DoorDash (YC S13) Raises $17.3 Million From Sequoia To Expand On-Demand Delivery

http://techcrunch.com/2014/05/22/doordash-17-3m-sequoia/

by stanleytang • 12 years ago

76 27 12 years ago

Congrats, guys!

brryant• 12 years ago

Congrats guys! Was excited about this company from day 1. A great founding team and an amazing service. Now go take out FedEx!

arbuge• 12 years ago

Something tells me their plan could be for Fedex to take them out instead...

Nimi3• 12 years ago

Good luck!

Would you mind elaborating on that defensibility claim ("if you look at any of these local businesses, whether they’re Yelp, or Grubhub, or whatever… once they’re built, they’re defensible")?

Why wouldn't this be a race to the bottom where "courier as a service" companies will be lowering prices until competition has eroded profits completely?

(just to be sure, to clarify: I'm genuinely asking out of curiosity - I'm sure if you have both YC and Sequoia backing you, you have some excellent answers for this question)

cft• 12 years ago

Yelp is a "pure play" company that does not involve a real physical component. So are AirBnB and Uber/Lyft: they merely annotate the psychical world. Delivery and shipping is a whole another matter.

What I found interesting is how Sequoia degenerated from funding AMD/silicon to funding food delivery and calling it "tech".

Nimi3• 12 years ago

One could argue that Yelp, AirBnB and Uber all fall into the "marketplace" category of defensibility rationale. At first glance, this doesn't seem (to me) to apply to delivery, as restaurants can always opt-out and build their own delivery operation. This is also a significant source of cost for them, so unlike Uber, where users might be willing to pay a few dollars more for a slick experience, they will likely try to skimp on costs.

2pasc2• 12 years ago

Sequoia, like all VCs, is funding startups, and startups are defined by growth.

If these guys are growing at such a speed that they are selling $10M worth of food in 10 months, they are growing freaking fast.

troymc• 12 years ago

Uber wants to expand into logistics.

"The new service [UberRUSH] signals the company's expansion beyond local transportation and into the much larger world of urban logistics. And it's a savvy play for several reasons: The same back-end technology that Uber has built to track drivers and connect them to riders can easily be used to order and follow deliveries."

http://www.washingtonpost.com/blogs/wonkblog/wp/2014/04/08/w...

tpeng• 12 years ago

Businesses in local have two-sided network effects. The most famous two-sided network effect is eBay, where the buyers attract the sellers and the sellers attract the buyers. Here you have local businesses and consumers as the two sides. Ideally, you would have long-term, exclusive relationships with the local businesses and offer some loyalty rewards to the consumers.

There are also some interesting scale economics unique to logistics. It doesn't cost much more to deliver to two houses on the same street vs. one house. So as the density of your userbase goes up, your cost per delivery drops. That being said, scale advantages of local delivery do not approach the scale advantages of a wider network like UPS/FedEx. If delivery were the only aspect of the business, I agree that it would be very competitive

Although I do believe local delivery companies are defensible, they are not necessarily a winner-take-all business in every market like eBay or craigslist. Multiple delivery companies can coexist in a local market, each serving a distinct set of restaurants

Nimi3• 12 years ago

So if I understand correctly, the plan is eventually to become the "marketplace for food"? We have one here in the high-tech sector around Tel-Aviv (mainly for lunches), this is indeed very defensible. You might be interested to know they apparently built their customer base by saving the employers the hassle of accounting for the lunches for tax purposes - the employer is simply informed of a sum at the end of each month and that's it; they also have a way to limit the expenditure of employees to something reasonable each month.

BTW, this marketplace take wasn't the impression I got from the TC article.

aelaguiz• 12 years ago

Congrats guys!

rdoherty2• 12 years ago

I've used DoorDash 3 times in the past few months and they always underpromise and overdeliver. Emails and texts are sent at each stage of the delivery (order, pickup, en-route, driver is 5 mins away), they always beat their estimates and the drivers are very friendly.

The logistics for ensuring food arrives hot when you don't have any control over the cooking process and timing is hard, but they always managed to do it. I'm impressed.

ar7hur• 12 years ago

Congrats to the team!

I respect what you've done so far, but I can't help wondering how investors can base their analysis on an experiment restricted to Palo Alto, Mountain View and San Jose. From what I see, the bulk of orders (in $) are from fellow startups ordering lunch and dinners. Where else is the world (except SF and maybe NYC) do so many companies, in such a small geography, order so much food from restaurants?

I'm not saying it's not a good business. I'm wondering if there is really room for growth (a growth big enough to justify the huge series A valuation) outside of very specific geographies.

jconley• 12 years ago

Well, you are talking about over a million people in that area. I'd say that's a reasonable sample size. Also, not sure we know who their clientele are. We use doordash for the office, but I also use it at home. Because of their level of service it has also become a destination site, where I go to see what they offer first rather than choosing the restaurant I want first. I imagine I am not alone.

untog• 12 years ago

Well, look at Seamless. It's quite possible to just have a business that focuses on these major metro areas.

That said, I'd still be dubious of a company that only operates in California. Markets like Chicago and NYC are quite different.

jvrossb• 12 years ago

Some college towns will have a high density of students ordering food from restaurants.

trounce• 12 years ago

Based on the heatmaps, it looks like the customer base is highly concentrated amongst apartment dwellers and students.

Having said that, we live in a house in Palo Alto and my wife is a big fan, to avoid cooking or eating out with small children :-)

ajju• 12 years ago

Impressive. Does each restaurant have a DoorDash tablet, or do the orders get transmitted via phone/fax?

rayiner• 12 years ago

I don't get this. How often do people order-in from places that don't deliver? Is this a Bay-area phenomenon? Or is this more of a replacement for the restaurant owner's teenager?

rdoherty2• 12 years ago

There's a lot of great restaurants that don't deliver in the Bay Area (and probably elsewhere). With most startups offering catered lunches and dinners there's a strong demand for delivery of food better than pizza.

paul• 12 years ago

So exciting! This is actually a surprisingly difficult business because of the need to be so fast and efficient, and there was a lot of skepticism early on as to whether there was actually a viable business in this space. The DoorDash team has done a great job of proving the model and creating a playbook for scaling and expanding the business. They are one of the startups that I most often refer to when advising new YC companies.

Also they feed me! (that was one of the key questions I asked during interviews: "Will you deliver to my house?" They answered correctly! :)

_sentient• 12 years ago

You wouldn't have a lawn, perchance? ;)

iandanforth• 12 years ago

I've never seen a restaurant post a menu on its website with different prices than what you would find in person, however this is exactly the business model of DoorDash. My question is, why don't restaurants do this? Is it illegal? Out of laziness? A tacit custom? Genuinely curious about this.

jgoldsmith• 12 years ago

(I work at DoorDash)

For restaurants that we haven't yet partnered with, we have a slightly increased price in order to pay for the cost of delivery. However, many of our restaurants pay this fee as a commission, and the price on our website is the same as at the restaurant.

We try to be very upfront about this price difference for our customers. For more info, see https://www.doordash.com/faq/#question4.

balls187• 12 years ago

What makes DoorDash different than all the other Delivery startups out there?

GregorStocks• 12 years ago

Based on the article, the fact that their customers love them. Of course, it's not hard to have customers that love you at the early money-hemorrhaging stage - the tough bit is continuing to be loved once you're turning a profit.

DoorDash (YC S13) Raises $17.3 Million From Sequoia To Expand On-Demand Delivery

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