DoorDash Raises $40M, Led by Kleiner Perkins Caufield and Byers | Hacker News Reader

DoorDash Raises $40M, Led by Kleiner Perkins Caufield and Byers

blog.doordash.com

60 pointsstanleytang46 comments

My wife and I used DoorDash pretty extensively when we first moved to the bay area, we were living out of a hotel for a few weeks.

It was interesting how our reactions to the site differed. I was just happy to have a one-stop list of delivery restaurants with no phone calls, no complicated payment info, etc.

Her reaction was "There's no pictures! I just want someone to tell me what I want to eat!"

Now, whenever I go to their homepage I see a huge missed opportunity to sell advertising. As sites like DoorDash become well-known hubs for the logistics services they provide, I wonder if they will take advantage of the huge set of eyeballs landing on their homepage with open wallets. And for a restaurant, a well-done DoorDash campaign could be more effective than Facebook/TV/radio marketing.

I do see myself stuck with a bit of a paralysis of choice when I land on their homepage. Sure, there's 50 restaurants near me that I can order from, but all I really know is that I'm hungry right now. Some help choosing would be nice.

"I just want someone to tell me what I want to eat!"

"Sure, there's 50 restaurants near me that I can order from, but all I really know is that I'm hungry right now. Some help choosing would be nice."

We just linked to your comment on our YC application because we're solving this exact problem. Contact me (see profile) if you're interested in being part of the private beta.

In Palo Alto, there are DoorDash workers EVERYWHERE. Literally every restaurant you go into you see a bunch of people in red shirts picking up meals. I'm curious how this will do in other parts of the country.

Wow what a crowded space. This reminds me of the daily deals site era, but at least then there was some room to compete because there wasn't a $40 billion behemoth waiting to crush them. I suspect that at whatever point Uber Logistics (or whatever they choose to call this inevitable extension of their service) takes flight, DoorDash and its $40 million will quickly vanish. This definitely isn't a space I would be doing a startup or investing in at this point.

I share your opinion, but I would have passed on a Twitter seed round so what do I know.

What would really be interesting is to understand why so many smart and experienced people have the exact opposite opinion.

The only reason that Twitter is successful is because it was embraced by celebrities very early. I would have passed at the seed round stage as well, but that's because no one could have predicted the celebrity embrace of such a service. The reality is that they, along with most other startups, got seed funding not because of the idea but because of the pedigree of the founders.

I suspect there is some of that going on here as well. They are all current/former Stanford students and have been involved in successful companies. According to Crunchbase:

DoorDash was founded by four Stanford students: Evan Charles Moore worked on the founding team of Vevo; Tony Xu was at Square and Red Laser/eBay; and Andy Fang and Stanley Tang spent a summer together at Facebook. Moore and Xu were friends in Stanford's business school, and Fang and Tang are undergrads.

Same deal with Larry and Sergey, Mark Zuckerberg, Evan Spiegel, and most others. They weren't merely college students; they were Ivy League students. As much as people say college doesn't matter anymore, the evidence says otherwise. We'll probably never know if entrepreneurs from lower-tier and public universities can succeed at an equal rate, because they won't be given the funding to try.

Celebrities didn't embrace twitter for three years after it was launched. That counts as "very early"?

That must be why they didn't really grow until about 3 years after they were founded:

http://static1.businessinsider.com/~~/f?id=4abbcbef60b187740...

And yes, it was "very early" in their growth cycle. In fact celebrity embrace was the catalyst for their growth. No Ashton Kutcher = no Twitter today.

'eh. I think cause and effect are pretty hard to untangle here. Mostly I think you're wrong. But I'll admit that it's hard to bring real evidence to the table. There were a billion tweets before Ashton though and the celebs showed up because there was an audience to be had.

I can see your point of view though.

Many things look similar from a 1000 miles away. At the actual business level, Uber and DoorDash are different in almost every way. This is one advantage that investors close to these companies have, and one reason why it can be so hard to understand any of this just by reading blog posts. DoorDash has a great business, in many ways better than Uber's.

Whether carrying passengers or food, they are both in the delivery business. The primary difference is that one is worth $40 billion and one is not. Doordash may have some restaurant relationships that Uber doesn't, but that is ground that can be quickly made up with money. These VC's are merely hedging their bets with this investment.

In that case you should assume that FedEx will put them all out of business. There's a lot more going on than "delivery".

I wouldn't assume that. Fedex has many constraints on its business, and shares almost no core competencies with DoorDash or Uber. Its fleet consists not of nimble passenger cars, but of large, fuel guzzling trucks - making one-to-one pickups and deliveries inefficient and unprofitable. It also has no expertise in the area of recruiting independent contractors to perform work for it, which is one of the core competencies of both DoorDash and Uber.

I wouldn't turn to DoorDash to deliver live lobsters to me from Maine overnight, and I wouldn't turn to Fedex to get me food from down the street. Those are very different businesses requiring very different infrastructures. Therein lies the problem for DoorDash: they are not that different from Uber. They have similar core competencies, but Uber is vastly better known and financed.

Time will tell :)

didn't all the Fedex drivers start out as contractors, until a court case ruled that they are actually employees? Time will tell if this will happen to DoorDash and Uber.

I feel like your post highlights one of the glaring problems with the SV/SFBA echo chamber.

Uber, DoorDash, whatever, they're services glued together with server-side logic and mobile apps.

Fedex, UPS, and I'll even lump Amazon in there. These are logistics powerhouses. Their physical world equipment isn't a liability, its their advantage. Fedex and UPS have knowledge on how to manage a fleet of hundreds of aircraft, thousands of long-haul tractor trailers, tens of thousands of local delivery trucks, and hundreds of thousands of employees.

Your app does not have that. You have users. You have VC money. And while you might think you're more agile than logistics dinosaurs, they have the upper hand. Good luck.

> DoorDash has a great business, in many ways better than Uber's.

Have you considered what happens to that business if DoorDash is forced to reclassify its workers as employees? A delivery business is particularly sensitive to classification because of all the expenses that drivers incur, namely those associated with the use of their vehicles.

Do a Google search for "delivery driver class action" and look at the Glassdoor reviews for some of the companies in the space, this one included. Instacart has already been sued and it's only a matter of time before all of the major players are forced to defend their models in court too. You don't just get a free pass because you build an app, raise a bunch of money from VCs on Sand Hill Road and try to position a basic delivery service as a technology-based communication platform.

Few startups die because someone else stepped in. Most of the time they die by their own mistakes.

It's disappointing to see that the biggest "disruption" in the logistics space involves shifting risk further down the economic hierarchy. The most difficult part of last-mile logistics has been capacity planning, both human and infrastructure. And yet, much of this risk is now being pushed down to the entities least capable of absorbing it - what is the opportunity cost of being "available" as a DoorDash driver for a given shift with non-guaranteed compensation?

The message that is emerging loudly from the SV VC community is that they believe this model is one that should be pursued, aggressively. Let's be clear that in terms of labor and risk management, this is not innovation, it is a return to the status quo of a century ago - one that we as a society fought hard to change.

I fear that the plan is to just fight the legal and PR battles, and hope that the robots arrive fast enough and make the situation moot (aka the Foxconn gambit).

I've talked to the drivers for a lot of different services, and they seem to enjoy the work. In particular, these on-demand services offer a lot more flexibility than traditional jobs where you are expected to show up every day and sit in a chair for 8 hours.

Traditional jobs guarantee a wage for those 8 hours. Most on-demand services guarantee nothing. I'm glad DoorDash at least guarantees an hourly wage in some markets.

My brother-in-law quit a traditional job to drive for Uber, so he must think it's better. (also, he told me that for the first time, he's excited to work in the morning) It's a pretty competitive market -- if a service doesn't provide enough work, they won't be able to retain drivers (plus many people drive for multiple services, especially Uber/Lyft drivers).

How long has he been doing it?

This is a case where money and happiness aren't really correlated. Remember, people get addicted to variable reward schedules, and get bored of fixed reward schedules. Want someone to be more excited to go to work? Flip a coin to determine whether they get paid each day!

This is also why games put random drops in your grindable content.

And why despite the satiric premise behind http://progressquest.com/ it is weirdly addicting.

It isn't new.

Look up how the Leapforce/Lions Bridge raters who indirectly work for Google have inconsistent/unguaranteed work as independent contractors. When those programs started, the pay was near $20, as time has gone on, the output demands have increased and the hourly pay has decreased to ~$13 the last I heard.

Why not squeeze the IC's? They aren't represented and typically have no recourse besides quitting, to be replaced by another IC at possibly even lower pay. It just seems like a race to the bottom, with the primary victim being the most vulnerable parties to begin with.

On the bright side, you can "work for" dozens of on-demand services at once, and take work as you like.

You reduce your opportunity costs by multiplying your availability (do Lyft and Uber for example).

You can't work 40 hours a week for 5 different companies, but you can be available to 5 different "sharing economy" companies at once.

app idea: manage all of your service economy employee interfaces through one interface.

hell, this probably already exists.

if it doesn't it will.

To be clear, there's another innovation here that you're not mentioning. The number of restaurants from which I can get food delivered to my doorstep is greatly increasing.

If we're going to critique the value of a service, we might as well include the benefit to consumers.

You're right in that these new labor markets, while they remove friction for entities in need of labor, potentially reduce the relative demand for a full time worker.

On the other hand, I would have loved this labor market as a college and university student.

The sad part is that we have an economy where mature adults are in jobs a highschooler could accomplish. No experience or skills necessary. It should not be that way, ideally, but that's how it is.

> The sad part is that we have an economy where mature adults are in jobs a highschooler could accomplish. No experience or skills necessary. It should not be that way, ideally, but that's how it is.

As we continue to automate jobs away, the number of jobs everyone competes for is reduced (yes, yes, some new jobs will be created. How many employees did Whatsapp have?).

What do we do when those with a Bachelor's can't find a job? A Masters?

End game: Automation will continue to eat its way up the chain; we either figure it out with taxes, basic income, or some other form of redistribution, or you hope your robotic army stops mobs with pitchforks.

I'm seeing the same endgame. How long it will take to get there i don't know. And how we deal with that future reality you alude to where there are only a few with actual work with concentrated power and a sea of people without jobs and even less power, is unknown. To be sure maybe we'll find a way to avoid this weird dystopia. Going back to the land, certainly is not a solution. Not with this population.

Interesting times ahead for humanity, that's for sure.

I'm scratching my head on this. The service has been terrible so far. Whether it's getting lost because Google Maps misdirected them, or delivering cold food because they don't have insulated boxes, every delivery I've had has problems. In their defense I get a discount every time, but I've stopped using them as a result.

Is it the scheduling software or sub-contracting system that makes them so valuable?

It's interesting to see investors continue to pour lots of money into startups that classify their workers as independent contractors even though the risks of doing so are clear, immediate and growing[1][2]. The lines between employee and independent contractor are somewhat blurred in some cases, but given how important the cost shifting is to the economic viability of many of these companies, a lot of these investments are damn near binary. That's fine when you're investing a few hundred thousand or even a few million but not at all necessary in today's market when you're investing $40 million.

In this case, it's also somewhat ironic that Kleiner Perkins is the lead investor.

[1] http://www.latimes.com/business/technology/la-fi-tn-uber-lyf...

[2] http://time.com/3748438/instacart-lawsuit/

Yup. The new bus service in SF - http://rideleap.com - classifies the bus drivers as independents. From their ToS (excuse the all caps) https://app.leaptransit.com/webterms - LEAP DOES NOT PROVIDE TRANSPORTATION SERVICES, AND LEAP IS NOT A TRANSPORTATION CARRIER. IT IS UP TO THE DRIVER OR VEHICLE OPERATOR TO OFFER TRANSPORTATION SERVICES WHICH MAY BE ARRANGED THROUGH USE OF THE SERVICES

Hilarious. That's like United saying, "We aren't an airline. It's up to the pilot to offer a flight which may be arranged through united.com."

Surprised not to see a mention of Postmates here. At least in San Francisco I'd consider Postmates to be the front runner for door-to-door delivery services, followed by Door Dash (sort of an Uber v. Lyft dynamic).

I am not a frequent customer of either but I actually do occasional bike deliveries for Postmates (about 5 deliveries a week, on the weekends). Postmates has insane demand, whenever I sign on the deliver my phone is practically exploding with orders, even when they turn on 'blitz' pricing (and it's not cheap to begin with). The product seems simple but I am very impressed with Postmates' logistics.

Postmates basically has a comprehensive listing of not only all the places to buy things in the city (mostly food but not only) but they know the full menu, item by item pricing, if they accept cash/credit, open hours etc. So you can place highly specific orders. Postmates gives each courier a credit card which they load with about how much money you will need for a given delivery on demand so you can pick up an iMac or a burrito through the same process. They also have a 24/7 customer and courier support network. So if I get a flat tire on my way to deliver a sandwich they can actually try to get another Postmate courier nearby to come finish the delivery.

And recently Postmates has started working closely with some restaurants to provide "turbo" jobs, where the restaurant knows the order is for postmates, provides postmates with an ETA for when it will be ready, which means I can get an order saying "Go to XXX restaurant, the sandwich is already prepared and paid for" and pick it up and go. This enables me to get food to most customers about 30-40m after they order it from anywhere in town.

Anyway those are just some things that came to mind. There is a lot more to it (scheduled shifts, tipping, etc). It all goes to show how interesting these seemingly simple ideas are from the inside.

My favorite part of DoorDash is how they got the tipping right. Add it upfront and then they just quickly drop off the food. Munchery is awkward because you're never sure if the person that ordered it included the tip and the driver is hanging around awkwardly making small talk.

Munchery is upfront in app too.

I use doordash quite often. Their delivery process is excellent and if you get two meals out of a delivery of one meal (the portions at most places are pretty large) the costs are comparable to eating out.

I'm glad to see they've received more funding. In the south bay at least, doordash far exceeds the competition for the variety of restaurants they offer.

The startup class talk by one of the founders was also quite good.

im just waiting for the promo codes that follow these funding rounds

What's the key differentiator from Grubhub/Seamless, or is it simply a direct competitor?

Waiter.com is pissed

I always download stupid SF apps to do my part to throw off the numbers ;)

Reply on news.ycombinator.com