which many are from the same company, just at different times.

https://www.sec.gov/edgar/search/#/q=%2522may%2520identify%2...

Twilio has had an SEC filing with similar language.

My guess is that they are operating at such large numbers so rapidly that they're basically saying "if you tried to audit every penny we make it, you're probably going to find discrepancies, we guarantee it".

Going from $600M to $1.9B in revenue in a year will stress any system.

Yeah but when they say “material” it means the problem is definitely not about pennies

"material" basically meant pulling an Enron when we started SOX

I love this about HN. Learning from experts. Thanks for taking the time to write that.

The first part is very standard language. In general, the risk section needs to cover every possible risk so no-one can sue you. The likelihood doesn't matter.

Wouldn't be a HN S-1 without someone posting the first quote you did, a quote that is present in literally every tech company's S-1 filings.

"literally every tech company" is a significant overstatement. There are a lot of tech companies that were profitable at time of IPO and that did not include the first statement.

Just because it has become standard operating procedure for tech companies to go public with a business model of "lose money on every sale, but make up for it in volume" (with a hope that they can sustain predatory pricing long enough to dominate the market) doesn't mean it's ever less interesting. It's a fairly recent phenomenon and IMO will never get old to comment about every time there's a notable IPO.

Recovering CPA/auditor here. If you're curious to what the second bullet point means...

When a CPA firm audits a public company, they're basically performing two parallel audits -- an audit of the books and records (i.e. are the numbers accurate/truthful?) and an audit of the internal controls over financial reporting (i.e are there procedures/controls to find correct errors/fraud?) This second audit is required because of Enron, basically.

Anyway, when the auditors find a big error, they will usually tell the Company how to fix it, so the books and records are fairly stated. However, since this error usually results from a deficiency in controls (i.e. you had nothing to catch this error), it is noted on the audit report on the internal controls.

A 'material weakness' is the worst kind of deficiency in internal controls. It basically means that an enormous error could occur (enormous in the sense that it would effect an investor's decision about buying or selling the stock) and the Company wouldn't be able to catch it/fix it or even know that it happens

In the S-1 they state:

"The material weakness that we and our independent registered public accounting firm identified occurred because (i) we had inadequate processes and controls to ensure an appropriate level of precision related to our revenue to cash reconciliation process, and (ii) we did not have sufficient resources with the adequate technical skills to meet the emerging needs of our financial reporting requirements"

So it basically means their accounting team was completely overwhelmed/inexperienced. My experience with software companies is that accounting is a total shitshow, so not surprising.

The surprising thing is that this weakness must be so pervasive, they can't predict with any confidence whether they will remediate it and be able to have sufficient controls over their numbers. So it sounds like they're probably trying to completely overhaul their accounting function while they try to go public. As a potential investor, wouldn't give me a huge deal of confidence in the accuracy of their financials. Pity the poor souls trying to fix this...

"To address this material weakness, we are hiring additional accounting, engineering, and business intelligence personnel and are implementing process level and management review controls to identify and address emerging risks. While we are undertaking efforts to remediate this material weakness, we cannot predict the success of such efforts or the outcome of our assessment of the remediation efforts at this time. We can give no assurance that our efforts will remediate this deficiency in internal control over financial reporting or that additional material weaknesses in our internal control over financial reporting will not be identified in the future."

These are in almost every S1. "in the event of the end-of-the-world we may have issues generating revenue"

The food delivery market at the moment feels a bit like the daily deals market from 10-12 years ago (with Groupon and Living Social).

Sure there's a market there, but is it really big enough to sustain multiple large IPO'd start-ups...

There's always a market for VC subsidized consumer services. What's in dispute is whether there's a market for these services when they reflect their true unsubsidized costs.

If food (or grocery) delivery companies cannot turn a profit during a pandemic, there's no way they're going to turn a profit when the majority of people return to in person dining or pickup. Groceries and restaurants have terrible margins already. There's just not enough pie to give a meaningful slice to middle men facilitating payment and delivery.

Turn a profit? No these companies are taking all revenues and deploying it back into the company to continue to grow operations. They will be loss taking companies until they get market share and then Extract profits once they have market share or die trying.

It will be a battle to the death until there is some consolidation to empower a price increase.

Interesting comment but some prelim research can help us understand if it has legs: Look up the S-1 from those companies and compare the numbers.

Yeah, I had the same feeling. None of this feels sustainable and I get the sense that most of these companies are rushing to IPO as soon as they can to unload their terrible businesses on the public.

Groupon failed because they were selling full priced items at a discount. This was meant to be a marketing thing for small businesses but in practice you just ended up with cheapskates who never intended to be repeat customers. The only thing I can say in the delivery companies defense is they have normalized large markups on delivery. People are paying more for delivery than they were before(the apps do a good job of obfuscating how much more). Clearly there was an arbitrage opportunity but there are so many companies fighting over the same tiny margin while losing tons of money. This can't end well.

There must be a viable market there. For example, pizza franchises have managed to eek out a profit from home delivery for years. Centralized delivery service should be able to find some extra efficiencies to make their business viable. The demand is certainly there.

Pizza costs $1.50 to make and charging $8-20 for it, you can eek out a great margin. It also transports well and can be easily reheated. Regular restaurants have a lot thinner margins.

Exactly, pizza franchisors eek out a profit. They don’t earn enough profit to also have a tech startup take a piece.

I didn't realize that groupon still exists.

I pretty much only get delivery if I have some sort of promo code emailed to me.

Otherwise I can’t really justify spending $25 to get a burrito delivered. Amazing that people have normalized paying for the insane number of fees plus tip to get one thing delivered.

It's often justified by, "I can keep working for another hour if I don't leave to get food."

And even more often "I can keep drinking another beer if I don't have to leave to get food."

I can verify this justification exists.

I may or may not be able to verify that sometimes both justifications exist in parallel.

How long does it take to go to a restaurant and pick up the food yourself? 10 minutes each way at most + 5 minute wait seems the maximum reasonable estimate to me

Precisely. I can't stomach the extremely high price of this service.

I feel like I'm living in a different world than this thread. DoorDash is practically giving away money with their service it's unreal.

DashPass is $10/mo which which turns every delivery into ~$1+tip. The idea that I can buy 30min-1hour of a real human's time and labor for $3-4 to deliver me food is silly.

My usual Indian take-out order is $16 if I spend 40 minutes for the round trip or $18 to get someone to deliver it to me.

It definitely depends heavily on the market you're living in - some are very heavily subsidized, others are not. As a counterpoint, I recently had a $30 off promotion for uber eats. Ordered a couple of hamburgers, and the food tab came to $29 - which was zeroed out after the promotion.

Delivery fee + service fee + tip meant I still ended up paying $18 for the service. I can't imagine I'd ever be a buyer at the full price.

Last time I used it there were two fees (I don't remember exactly what they were called but it was like a service charge and a delivery fee) and dashpass only covers one.

Also in my experience (in Chicago) the food in the app costed $1-2 more per item (this wasn't listed anywhere, but if you compare the cost with what the resturant charged it was a lot more).

Also there was at least one resturant that I visited that would give you less if you ordered through a delivery app to make up for the fact that they had to pay a fee. This is shady and shitty on the resturant's part and not really DD's fault (although frankly it's kind of predictable) but it was still a thing that happened when I used the app.

I haven't used it for about a year though (because of the above shady practices) so they might have changed.

I had this same experience. Decided to try doordash because I had a $5 coupon in the mail + free delivery on the first order. I was suspicious of pricing so decided to check what the total would be for same order through restaurants site. All of the item prices were inflated on doordash. The $5 coupon + free delivery brought the total down to about the same price if I ordered directly from the restaurant.

I don't like that they inflate prices and will not order directly from them because of it. They should be transparent about how much their service costs rather than hiding the true cost of their service in the item prices. I feel like it's likely their fault and not the restaurants since it seems like every restaurant has inflated doordash prices. My only theory is that they may be charging the business service fees in addition to the service/delivery fees they charge the customer.

They do white label delivery for a fast food restaurant I order from. I've had it take 2 hours to deliver multiple times and even had one order get cancelled by doordash after they couldn't get anyone to pick up the order. Most of that delivery time is made up of it switching between multiple people who they expect to pick up my order. Once someone actually picks up my order it only takes about 5 minutes to get to me.

That's assuming that a real human's time is devoted to you for that period. DoorDash seems to have drivers execute multiple orders concurrently. If someone else in your area ordered from the Indian place around the same time (or another restaurant nearby), the same driver will likely pick up both orders and deliver one and then the other. You're definitely not buying a dedicated slice of that human's time for $3-4.

Delivery drivers do multiple restaurants at once and some use multiple delivery apps, so it's somewhat more efficient than taking the roundtrip yourself.

I'll bite. I tried to order a Taco Bell bean burrito. Small item, so you can throw stones about that, but here's the price:

  - $2.03 for the burrito (vs 1.29 in store)
  - $2.99 for fees and taxes
  - $3.99 for the delivery fee
  - $2 for the dash tip??? Is 20% customary? It's the lowest dash suggests.
  - $11.01 for your burrito

So, for your $1.29 burrito, the price of the item is jacked up by nearly 60% to start. And slam fees, taxes, tips, and you're talking about a total that's 800% higher than the actual item.

It's ludicrous. They're catching you at every point to extract cash. Yes, a human delivered something to you, but for the cash conscious, this is an absurdly expensive tilt.

Well, you said we could throw stones, so... this is a very unrealistic order. The parent comment is talking about a specific (long term) promotion that makes the decision very reasonable, but a realistic fee might be:

- $15+2 for say, pad thai + taxes - $4 for delivery - $3 for tip

I'm not saying that paying 40% extra for food is a reasonable decision for most people, but (a) I can afford to pay $7 to avoid traveling across town for a specific meal I want, and (b) these numbers get even better with a larger order. If you're the consumer that wants a single $2 bean burrito, the market answer is clearly that you should put a dozen in your freezer and microwave them yourself.

I also think the Doordash business model is not super valuable, but it clearly has some value. Restaurants make an increasing portion of their revenue from delivery (especially during COVID), and having to staff, manage, and route a delivery person themselves is not their core competency. Does signing up with Doordash marginally increase revenue? Yes.

The fees/tip are much easier to justify if you order more than $2 in food.

I know right, it's crazy. $3 service fee + $1.99 delivery fee + the food costs $4 more + expected $5 tip + ...

I feel like every time I tap the screen while using a delivery app I get charged a dollar

Interesting, I've never seen food markups. That might be specific to a restaurant/location/app

They're not always obvious! You need to compare the prices in the app to the restaurant's own takeout menu prices. My understanding is that the restaurants themselves add the markup to offset the fees that DoorDash charges them.

I also balked at it until my credit card gave me free delivery and only 5% fees. The final cost is cost of food + 1 dollar + tip to the driver (which I'm perfectly OK with!).

This comes out to a real marginal difference of about 4-6$, which I don't really care about.

Edit: people keep mentioning markups. I see those much more often on GrubHub (actually, every place is marked up on GrubHub except big chains), but don't see markups my regular set of local restaurants.

I find that the prices of the food are also inflated over what the restaurant would charge.

What card?

Chase Sapphire Reserve: https://www.doordash.com/dashpass-v2/chase/sapphire-reserve/...

https://media.chase.com/news/chase-partners-with-door-dash-t...

Seems like free DashPass is valid only for a year.

> Complimentary DashPass Subscription for Chase Sapphire Reserve and Preferred cardmembers: Your Chase Sapphire account will receive one complimentary DashPass subscription from DoorDash for at least 12 months when the subscription is activated by 12/31/21. After the DashPass discounted period ends, you can choose to continue to be enrolled and charged the then current monthly DashPass rate

They also have an offer for the Freedom and Slate cards (which have no annual fee) albeit free DashPass only for the first 3 months and a 50% discount for the next 9. So, still a good deal overall when compared to paying $9.99 every month. Thanks!

I can attest to using Chase sapphire reserve getting DoorDash and American Express platinum getting Seamless (from Lyft Pink) and Uber Eats. Agree with the parent, with these faux discounts and ordering for more than one person makes it well worth it. I say faux because the fees are negotiated and paid with the credit card membership fees invisible to us

Pretty sure Lyft pink is through Chase sapphire as well, which in turn gives Grubhub+ (at least for me)

This only means the cost is somewhere else, just hidden. No free lunch. This remark is useless since I have no clue where, just that it is somewhere.

The cost right now is all that sweet sweet investor cash which I am more than happy to burn for them.

> food + 1 dollar + tip to the driver (which I'm perfectly OK with!).

In many cases there's a markup on the food over the restaurant's prices. There's delivery fee that's generally $2-$3, a service fee that's hidden in the "taxes and fees line item", not to mention a small order fee etc on some orders. And, of course the tip. This I do not understand. It went from tipping the waiter a bit more because you were well taken care of at the restaurant dining experience, to pre-paying a tip to the driver before knowing if the food's good or if the delivery is late etc. The restaurant doesn't get any of the tip. Anyway, a subsided food delivery that you got is not sustainable.

To be honest I do not understand the tipping culture at all. Its expected to tip a restaurant staff if you eat at the restaurant, but not if you get the food delivered. But, expected to pre-pay a tip the driver who delivered the food (irrespective of quality of food or delivery) but not the USPS/UPS/fedex driver who delivered anything else even if he/she carries a heavy package over a flight of stairs. Its expected to tip a uber/lyft driver even on a shared ride with other folks but not a bus/metro/train driver. None of it makes sense to me :)

I prefer to order food from the restaurant directly and pick it up, so that they get the maximum $. Door dash is convenient to see what's out there, but not very good to the actual business of the restaurant. Plus you are paying for that convenience. I also don't see how DD will ever be cash positive as the fees would have to go up, which seems bad business.

I think it has less to do with any culture, and just how the pay structure works for all the different things you mentioned. USPS/UPS/Fedex/bus/metro/train drivers all make livable wages and have benefits.

I'm not defending the tipping pay structure, but it's certainly not some confusing mystery.

Do not underestimate the number of people who can't be bothered to (a) put on pants, (b) go outside, and/or (c) interact with others.

Just as an aside, one of the best perks of work from home had been not wearing pants.

Based on income/wealth statistics, very few Americans are able to afford a $25 burrito outside of a special occasion. I wonder how big the market really is.

The same people who have a $500 car lease, $900 smart phone, $65/month in subscription streaming services, blah blah blah

The other thing to think about is people are probably just shifting money from eating out, to delivery. I mean you could go to Chili's and spend $50 for two people, or you could get Chipotle delivered for $30.

I would say the same thing about very few Americans being able to afford a $25 per person visit to Chili’s, outside of special occasions, but I understand what you’re saying.

I don’t think “very few” is the right way to look at this - the US is a very wealthy country. In 2019, something like 42 million Americans - not much below the population of Spain - had incomes over $100,000 (the 87th income percentile was $100,478). Almost all of those people are able to afford a $25pp visit to Chili’s outside of a special occasion!

"Few" in the relative sense compared to other Americans, but "lots" in the sense of raw numbers because America is so large.

There are also the shrinking frugal demographic like me who can afford a $25 burrito, but out of principle would absolutely not pay that much for a bunch of beans wrapped in a tortilla, microwaved for 1 minute.

I prefer to use non tax advantaged savings (aka emergency fund amounts) as a more accurate metric for being able to afford luxuries. If you’re living close to paycheck to paycheck , I would say you can’t afford to pay $25 per person per meal, regardless if you earn $100k or $50k.

My overarching point being that if people can barely afford the current VC subsidized food delivery prices, what is the possible market size for non VC subsidized food delivery?

Edit: I don’t see a source for 42M Americans having incomes over $100k per year. This source says 15.5% of US households had incomes over $100k, and at 128M households, that is 20M households with incomes over $100k.

https://www2.census.gov/programs-surveys/demo/tables/p60/270...

If you’re making $100k but have no savings, maybe your money is being spend on trips to Chili’s. Of course it’s not literally that, but an individual having no savings but high income doesn’t mean that they can’t spend money - it means that they do.

Let's put it this way.

I went to lunch with a girl who worked at a Bestbuy. She spent the entire time trying out figure out how the a group of current BestBuy employees nearby at the restaurant could afford the food (overpriced $20 meal) for such a causal meal.

My former landlord financed everything she ever did, including her damn electronics she would throw away or break in a year. She was a widow, on social security and was cheated out of a pension. I have no idea how her monthly payments weren't thousands per month.

Americans fucking suck at financial literacy and trap themselves in debt pits. Alternatively, people spend themselves silly without stepping back and realizing their savings is staying at $0 by living larger than they should if they want savings to go up.

>> the US is a very wealthy country. In 2019, something like 42 million Americans - not much below the population of Spain - had incomes over $100,000

Yet, 4 out of 5 Americans live paycheck to paycheck, and 3 in 10 have no emergency savings at all.

The numbers will vary based upon what study/report you read, but the message is clear that the majority of people are not making financially sound decisions.

What you're saying is however not in disagreement with the comment you are replying to!

Living paycheck to paycheck can happen even if you're making 400-500k. I've seen people do it.

You can have no emergency savings (at all) and be making $100k+.

It's pretty easy - spend everything you have (often on "dumb" things like expensive takeout for every meal, a lease on a car you don't need, more house than you can afford, refreshing electronics constantly for no reason, etc.).

The reasons usually boil down to lack of emotional regulation and/or bad spending habits, not lack of income - though it is easier to do with low income, as the margins are smaller.

I'm curious as to where you live. Here in the Bay Area, pretty much every casual dining has a wait on Fri/Sat/Sun (pre-pandemic of course). Places like Chilis with an average $25pp and places like Korean BBQ, where it's closer to $40pp.

Same thing in Seattle, Los Angeles, Portland, NYC, Chicago, pretty much any major city. Which is also where a lot of economic activity comes from.

Seattle. I agree that people are (or were) spending the money, but they’re stretched thin and I wonder how much more they can take.

Just because Americans can't afford something doesn't mean we won't buy it!

"Always bet on laziness"

d) are drunk

Also, parents stuck at home with babies. That convenience is immense.

I'm really in the same boat. Grocery delivery is a bit less insane (tip + fee = ~13% premium) because your average order size is bigger (at least for me - I usually do 200ish bucks every 1.5-2.0 weeks). I can stomach a 13% premium for delivery when I have 2-under-2 (years old) and I really don't want any of us to get covid for a variety of reasons (I can't afford (emotionally more than financially) to be down a caretaker and partner right now, can't afford (emotionally) to have either an infant or a toddler to have covid, etc etc).

Doordash is really hard for me to justify, I only use it when given gift cards etc. It can literally double the price of a meal (a $20 mcdonalds order becomes $35-40). Even during covid I still generally do curbside because that feels like a very minimal risk.

Post-covid, I'll probably use instacart/shipt maybe once or twice a year - I'm 100% sure there will be times where for whatever reason I just can't get out and the world will end if we run out of milk for the kids. But when there's not a pandemic on, taking the kids to the grocery store knocks out so many birds with one stone:

* kids get to get used to the grocery store experience

* we get groceries

* my wife gets a break

You might want to go back and re-calculate. Pre-covid, I did a comparison between in-store, Instacart, and Shipt. I did my normal groceries in store, then took the receipt and re-created it in Instacart and Shipt. It wasn't just the delivery fee + tip. Shipt and Instacart both increased the prices of each individual item; sometimes by a lot. IIRC the total was about 12% more BEFORE taxes, fees and tips. On a $150 shop, it was considerable. This was a while ago and things may have changed, but its worth looking into. You don't even need an in-store receipt; just download your store's weekly flyer and compare those prices with Shipt's and Instacart's.

Also noteworthy: Shipt didn't respect any of my store's B1G1 offers. It didn't even appear in their system while shopping (Instacart did). I actually know a Shipt shopper that was getting free stuff all the time because of this.

If you're strapped for time but still want to stay safe and save money, consider stores that have curb side service like Wal-Mart. You get in store prices with no extra fees and no-contact hand off.

The one period I used grocery delivery quite a while back (I was on crutches and I could easily enough go to a grocery store but it was hard to do a full shopping) my big objection was that they'd be out of enough things or did substitutions I didn't want that it was hard to count on getting everything I needed to make a recipe. This was before meal kits so those weren't available as a substitute.

Not sure about prices but I didn't really have a choice.

Hmm I haven't done anything rigorous but a few staples I know the price of off-hand are the same at least, but maybe they're being sneaky. I'll look more closely. Thanks for the tip!

FWIW though I do mainly use instacart, since my amex card counts them as a grocery store/supermarket, I get my 6% cashback.

> to get one thing delivered

Obligatory note that many people order more than one thing, and that some people eat things that are more expensive than burritos. The fees to order a single $7 burrito and 5 x $20 meals are similar in absolute $ terms. And of course, many of the popular services have effectively capped delivery fees at ~$10/mo so ordering once weekly brings the delivery fee down to ~$2.50.

Not only the fees, but also just a completely substandard final product. Every time I have used one of these services (pretty much only when I get a promo code) it arrives late and cold. I would be furious if I spent an extra $5-10 on my meal for that to happen.

On a side note, I've noticed that most restaurants around me will add $3-4 per dish when using Uber Eats vs. just calling them directly.

If you order with any regularity, the $10/month fee makes the overall fees you pay fairly minor. The difference in cost is primarily in the tip.

"Amazing that people have normalized..." something that is ridiculously convenient and comes at a marginal additional cost? I'm no more amazed at that than wash-n-fold laundry or taxi service.

the fees double the cost of the burrito. maybe the calculus is different if you live in more suburban areas but being in SF it is easy to walk to food places nearby.

Never order just 1 thing if you are getting delivery. That will never make sense for delivery of any item. Same applies for grocery.

What do you do with the extra food?

Isn't the point of takeaway that you get hot fresh food without having to prep it? 'Stocking up' on takeaway seems counterproductive.

>wash-n-fold laundry or taxi service

Which the vast bulk of people don't use either. I'm sure there's some market and I've seen market research that suggests grocery delivery is something that will hang around at higher levels post-COVID. (Though the same report also highlighted home cooking, not food delivery.)

I admittedly don't have great food delivery options where I live. But getting most prepared food delivered isn't something I find very interesting at all.

"Which the vast bulk of people don't use either."

Who the hell said they did? These are long-standing and economically viable businesses - that was my only point.

I think the contention is they’re not able to produce margins capable of returning what a VC or public company would need to for investors to make it worth their while.

Eh, I live in the bay area and spend $13-15 bucks tops on a burrito. Where is it $25?

The fees are not as apparent if you don't live alone. Imagine living with 4 roommates, all of whom want to order together. The fees and tips are divided among the 4 and become almost invisible.

YMMV but my 3 housemates and I order a lot of delivery and have maybe coordinated 1 delivery to split fees despite having similar schedules, food tastes, and getting along pretty well. Food delivery is about getting the exact food you want when you want, and with a group of people that won't line up very often.

Sometimes groups will order, but in my experience they do not.

I would have thought people who need to have roommates would be extremely price sensitive.

What's the difference between getting a burrito delivered and the decades-old delivery option for pizza?

>Amazing that people have normalized paying for the insane number of fees plus tip to get one thing delivered.

By the same token, you can ask why people eat out in restaurants given how much more expensive it is compared to cooking at home. I take your point about the expense though. If you habitually get delivery, it will add up to significant sums .. but then again, so does eating out.

The main difference is that the pizza place hires the delivery person, and all the carryout folks were subsidizing it. The price for carryout and delivery is the same, except I have to tip the driver, and I know the driver keeps the whole tip.

There is no middleman sucking a bunch of money out of my community.

Yes. When you add in the fees + tip, it simply is not worth it. Then add the inconvenience of the driver being 40 minutes late. A lot of these drivers are so lazy, they won't even get out of their cars. I lost track of how many times I had to go out to the parking lot and track them down because they were in front of a different building.

If I'm paying a delivery fee + tip, you better at least get it to my door. That has less than a 50% chance of happening with these services. These days, it's cheaper, faster, and safer to pick it up myself.

ITT: people claiming DoorDash has no path to profitability - the numbers in the S-1 tell a different story. On page 112, there's a chart of how much profit they make per order based on how long the user has been on the platform. In the first year, the value is negative because DoorDash spends money on sales and marketing to acquire the customer. By the third year, DoorDash is making a consistent profit of 8% on each order placed.

When you look at the numbers in aggregate, it appears they are massively unprofitable. When you look at the numbers by cohort, it's clear they are investing money in sales and marketing and based on their metrics, they will generate a significant return on their investment over the next few years. Over time, as a larger and larger percentage of their users become recurring users, their profit on each order will approach 8%.

I think the bigger question for this type of company is margins in the face of competition. The service they offer is totally undifferentiated from that which a competitor could fairly easily provide. Yes, it takes marketing dollars to sensitize consumers to the existence of delivery services. But, once someone knows about them, there may well be a race to the bottom on price. An 8% profit sounds great, but is it sustainable?

That's a different argument that what most people in the thread are making and in my opinion, a reasonable one.

I suspect that the massively negative first year margins due to, what I assume is CAC, creates a moat. Very few companies are as "backed by Masayoshi Son," i.e. willing to set fire to the huge quantities of money necessary to establish a foothold. This is a network effect business in a lot of ways, and metros tend to be dominated by a particular food delivery provider.

The problem with CAC in this market is that I doubt enough people say, "I'm hungry, I'll open door dash". Instead I want to eat from a local restaurant whom I call for delivery and then door dash pays someone to bring my food. In that case DD hasn't "acquired" me as a customer.

I'm definitely in the former camp so I'm curious what the breakdown is.

Yep... I use whatever one offers me the best deal. These days, I rather order it from the restaurant directly if they have curb side pick up. It's better for them and me. Delivery drivers often get lost or are incredibly late.

This is not an unreasonable argument but you're negating the company and the industry ability to innovate and find new rev models. I use to frequently see this argument made about Apple and Amazon before Apple's transition to "services" and AWS. When you buy a tech stock you're not betting on a robot that can't adapt, you're betting on a corporate culture that's digging up new ground.

The question, then, is whether DoorDash is more like Amazon or WeWork.

By everything I see, they are a company that pays people to deliver stuff. That is a very crowded marketplace. Without groundbreaking innovation the likes of which companies an order of magnitude bigger have failed to deliver (like Uber and self-driving cars), I personally don't see how they create a revenue stream as lucrative as AWS.

That graph is only as good as the "contribution profit" metric, which is basically a thing made up by DoorDash to make the financials look better. It is not "profitable" in any standard metric.

Look at how many things are excluded in contribution profits:

"We define Contribution Profit (Loss) as our gross profit (loss) less sales and marketing expense plus (i) depreciation and amortization expense related to cost of revenue, (ii) stock-based compensation expense included in cost of revenue and sales and marketing expenses, and (iii) allocated overhead included in cost of revenue and sales and marketing expenses. "

So basically if you don't count any indirect COGS, you don't count the RSUs you're paying the engineers and you don't count the capitalized costs of your infrastructure, you can eek out an operating profit. In my view, that's not a "profit."

Excluding stock-based compensation is pretty nuts IMO, RSUs are recognized and taxed as ordinary income because they're ordinary income. Apparently "Contribution Profit" is roughly defined as "ramen profitability."

"Well you see, if you only count about 1/3 of the compensation we pay engineers, ignore bonuses, etc, we've got us a great business!"

Haven't read the S-1, and won't be investing, but I can give you another way of looking at it.

You do an IPO to scale. Once you scale, the relative costs of systems and engineering 'disappears'.

In terms of profitability. Everyone is used to success stories of 50% margin. That's not the norm though. In retail 8% is not bad. Especially since you're hoping to get 8% of a huge market.

If they had an 8% margin, or expected to have one soon, it would be a great business. But you only get to those numbers using their non-GAAP metrics. None of that really matters/is surprising though, obviously investors know this but speculate that future growth and the changing market will one day result in real margins. Food delivery has been profitable on a small scale since forever, it definitely seems plausible that you could do it on a large scale and makes loads of money.

As an investor, I worry about churn. Year 2...N customers are more profitable. Great. But what happens when <New Startup X> throws billions into blitzscaling their new delivery app? There goes your most profitable cohort, to the next (temporarily cheaper) delivery platform. And food delivery apps aren't a classically 'sticky' business: it's centered on ephemeral transactions.

Don't you think it depends on the existing players' cash horde after an IPO? I am very interested to hear a successful VC's response to "I want to go against Uber, DD, and GrubHub. Money plz!"

There's far too much cash sloshing around, lots of malinvestment since too many dollars are looking for returns.

You worry about the entrepreneur who asks the Venture Capitalist, and their MO is 'take on <DoorDash/etc>'. Instead of worrying about our hypothetical entrepreneur with a lousy funding rationale, I worry about the structure of the market proving it's 100% inevitable someone will try and undercut them, by virtue of the magnitude of malinvestment present today.

And you're right to be. Every consumer cohort has first year drop out. Like Universities, like festival goers, like any iterated system it shows a Pareto distribution.

This is what I don't get. GRUB has been public for five years. What's the difference between them and Doordash?

The numbers you describe are an opportunity but also a big risk. The problem with these app-based businesses is that there’s little brand loyalty. They spend a ton of money to create a market and customer base and round about the time they start making money a copycat comes along and customers flip. It becomes a race to the bottom. Few would dispute the profit that could come from holding onto a user for years. Many will dispute the likelihood that this will actually happen.

Because of covid, my wife and I have been using DoorDash probably twice a week. As others have mentioned, if you have a chase sapphire reserve card, they give you like $60 in credit this year and next, and free dash pass, so it makes it actually decently economical to use. Obviously if you do the math, this is just another VC Ponzi scheme with no real path to profit, but as a consumer who already had that credit card, might as well ride the wave and use some rich LPs subsidies to pay for the delivery of my cheeseburgers I suppose.

Very well said.

I see this sentiment a lot and I don't understand it. Why would you involve yet another human in your food purchase? I've never been a huge fan of delivery services like this anyway, but even if I had ever considered them before, now just seems like it's not the time to do so.

Well, going to the takeout place can expose you to more human beings. At least with delivery, you get just one person and a brief contact.

And of course this plague is not carried in food.

And it's a real balancing act but having caught COVID and almost died at the age of 33 I'm simply not going to take any chances when since we have no solid proof that my antibodies are going to ensure from now until I am next in line for the vaccine. Having worked in NYC in the immigration law system a ton of my ex-colleagues caught it and some of my supervisors passed away from it right away and as much as I'd like to think of myself as a rationale person who evaluates th evidence, personal experiences are powerful and scary and it's hard to convey how unexpectedly agonizing a "mild" case felt to me. This isn't the difference between mild and spicy wings, it's less-spicy and qhost-pepper wings.

And so them (and postmates, and instacart, and shipt, and local booze deliveries) have been extremely important because it reducecs the attack vector. Call me paranoid, but I can at least hae some control over the groceries sent to me, and for example. It's simply a tradeoff I'm willing to make. At once point, I couldn't even even properly update my will even though I'm a lawyer because I wanted to be prepared but not even my friends from school who are in the field were willing to come to my house, with the quarantine complicating things. since it was felt tha the 14 day window was arbitrary and I didn't get full blown symptoms until day 8-9.Under these cirucmstances every precaution, in my personal view, as long as it's a precaution that isn't conjured out of thin air and backed by some level of indication of efficacy that skews towards minimizing potential vectors of re-infection. It's not failsafe - my then-girlfriend, was asympomatic, gave mteh rvirus, and there wasn't any way in those days to even know or sure what do to, but as Don Draper said in Mad Men: "Limit your exposure".

On the other hand this one person risks becoming a superspreader. It's not at all clear which is better from an epidemiological perspective.

How is that different from the server/cashier who gives you your food at the store, from becoming a superspreader? I don't see it as very different, and in fact from a single customer point of view a delivery service isolates them best of all.

It would be lower risk than going to the restaurant yourself.

To clarify, it is a lower risk for you. It is not a lower risk for the driver, who mingles with multiple restaurants and goes to multiple houses, and it is not a lower risk to the restaurant.

wouldn't curbside pickup be essentially equivalent in risk profile? you're outside and you only have to interact with one person.

well I can speak from experience. Since i'm at home more. Not going to bars and restaurants. I make cocktails at home and then order food because I am not able to drive to pick up the food.

This is the main reason why food delivery makes sense to my situation.

Despite the communal nature of the pandemic, people are obsessed with an individualistic formulation of risk.

I agree with your sentiment. In top of the fact that these apps in the past have ripped off the drivers:

https://www.vox.com/recode/2019/8/20/20825937/doordash-tippi...

https://www.forbes.com/sites/charlesradclyffe/2018/10/16/tip...

And have manipulated search rankings to force people to use their service when they think they are talking to the restaurant:

https://www.wxyz.com/news/doordash-is-delivering-food-withou...

Than bully restaurants:

https://www.usatoday.com/story/money/2020/04/14/doordash-gru...

I an good conscious can't use them.

In addition, the argument that the customer is minimally exposed is, to me, an incredibly selfish argument. Yes you the customer may be less exposed, but at the expense of the driver (who now goes to multiple restaurants and multiple houses), and the restaurant (who also has to interact with those drivers).

I personally do carry out from restaurants, and done properly, carry the same risk exposure as delivery to the customer (e.g. putting the food in the trunk of your car, placing the order in the front door and allowing you to get it at a safe distance).

> but as a consumer, might as well ride the wave

I am mostly doing the same: I understand what Uber is doing, but it's just so much more convenient than your old-school taxi company. However, to play the devil's advocate, this strategy could be a myopic one. As a consumer you should be supporting competition. Such VC Ponzi schemes are ultimately about demolishing competition, and then leveraging the achieved dominance on the market at consumer's expense. Should we be more careful about jumping into these, and sacrifice short-term convenience for longer-term interests if we can?

Taxis and in house restaurant delivery schemes are the equivalent of using Netscape Navigator to oppose Google Chrome in the modern age. The competition comes from the battle between the VCs, not what they are replacing.

I agree, especially the biggest problems I had with Uber hasn't changed for years: drivers either cancelling on me because they don't like where I go and Uber shows it to them only after they finished the last ride, or waiting for me to cancel because they have time and want me to pay cancellation fee.

I don't know what Uber software engineers are doing, but it doesn't seem to me that they really care about user experience (not UI, which I don't care about, as that doesn't make me late for a hospital appointment).

Does it really come from the battle between VCs though? My understanding is that these VC-backed companies of Uber type are designed to run at a loss until a) the market dominance is achieved, at which point the prices are raised to get to profitability; b) it's clear that the market dominance won't be achieved any time soon, at which point the funding is pulled and VCs leave for greener pastures. Such companies aren't designed to compete in your typical sense, i.e. by improving service or reducing operating costs. Instead it's about which VC is ready to lose more money before their competitors go bust. Am I being too cynical here?

I think the innovations in this space just take a long time as they are capital intensive or require huge usage, like cloud kitchens, effective multiple delivery routing, and autonomous vehicles/delivery drones when they arrive.

There are still two large costs that may not be there in the future. The human driver and the heavy restaurant overhead of being located in premium retail space instead of behind the gravel pit.

It goes without saying, but if you're gonna use those apps, please please please tip your drivers. These apps make it so hard to discern how much they make, especially when "free money" for customers is involved.

Personally, I think companies like DoorDash set a really dark precedent for the future of work in the US. Their primary value as a company is their ability to manipulate how thousands of people get paid, not to ensure top quality service.

To add: Tip cash! Never tip in app!

EDIT: To those who ask why, you cannot trust the app to disburse the "tip" to the worker.

That's a crazy ask and defeats at least some of the purpose of using these apps

I would also support tipping via Venmo, Cash App, or Zelle for those who aren't willing to keep cash on hand. The goal is to tip out of band to prevent the usual gig app shenanigans, further harming gig workers beyond the usual gig work transactional arrangement.

If you don't want to support the "gig economy" then it is better not to use the apps. Cash payments will never lead to improvements in working conditions, pensions or health insurance.

DoorDash will steal from their workers tips if you pay it in-app.

The societally disruptive idea of not paying your workers is the great "innovation" of the gig economy. The oldest grift there ever was.

Seems like the better advice is to not use Doordash. Doordash likes it when you let them advertise lower prices and then help pay for their labor costs via unstated cash tips. Workers might like it too to avoid taxes, but that’s opposite to my interests.

Yes, I agree, but that's the reason why people are recommending to not tip in-app.

I strongly encourage everyone who uses these apps to try delivering for them for a night or two. Just get a feel for what it's like. I do it as a hobby kind of and they're all bad for their various reasons. Uber Eats tells you what you stand to make up front but that depends on tip, which isn't guaranteed. Postmates is the only one that tells you what's in the order before you accept it (I can't carry a pizza and prefer to avoid fountain drinks). But you just don't know what it's like to deliver for the apps until you try it.

could you elaborate why? i mainly use deliveroo and tip with the app -- they also seek to minimise contact so usually i just get to pick up the food from my doorstep, cash tipping seems a bit suboptimal

Type in your favorite search engine: "Deliveroo stealing tips".

https://www.forbes.com/sites/charlesradclyffe/2018/10/16/tip...

cheers, had no idea

Doordash does the same thing:

https://www.vox.com/recode/2019/8/20/20825937/doordash-tippi...

That article says nothing of the sort.

It's just moaning about the bad UX deliveroo has and using made up figures.

All he says is that he's guessing 5-10% of people tip, and the default tip is only 10% therefore the gig workers are only getting 1% on AVERAGE.

It makes no claims of stealing, there are ZERO articles on the search backing up your claim, and only a few Reddit posts from riders who thought that maybe one-time, deliveroo didn't give them their tip in a complicated set of circumstances that was probably simple user-error.

I'm not a fan of the gig economy, I know the previously some other companies in America stole tips, but you've made a totally unsubstantiated, libellous claim about Deliveroo there.

To add onto the other point about American apps stealing tip: the problem is that DoorDash and some other apps were deducting tips from base pay for deliveries, so that even if you tipped the driver would be paid the same amount. https://www.theverge.com/2019/7/22/20703434/delivery-app-tip...

This is part of the reason why there's this whole struggle to define what exactly the gig-economy worker contract is supposed to look like, because they're not paid hourly and it's often net negative for full-timers, who do exist.

Also to clarify a point made in the article; this is not the equivalent to a tipped wage. With a tip wage you already know what your base pay is up front, and tips are additive; what DoorDash was doing was deducting tip from some set base pay. Fortunately I live in a state that does not differentiate tipped and regular wage.

The poster already edited, but to be more explicit: as I understand it’s some variation of some of these companies have been paying the driver X per hour, but if they don’t make X per hour, the tips fill in X-1. Effectively you’re paying the drivers wages instead of the company, rather than tips on top of their wages, in some cases.

Is this a moot point if the assumption tips are reported as wages? I was never a server, but worked in the back of the restaurant so maybe I don't understand, but this seemed to be the same dynamic.

With all that said, tipping seems to be a weird cultural holdover where employers can keep labor rates down via a quasi-voluntary tax

Are you in USA? In UK (pubs/ restaurants that I've had an association with; some time ago) it was normal for tips to be shared with all staff. Maybe that was a UK/rural/independent establishment thing?

I'm old, so this was some time ago. The servers were supposed to share tips with the dishwashers etc. but in practice it was hit or miss since most of the tips were cash and could be easily under-reported. Not sure if it was a law to share tips or not

The difference is this -- let's say your delivery company pays the driver $1 per hour plus "100% of the tips" but guarantees them at least $15 per hour.

The reality is that $1 + tips almost never makes it to $15, so they always pay them $15 an hour.

If you tip $5, they get $1 + $5 (from you) + $9 (from the company).

If you tip $0, they get $1 + $14 (from the company).

This is a shitty system designed to get you to offset company expenses.

In a well-designed system they should not pay them $1 + 100% of the tips, they should pay them $15 + 100% of the tips and where tips are truly optional.

I understand the mechanism. I don't know that I think it makes a large pragmatic difference as long as the pay guarantee is there but it seems a convoluted system as opposed to an immoral or unfair one.

I think where we may disagree is that my main concern is that the employee makes that minimum threshold, whether paid directly by the customer via a weird quasi-voluntary tax or by the employer who would presumably pass that cost on to the customer. Again, assuming it all gets claimed in income I don't see any shortfalls; it's just a weird convention.

Where I may have a problem is that there seems to be some evidence there is bias in tipping. I've seen some that indicates some race groups/protected classes are tipped less, controlling for service quality, even by their own race/class. If true, it would mean tipping is a de-facto form of discrimination and obviously needs to go away.

> as opposed to an immoral or unfair one

I would consider unethical when the result of me tipping vs. me not tipping is the same outcome for the driver. If it is advertised as a "tip" box, it should result in exactly that amount of gain to the driver than if $0 were entered in that box. How much you, the corporation, pays, should never depend on what I fill in for the tips.

Also, if the company can pay $15, they should pay $15, and recruiting me to pay part of that $15 under the guise of "tips" is unethical IMO. Call it a delivery fee and charge a fixed amount.

If you are asking me how much extra I want to pay in tips to a driver (10%, 15%, or 20%), I would be sympathetic to gig workers, because you're an asshole for paying them a $1 base wage.

If you are asking me how much extra I want pay to your asshole corporation, the answer will always be 0%. I don't want to pay any extra to your corporation. Name your lowest price that would keep your company afloat and I'll decide if I want the service or not.

>if the company can pay $15, they should pay $15

This doesn't hold unless you think profits should be driven to zero. Any profit would mean an additional wage being withheld. I may not understand the dynamic here, but my understanding is that tip laws ensure that if the employee comes in under $15, the company makes up the difference.

I've alluded to it a few times, but I think we disagree in that tipping is a quasi-voluntary tax. A tax is a fee paid to subsidize a service. That tax, in this case, subsidizes fare charges by reducing overhead labor costs. If you want to not tip, you should pay a higher fare because otherwise those who do tip are subsidizing your ride. I don't think it's unethical just because it's called a "tip" unless you assume people don't understand how the tipping system works. If your claim is it allows a corporation to make an unfair profit, I'm not sure I'm tracking the logic of that argument because the tax in this case is entirely voluntary. Where I have an ethical problem is when wages are suppressed so much that the public must subsidize employee wages in the form of government benefits. In that case, non-customers are subsidizing the company profits; since they are not consumers of that company, it makes it a compulsory tax to protect their profit. This is entirely different than a voluntary tax on those who use the service.

Personally, I would prefer tipping in general to be banned because it's a clunky, inefficient system. It's much more transparent and straightforward to just have a fair wage without all the game theory that comes along with a convoluted system of tipping.

> Personally, I would prefer tipping in general to be banned because it's a clunky, inefficient system. It's much more transparent and straightforward to just have a fair wage without all the game theory that comes along with a convoluted system of tipping.

100% agree with this.

Tips in the US normally work differently, in that the tip base pay is known up front, there is a minimum for it, and tips are additive on top of that.

Tip is not supposed to be deducted from a standard rate of pay.

Help me understand. Is the distinction here that since they are independent contractors they aren't guaranteed to make a minimum threshold of pay, regardless of tip amount?

That seems to be what they were operating under, but they definitely did not explain this to consumers who assumed that normal tipping practices were being applied. (The checkout looked much like a normal receipt with a tip line.)

The resulting backlash from consumers was severe enough that at least one company operating in this space changed the policy: https://www.theverge.com/2019/7/22/20703434/delivery-app-tip...

It's worth noting that the law is still changing in the area; gig-economy workers in California were classified as employees by the courts, but then this got overturned by a voter initiative, so there are no solid answers as we continue political campaigns and litigation.

It's a shame that some apps takes a commission on tips

Last night I didn't realize Doordash doesn't even give me the option to tip for carryout. I came back to the restaurant to leave some cash in their jar labeled "DOORDASH TIPS!"

We Americans really need a way to tip via app. I wish cryptocurrency was viable, because the POS ecosystem (Toast, Square, Clover, etc) is fragmented and takes a cut, the gig-app ordering systems take an even bigger cut, and it's just awfully annoying to have paper cash on hand. Crypto has yet to make any firm inroads though.

It'll even be a great day for those who rely on gratituity when the US decides to mint $2 and/or $5 coins. $1 coins are so hard to come by and people think they're such a novelty yet they're immensely more useful, more durable, cleaner, and denser (10 $1 bills bursts my wallet and eventually turns into a chaotic mess in my pocket when I don't have time at the register to nicely stack and fold them back into my wallet; 10 $1 coins in my pocket is far more manageable.)

> We Americans really need a way to tip via app

What we really need is to change culture so that it's considered totally unacceptable for a business to pay service workers far below minimum wage, and rely on customers to make up the difference individually. I'm not Mr. Pink--I tip, but with full knowledge that all it's doing is enriching the business owner, who, instead of paying their staff properly, pockets an extra few dollars an hour instead.

Is there evidence that tipped employees in a states without a tip credit do better than in a state with tip credits?

I don’t know what you mean by tip credit, but in states where there there is only one minimum wage, regardless of tips, the people still expect to be tipped.

Unfortunately this isn't practical. The drivers can see the tip before they accept the order. So if they see no tip, they will reject it. Eventually you'll probably find a driver that will bring you your food, but it will take a lot longer, and that driver is going to have to drive a lot farther to bring your order (depending on how many drivers rejected you ahead of them).

"Customers can leave a tip when they check out or after the delivery is completed. 100% of tips are yours on top of base pay and promotions. The amount DoorDash pays will never vary based on the tip amount. For example, for two identical deliveries where one customer leaves a $3 tip and another customer leaves a $6 tip, one Dasher will earn $3 more than the other."

https://help.doordash.com/dashers/s/article/How-is-Dasher-pa....

It is hard to believe a company that has been guilty of stealing tips in the past.

https://www.vox.com/recode/2019/8/20/20825937/doordash-tippi...

> Tip cash! Never tip in app!

This is very, very bad advice.

DD drivers filter out customers based on the size of the tip. If drivers see only base pay in the app, they will pass over your delivery request for more lucrative ones, meaning your food will take longer to get picked up and delivered, and in some cases, may not get delivered at all.

Why would you tip before hand? Doesn't this defeat the purpose of a tip?

yes

Not a DoorDash user personally, but on Uber you can adjust the tip up to an hour after delivery.

Yes, but we're so far gone from "tipping as a function of service" that there's no point in even pretending it's a thing anymore.

If the food arrived or I got to my destination I give the same, good, tip. I think it's gross to make workers dance for their supper. It's not "a little extra you're paying to a kid in highshcool" anymore, it's almost their entire income.

I think it’s gross to sell something and not state it’s price upfront.

Oh I totally agree. I think we should completely abolish tipped wages, require listing and advertising taxes and fees included prices, and use some light regulation to discourage tipping like removing tip lines, prohibiting businesses from asking for them, and requiring a notice that explicitly says not to tip.

But! BUT! This is a top-down change that has to has to come from leadership. Trying to do this by just not tipping or being a bad tipper does nothing except punish the poorest people.

> Why would you tip before hand? Doesn't this defeat the purpose of a tip?

It's a great question, and there's no simple answer that will satisfy anyone. Suffice it to say that I have my own interpretation. Take it for what you will:

1. DD (and other gig economy) apps, have redefined the concept of a tip to subsidize the low wages paid to gig workers.

2. When gig economy workers see the tip in advance of their gig, it acts as an incentive to complete the task. For example, the higher the tip, the farther a DD driver will go, the more items they will deliver, and the better service they (should) provide.

3. In this particular case, the DD customer can still rate the driver after the delivery is complete. If their rating drops below a certain level, or if they receive a contract violation three times in 100 orders, they will face deactivation from the platform.

4. Currently, Lyft and Uber both delay tips to drivers depending on different circumstances. Tips could be delayed anywhere from minutes to hours to days, and this tends to de-incentivize drivers and could lead to diminished quality of service. DD, on the other hand, has found a strategy that both incentivizes drivers and promotes increased customer and driver satisfaction.

I haven't physically seen a doordash driver since covid started, they just leave it at my door. I also don't want to exchange paper money with people at this point in time.

The odds of DoorDash lying about tip distribution are basically 0.

https://payup.wtf/blog/doordash-tip-theft

"That’s right — the more you tip in-app on DoorDash, the less DoorDash pays the worker."

Tipping the driver in cash hides the larger problem of the gig economy and the VC funded startups that take advantage of it. While I agree these people need real income, this isnt the way to do it.

People who hate tipping should run for public office, I swear. Damn Kantians!

You don't get to act as though your behavior is a categorical imperative if you don't participate in writing laws that make such imperatives a reality. You do not live as Robinson Crusoe, Chuck Noland, or even Richard Hatch did.

"Categorical imperative" is just a bad translation of "Law" which is a perfectly cromulent word.

Product(A) === Product(B)

Price(A) > Price(B)

B > A

--------------------

Simplification aside, tipping is a service as well. The tipper "feels" good about tipping, the same way people donate or buy because of donations when there are such campaigns. For a lot of people the utility of that is close to 0, so they don't tip. For some its very high.

So it makes sense to have tipping as a way to implement price differentiation.

> The tipper "feels" good about tipping

This would be true if tipping was optional, rather than expected. But this isn't even close to how things work in the US. In the US, you tip so that the restaurant can advertise lower prices on their menu. That's it. They tell you a burger costs $12, when in reality it costs $15. And if you decide to only pay $12 instead of $15 the restaurant just makes the waiter eat the cost.

I think the economic analysis of tipping is pretty complex. Cash tips allow for a lot of tax avoidance, which makes a huge difference with payroll taxes. Also the price differentiation effect is very good for businesses, they increase revenues (not only the "split" between tips & wages)

It’s not complex, just price obfuscation, price discrimination, and tax evasion. All advantages for the seller and disadvantages for the buyer.

The state not collecting in the transaction is a benefit for both parties, because you can buy/sell at a lower price.

Price discrimination means you can sell at a lower price to customers who might will not buy otherwise.

There is no price obfuscation.

I agree with you.

I think in a world where people made enough money to eat and we didn't outlaw the stupid penny, we could keep all the pennies and offer them to people as tokens of our appreciation, then it's operating as a symbol and the emotional purpose is served without people who don't want to tip feeling expected to support people's lives all of the sudden at the end of the meal.

Our current system makes thoughtful, considerate people feel guilty if they don't want to tip deep down but feel they ought to.

Steve Martin's My Blue Heaven deals with the problem of wanting to express gratitude and joy to people in a world where everything is officious and transactional

Well, there was a law, but then these companies spent $200 million to overthrow that law, and won...

So, all of New Zealand and Australia? Tipping is a very cultural thing. In Germany you might tip someone your change. Getting 1/2 euro is rare. In Ireland, people usually tip closer to 10%. In AU/NZ, people rarely tip at all.

I tip quite a bit now that I'm back in the US, but I prefer restaurants where servers were paid a better wage and their service was baked in to the cost of the meal.

Can confirm. I'm a kiwi and tipping in NZ/Aus would be weird.

I'm not arguing that just tipping drivers solves the problem, I support doing away with these exploitative systems of labor manipulation entirely. I'm merely asking people who do choose to use these apps to tip in the meantime, because millions of people are struggling, and it's usually not the ones can afford to patronize a delivery service.

The more that people "tip in the meantime" the more we are signaling support for the company's model. Customers are not in the role of ensuring employees are paid, and if we as society accept Doordash et al's attempts to push that role onto us, the more we are supporting the abusive employment in the first place.

The correct place for this implementation is in legislation or in free markets.

If we as society deem it necessary, legislation.

If we as society stopped being tricked into tipping as you are suggesting, and the effective wage was low to the point of triggering necessary business changes, the free markets will do their work.

Tipping is an entirely broken concept for the deliver model and arguing for customers to tip more or via cash is further incentivizing the model.

I totally agree that these people deserve to earn money, but I believe that tipping the mean time exacerbates the issue, and now were seeing these companies go public with makes the societal issues permanent. I would say it's akin to Walmart depending on food stamps to justify their labor economics. Without that unofficial government subsidy Walmart would not be as powerful or be able to offer lower prices, etc...

In merit and morality I agree, these are nice, hard working people that choose a profession that cannot meet their financial needs. I don't have an perfect answer for it either, I just see the glaring elephant in the room.

Far more restaurants are accessible for delivery to customers due to these apps. That's not worthless, it's an under served market.

Just because our regulatory frameworks allow DoorDash's workers to be taken advantage up does not mean that these apps have no value. DoorDash & others basically fed the whole young, well-off, urban dweller population that can't cook during lock down.

I'm not arguing that DoorDash creates no value, I'm arguing that it creates a ton of value for executives and shareholders while exploiting workers who are vastly underpaid using opaque payment and tipping mechanisms. Yeah, affluent urban dwellers absolutely benefit from this system. But by choosing to use these services, you endorse this exploitation unless you choose to pay drivers anything close to a living wage, because the company sure isn't going to.

Of coarse the company is not going to pay more then the market-rate for gig workers. It's actually impossible for them, and will be even more impossible once DoorDash goes public, they'll be legally obligated by their shareholders to make the most money possible.

Our legal system supports companies making the most money the market will allow, if they paid more then the market for delivery drivers the executive that made that decision would be fired.

You aren't supporting exploitative practices by using DoorDash, you're giving somebody a job where they otherwise they wouldn't have any. You're funneling money from affluent city dwellers to the pockets of DoorDash's share holders yes, but also to their delivery drivers.

Attacking a company for creating jobs where there weren't any before is silly. Attack the issues with the legal framework, not the people that are using it as designed.

I can cook quite well but honestly living in NYC and going to the grocery store to serve my partner and I ~2 meals a day every day of the week is nearly impossible with our work schedule. If I wanted to do nothing else with my day but work and cook, that might be fine, but Doordash et al. are making life a whole lot better. When we were launching our company, we joked that it was often just a stream of delivery drivers bringing us stuff to sustain ourselves.

The truth is though that if these apps and conveniences didn't exist, you'd adapt and find meals to eat that required 5 min prep time - things like a sandwich that are just assembling pre-ready ingredients in a bowl or in a piece of bread or in a wrap truly don't require cooking.

Laziness is an adaption, and we adapt to whatever level of effort is required. Money is just an intangible so it's easy to be wasteful with it when it pretty much doesn't exist and is just a number somewhere we can't see.

But if a particular luxury disappeared, you'd adapt just fine.

When I was regularly in an office quite a few years ago, there certainly were days when I just didn't feel like cooking at all and would pickup takeout. However, I also had a stable of recipes that were generally in the vein of throw some things in a skillet and saute for 5-10 minutes. Especially with partially pre-prepped food in grocery stores these days, it's pretty easy to throw decent meals together quickly with very little time or effort given just a little bit of planning.

If it were underserved it should be paid for properly.

The fact that they don't make a profit even with shitty labor practices probably means it's not very sustainable, in the same way that WeWork filled a need but was ultimately not sustainable.

Some delivery seems to work given sufficient density and/or volume, e.g. NYC Chinese food or Dominos. Of course, the delivery drivers/bikers still make very little.

But the evidence suggests that given US labor costs and relative equality for much of the population, it's generally hard for middle-class or even upper-middle class to justify paying people to run errands for them generally. I'm not sure the economics of fast delivery are all that different from when kozmo.com was around.

Both WeWork and DoorDash proved their markets which is what is meant here. They found demand for something to fill a need irrespective of the services they offered to try and fill it.

There's a market for a great many things offered at below cost.

For example, there's probably a pretty robust market for a personal chef to come by your house and cook you a gourmet meal for $5. And private jets for the same price as commercial? Sign me up.

It's more nuanced than that. It's not really about cost so much as it is a new kind of thing people want and would be willing to pay for.

WeWork showed that individuals want and are willing to pay for communal office space and that small companies want and are willing to pay for "slices" of that space.

DoorDash (and the like) shows that people want and are willing to pay for more than just pizza and American-Chinese takeout and restaurants were willing to take a large percent cut for delivery-as-a-service.

>WeWork showed

Regus existed long before WeWork--as did many local spaces. I guess WeWork demonstrated that there was a market for "cooler" co-working spaces at scale.

As for DoorDash? People clearly want all sorts of rapid delivery and especially younger people who hate calling up a place really want to order through a consolidated web site. I'm not sure that's a revelation. The question is whether the economics broadly work out which is really not proven yet.

I mean Dropbox wasn't exactly revolutionary either, you could just always use curlftpfs but there's something to the execution that answers "why would anyone pay for DoorDash when they could just call the restaurant?"

That's fair enough. I guess my view is a bit colored by the fact that, heavy use of Amazon and other online shopping aside, I don't use any sort of food delivery services, am a very light Uber user even when traveling, don't use scooter or bike shares, etc. So I look at a lot of these VC-backed companies and go meh based on personal interest and experience.

That's the thing; calling for takeout is easy, the hard part is that most restaurants don't efficiently cook enough volume enough to justify the overhead of having dedicated delivery drivers.

The value proposition that has changed with the delivery apps is that lots of restaurants can share the cost of a large pool of drivers with an app that can sufficiently allocate routes. This isn't a proposition that has actually been profitable yet, though, and really the only thing that makes this situation unique is that we are now in an unprecedented situation where indoor dining is recommended against and in some cases heavily restricted or banned entirely. Presumably when restaurants are free to operate traditionally again they might not find having such a low-margin delivery arm so great, and they will leave. Anecdotally, some restaurants did this in my area when lockdowns were eased up.

Please do NOT tip through DoorDash. DoorDash used to eat tips and it's still not clear what they do now. If you want to tip, leave an envelope on your door with cash tip and put a big fat sign that says "tips for doordash driver" so it's obvious.

Separately, I really don't understand this tipping economy at all. Aren't tips supposed to be based on quality of service? Why do they ask you for the tip amount before you have received service? They should just charge a fair amount and pay drivers a fair amount and not over-complicate the checkout process.

In general I absolutely hate "how much do you want to pay" type interfaces. I really hate thinking about that stuff. Just give me a number and I'll decide if I want the product or not -- that's how the rest of the world works.

> before you have received service

One supposed origin of the word TIP is "To Ensure Proper Service. Ask people who are old enough and they'll tell you about how a tip was put on a table at the beginning of a meal. Today that's extremely rude, but it was common in certain areas.

By tipping at large scale customers are showing support to the business model. If you worry about future that model is setting, last thing you want to do, is to ask others to help support that model.

punishing people at the poverty level for VC behavior is terrible.

yes, on a certain level you're right. it's a tough problem to fix. similar to the war refugee situation. if people feel it's very easy to flee a bad situation, then there's less of an incentive to keep your own house in order. but if people have nowhere to go, they'll invest and fight to keep their homes good places to live. see also, white flight.

How are war refugees supposed to fix the fact that they are getting bombed out of their homes, particularly in one of the most recent scenarios as part of a civil war?

If the attacking party knows

- the opponent will flee or - the opponent will fight to the death

Don't you think that would affect the attacking party's plans?

I don't think this is a distinction that matters to a government prepared to indiscriminately kill anyone, combatant or civilian, to maintain control.

I'm not sure how, but I think you've managed to find the worst possible example to rhetorically support the idea that poverty level people should be punished for VC behavior or even try and claim that it is a tough problem with moral grey area. You are going to find very very little sympathy for an argument that, if you are an unarmed civilian being killed in a genocide, then really its really your own fault for not keeping your house in order, and allowing your family to not be murdered by letting them leave would only disincentivize them from investing in their community to stop the violence somehow. Surely there is a better analogy for doordash drivers than that?

I minimize the services I use that “require” tipping, because I philosophically oppose it. Would the workers prefer I spend $0 rather than some?

I really hope you avoid using any service where tipping is the expected norm if you won't tip. Otherwise, I hope that you either grudgingly tip or simply avoid those services whether it's convenient to do so or not.

If you use the service, you need to tip, otherwise the workers are screwed. If you don’t support the model, don’t use the service. Don’t be an accelerationist; real people get hurt in its intermediate phases.

If the workers are screwed, they will stop working for doordash, increasing the costs to doordash and therefore speeding up their demise.

By tipping you are directly subsidizing doordash

> If the workers are screwed, they will stop working for doordash, increasing the costs to doordash and therefore speeding up their demise

Not if they can't find other work (like now where un-employment is high).

You or I might have to privilege to choose our next jobs but for some people especially those in the services industry don’t have that and end up having to work doordash/instacart. Don’t attack the messenger when it’s probably easier for most people to stop using doordash.

Given that we arent going to be convincing others to tip or not to tip, id argue by not tipping you are not "part of a movement trying to take down doordash" but just being cheap (if in the US where there is a culture for this)

The companies are required to pay their workers at least minimum wages if wage + tips is less than minimum wage. As far as I can tell, tipping is justified by guilt-tripping everyone by saying "the food industry doesn't pay its workers enough so it's your responsibility to make up for the difference" instead of saying "the food industry needs to pay its workers a real wage and give customers the real price". If tip is not optional, then make it not optional, but don't guilt-trip people into feeling required to do something optional.

Do you tip based on the value of your meal rather than the volume/size, anticipated inconvenience for the dasher, or some other combination of factors? Or is it always flat regardless of what you order?

Personally I feel like it should be based on the time to fulfill the order primarily if you have a good idea how long it took. For example, I used to order from a place that did bike delivery from less than five minutes away and I feel like obviously that was much more convenient than someone who has to drive 30 minutes to reach me and then go back to the restaurant.

You could argue that bike delivery can be more dangerous than delivering by car. It's also hard to get visibility into how difficult it was for your dasher/delivery-person to actually acquire your order. Was the parking situation a mess? Was there a long line? Finally, there's the matter of delivering to your doorstep vs. delivering somewhere outside (an apartment building) where you need to still need to walk a block or two to get your food.

Sure I’m not saying it’s perfect. But I also don’t think it was harder for them to deliver if I order $30 in food versus $50 in food usually. Hence why I would try to pay them a fair amount based on their time, rather than rewarding the person delivering more food with more money even if they went significantly less distance and it was quicker

Clearly it would be better if they were compensated fairly and I didn’t have to try to even it out with tips

One thing that frustrates me is that as far as I'm aware none of the delivery apps provide an option for me to tip the restaurant. Especially in these times I want to give some extra support to the workers preparing my meal. The lack of that option is one of the main reasons I usually pick up myself; if any of the delivery apps added the feature I would immediately switch to it!

UberEats definitely had options to tip restaurants earlier this year during the early days of lockdown. Sadly the option seems to have been removed since.

Yes, I definitely wish they would add this back permanently and also let me choose the tip rather than the small fixed tip they had before.

But then again, maybe this would create an incentive for delivery services to raise costs for restaurants?

A few restaurants on caviar offered a $10 or $20 item on their menu that goes directly to their workers, which I thought was nice. Would be cool to see that productized.

absolutely 100% wrong incentive. if you insist on tipping for the reason that you believe the drivers are underpaid relative to the value received, tip them in cash, not in the app.

tipping in general stinks and you should really set tip to $0. the driver sees the tip in advance and can take or not take the delivery. but then tip in cash if you want.

Out of curiosity, how is the fee structure of DoorDash compared to something like Seamless?

A few years ago I would routinely use Seamless to order delivery or carry out 3-4x a week, but in the past year or so I noticed enormous service fees added onto transactions (making a $12 burger cost more like $22 all in). As such, I've pivoted away from using these apps and try to order directly from restaurants websites, usually via ChowNow.

Even thought you are taking money from the VCs you are also supporting the systematic exploitation of the working poor. These companies do everything they can to go around what little protection these people have e.g. minimum wage.

Do not use or support these pretatory businesses even if you get freebies. By using them you turn them into something people can't do without and laws get changed to make the exploitation permanently legal.

As far as I'm aware, no one is forced to drive for these companies. I very much get your point, but in a fully opt-in scenario, it's hard to feel like I'm compromising my ethics by ordering cheeseburgers in an app.

Not really opt-in if all other opportunities cease to exist.

You definitely are being hyperbolic here. There's no world where the only jobs available are food delivery, even in the fucked up world of Covid.

Since COVID I’ve used DoorDash more than ever. I got the dash pass with my cc and have been ordering a couple times a week. That is until I finally cancelled over some recurring bad experiences:

1. The food is wrong often. Whether it’s the dasher’s fault or the app’s or the restaurant’s who knows, but it happens too frequently. Granted DD gives an automatic refund in credits but our meal is ruined at that point and no one wants to wait another hour to roll the dice on a DD order.

2. All the good restaurants are leaving DoorDash. Maybe this is more so a trend in my town but at the beginning of COVID there were lots of great restaurants on it and now there’s just chains like Chipotle and McDonalds. Apparently it’s not just DD that loses money on these orders.

Now I will just call the restaurant directly and pick it up myself. Much better quality control, timing, cost and selection.

To make matters worse when #1 happens, DoorDash apparently uses temporary disposable numbers for their drivers which get TERMINATED as soon as the driver marks your order as "delivered."

I once couldn't get a hold of my driver after opening the bag and seeing 1/2 my order was missing. Number was disconnected, and couldn't text it either.

#2 is because apparently DoorDash and Uber Eats takes 30-40% commission on the order! How are they even able to get away with this robbery, especially in an industry that already has low margins (apparently).

> The food is wrong often. Whether it’s the dasher’s fault or the app’s or the restaurant’s who knows, but it happens too frequently.

The dasher doesn't actually order or make your food, they just pick it up and drive it to you... AFAIK the restaurant has an app aka "the tablet" which they receive orders on that they can press a "ready in 15 minutes" button on when the order is ready.

Thanks for clarifying that. It makes sense. I figured that it was rarely the driver’s fault.

Good operation for the founders. They have 42M stocks + 35M options which should yield $3-4B. 3 newly minted billionaires.

So can we all admit now that we're clearly in a massive tech bubble? I don't think I've seen an IPO lately for a tech company thats profitable or has any real path to profitability.

For any VCs out there, I have a half baked AI for Dogs app I coded in 20 minutes so please wire me $50M, it'll cost you less than what you wasted so far in 2020, thanks.

> IPO lately for a tech company thats profitable or has any real path to profitability

snowflake?

Cloudflare?

Are you always this cynical? There are plenty of good tech companies that have IPO'd recently: Snowflake, Unity, Corsair to name a few. I'm sure all three of those will do well in the coming years. Not everything is a bubble, these companies have some impressive growth numbers.

datadog?

Better than I thought! Looks like huge growth under covid, and marginally profitable for first time.

Doordash charged my card for an order I didn't place. I could easily show that I didn't place the order. They refunded my card, then immediately deactivated my account for violating their terms of service. I'm not sure how their screw up caused me to violate something other than I asked for my money back. At any rate, best of luck. If the only way to profit is to steal from people and hold restaurants hostage, karma will have it's day.

Definitely impressive to see the losses getting narrowed so heavily. Assuming they function like ridesharing and much of the cost is variable (labor), then they are a lot closer to profitability than some of the other comments here seem to think. This balance sheet looks remarkably better than ridesharing ones.

I am cautiously optimistic about their ability to be a sustainable business.

I stopped using DoorDash when they had an outage, and when I tried to contact customer support I got an e-mail saying that a person would get back to me in 48 hours and they never did.

Then I read about the Doordash tip controversy and that made my decision final.

Meanwhile, I live in a small town of 4,000 people. Closest “big town” is 5 miles away with 44,000 people. I have 0 options in DoorDash. :(

I hope they use this capital to do more expansion. Grubhub at least provides me with the local VFW.

The VC world and the economy of online startups are almost like a planned economy. The extremely wealthy allocate money for these expensive yet unprofitable online services, like uber, doordash, and UpWork, almost like socialist central planners. So many of these modern businesses would not exist without the safety net of the extremely wealthy.

Also, how is DoorDash still unprofitable, despite taking 30% commissions from restaurants, and 25% commissions from delivery costs, during a pandemic which has many people locked inside??? It's like the Quibi excuse but somehow worse.

How is it that pizza delivery has existed for so many decades viably, but integrated delivery companies (which I would have expected to be more efficient) are all losing so much money?

Pizza has really good margins

For some reason DoorDash decided to ban my account one day, I have no idea why. I found out while trying to order food.

I ask their customer support chat, who told me they'd be in touch in 24 hours.

24 hours later I indeed got an email:

"I've looked into your account and our system shows your account has been deactivated due to account activity that violates our Terms and Conditions of Use."

I asked what ToS I violated, but never got an answer. Some research shows I'm not the only one in this situation. What a weird thing to do.

I deleted the app.

A popular Bay Area restaurant, with one location in both SF and Oakland, recently spun up a new "restaurant" that exists solely in Doordash. The first order I put in with them came back warmer and with better packaging.

I was left wondering who actually prepared the food. The branding on the bag was like 50/50 Doordash and the restaurant (Burma Superstar).

Yeah, I could see "ghost kitchens" or "cloud kitchens" like this becoming much more popular in the coming years. For restaurants that primarily focus on their dine-in location, their food often doesn't work very well for delivery, but a restaurant whose sole focus is delivery could ensure the best customer experience.

Hopefully if this goes well they can cleanup their app. As a regular user, one of the main problems is the order tab. It loads very slowly. The location of the dasher updates infrequently but instantly if I hard close the app. Otherwise, their product is effective and pretty nice with Dash pass.

Really glad my local Thai restaurant handles their own delivery. I just call them and they already know my general order as it's on file with my phone number. I prefer going to direct as it's a better way to support them.

Pretty tacky to buy your own labor laws for $200m and then try to cash out your shares.

Or, ya know, people just disagree with you.

Being in the minority doesn't mean the other side cheated.

I don't understand why people say Uber "bought" a law. Is every prop sponsored by a corporation a "purchase"? This type of speech undermines our collective trust in democracy and should not be OK.

Corporate lobbying and the wealthy's influence in politics damages democracy far more then this rhetoric ever could.

> This type of speech ... should not be OK

I think there are perfectly good reasons to distrust democracy. especially in the information age.

Uber and friends spend over $200 million to pass this law. Yes, this is a purchase, or more like a theft. Yes, I would even go so far as to say every prop sponsored by a corporation is a purchase. Do you have the ability to spend $200m on a law to help your company? Would it be ok if you did?

This is a very idealistic view of the Prop 22 debate, and I encourage you take a more material analysis to this issue if you want to understand it.

It was a cheap way for VC-backed companies to "buy" a legal method to skirt existing labor laws and regulations. This is the antithesis of democracy.

Do we know what their Net versus Gross Revenue Retention looks like?

I'd want to re-evaluate businesses like DoorDash in a few months from now, _after_ vaccine distribution is underway. I think this whole model might look very different then (i.e. as shaky as it did pre-Covid).

I was building a point of sale and online ordering system for my friend's pizza restaurant. DoorDash drivers would come in for orders, and no one had ever signed up for it. Calling them on the phone to cancel it was a nightmare. I hope they fail.

Awesome

Any chance you use alpaca.markets?

You planning for some algo-trades on doordash? ;P

looks like founders / VCs exiting .

btw , how is Uber stock doing these days ?

Better than IPO price, market cap is 82B+ today.

Everything is doing better than when Uber IPO'ed. Asset prices are to the roof!

The whole market makes no sense right now. Question is when does the bubble pop? Corporate debt is the risk, but the Fed seems intent on extending easy credit to keep the thing going. We might see negative rates soon as we further zombify the economy where insolvent companies somehow continue to exist thanks to bailouts and hoard capital that could have been better allocated.

is the Fed's easy-credit helping the common-man to get easier & lower-cost loans for business / home-buying , or is it helping only the shiny-suited investment bankers who trade bonds & shares & commodities in front of their multi-screen-monitor bloomberg-terminals ?

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