DoorDash from Application to IPO | Hacker News Reader

DoorDash from Application to IPO

blog.ycombinator.com

272 pointstodsacerdoti273 comments

My 2 cts on the long term play of Doordash:

The long term trend is that (primarily take-out) restaurants will decline and be replaced by ghost kitchens. The unit economics of ghost kitchens is much better than paying rent for prime real estate. You can run a ghost kitchen from a warehouse. This trend was already underway before covid [1] (see also Travis Kalanick's investments in this space) but has been 10x accelerated due to covid. Many people are saying that Doordash's revenues will decline post covid, but are neglecting the fact that many restaurants struggle to stay alive. Prime opportunity for Doordash to step in and solve the supply side with ghost kitchens. Restaurant brands will go virtual. And who is going to be the "app store" of the virtual brands? Doordash.

[1] https://www.qsrmagazine.com/ordering/doordash-gets-ghost-kit...

It is not just about eating but about being at a place.

The market for cheap delivered food is much larger than sit down restaurants.

Covid just make more of the population comfortable with apps.

I've experienced cheap delivered food done well when in Bejing, and it's definitely a real thing. However if you tag a $10+ service/delivery/tip onto the bill, it kind of negates the "cheap" part of the experience.

doordash is cheap?

The prices are higher (the same plus delivery plus tip) and the food comes cold and unless you’re ordering for a cold outdoor social visit you’re eating it alone/with the same company you see everyday. That’s a market that serves homebodies (I’m one half the time) and absolutely will fail for people who go out to eat and drink socially (me the other half of the time) when that becomes available again.

> You can run a ghost kitchen from a warehouse. This trend was already underway before covid

And it was already failing before Covid.

Delivery requires proximity--every minute in delivery is a minute your food is shittier. And warehouses aren't proximate to residential in most places.

Why do you think food trucks became a thing (and even they were declining)? They changed "proximate" to "immediate".

Yeah, I dont order from food apps too often because a lot food doesn't travel well.

Most fried things are soggy by the time they reach you.

Many people don't seem to care though.

This depends where you live. In NYC, I can get fried food delivered fresh almost every time. When I lived in SF, I wouldn't even dare order fried food because nothing was going to show up for at least an hour.

Is it better than anything I'm going to cook myself? "Yes."

That's the only relevant question, at least for me, and the answer is pretty much always the same.

That's why you open food trucks that serve as ghost kitchens and serve food that travels well. All variables completely in your control as a food entrepreneur.

what the parent really meant is "from some dirty basement near you" /s as it is already the case for some of these 'ghost kitchens'. And of course when something bad happens like food poising, ecoli or whatever, these illegal kitchens were never there...

I think it's a spectrum: some foods deliver better than others. Not all cuisines are equal, so there's no one-size-fits-all business model. Here's a rough list of foods that travel well.

https://www.7shifts.com/blog/food-that-travels-well-for-deli...

Pizza travels exceedingly well over larger distances. Most types of non-soupy Chinese dishes also deliver well. There are proven delivery business models for pizza and Chinese food, even pre-covid, and they've mostly been successful.

Other foods, not so much. Good soup ramens don't travel so well (in fact, ramen is so time-sensitive that you're supposed to eat it within the first 10 minutes of it being served). Similarly, good pasta is time-sensitive. (I'm sure you've had gloopy pasta at potlucks where it's been left out on a chafer for a while)

I believe there is potential for innovation around packaging (for preserving food quality) and maximizing efficiencies, but the economic window is very small in high labor cost jurisdictions. There are lots of people working on this problem though. Solutions will likely end up being bespoke, and likely involve complementary sources of income. (for instance, tipping in America is a lever in the economics of a sit-down restaurant; delivery-only businesses need similar levers)

Another take on this is that restaurants are in the entertainment business, not the food business. Post COVID people are going to have a lot of pent up demand for entertainment that isn't in their homes.

So perhaps this is more of a complement to restaurants rather than a replacement. But is DASH valued as a complement? But then again price is king right now, not value :)

Exactly. This is why cocktails you order from the restaurant don't taste nearly as good as they do in store (unless you know what you're doing with them).

I can't wait to get drunk in a bar with people again.

Also, decent fries... Some things just don't survive delivery.

I'm a bit skeptical. I've never ordered takeout from a restaurant I haven't been to first.

That's because it isn't the norm currently, just like online shopping/mail orders wasn't the norm.

In the Before Times, I’d have the experience of walking down the street, seeing a sign, and being like, “oh, that’s where The Clay Pit is.” There’s tons of places whose food I really love that I’ve never actually been to physically.

I had several bad experiences with ghost kitchens (low quality food) and now I look up ay restaurant before I order from them to make sure it has a storefront. Though usually you can tell by the absurd names most ghost kitchen places use.

interestingly there's a local startup here in Boise that is trying to pre-empt your experience. They are a ghost kitchen that also owns the logistics (delivery) the ordering software, and have hired chefs to build menus specifically targeted at being delivered and still being good.

https://www.cravedelivery.com/

I'm actually going to order dinner from them now as a first time user (i've been signed up for a while but now after reading this thread i'm curious what the quality is like)

will report back.

There have always been a lot of those, cooking group meals, lunches for cooperation/events. It's always there, just DoorDash enabled those kitchens to take individual customers, which would have only been possible with a storefront, before the time of digital delivery service.

There was a company that did this called Munchery.

Reporting back: It was fine, no better or worse than ordering from anywhere downtown but probably 20% more expensive.

I was extremely excited about ghost kitchens and have had been disappointed by similar experiences with them all providing low quality food. I'm still optimistic that the supply will shape itself over time and eventually a market for high quality food ghost kitchens will emerge.

This seems unlikely to me because most good chefs seem very interested in interacting with their customers - in many cases it's the one redeeming factor in an otherwise brutal industry.

I’ve experienced the same thing. It makes sense. Ghost kitchens are a purely profit-motivated enterprise. Local restaurants are for-profit, but also places where hospitality, socializing, community, etc. has value. I would expect the food to reflect that.

Plus, if you’re an actual restaurant it’s a lot harder to rebrand if people don’t like what you’re doing. They’ll notice it’s the same people, the same location and a similar menu, but if you’re a ghost kitchen that gets bad reviews you can just shut down Phil’s Mouthwatering Mexican and open up Tabasco Flavour Tacos the next day.

Don't even have to shut one down.

You all sound like people in the 90s explaining why e-commerce will never take off because of returns

I feel like the Amazon analogy here would be the fly-by-night Chinese brands that dominate search results for products that aren't branded.

People just looking for food will get them at a lower price.

People go to the restaurant for the restaurant and everything with it will still go to the restaurant.

It's an entirely different market, the segmentation of which DoorDash enabled.

As a person that spent time in the Industry as well as did/does logistics and supply chain management I agree with your assessment. After the short-lived breather the PPP program allowed the Industry to have, few restaurants really saw the writing on the wall: after the summer season the shutdowns were inevitable either way due to the lack of dine in option or a forced 50% capacity. This was not sustainable in a business with razor thing margins and large overhead.

The only ones that are going to survive are the ones with large outside investment, where they're attached to a Corp with other forms of revenue--this is exactly the model of where I last worked, and only the flagship(s) and 2 other bistros remain after most had to shutdown. Everything else got the axe.

On the other side of the spectrum, cheap(er) eats, its a race to the bottom and a re-structuring of how to deliver. I have friends with restaurants and they offer curbside pick up, but are now also thinking about how to deploy a meal-prep type solution. A sort of interactive blue apron model with videos online to walk them through the process. Perhaps creating a community facebook page/social media presence to spread the word, I proposed it as a 'chowhound meets flickr' idea.

It's a sad situation, and the Industry needed a much needed overhaul given the amount of waste and abuse within it. But even I agree this was too high of a cost to pay. I'm just glad that I hit a high water mark that I can leave with my head held up high and can be satisfied with what I did as a chef in several countries on two continents.

DD is not a sustainable without tons of VC money to burn, their app is utter garbage, their fee policy on merchants exploitative, and the drivers are treated and paid well below even Industry standards who had their tips stolen while assuming no liability--VERY limited protection if an accident occurs while on delivery. Softbank created a poorly structured logistics solution that took a lot of marketshare without caring it was a money-pit with little to no potential ROI unless its IPO is a homerun, which Softbank will probably use to exit from its investment.

We are living through yet another absurd financial era, like 2008, where the Market is so filled with cheap money that it is flooding into any ponzi scheme that shows even a glimmer of short-lived profitability gets flooded with funding and investment, all while 1/4 of the US population is out of work and unemployment continues to rise everyday.

When Doordash can deliver food from restaurants around the world straight to my door, they can be the "app store" of virtual (kitchen) brands.

Right now DoorDash can't even offer 90% of local restaurants and zero of my favorites - it's just Groupon 2.0.

Maybe.. I see a lot of take out store fronts with food trucks and door dash. I still see restaurants post covid, just at smaller capacities. A lot of restaurants in the suburbs have plenty of space.

Also bars are a major component of restaurants too.

A good middle ground between a ghost kitchen and a full on restaurant is the food court model. Restaurants get to pay a little less for rent, keep some in person dining but mostly focus on takeout.

I relocated to Singapore earlier in the year, and I have to say that the hawker centres here are amazing.

I know the economics require a bit of government intervention (and it only really works in a dense urban environment), but I would love to see more governments embrace this model.

That being said, I also expect that implementing this somewhere like Australia would also require a lot more security to deal with drunks, thieves and generic shitheads. So a lot of it is cultural.

There are food courts in Australia. MLC Centre, Australia Square, Eating World, Central, the Galeries and more. None of them have any security guards or have any issues with drinks, thieves, or generic shit heads.

Not sure why you think they don't exist in Australia.

I'm assuming you haven't been to Singapore hawker centres, because they're nothing like the crappy corporate foodcourts in Australian office towers.

First, the food quality is much, much better and considerably cheaper.

Second (and I assume related to the first), the stalls are much smaller, meaning they can be properly independently run.

Third, they're regulated (after a fashion), so ma and pa stalls aren't competing with Subway.

Fourth, the majority of people here don't cook, so eating hawker food twice or three times a day isn't just normal, it's probably common.

Fifth, they're generally stand-alone buildings and smoking/drinking is permitted.

Sixth, they're usually open from 6am until 9pm (some are even 24 hours).

Seventh, they're a staple of literally every neighbourhood, not just CBD office towers.

> and it only really works in a dense urban environment

I wouldn't consider Georgetown (Penang, Malaysia) as a dense urban environment.

Despite this food courts there are numerous, immensely popular and fantastic to get a cheap, ultra-delicious meal.

> I wouldn't consider Georgetown (Penang, Malaysia) as a dense urban environment.

I can't say I'm familiar with Georgetown (unfortunately due to COVID, I haven't been able to travel through Malaysia just yet). Interesting that they also manage to work in the less-populated areas though. Look forward to seeing it first-hand (hopefully 2021).

> the hawker centres here are amazing.

I lived in Singapore 2010-2012. 100% agree with you. Quality and taste of food, especially price-wise, is so good!

Do you actually know of any good "take out" only restaurants that don't have people eating there? I don't.

I live in a city so maybe that's the difference, but one things for sure, if people could be in there, sitting at a table enjoying food with their friends, they would be.

I think there is a very obvious opportunity here that people seem to be missing.

The first "high end ghost kicthen" to stick a camera in their kitchen and stream their food prep will probably make a killing.

You can probably build an entire social network for foodies around this stuff.

I can see them streaming food preparation in a highly curated setting. But they would never show the actual line cooks at work, with all the yelling, swearing and less-than-perfect hygiene and sanitation. That would just be asking to be reported to the health and sanitation authorities.

> The long term trend is that (primarily take-out) restaurants will decline and be replaced by ghost kitchens.

If you mean takeaways will stop having so many storefronts, sure.

But for sure restaurant brands are not going virtual - you'll have your Dominos but most restaurants are going to mainly be in person eateries. There's this tendency to over-estimate the impact of major events as you're in the centre of them... once COVID is "over" we're going to see a boom in eating out, as people rush back to normal life. It ain't going change so much.

The reason it's so hard to make money out of a restaurant is not because rents are high (people will travel to good restaurants) it's because the competition is so damn fierce.

The dichotomy between this massive IPO making the founding team and investors rich and local restaurants shuttering in record numbers (partly due to losing 25% off the top to DD with no other options) is startling.

A small case study on how inequality is growing in our country and tech like this is pouring fuel on the fire

> A small case study on how inequality ..

Can you please explain this to me?

Inequality of ... what? Opportunity or outcome?

Distribution of wealth.

Seems to me that it's both. I don't see VCs pouring billions in investments into new restaurants.

Seems like some people are more interested in using Doordash than getting the food from the restaurants directly. I think that Doordash provides a useful service that was not as present or not as good previously. What do you think?

I do not think Doordash is useful, I'm fine with picking up my own food. I also think that Doordash is an example of a business that is lowering the bar for what's considered entry-level employment and will result in erosion of the consumer base and eventual economic or social crisis. Only time will tell.

> I don't see VCs pouring billions in investments into new restaurants.

Serious investors play in their niche: Restaurant investors don't invest in tech either.

If your statement outlines a problem, how would you go about solving it?

I suspect that the 80th percentile best restaurant investor would be better off becoming a 20th percentile retail investor in tech.

Off the top of my head, Sequoia did back The Melt, there was a time a few years ago when VCs did dabble in restaurants.

Small group of people (investors and early employees) pull in a ton of money while a big group of people (restaurant owners and employees) face worse economic outcomes.

Similarly, private mkt investors get insane outcomes while retail investors end up buying at peak prices and less information.

I'm not saying what DD did was unfair or unethical. We're just moving quickly to a very unequal society and this is a small ex of how that's happening

Thank you for the explanation, so ok inequality of outcomes, but not inequality of opportunity.

2 more questions:

1. How is this a "problem"? 2. How would you go about solving it?

1. When this gets too extreme people start to ignore whether it is fair, logical or right, and respond with rage. People who have to close down, or feel poor, while they see a small group get crazy rich don’t care about economic theory, they just feel that something is wrong. Politicians use that rage to get elected and ‘fight for the people’, often implementing harmful policies to please angry crowds.

2. Australia has minimized this problem pretty well by having a pretty unregulated economy but a robust safety net.

Best.Answer.Ever.

Thank you.

> How is this a "problem"?

"[a] Stanford professor posits that throughout history, economic inequality has only been rectified by one of the 'Four Horsemen of Leveling': warfare, revolution, state collapse and plague."[1]

You can hang on to imaginative phrases like "inequality of opportunity" or an economy that reliably delivers food. I think most people are going to go with the second option.

[1] https://www.economist.com/open-future/2018/09/10/can-inequal...

And here were are in the midst of a plague and it hasn't helped! I was hoping we'd get UBI out of it!

Yeah I'm not sure this is a great example of inequality either. Most independent restaurants fail, I don't recall the exact stats off the top of my head but very very few last >5 years and the majority fail within the first year (this was before DD or any similar services) and yes maybe tech pressures have exacerbated that, but I'm not sure the stats on that are conclusive.

Anecdotally apps are how I and a lot of people I know have come to discover or order from many independent restaurants for the first time. Even with a 25% cut, without knowing the exact numbers of how many new customers these services introduce, its not that easy to say that big tech boogey monsters are destroying independent restaurants, especially since its a fairly risky venture to start with.

Alternately, you could look at this as a dichotomy between local restaurants shuttering in record numbers due to inadequate government support for small businesses during a once-in-a-lifetime pandemic, and tech like this providing some of them with a lifeline to stay open (while also making the founding team and investors rich). A small case study in how the world is not necessarily a zero-sum game?

This is such a healthy perspective in a world where it has become fashionable to hate on wealth creation.

World is not hating on wealth creation, world is hating on tilting the scale in favor of the super rich at the expense of the poor.

This is the most insane comment I’ve ever seen on this site. Imagine the kind of insulated you have to be to think that “hating on wealth creation” is the problem at one of the highest points of wealth inequality and economic devastation.

Thank you for sharing your perspective.

Seriously, I fail to imagine how the fate of those local restaurants would have been better if DoorDash didn't exist.

It would be a lifeline if restaurants made money from Doordash orders. Some do and for them it's been a lifeline.

But many restaurants don't make any profit after the 25% cut. Pre-covid you could write it off as a marketing expense but when in-person dining disappears you're faced with option to close or keep open and make a loss or no money on every DD you get.

This is partly why 110,000 restaurants have closed since the pandemic

How exactly is tech pouring fuel on the fire though? If DD simply didn't exist, what better option would these closing restaurants suddenly have?

Like you said here, with DD around it does give some restaurants a lifeline they wouldn't otherwise have. Plus the government gets more tax revenue, over time some large percentage of the currently $60B valuation created by Doordash, which could be used to help the rest of those hit hardest by the pandemic if our democracy wasn't being held hostage by one Mitch McConnell.

I think the implication wasn't that DD was pouring fuel on to the fire of "restaurants closing", but rather that when they, a company that works with restaurants (many of which are closing) are doing so well that they can IPO to the tune of $60B and make their founders/investors VERY rich, this can pour fuel onto the fire of "tech companies making money at the expense of others".

I feel that regardless of your feelings on the truth of that last quote, the connection can still (and will) be made by many people.

If DD didn’t exist it’s be someone else.. but if there was no delivery most people would pick up take out like before. I don’t mind paying a delivery fee. It’s kinda like the tip when you dine in person..

The 25% fee goes mostly to DD, not to the driver who delivered. DD and other app's value is removing the friction of ordering and paying. Of all the participants in the supply chain- farmer, cook, business owner, delivery guy- the ordering app (tech) took the most outsized piece of the pie.

To be fair though, not all tech is similar. I don't think people mind Amzn charging the seller 5-15% and paying the delivery guys whatever it takes. I hope food delivery apps become more reasonably priced- or then maybe Amzn comes after their margin!

2 years ago, I could order 4 entrees from a local Indian restaurant for $50 + $20 tip. The same restaurant is DoorDash only now and the same order is $70 with no tip.

I don't order delivery anymore, for $20 I'll pick it up myself.

I'm not a fan of delivery apps (I prefer calling in my order and picking up), but I thought I'd investigate the oft-repeated refrain that restaurants either make no money or a loss. I think it depends.

From my back of the envelope calculations, it seems that the conditions necessary for a restaurant to break even or make a tiny profit with delivery apps that take a 30% cut exist but are narrow. For the restaurant to cover that fee, it would have to increase its online prices by 1/(1-0.7) - 1 = 43%, which would make it less competitive to a segment of its consumer base.

On the other hand, if the app's fee was 15% (which it is in Chicago, due to a city-wide cap), a restaurant only has to increase its prices 1/(1-0.15) - 1 = 18%, which is more palatable and less noticeable.

It does also create cash flow, and there are various things you can do with cash flow.

If you can increase sales velocity, the increased returns might be able to help profitability (though the counterfactual is hard to prove -- if you didn't have the apps, would velocity have been lower? Hard to measure).

Just eyeballing this, but trading at $180 gives DoorDash a market cap of $60 billion. The IPO priced it at $30 billion.

Uber's market cap is $95 billion.

Lyft's market cap is $14 billion.

UPS's market cap is $120 billion.

Delta's market cap is $40 billion.

So with this naive analysis, I assume there is a lot of potential in last mile delivery. And moving things is more profitable than moving people. Or moving things is stickier than moving people.

In general, curious to wonder how durable this trend is. Or their proprietary gifts. And the pivots they take in the future. They are capturing a lot of taste and preference data on top of logistics.

I keep reading about how the long term play to justify the valuation is moving to last-mile delivery of retail, pharmacy etc. But there is a reason that Amazon distributes out of a central warehouse - it's much more efficient than sending individual drivers to a bunch of Walgreens around the city to pick up prescriptions.

Perhaps that is the Doordash play? Force restaurants to either exclusive dining or ghost cloud kitchens in warehouses (presumably owned by DD)?

Has anyone had a recent good experience with doordash?

I recently ordered from doordash where the estimate was 60 minutes from order to delivery. I wrote in to CX at about the 90 minute mark and they told me that maybe the restaurant wasn’t finished and that they had a person on the way to pick it up (counter to what the app said). Around the two hour mark, I wrote in again and they said the same. I asked if they had a specific person currently on the way and was told yes. We eventually called the restaurant who confirmed that they had had our food ready for hours, at which point doordash said “oh actually, we don’t know when we’ll be able to get it to you, we’ll give you doordash credits in refund.”

When we drove ourselves to the restaurant to pick it up, hours after ordering, they said doordash had kept submitting orders but hadn’t actually sent any doordash drivers in a week or two.

Everyone seems to have a doordash is terrible story.

I can’t believe the valuation I’m seeing.

yeah I ordered some food and a guy delivered it more or less on time. I'd say I enjoyed the experience

This is not specific to DoorDash in any way and applies to all the VC-funded food delivery services. The business model is to provide the shittiest service possible and hope customers don't ask for their money back (and refund the few that do after wasting as much of their time as possible to try and make them give up).

Love it! It's great to see initial skepticism from YC about how this wasn't working. I feel like you see IPO write-ups like these and it's always implied that everyone around them always knew they were going to make it.

That said, I searched the entire article for the words "luck" and "lucky" and see none. No doubt the pandemic and WFH life helped them, and that's something even YC couldn't have predicted.

Yeah, it's so easy to convince yourself that you knew all along that a company would succeed, which is one reason why it's helpful to keep actual notes.

It's also a great example of a company that was not popular on Demo Day. This kind of success is so hard to predict.

> that a company would succeed

has it succeeded?

What happens if their cost of capital goes positive?

What happens if people start going to restaurants again?

They just IPOed to the tune of $70B market cap...

This comment really comes across as out of touch... The company just went public and based on their S-1 has been massively growing even pre-pandemic! (both huge measures of success)

It's not out of touch to question metrics when it appears a company was dumped on public investors with no profitability in sight. Growth is not success; profit is, growth is simply the mechanism by which you're supposed to reach profitability.

If we define success as cashing out, sure, success. It feels like the delta in journey between building a sustainable, profitable business that handsomely rewards you at your exit and "congrats on your lottery ticket" is growing by the day. Let's not kid ourselves, investor dollars chasing after your equity when you go public and with no evidence profitability is possible is a rare lottery ticket that has paid out (or maybe not so rare! See: Adam Neumann/WeWork).

EDIT: I want to really stress that this isn't "sour grapes" but more echo chamber fatigue. If you are founders at a startup, who grow it into a unicorn, are delivering value, your employees and customers are happy and delighted, and you're profitable, those are the folks who deserve to be congratulated when they IPO and become billionaires and are who you can learn the most from on your own startup journey.

> If we define success as cashing out, sure, success.

That's the only definition of success that matters to VCs.

Even if the company is not around in a year, if they were able to dump their stock to investors^Wspeculators^Wsuckers before the meltdown then it's bagged as a win.

https://www.sec.gov/Archives/edgar/data/1792789/000119312520...

F-4 they are clearly on a path to profitability...

It seems silly to even focus on profitability at IPO when credit is so cheap. Growth trajectory is rewarded and based on the S-1 they are growing in a healthy enough fashion. This is VERY different than WeWork which had massive amounts of debt on their books and didn't have a plan out.

Again, if you keep getting hung up on profitability you aren't really realizing what stage Doordash is at or the maturity level by which companies are expected to be profitable

> has been massively growing even pre-pandemic

Well, anyone can massively grow (pandemic or not) when you're selling dimes at the price of a nickel.

https://www.bloomberg.com/opinion/articles/2020-05-18/the-un...

"I don't think you understand what the product is... The product is its stock." https://www.youtube.com/embed/YZFTaEenaHM

> They just IPOed to the tune of $70B market cap...

You must not be aware of what happened around the year 2000.

If you look at their S-1 there isn't a chance of this looking like what happened in year 2000. Way too much capital, way too low interest rates, and a real path to profitability

> real path to profitability

You had me up until here. This is WIDELY debatable.

Sure, but their S-1 shows REAL TRENDS not handwavy private loss sheets and leaked financials.

Widely debatable is now up to the common investor to determine.

By the way, with such faith, I assume you will short the stock.

Succeeded as an exit strategy for the founders, yes, but according to the filing, I do not see them expecting to be profitable.

I remember when GrubHub was still significantly bigger and it looked like Amazon was going to make a serious play in the space.

Certainly the pandemic helped with mass adoption but they've also just built a more competitive product.

I used to use DoorDash, and tipped very well since I knew the workers could really use it.

And then I learned that the company has been stealing tips from the workers who need it, so that they can make their finances look better in anticipation of this IPO.

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

I haven't used the service since.

I don't really know the precise details, but I'm pretty sure their pay model changed after the backlash(and being sued) to the tip-stealing.

Still, I wouldn't choose DoorDash unless it was the only option in my area. When I was driving for GrubHub I met a lot of other delivery drivers and everyone considered DoorDash to be the the worst in terms of treatment of drivers. In other words, bad support and tip stealing. We referred to it as "DoorTrash" or "PoorDash" for that reason. Postmates has pretty much nonexistent driver support but at least they didn't steal tips and it was pretty difficult to get fired from it randomly.

A company that would allow that in the first place should not be trusted later on, claiming they "fixed it". It's such a clear violation of ethics and morals. I don't get how a corporation can literally steal money from it's employees, say it's "sorry" and it "fixed the problem" and get off freely.

Well spending millions of dollars on Prop 22 ensured that they're technically not "employees"

The "technically" in that sentence is the evil part of their argument, IMO.

I'm pretty sure an organization willing to play with that sort of dark pattern has any number of other dark patterns in the wings.

They eventually changed it but they defended their behavior repeatedly as if it was fine and not exploitative to their delivery drivers.

Very much agreed; while I try to avoid food delivery services as much as I can (knowing drivers are generally making sub-minimum wage after vehicle depreciation) this brazenness of DoorDash's tip garnishing is a bit of a black mark on YC. I won't even take DD up on the "free meal" promos they're running in my city.

> I really wanted them to make refrigerator magnets. They wisely ignored that bit of advice.

Fun to hear about tidbits like this. I often have “genius” marketing gimmicks for other people. Turns out while all successful startups will have external marketing successes that people will think were key to their success, their internal qualities are the real causative and what ends up being their famous marketing tricks are just symptoms and arbitrary.

Doordash's demo day was the first one I attended. I invested in spoonrocket.

I'm curious, would you be willing to share the origin of your HN username?

Can you explain why you chose one over the other.

The most interesting data point here for me is that they went from nothing to IPO in about 7 years. That seems to be much shorter than the typical or median time to IPO of other startups these days. Am I correct on this? What does the distribution of time to IPO look like for more recently IPO'ed tech companies?

It looks to me like they're roughly on-target for consumer startups. It's quite industry-dependent. https://about.crunchbase.com/blog/startup-exit/

That said, most of these companies IPOed at much lower valuations than Doordash.

"... a delivery courier’s income, which ranges from $300 to $800 a week for those who work 12-hour days, seven days a week."

https://www.thecity.nyc/work/2020/12/6/22157730/nyc-food-del...

Yeah but with all that cycling they won't need to visit the doctor anytime soon so they save a lot of money not paying for health insurance. /s

I know that this was a joke, but physically healthy people should definitely still be visiting their doctor on a somewhat regular basis too.

Visiting a doctor in US costs a fortune. Even with insurance a doctors visit costs me 200-500 out of pocket. That’s nuts. I’ll pass unless I really need to see the doctor.

I think you misunderstood my statement.

I completely understand that doctors in the US was way to expensive to see for acute issues. However my understanding is that with any ACA-compatible plan, "basic preventative care" (ie, yearly physical/check-up) is no cost out-of-pocket.

"They are young and healthy and shouldn't need it" is not a valid excuse to not provide health insurance to those who work for you (in the US).

Do you know any cyclists? All the ones I know have had accidents ranging from bone-breaking to fatal.

I was a cyclist for another tech company that used cyclists to deliver in NYC, AMA.

Delivery people are truly neglected at these companies. A quarter of my wage went to recovering the calories I spent on my shift. I'm lucky that I didn't need that job, I only took it to experience being a bike messenger.

“/s” means your parent was being sarcastic.

Congratulations to DoorDash! Their IPO is quite an achievement.

I'm curious to see what the state of aggregated food delivery will be in, say, 2024. Not too far in the future, but long enough for losers to start giving up.

My current understanding is that DoorDash-like start-ups are consistently in the red. The upfront expenditure on engineering and marketing for a 3-sided marketplace is huge. The business model would be to take a bit from each transaction and achieve profitability on volume. Thus, a winner-takes-all (or few-takes-all) situation seems inevitable.

It seems there's many players right now in the space, and the only differentiator I see thus far is restaurant selection and price.

I may be in my own bubble, but I have no loyalty to DoorDash, UberEats, GrubHub, etc. I usually flip through each app to compare prices and pick the lowest one.

As an investor, how would you differentiate these food delivery start-ups?

> As an investor, how would you differentiate these food delivery start-ups?

https://www.doordash.com/drive/portal/discover

Probably set it up as a stripe like DAAS for businesses.

Was asking the same question myself. I am also on the same boat -- flipping through the apps to compare the prices. I thought maybe we are the minorities and the general public just downloads a single food delivery app. The same goes for ride hailing apps, too. An aggregator app that combines every delivery app may disrupt the system. Or maybe they will go for restaurant exclusivity instead of user loyalty. I don't know.

Congrats to Doordash! The pandemic certainly helped accelerate this process, but I will add that within the bay-area, anecdotally, my first circle were all Dashpass subscribers for a while before 2020 too. Their partnerships with Chase, amongst others were smart, big moves.

I do want to link here a super insightful/funny article that calls out how Doordash acquires new restaurants( amongst other ways of course) , and the resulting loopholes.

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

HN discussion - https://news.ycombinator.com/item?id=23216852

And I'll link to how cities, including in the Bay Area, are catching up to their price gouging shenanigans and puttig a stop to it https://www.berkeleyside.com/2020/07/13/food-delivery-berkel... .

Is this the company that used to take tip money and apply it to the drivers per hour rate? Effectively reducing drivers take home pay?

Yes - https://www.washingtonpost.com/business/2019/07/24/doordash-...

I love watching these videos so many years later. Great examples for anyone considering applying to YC!

As a customer, DoorDash is just consistently a terrible experience. I have the DashPass, which was advertised as free delivery for many restaurants. Turns out it only works if you spend $12, and even then sometimes it doesn’t apply. If you check prices between the app and the actual restaurants’ websites, there’s often an extra $2-3 added on for each item on DoorDash (I don’t blame the restaurants). When it’s all said and done, a basic $10 meal ends up being $20+ through DoorDash after the upcharged food items, delivery fee, service fee, and tip.

Edit: I do still order through DoorDash when they offer me the occasional coupon, but I rarely order without a substantial discount. I don’t know how this business model is sustainable. I’ve also noticed that many local restaurants offer their own free delivery with no service fee or up charging if you live nearby. Also, some of the best restaurants in the area seem to not be on DoorDash, Uber Eats, etc.

There's a nearby restaurant me and the wife love to order from for breakfast every other month cause its so good, but we stopped ordering from that location and pick a slightly further location because they upcharge on things in a ridiculous way. I'm talking a $20 difference if not more depending on if we're both trying to order the same thing, imagine overpaying by $40 to feed two people.

Imagine having that luxury to choose to overpay by $40 to feed two people.

I never paid for that option though. I think you misunderstood what I said.

You're on hacker news, I would wager 80% of the people here have that luxury

I consistently get late orders, missing items, or the app is just completely down after I order and I can't access anything. Literally the only reason I keep using it is because of the lax refund/credits policy which results in me getting free food.

I have an honest question: do you feel like you're taking advantage of the situation in an unethical way?

You seem know the service will suck and would normally not use it, but you do it anyways because you get free food, which is in turn effectively paid for by everyone else using the service, VC investors, and by Doordash taking advantage of employees/contractors by stealing their tips (in the past).

No, because it's not like I'm quiet about it to them so they have the opportunity to fix it, and also I'm not lying to them either. I give good ratings and tips otherwise. The tip-stealing thing is bad, but it seems like they've fixed it?

If VC's wanna subsidize my dinner, I'm gonna go for it. Theoretically, this would incentivize them to make the service not suck, since they have to refund/comp so many orders.

And as someone who uses both DoorDash and Skip the Dishes, those weirdly only ever happen to me on DoorDash.

They happen a lot with Postamtes too :/. Maybe it's locational?

I also noticed that Postamtes seems to give drivers either instructions or photos of last delivered foods based on time of day or something, as my deliverys between a bracket of hours are always in the same wrong unit, yet it's tons of different drivers and I complain each time.

My order from a restaurant that's a 5 minute drive away (raising a puppy, I can't really leave him alone right now) arrived almost 40 minutes after it was picked up.

I was given a credit that didn't even cover the delivery and service fees, let alone the tip that they don't let you edit after the order.

Doordash and Amazon Fresh has been a saviour the first month with the puppy.

UberEats has a "guaranteed delivery time" feature that they pretty much never go past in my experience. The delivery usually arrives sooner, but at least you know what the worst case scenario is. They also recently added "priority delivery" which lets you ensure the driver won't make any other stops between the restaurant and your house for a few extra bucks--this seems to drastically improve predictability and is well worth it imo.

I'd love to see DoorDash copy both of those (assuming they haven't already--it's been awhile since I've used it). I've had many similar frustrations with them. Being hungry and waiting on food that is already 45 minutes late, with no indication of whether it will arrive sooner, later, or ever as the driver zig zags all over creation on the map is a special version of first world hell.

Is this new? My last Uber order was 3? years ago when my order was over 2 hours late. I contacted support and their answer was essentially "<shrug> shit happens".

I've found UberEats to be a similarly mixed bag with timing (and the only service where I've had the driver steal the food).

Pre-pandemic eats drivers would also almost never come to the door or get out of the car. Doordash drivers tend to be find the door more reliably in my experience and the service is usually more reliable.

They're all a kind of weird business for me - I don't see how the margins work, but I use them sometimes because it's convenient. Usually if I use something then I'd be willing to buy stock for it, but I don't really want to here.

It feels like the 'we have massive revenue, sure we're losing money on every sale, but we'll make it up in volume' kind of company. IPO, take your cash out and then leave it to die in the public's hands.

I use UberEats fairly frequently, and while there have been a few bad experiences, they are usually fine.

The most common annoyance IMHO are restaurants not honoring the utensils option (i.e. not providing them even though you asked them to, or to a lesser extent vice-versa). The other minor annoyance is that they don't update the status of the order correctly when you opt to pick up (it will often sit in "preparing" even after you actually pick it up, only changing to "picked up" 2 hours later.

The other thing that is weird is that while they make it fairly clear what the price breakdown is in term of food cost vs service fees (which I'd assume is the driver's cut), they also have a mandatory tip for drivers (i.e. is the service fee not going to the driver then?)

I've had a few long delays, but this was because the restaurant was apparently slammed with some huge order, which is understandable. The weirdest one was when I placed an order, and it got marked as picked up before I got there to actually pick it up. Turned out they were a food court shop in a mall which closed for the day 10 minutes after I ordered (it was in some small town I was driving by in a road trip, I had no idea). I was able to get a full refund just by raising an issue in the app, without ever having to talk to anyone.

my wife always tells me to not mess with utensils option (on any delivery services) as we almost seem to not get any.

when we leave it at default, always get atleast 1 pair of cutlery.

when we specify we want more, normally end up receiving none.

i have done doordash pickup. the estimated wait was 45 minutes.

i called the restaurant after about 20 minutes as i have ordered there directly over the phone before, and its only been 15-20 minutes wait for phone ordered.

they like oh yea, its already ready, we just punched 45 minutes into door dash just in case...

Oh yeah, estimated time for pickups are usually way too conservative. Most of the time, I will show up 5-10 minutes after ordering (basically I hop in my car as soon as I order) and I can almost always walk away with my food right away or within a few mins.

Guaranteed delivery hasn’t been my experience with Uber Eats. I almost always pick priority delivery but on many occasions I’ve had food sit at the restaurant for 30+ minutes waiting for pickup. And Uber always was hiding behind we’re waiting for the restaurant to prepare the order when in reality they’re waiting to assign a driver.

After 3 such incidents I gave up and deleted the app. I don’t mind paying $10+ in fees for convenience, but not knowing if the food will show up on time or an hour late destroyed all the benefit.

Problem is they all seem to be flaky. The challenge of working with an unreliable army of independent contractors I guess.

So at this point when I need food to show up on time I go and pick it up myself, and save delivery for when I don’t care if the food is an hour late.

> I was given a credit that didn't even cover the delivery and service fees, let alone the tip that they don't let you edit after the order

I'm opposed to the whole idea of tipping, but putting that aside, I can't see how it makes any sense to tip before you've had the service?

Oh 100% agreed. It's my biggest annoyance with the platform. I don't want to contact support to change my tip, whether to increase or decrease it.

Every other service lets you change your tip up to 24 hours after delivery if they ask you for it up front.

This +1000

My food is regularly delivered incorrectly or missing and they refuse to refund the fees. What is beyond fucked up to me; is that they increase the fees based on what I buy. So they charge me for something and then refuse to refund it. I just don't know how it's even legal to bill me for something and then not provide it. I need to write my congressman again and state senators about this shit again.

Oh the the higher prices? Those are probably going directly to doordash to... I mean DoorDash and its ilk are quickly becoming the cable companies of modern SAAS businesses.

> I just don't know how it's even legal to bill me for something and then not provide it

I don't know either, but the airline industry is the living proof that this is legal.

I have many complaints about DoorDash, mainly that the platform has degraded a lot as they've grown (customer service used to be top notch), and that their tipping policy was not clear for years. But I've used it for 5-6 years, and for a chunk of that almost daily (I'm lazy), and they've never refused to refund anything that was incorrect/missing.

My nephew recently had a debacle where his food was not delivered at all--$80 worth of sushi.

They tried to offer him a $45 refund. Then they tried to offer him a refund for just the food prices.

He had to threaten to charge back before they refunded everything.

This is what chargebacks/disputes are for. I have had the same experience several times and disputing the transaction always worked.

Disputing the transaction is also the only thing that would actually discourage them from such shenanigans in the future, as it would sour their relationship with their acquirer bank if they get too many disputes.

I've noticed that they have been trying to get away with partial refunds and are now making you complain longer / threaten a charge back to get the full refund.

Interesting, I order to work every once in a while, and I once ordered to the wrong jobsite. A coworker took my meal and customer support refunded the whole thing. I was under the impression they were very generous with customer support

If your order is completely missing, they'll refund it. If it's late, even exorbitantly late, they will only do a paltry credit for the inconvenience as they consider their job done, even if it was done horribly.

> raising a puppy, I can't really leave him alone right now

Off topic, but why not take the puppy to pick up the food? Might even be a decent walk, if there are sidewalks along the way.

It's my first week with him; he hasn't had all his shots and I don't want to stress him out with too many new things all at once.

Right now it takes around 5-10 minutes to just get him comfortable with a car ride to begin with, so even that's not a fantastic option.

In the future that's definitely the plan but it's just not practical right now.

Thanks for the answer. Still sounds like a lot of fun raising a puppy! Please give him some pets from me :-)

Alternating between an absolute blast and grueling, yep.

He'll get tons of pets and belly rubs when he wakes up, don't worry! :)

If puppy is really small (under 18 weeks) and didn't have all the vaccines yet, you should avoid putting them directly on the ground if don't know the environment. If they come into contact with leftover feces of other dog that cary disease, they can some deadly ones, like Lepto.

Which is also tricky, as at the same time it's when you have to socialize the puppy. Things they haven't been exposed to under 18 weeks, they're more likely to be scared of/aggressive towards.

It can be very tricky. In my case I got a rescue puppy, 5 months old. Didn't have any shots. And wasn't spayed - and we couldn't due to her state - got to us full of all kinds of parasites and malnourished, not to mention the previous "owner" left the poor thing locked up in a dark garage ALL DAY, plus punishments whenever the dog would poop.

Needless to say, there were issues. Still, we were lucky that family members had pets (all sorts of pets), so we could socialize in a controlled environment.

Now we got a well-adjusted pet (minus some separation anxiety issues we have managed to control, but not eliminate). That is, well-adjusted, provided there's enough exercising :)

The worst is when they give the drivers a second order after they're already holding yours. So the driver has your food sitting for 45 minutes before they even start driving to you.

These food delivery apps tend to execute it poorly, but multiples orders in a single run is pretty standard fare in food delivery.

If you order delivery from a pizza place during lunch or dinner rush, the vast majority of the time the restaurant is going to try it's damndest to dispatch orders in a way that allows the driver to take multiple deliveries in one run. Even if it means letting one that's ready to go out the door sit under the heatlamps for a bit while you make and cook another that's going in the same direction. That said, your order goes from oven -> metal table with heat lamps -> insulated (or with an actual heat plate in it) delivery bag. So it should still end up getting delivered hot, even if not quite fresh.

I managed a Dominos when they started their pizza tracker[1] back in the day, and 99% of complaints were from online orders, which got quoted wildly optimistic delivery times and coupled with the following the progress tracker, gave a false sense of when to expect your order. Dominos recently updated their pizza tracker with driver GPS tracking[2] so that it works on par with the delivery apps, and I can't even imagine how many complaints come from people who are second on a driver's run and notice the driver taking off in the wrong direction from the store or taking a highly roundabout route to their house.

[1] https://www.huffpost.com/entry/dominos-pizza-tracker_b_59477...

[2] https://www.dominos.com/en/about-pizza/gps-tracker/

I think the answer is a delivery on demand service for the restaurants. So you order from the place and they have the most recent orders ready to go and the delivery person that shows up takes the ones that make sense to go together. Just like a pizza place would.

I've consistently seen orders marked Doordash that have been sitting for 30-45 minutes when I got to pick up my own food. They also have flaked several times on me-- no delivery after an hour. They seem to have a weakness dispatching drivers. The restaurants are doing their job.

What happens if the restaurant completes a Doordash order but then Doordash fails to deliver it and must issue a refund? Does that transaction still get recognized as revenue?

This is a mad dash to cash in at an IPO before vaccines get distributed and people rush back to dining in person after a year of pent up demand and their revenue falls off a cliff.

Home delivery of groceries was gaining popularity years before the pandemic, restaurant meals is just the next step.

All other platforms like UberEats and Postmates do the same thing for their "passes" and all the upcharges or else they wouldn't be profitable. Not saying it's good for consumers and users and I personally don't like it, but it has become the standard, not just DD.

Which is confusing, because the premise of these delievery services is that the advanced routing algorithms would make it cheaper to provide delivery than it had been before.

It very well might. Doesn't mean that it turns it into a long term business.

> DoorDash is just consistently a terrible experience

In New York, Caviar used to be great. The quality noticeably plummeted after DoorDash bought them. To the point that I have since deleted the app.

That's been my experience in San Francisco, as well.

FWIW Caviar is/was still my favorite app for ordering food. No major quality reduction in the SFBay from what I've noticed (aside from pandemic related issues like slightly longer delays on peek evenings). Hopefully the kinks get ironed out for ya in NY.

Why would you assume the per-item upcharge would not apply if you bought DashPass? The advertising says free delivery only, it isn't marketed as no upcharge.

I did not assume the up charge would go away. I assumed I would get free delivery as advertised, but there are additional caveats to free delivery that were not advertised.

The market doesn’t contemplate your reality and it doesn’t reflect you.

Which is to say, pointing out that it’s expensive and you’d never use it without a coupon and for that reason find the business model not sustainable does not reflect how millions of other people think about and use the service, and how the market responds.

I agree with you, which is why I commented. I believe in the value of startups and their role in disrupting business to provide old services in a better way or to provide entirely new services. However, I also want startups to facilitate virtuous cycles so that all stakeholders move forward [1].

DoorDash fulfills the former but not the latter. DoorDash's business involves 3 stakeholders: restaurants, drivers, and end customers. DoorDash hasn't done well by drivers given the tip stealing scandal. DoorDash initially benefited restaurants by expanding their addressable markets, but as DoorDash now extracts substantial commissions and any modern restaurant is required to have a presence on DoorDash, they're essentially just rent-seeking. Regarding customers, this comment thread demonstrates how controversial DoorDash is. Yes, DoorDash provides a delivery service that didn't exist before, but they're also engaging in shady business practices (e.g. claiming free delivery with DashPass, the Chicago and Philadelphia fees designed to look like government taxes rather than additional DoorDash fees, and other dark patterns). In my opinion, DoorDash's net effect on the restaurant-driver-customer relationship is negative.

I think DoorDash has found a way to make a ton of money without actually creating a net good for the restaurant-driver-customer relationship. Kudos to DoorDash for finding a way to make tons of money, but I personally can't support any company that doesn't actually create a net positive value on society. I accept that I'm in the minority here as evidenced by DoorDash's market cap, but I hope my thoughts on this at least prompt a discussion about the value and role of startups in society.

[1] https://en.wikipedia.org/wiki/Virtuous_circle_and_vicious_ci...

I'm also surprised at how doordash does as a stock, because as a customer I've lost packages, got packages in bad shape, etc. I'm a serious detractor for doordash.

I wonder what their NPS is but it can't be very high.

I used a coupon once then got an order confirmation email that didn't show the coupon. Tried disputing it to get them to apply the coupon, they refused and demanded a screenshot of the order before I clicked checkout which I obviously didn't have since I didn't expect them to scam me. I pressed further and they basically responded saying they spent more time on this issue then allowed and just offered a $5 credit for a future order. After using that I'll never order through doordash again. That $5 coupon just brought the price down to what it would be if I ordered directly from the restaurant.

Wow, everyone doesn't like doordash here.

I've personslly had no problems and they have a much better selection of resturants than the other apps in my area.

App is a bit buggy at times though

Can't wait for more reasonable platforms to take over. I'd rather have some clarity and honesty than a stack of sneaky fee and not knowing who gets paid what. I have been pretty much only doing pick up orders (from the restaurant's site) since the whole tip stealing debacle. I know that some people would like jobs in the delivery space for flexibility and extra income but it seems too dishonest of a space for me to caution. Just my feeling tho, plenty of no-car downtown life friends who order and that's their choice :).

I'm not sure I expect much to change. There's an insane amount of competition in this space, and they all seem to fall prey to the same dark patterns and mediocre execution. I'm starting to question whether any company can successfully squeeze into the already extremely tight margins that restaurants operate in without increasing the cost to the consumer in some way.

It'll probably take a crash and burn of a few big names with VCs being very careful about any new company in that space. I could see something come up that'd be bootstrapped and just slowly gain business in a big metro area before becoming a "thing". Def going to remain a low margin business though so it won't be easy to make it healthy

Weird.... I love the door dash experience... my best delivery experience by far.

I order like 2-3 times a week right now. Sure, the prices might be a little higher, but the ease of use is worth it for me. I love being able to know when the delivery person is getting near. I love being able to do one button re-ordering.

I don't see it mentioned in the comments thus far, but the Papa John's near me (Austin) appears to have farmed out its delivery completely to DoorDash.

Aside from significantly worse service (my last pizza was over 20 minutes late and barely lukewarm), they have also made zero effort to "white box" DoorDash under the Papa John's brand, which makes for a very confusing customer experience ("Hi this is John, I have your DoorDash order", "Huh? I didn't order anything from DoorDash...").

I'm also surprised that this move apparently made financial sense.

> When it’s all said and done, a basic $10 meal ends up being $20+ through DoorDash after the upcharged food items, delivery fee, service fee, and tip.

If said restaurant paid a standard of living wage that $10 meal would probably be closer to $25.

I'm not necessarily a fan of DoorDash's business practices, but I don't fault them for extracting money that restaurants have left on the table.

The biggest problem with doordash is when there's a problem with your order. They can't resolve that problem adequately, all they can do is refund an item and that's not the right solution. Someone needs a meal, and if that item is forgotten or wrong to the point where the person can't eat the meal then I still have a problem after they've given me my money back. I don't need that money, I need a meal to feed someone.

Ya sure, I can dig around in the fridge and find something for that person to eat but by not replacing that meal, Doordash makes that person feel completely unimportant. Yes, of course it would be expensive for them to dispatch another driver to bring one meal. But, that's the right thing to do. Even if I pay another delivery fee and another tip to reorder the refunded food, then I'm taking the hit for someone else's mistake.

When it goes right, it's great. When it goes wrong, it's one of the worst customer experiences you could design because nobody wins, not even DoorDash. Well, maybe they win a little bit in the short term, but not long term.

Where do you live? Here in Scottsdale, Doordash delights me with their great service. Things are tougher for their drivers in San Francisco and other dense cities where they can't easily park, then have to deal with a confusing array of call boxes to enter the buildings.

My experience with food delivery has been mostly negative. Drivers often get lost. I put very specific directions, yet only about 50% of the drivers would actually make it to my door.

The other 50% would go to a different building, a different unit in my building, or not even bother and call me from some nearby location. One guy was like "your food's here." I go outside and he's in the parking lot across the street. He didn't even get out of his car.

These days I don't bother. I order the food and pick it up myself.

Let's not forget their blatant wage theft. This is an exploitative and deceptive company that should not be a point of pride for any organisation to associate themselves with.

I am shocked at how much better DD's financials are than every other food delivery service. Was pretty skeptical because of that, but their gross margin improvement is huge and their net loss is relatively controlled.

Pre YC-Application they went through Stanford's Startup Garage. Worked out a bunch of challenges selling Macaroons to students. "Delightful Delivery" was their early tagline. The Macaroons were a delight.

I just don't get it. Who's buying this stock and why do they think that a company that is not profitable during a pandemic, with people locked in their homes and in-person dining outlawed, is going to be worth billions of dollars?

There's no loyalty in food delivery. Everybody is chasing the same promos. There's no moat. Just VC funded revenue.

We're in a bubble, every IPO is being bought, we're in the manic state, "stocks only go up" they say, people FOMO into all kinds of stocks. I think we're in the peak time of scams, grifters and conmen. Heck, even the president is one. BTC at all time valuation again. Everything is amazing in the stock market right now. But look at the food lines, look at the covid cases and deaths, unemployment. We're heading to an insolvency event.

BTC is high because BTC is in limited supply. While US govt is pouring in trillions of dollars out of thin air into the economy, BTC is seen as a safe store of value. You can’t create that much BTC out of thin air. Just like gold, BTC is a good place to store money that doesn’t lose if value. Albeit a risky one. Gold is perhaps better.

BTC is a great store of value until better tech come out then it's done.

DoorDash doesn’t intend to be a “food delivery company”. Listen to their CEO in interviews. His catch phrase is that if you solve food delivery, you solve some of the most challenging aspects of last-mile logistics.

I expect they will transition away from food and into other verticals soon.

However, they are not solving that problem. They are throwing unlimited investor money at getting food delivered by overworked underpaid poor people.

That's ... that's not a solution.

UPS famously hired mathematicians to figure out the optimal way to plan their trucks' routes [1]. Now that is a solution.

[1] https://www.wired.com/2013/06/ups-astronomical-math/ and https://www.mathscareers.org.uk/ups-turn-left/

Congrats! Totally inspiring. Curious to know what you found to be the most challenging aspect of going public to be: sec filing, on the roadshow selling yourself to institutional investors, adjusting to a quarterly wall street mindset, or pricing the listing itself? Bloomberg last night made the point that the $DASH listing was around 2x over-subscribed. Contrasted to a 200x over-subscribed offering for JD Health on HKEX!

I just can't help but see this as a turd being passed on to retail investors. Don't have high hopes. But in this market, who the hell knows.

They also created a "chicago tax" to make customers believe that it was a tax from the city when it is something entirely created by them ($1.5 per order). Just because they were asked to stop overcharging orders (sometimes 15% overcharge). Yet another dishonest and poorly functioning company. Experience has been worse with time, that and the fake restaurant pages...

They did something similar to where I live. When I found out just how much of the cost goes to them rather than the business I stopped using them. It is better to support local businesses by just ordering pick up and and tipping them directly.

IIUC you can't really tip the restaurant on doordash either just the delivery person.

I have never ate at or ordered from any restaurant where you can tip the restaurant, it is always the delivery driver / server.

> Yet another dishonest and poorly functioning company.

So, a company?

No. A dishonest company. Many companies are dishonest; perhaps most have to compromise on some smaller or larger things - but let's not forget that it's possible, if hard, to have a honest business. What we need is to beat the market into a shape in which it structurally promotes firms that have integrity.

> let's not forget that it's possible, if hard, to have a honest business.

I'm not convinced this is true in all industries. E.g. if you're a waste management company, how are you supposed to win deals on price if you have a competitors who are illegally dumping garbage into the ocean?

It's $2.00 in Denver. [d]

[d] https://www.denverpost.com/2020/12/02/doordash-delivery-fees...

I don't use food delivery services so I'm not familiar with industry but from the business point of view can somebody explain me how GrubHub being 15 years old has $1.3bn of revenue but UberEats and DoorDash being much younger have $2.5bn and $1.9bn of revenue respectively.

Because it's revenue.

If I spend $10 to acquire a customer worth $50 in revenue, my revenue is $50.

If I spend $150 to acquire a customer worth $100 in revenue, my revenue is $100.

In the second situation I have twice as much revenue. The fact that that revenue has been heavily subsidized and isn't profitable doesn't make it any less "revenue".

These on-demand delivery companies offer a useful service at an unreasonable premium to both restaurant and customer. Plenty of cities are capping their price gouging https://www.berkeleyside.com/2020/07/13/food-delivery-berkel... which may slash their bottom line.

I hope to see cities create their own delivery services at cost so restaurants aren't taking these huge hits and the $ stays within the community.

As far as the customer paying an arm and a leg for the convenience, yeah that's the market. No idea why someone wants a gourmet meal put into a box, jostled around, and served a 1/2 hour later.

Good for them to cash out now- the food delivery model is at peak right now, and the fees are starting to reach a sustainable level that is turning customers off. Customers are learning the hard way that some food doesn’t travel well, and other food just isn’t worth the high delivery fees.

It was great while it lasted but until more VC money floods in the land grab is over and it’s going to be a long, hard slug to keep a margin and keep these businesses profitable.

> “We need to make them succeed so that I can keep getting food delivered to my house.”

I love that. Bizarre to reflect on how such a ubiquitous service was novel.

It's surprising to me that the post doesn't discuss Grubhub, which I used in early 2012, while that quote is from the middle of 2013. I think Seamless was around in my area too, then. Was it just not widely available?

My getting on in years parents pretty much feel the same way. They live just outside the delivery range of every restaurant because their house is right on the border of the city. When these delivery companies started popping up it was the first time in years they got to have someone else cook for them since they have a hard time walking.

Refrigerator magnets seems like a good idea, no?

This is one of the scammiest companies to ipo in a while. They're dumping shitty stock on the public and doordash will never, ever make a profit. The way they handle tips should be illegal.

Doordash stopped doing the tipping thing over a year ago https://blog.doordash.com/working-to-strike-a-better-balance...

The problem is less about stopping doing it but the fact that such an obviously dishonest and scummy practice was allowed to be done in the first place.

Congrats to the DoorDash team! Personally I think this market has peaked, but that comes from my gut rather than some intelligent data driven analysis.

One awesome thing about DoorDash is their Delivery-as-a-Service API. It's application only, unlike Postmates, but I'm super excited DaaS in general and what it means for the future of logistics.

Shameless plug: I've developed an on-demand delivery app called getcho [1] (for anything, not just food) and am in the process of adding their fleet!

[1] https://getcho.app

The revenues will go down after covid. Unless they lobby no-vaccine.

Would be comically villainous to have humans siding with the virus against fellow humans

When people are sufficiently separated and it doesn’t affect them, people can make very poor decisions on the fate of others.

True

So many companies cashing in on IPOs this year, good for them.

I still cannot support a company that pockets tips intended for their drivers, it's pure greed.

Probably only one of the few tricks we know of. These companies running unscalable models by burning VC money like it's firewood have to somehow smooth the numbers.

A local pizza place recently decided to start using them for deliveries, whether you order on their platform or not doordash will drive it.

I stopped using doordash years ago over extremely poor quality and was extremely disappointed. I realized.. when you order local they put your pizza in those oven mit things and delivery you a fresh warm pizza.

Doordash makes zero investment in their drivers. That short 10 minute drive to my house, no oven thingy, cold pizza, slid to one side of the box ruining half of it. Thnx doordash

They stopped messing with driver tips. As for questionable business practices in general, I don't see that as any different than a hundred other questionable-but-still-legal practices, many of which cause vastly greater social and environmental harm that Doordash could ever hope to achieve.

I still question the viability of the delivery apps once the pandemic is over. In that sense, this is a great timing for their IPO. However I wouldn't buy. I am happy to lose any potential gains if I am wrong but I am way too skeptical to jump in. I really think the market for delivery is not there to the extent we see now. In fact they will have a severely depressed couple of quarters once people get the vaccine. It will take some time for it to pickup and even then I would expect the traffic to be around 50% of what it is now.

Doordash, GrubHub and Uber Eats have increased prices for delivery with no increase in value.

I used to be able to order 4 entrees from a local Indian restaurant for $50 + $20 tip.

Now this same order costs $70 with no tip. The same applies to all local delivery now.

These 3rd party vendors are sucking the profit off the top, killing small businesses and increasing costs to consumers.

I thought capitalism made things more efficient, this is rent seeking.

Another example of tech "disruption", which typically just means siphoning money from an established system and adding little in return.

The users apparently feel they are getting something in return. Otherwise why download and use the app (and pay extra for the food)?

Users get something, restaurants lose, delivery people are abused and underpaid, but the founders will be very rich.

Looking at the entire system there was very little added, there's just a lot of money being shifted to a small group of people.

At least in DoorDash's YC application, they pitched that delivery drivers wanted to make more money.

When the drivers worked for one restaurant only, they would be sitting around most of the time waiting for an order.

By delivering for many restaurants at once on DoorDash, they would be able to make more money and have less idle time.

I'd love to see data, but I can intuitively imagine this being true, and the common view of "underpaid" being a view that isn't consistent with the history of the space.

> I'd love to see data, but I can intuitively imagine this being true, and the common view of "underpaid" being a view that isn't consistent with the history of the space.

Except, you know, the history of the space is consistent with delivery drivers being consistently underpaid, cheated out of tips and hazard pay etc. etc.

With Doordash alone multiple lawsuits against it for payments alone. So far Doordash has been settling those for millions of dollars ($5 mln in California, $2.5 in Washington).

> the history of the space is consistent with delivery drivers being consistently underpaid

If that's the case, how can one say that, for all of history, they have been underpaid? What is the standard that defines underpaid? If we agree that this is an issue that DoorDash has done better on than historical alternatives, should they receive as much flak as they do?

> With Doordash alone multiple lawsuits against it for payments alone

I would never argue that DoorDash isn't acting in its own self-interest and has been quite misleading when it comes to tips, to the point where they should be losing lawsuits. When we talk about delivery people being underpaid, though, that seems directly against the initial pitch of DoorDash, and it seems to have instead fulfilled its pitch to help drivers make more money than they did previously.

> If that's the case, how can one say that, for all of history, they have been underpaid? What is the standard that defines underpaid?

Your original statement was: "the common view of "underpaid" being a view that isn't consistent with the history of the space."

And this statement is false. Now you're trying to wiggle out of this by pretending that "being underpaid" is undefined because we haven't decided the concept of paid/underpaid and other demagoguery.

1) Delivery drivers are underpaid

2) Doordash and all the rest of gig economy businesses systematically underpay and make conditions even worse because they force people into becoming external contractors with zero rights and protections, and shift many additional costs to these contractors.

> When we talk about delivery people being underpaid, though, that seems directly against the initial pitch

The pitch doesn't matter in the least. Especially if you essentially argue that "Doordash's pitch is true because the common view of "underpaid" isn't consistent with the history of the space."

1) Delivery drivers are underpaid

2) Doordash and all the rest of gig economy businesses systematically underpay people who work for them

> Your original statement was: "the common view of "underpaid" being a view that isn't consistent with the history of the space."

No wriggling. :)

To me, that statement would be backed by evidence that DoorDash allows drivers to make more than they previously made as drivers for specific restaurants.

To you, that wouldn’t satisfy the notion that they are fairly paid, because you believe they have always been underpaid.

I’m looking at “underpaid” through a lens of historical data, but you’re looking at it through a different lens, so I asked how you define underpaid.

Do you see what I mean?

> through a lens of historical data

You keep saying "historical data" as if that should make everyone node their head in agreement: "hmmm, yes, yes, you're right, historical data".

I'd love to see the "historical data" you allude to.

> but you’re looking at it through a different lens

Nope. I'm looking through the same lens: history tells us that couriers are underpaid and overworked, especially in the US. And they keep being underpaid and underworked with DoorDash and other vultures.

You pretend that DoorDash is somehow good.

I like how the drivers are always depicted as underpaid yet... they flock to the app!

If it paid more to have a minimum wage job, why are there so many drivers on the platform?

- Because the economy isn't doing that great

- There are not that many jobs to go around

- More and more companies force people into the gig economy

Drivers can easily put in consistent overtime which is harder to do at a traditional job. Removing some of the friction of overworking themselves while giving the illusion of choice.

Migrant workers consistently show up at farms too; it doesn't mean they're paid well.

The reason migrant workers pick ("pick") farms is because they legally can't work anywhere else.

Uber/DD/Postmates/... all do citizen verification checks.

That conflates undocumented workers with migrant workers when there is more like a ~50% overlap (at farms).

Drivers were so underpaid they were stealing food.

Many of the restaurants had to repackage their food in such a way that it could be sealed so that they could deny claims for theft.

That's not the sign of well-paid employees.

I mean, there's a lot of reasons they might have been stealing food. To presume it must have been because they were so poor and not because they had delicious smelling food in their car and a near-guarantee that theft wouldn't be noticed is, imo, disingenuous

To say that the only reason someone steals food is for hunger is to say that nobody has ever stolen food for any reason other than hunger. Otherwise, there would necessarily be multiple reasons to steal food. I don't think that could possibly be true.

Dude. People don't steal food if they're not hungry.

You are trying to justify THEFT.

Not IP theft. Not Copyright theft. Real, actual, physical theft.

Of someone's food. And there was so much theft that companies retooled their packaging.

Go back and contemplate on your ethics. Like ... a lot.

This is such a wildly incorrect interpretation of what I said. After re-reading my original comment I'm honestly confused as to how you arrived at the conclusion you did (that I was attempting to justify theft).

I wasn't saying they should be stealing. The only thing I was saying was that there is more than one reason to steal food. If anything, I was arguing against theft (but in the moment, I was just responding to GP).

> Dude. People don't steal food if they're not hungry.

I take it you have never worked in the food service industry.

yet all are willing participants...

> restaurants lose

I don't know if you've noticed, but we're in the middle of a pandemic and something like 85%[1] of restaurants have closed in some areas. For most restaurants, something like Doordash is the only way they're actually staying alive at this time.

[1] https://www.sfgate.com/food/article/It-s-decimated-down-here...

It's the restaurants and drivers that are losing out. Small local businesses that are eating this loss in profits.

At the moment Doordash is an elaborate scheme to funnel VC money to the restaurant/grocery business. So yes, it's good for customers and those businesses now. But their valuation implies that at some point that's going to change and they're going to start extracting ~$10 billion a year in value. It's hard to see how they're going to do that in a way that ultimately is good for customers.

You were able to get sushi, dim sum, boba, bagels, or even steaks promptly delivered in a few clicks before 2013? DoorDash is an easy example of a startup that has made my life better, especially during a pandemic.

Grubbhub, Seamless, Eat24, Foodler, DiningIn. They were all around and fairly large by then. But they didn't go big on spending VC money, so over time DoorDash wins. Pretty interesting, however it turns out.

Sorry I'm going to have to call on this.

Until on-demand delivery companies like Doordash/Postmates came onto the scene, the vast majority of places I could have ordered delivery from were the standard fare of pizza, Chinese, Indian, and Thai food within a half mile radius from my home.

What this generation unlocked was the ability to pay someone to grab you House of Prime Rib on Van Ness and deliver it halfway across the city. The value add here was "quality from halfway across the city, not just restaurants within a tiny radius who had large enough margins to afford to keep a driver on payroll".

This also resulted in what we now see as the normalization of national fast food brands having a coordinated delivery offering.

Thank you, this does well to answer the "compared to what" question--compared to a former world where these things did not exist.

I think the problem is that this achievement is unlocked mostly by subsidy. Without subsidy, many would just go back to the standard fare of pizza, Chinese, Indian, and Thai food within a half mile radius.

We will first have to wait and see whether the on-demand delivery business model will work out in a cheaper country, e.g. GrabFood in Indonesia. Even in such country, my sense is that the restaurants are still getting charged too much to cover for the subsidy given the customers, while the delivery riders are still being paid too little and have to rely on infrequent big tips.

I was able to get many things delivered for free by the restaurant pre 2015. I can’t even get pizza delivered anymore unless I want BigCo pizza, or pay doordash’s overheads.

Most of the pizza joints by me in LA are on Slice or Chownow. I'm surprised more restaurants aren't on Chownow, really, with the flat monthly fee structure and no commissions. Is it hard to get enough order volume to make that worth it?

Agreed. This is everything wrong with the tech industry. This company isn't profitable, so this IPO is effectively a way for the shareholders to offload their bad stock to the public [0]. And if that's not bad enough, the company itself is using dubious tactics [1] which in the short run appeal to customers but in the long run may drive many restaurants out of business [2].

[0] https://www.forbes.com/sites/greatspeculations/2020/12/08/do...

[1] https://www.saddlebackbbq.com/how-google-doordash-grubhub-co...

[2] https://laist.com/2020/08/10/why_so_many_restaurants_hate_fo...

What I just can't understand about companies like DoorDash, Uber Eats etc. is that it seems to be a lose-lose-lose proposition. It's more expensive for the consumer with restaurants often raising prices and delivery fees etc; the restaurants make less money per order; and the delivery drivers are often making less than minimum wage and rapidly depreciating their cars. And on top of that, these companies themselves are mostly unprofitable!

So who is benefiting here? Where is the true value for society being created? Yes I can get any restaurant meal delivered to my home in 30-45 min, but is that one small benefit really enough to sustain a $60bn market cap?

Dash-видание, doordash.

So how's their business model different from Deliveroo/Just Eat?

Raise money, buy competition, raise fees?

I've never used the service. Probably not available where I live. Judging by the complaints here it looks like they could improve on some aspects of the operation. To add to that I've incredulous responses to their valuation. All I can say that what they have achieved is very impressive. Regardless of how it pans out from here.

Why does anyone want cold food delivered by a rando? I never understood to value proposition because I never got the value proposition of delivered food, outside of coldcut sandwiches and pizzas, especially once you stop being 18 living in a dorm. To each his own, I guess.

I've ordered DoorDash a lot this year (pandemic and all) and the food has literally not been cold once.

Yeah I've easily spent 10k this year on delivery, not once.

How is that even possible? You would have to order every single meal you eat...

250 deliveries of about $40 each for my wife and I. We order almost every day, sometimes twice a day (lunch and dinner). We are well off and lazy.

Reply on news.ycombinator.com