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DoorDash raises $535M, now valued at $1.4B

107 points by smaili 9y ago

Gasparila 9y ago
Wow that's a lot of dilution for a late stage round. I feel bad for the employees that suddenly have their equity cut by 60%. If I'm doing my math right, ($865 MM pre-money) then it means even with the higher valuation preferred price goes down
- LethargicStud 9y ago
  Do you mind sharing the math? Isn't impossible to know how much the equity is cut by because we don't know how much dilution there was (vs. liquidation)?
- amitutk 9y ago
  Most likely earlier share holders sold their stakes, so not much dilution. Perhaps founders took money off the table too. In these cases, there is not much dilution because new shares are not issued (but not much capitalization either).
  - wskinner 9y ago
    It's hard to infer much from this article since it lacks all relevant detail. If the earlier share holders are selling common stock, it's not clear how that affects the preferred price.
  - not_that_noob 9y ago
    That's right, but it is usually minimal. This is a very dilutive round. But they need the cash, as the general MO is to try and drive competition out of business by pushing prices down. So not much of a choice here.
- wskinner 9y ago
  Correct me if I'm wrong, but couldn't the preferred price stay flat, even with dilution? The company issues new shares and sells them at e.g. the current preferred price. Now there are more outstanding shares, and a higher post-money valuation, but a close to flat pre-money valuation. In this case the preferred price in real percentage of the company terms is higher since there are now more shares outstanding, but the price per share is flat. I imagine the 409a (common stock price went down), but I don't think you can infer from this that the preferred price went down. The missing figure is how many shares were issued.
  - cgb223 9y ago
    Is there like a good blog post out there that can explain the difference between preferred and common stock, dilution, and all the other nuanced things about equity?
  - jtmcmc 9y ago
    yeah but all the employees probably have common stock not preferred so they are in fact getting screwed.
- jartelt 9y ago
  Some reports put the post-money valuation after the Series C at $700M. For this round, the pre-money is reported to be $865M and post-money is $1.4B. If I had a 1% stake in DoorDash after the Series C, it was worth $7M ($700M * 1%). Assuming all the Series D round was new shares issued (we don't know the details), my stake in DoorDash would be diluted from 1% to 0.62% after the Series D (1% * $865M/$1.4B). However, the value of my stake would have grown from $7M to $8.68M (0.62% * $1.4B) because the valuation went up. This obviously ignores things like value of preferred vs common stock. But, it is not straightforward to say everyone's stakes were diluted by 60% and it's bad. They were diluted, but the value of their holdings theoretically went up.
  - spookthesunset 9y ago
    This is something a lot of the "all dilution is bad" commenters don't seem to understand. Dilution isn't automatically bad. What matters is the total dollar value of your stake in the company. Did it go up or down? What percentage of the pie you hold isn't really relevant.
    - hkmurakami 9y ago
      The main takeaway imo is that door dash did not have the metrics to command a favorable valuation. The funding terms inform us of the immediate prospects of the company.
Mitchhhs 9y ago
"Xu said the company became “contribution margin positive” in the last year, which means that it’s profitable on a per-order basis. In fact, DoorDash has become profitable in its earliest markets." Its funny this is a milestone for a company at this stage. Congrats you aren't losing money on every order!
- notyourday 9y ago
  Creative accounting at its finest. Company is either GAAP profitable, pro-forma profitable, EBITDA profitable, cashflow profitable, cashflow neutral or money losing. All other metrics are creative accounting that put lipstick on a pig masking money losing status. DoorDash is money losing.
  - bfrog 9y ago
    Which is amusing given they don't have to pay the actual labor to deliver goods or make food. Are they set up in the valley paying mega wages perhaps?
    - ac29 9y ago
      Not sure why you think they don't pay their drivers. The exact amount is unclear, but according to this FAQ [0], it is "at least $1" per order, and at least a variable "guaranteed amount" that door dash will pay up to, regardless of customer tips. [0] https://dasherhelp.doordash.com/new-dasher-pay-model-faq https://dasherhelp.doordash.com/new-dasher-pay-model-faq
- thesimon 9y ago
  >> became “contribution margin positive” in the last year, which means that it’s profitable on a per-order basis. >Congrats you aren't losing money on every order! Seems like an overstatement as fixed costs are still not covered when they are "contribution marigin positve".
  - apendleton 9y ago
Pigo 9y ago
This is purely anecdotal, but I've never had a good experience with this service. But I have some friends that are so lazy they don't care if it takes 2 hours for the food to arrive, so that works in their favor.
tootie 9y ago
Food delivery has officially become a very frothy market. Is GrubHub/Seamless actually vulnerable? They seemed to be the 800 lb gorilla of the market. And based on my observation, the competition seems to be private labelled delivery service.
- bfrog 9y ago
  They're all pretty much mediocre. GrubHub especially I avoid after having several orders simply disappear without warning. Waiting an hour only to check by calling up the place and finding out they never got the order is frustrating. Twice and I was done, I just call now for delivery.
- danvayn 9y ago
  Just my personal experience but Grubhub has kind of declined a bit while DoorDash has become more useful. The most popular restaurant in my town has appeared to partner with DoorDash -- I can no longer order from them through doordash but if I do it through their restaurant website I get a delivery with a receipt from DoorDash. I can't order it anywhere else. So maybe you're right about the private delivery service.
- deleted 9y ago
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simonbw 9y ago
I'm surprised I've never heard of them before. Are they doing the same thing as Uber Eats, Postmates, Eat24, GrubHub, Amazon Restaurants, etc? That seems like a really tough market to succeed in. How is so much money being funneled into it?
- eridius 9y ago
  DoorDash is literally a Postmates clone.
martin_bech 9y ago
If you are "Per order profitable", why do you need 535M USD? I dont get valley valuations/Metrics..
- thesimon 9y ago
  Because you need money to cover fixed costs.
  - martin_bech 9y ago
    But if you need 535M USD to effectively deliver pizzas... I think you are doing it wrong. Specially if you make money on every order.
- ProAm 9y ago
  "Per order profitable" is a made up term by DoorDash to lure unknowing investors. They are still not profitable.
- ac29 9y ago
  This could be early investors/founders/employees taking the opportunity to sell equity. Its possible that DoorDash itself is getting little or nothing from this deal.
  - martin_bech 9y ago
    That would be a hardsell for an investor. I put in 535M USD, and nothing goes towards making the company grow, everything goes towards payouts?
- rkho 9y ago
  It could be Softbank forcing it -- they're known to overfund a round as a take-it-or-we'll-go-to-your-competitor tactic.
i0exception 9y ago
I really hope they use some of this money to better screen dashers and improve customer support. We used to order lunch on Doordash once a week till things got so bad that we decided never to use Doordash again. Orders would regularly have missing or incorrect items. Some dashers would leave the food in the lobby, text me, and leave. Delivery was hardly ever on time and there was no way to get in touch with a human on customer care except through some unlisted numbers. We've switched to Caviar(https://www.trycaviar.com https://www.trycaviar.com) since and have no complaints.
nextstepguy 9y ago
I swore not to use doordash anymore after a few bad experiences even if after placing a complain for each occurence I got $10 off the next order (resetting the fee and the tip.) Beside some of their fees are high. Mind you, I would still use them if the service was great. From incomplete orders to bad CS to cold food on arrival to even missing the basics of delivering location, I can't believe this is getting popular.
concernedctzn 9y ago
I won't use them after I tried one of their 'free delivery' codes and then the next time I went to place the same order it came out to the exact same price with delivery included, they seemed to have increased the price of the food to cover it the previous time.
- pavanred 9y ago
  The problem I have with doordash is that though they say the delivery fee is $x, there are a lot of hidden charges. You are actually paying a lot more than that, a markup on food items + a delivery fee + 8% service fee + taxes + 15% tip (optional but selected by default) + a small order fee (if your order is less than a predefined min order value) For instance, there's a a particular dish served at a local restaurant that I like, and I recently noticed that it is $11.99 at the restaurant but in doordash it's priced $13.99, delivery fee of $4.99, service fees of $1.88 and optional but pre-selected tip of $3.81. And, of course taxes in addition to this. At this point in some cases, its perhaps more economical to take an uber/lyft to the restaurant and back.
  - afterburner 9y ago
    Agreed, their fees are annoying. The website also always glitches for me the first time I press the final order button. It looks nice but it's making me look at other similar companies more these days. I enjoyed the early days with no fees and no glitches.
  - ac29 9y ago
    DoorDash doesn't mark up menu prices any more, at least in my market. Supposedly restaurants didnt like the hidden markup, so they moved all of their fees into the delivery fee and the service fee. Its not terribly fair to consider taxes and tip as "hidden charges", IMO. The taxes you pay even if you go to the restaurant yourself, and the tip is the majority of what the drivers get paid -- they dont work for free. I'd prefer a flat driver's fee, though, its not twice as much work for someone to deliver $50 of food vs $25, so I generally don't make large orders on DoorDash.
mooreds 9y ago
My guess is they're raising to follow the path of deliveroo: https://techcrunch.com/2017/09/24/deliveroo-raises-385m/ https://techcrunch.com/2017/09/24/deliveroo-raises-385m/ which is opening kitchens to allow restaurants to increase production (and, who knows, maybe create a few brands of their own). Ah, middlemen. There's always a peril in letting someone else own your customer.
traviswingo 9y ago
Unfortunately I no longer use DoorDash. The concept was amazing, but I’ve had one too many questionable people deliver my food that the last time it happened I didn’t even eat it. I’m a huge fan of the “1 million jobs” type of companies like this, but there’s a level of trust that comes with allowing someone to handle the food you eat. I’m not even a judgemental individual, and I hate people that are, but I shouldn’t feel uncomfortable about my food delivery. I now go get my own food. Oh well.
- Dirlewanger 9y ago
  When one hires everyone under the sun as a contractor, it's bound to attract society's ne'er-do-wells.
- ggg9990 9y ago
  My mom never used to let us order pizza delivery because she didn’t want a pizza delivery guy to know who we were and where we lived. Remember going out to the pizza shop in 5 degree F weather with my dad.
  - dexterdog 9y ago
    I'm well into my 40s with numerous kids and I still drive to the pizza place to pickup whenever I order. I never understood delivery unless there is some urgent need to stay home.
    - tudelo 9y ago
      It's Sunday. You're extremely hungover. Chinese food sounds great. What's not to understand about ordering delivery? Ultimately it boils down to convenience.
    - ghaff 9y ago
      I don't have any of this available where I live. But there are definitely times when I'd be willing to pay for something to be delivered rather than having to hop in my car and drive 10 minutes or whatever to pick something up.
tyingq 9y ago
Doordash is a tire fire. 10x worse than Uber Eats for basic service. My experience is less than 50% success at delivering what I ordered. Missing items, wrong items, wrong totals, completely failed deliveries, and non-equitable compensation. Then, shit follow up when they fail. I’ll savor in more than a little Shadenfreud when they fold.
- tyingq 9y ago
  Downvote at will. But be brave enough to offer some counterpoint. They truly suck at delivering on their promise. That includes direct comparison to their competitors.
  - tyingq 9y ago
    Lol, cowards. I ordered 15x times in a row. This isn't an isolated incident. They suck, badly. Less than 50/50, on basics in DFW. Put up, or shut up. You're terrible in Dallas/Fort Worth right r ,,,N
- dmode 9y ago
  I have ordered with Doordash 10-15 times. It failed me only once when the "dasher" delivered my food to a random neighbor (who actually ate all of it)
  - tyingq 9y ago
    Guess it's a regional issue then. Upvoted. Dfw is honestly terrible. Less than 50/50. I'd be embarrassed.
- thoughtpalette 9y ago
  Anecdotal but I've only had one issue (not delivered) on 50+ orders here in Chicago. Their customer service was quick and made sure the delivery was expedited, only received it 40 minutes late. They are also one of the only on-demand providers to serve a lot of common fast food in my area, which is handy when I'm feeling non-healthy food.
thisisit 9y ago
I haven't used DoorDash but my experience with food delivery services has been average. As a bachelor I loved them until I found out these companies use multiple ways to add up charges. Most of the time restaurant cost in-shop vs cost app varies a lot. Then they charge some kind of "packing charges". Including delivery fee some times the delivery price is 25% more than restaurant prices. When I talked to some of the restaurants, they said these guys can take up to 30% of the food cost. It means DoorDash et al, can take up to 50% of an order. So, I find it surprising that these guys still struggle to become profitable. I also think that this whole phenomena might actually end up pushing restaurant prices up to the detriment of consumers.
- Spivak 9y ago
  YMMV but I haven't noticed any change from places that list on delivery services. The local places around here typically just inflate their prices in the app to cover the delivery cut and then push customers to order directly with coupons, or takeout deals. You could be right and it might not last forever, but independent customer acquisition has a tangible value and I'll be basking in the 35c wings because I'm okay with calling in my order for as long as possible.
- bduerst 9y ago
  Same here. On top of that, the delivery itself can be pretty sub par. I had one delivery person not understand the concept of entering in a code on a keypad to get into an apartment building. Not having difficulties entering the code, mind you, but not knowing what the keypad was even for.
  - gfosco 9y ago
    Postmates delivery folks never ever read the delivery instructions, I have to send them all the callbox code via the app when they are close, and 25% of them still call and have no idea what to do. DoorDash folks at least read the instructions..
- jackmodern 9y ago
  every time I order from food dash I overpay and the food is cold. won't order from them ever again.
partycoder 9y ago
Doordash has frequent system-wide outages. https://twitter.com/DoorDash_Help https://twitter.com/DoorDash_Help During their outages your items will never arrive, your order may still appear as active and customer support may handle your case in 48 hours. Plus, their outage messages are misleading. On the other hand, Amazon almost never has outages, you can live chat with support at any moment, and if they're slightly late they will even give you money.
- glitch003 9y ago
  >On the other hand, Amazon Amazon does restaurant delivery?
  - partycoder 9y ago
    as a part of Amazon prime now
foepys 9y ago
I deeply despite those third-party food delivery services. The people delivering the food are often working for less than minimum wage and are mostly using their private equipment (smartphone, bicycle, car) for delivering. One might argue that people then should not work for those services but on the contrary why don't the services pay a fair wage and provide vehicles and devices necessary for the job? If the price gets too high, then maybe there is no market. All of this ignoring that SV venture capital is subsidizing the erosion of other comparable jobs at small businesses that try to pay their delivery drivers a fair wage.
- gehwartzen 9y ago
  I could probably develop a network of 5 driving-age teens in my neighborhood, call in an order at a restaurant, and then send out a "who wants to make 10$ cash picking this up for me?" group SMS. I'm sure the service would be better and I'm sure they would make more money than through DoorDash.
kels 9y ago
I really want to like all of these services. I've used Grubhub, Uber Eats and DoorDash. My problem with them is that it costs way more than eating at the restaurant. It's usually 30% - 40% of the cost of the food for delivery, service fees and tip. I've always wondered why it wasn't cheaper to do take out than eat at a restaurant. I'm not taking up a parking space, table, using facilities, or taking up as much of the employees time but I still incur that overhead.
- Consultant32452 9y ago
  In January I caught the flu and was down for 2 weeks. Amazon Prime Now and food delivery services like Uber Eats were a blessing. The reason why takeout isn't cheaper is they want to encourage you to sit in the restaurant. You're more likely to order drinks, desserts, and have a more controlled/positive emotional response to the eating experience.
- arkades 9y ago
  Food is priced to existing overhead; delivery is added to that. Whether or not you walk in the door doesn’t shift their fixed costs, and the marginal cost of the busboy cleaning one more table is trivial.
- mmanfrin 9y ago
  I've always wondered why it wasn't cheaper to do take out than eat at a restaurant. I'm not taking up a parking space, table, using facilities, or taking up as much of the employees time but I still incur that overhead. You're also not buying high-margin drinks or being swayed to buy the specials (which are often used to balance inventory).
  - Falling3 9y ago
    The impact of drinks really can't be overstated. As a booze-loving city, Portland restaurant's economy is especially interesting. At least half of the meals I eat out are at bars and you can get a quality meal for $8-12. But this all hinges on drinks subsidizing the rest of the meal.
- 9y ago
dawnerd 9y ago
Since moving just outside of Portland, none of these delivery companies cover my area with the exception of uber eats. It's insane considering how many large corps are all around (intel, nike, etc). Edit: Apparently grubhub decided my address was in their area, nice!
- ghaff 9y ago
  The availability of most of these delivery services seems to be very dependent on density and demographics. You get out of the core metro areas of relatively large cities and the options for these types of services tends to decrease dramatically.
  - dawnerd 9y ago
    I think in my case its more of my address being brand new. Hell, the zipcode fails validation on a lot of sites even since they just recently split it apart.
ben174 9y ago
One of the big players should launch a giant warehouse - serving as a giant kitchen. Capable of cooking all kinds of different varieties of cuisine and tons of automation. And a huge staff of well-trained chefs cooking, and delivering to a ~50 mile radius. I'd imagine they'd open this in - say Fremont - and deliver to the entire bay area. It would be great, because I could order Mexican food for me, Indian food for the wife, and the kids could have a couple hamburgers. Seems like something Amazon would be good at.
- ghaff 9y ago
  Honestly? Sounds awful. Industrialized, lowest common denominator fast food. Plus pretty much any time I've eaten at a big restaurant offering options from a bunch of different cuisines, the experience has been somewhere between mediocre and awful. ADDED: As others have pointed out, you can put together something that's effectively managed like a high-end food court. But it seems as if the economics are tough.
  - not_kurt_godel 9y ago
    Yep, sounds like one step above Soylent.
  - hahamrfunnyguy 9y ago
    My experience has been that the more things on the menu the worse the lower quality the food is, however it can be executed successfully. Wegmans, one of the grocers in the area has a huge variety of prepared food options. Despite the number of dishes, the quality is consistently high. They put a substantial effort into developing an entre before it goes into stores, and also own a few restaurants that probably help with this. Just one example of how it can be executed successfully.
- longerthoughts 9y ago
  Isn't this basically what Munchery does (although their meals are delivered cold)?
- jt2190 9y ago
econner 9y ago
Wow, seems like everyone is taking 40% dilution on this deal and SoftBank probably has huge liquidity preference. I believe DoorDash's last round was also done with a multiplier on the liquidity preference. Crazy.
contingencies 9y ago
In China where delivery of all kinds is omnipresent (the other day we even ordered someone to go shop for us and had the makings for breakfast arrive within half an hour!) it feels to me that people are beginning to see the limitations of prepared food delivery. While it's always great to get some food when you're hungry, the waiting involved in a typical order is 45min+ and the experience never matches eat-in or self-made due to factors like post-cook cool-down while in transit, corresponding ingredient visual and textural degradation, timing unpredictability (what if I need to bury myself in work or have a conference call? I don't want someone at the doorbell suddenly interrupting), etc. Limited hours of availability also suck, as do random phone calls about parking/access/are-you-around/etc. Some of these problems are impossible to completely solve as orders tend to be heavily grouped at peak periods, and driver and vehicle fleet size cannot be realistically optimized for short term burst demand patterns without substantially increasing costs.
- faluu101 9y ago
  Except unlike here in NA, the cost of a delivered meal in China is often times less than their in-restaurant equivalent. The delivery platforms there are still offering large discounts, and it's not only for new users. For example is common to see restaurants offering, 15 rmb off for orders over 50 rmb.
  - contingencies 9y ago
    The cost is less because: (1) the restaurant has limited sit down space and chef time during peak periods; (2) eating times in China are highly regimented (office lunch hour dominates); (3) delivery customers by default can tolerate higher volatility in meal completion schedule; (4) the actual cost to the restaurant for a 50RMB meal outside of the the limited sit down space represented by high rental costs and the chef's salary (already paid by peak hour sit-down customers) is negligible, often under 10RMB including ingredients, cooking energy and packaging; (5) delivery platforms are battling for market share. In short, the primary issue running a conventional restaurant is limited temporal and spatial bandwidth to serve customers. Delivery takes advantage of resources already spent toward the primary issues, so can be substantially discounted without loss.
natethinks 9y ago
I don't understand the appeal of DoorDash, I had an ad pop up for free delivery for a first time user and I happened to not have my car that day so I thought I would give it a go. "free" delivery only got rid of 1 of 3 service charges which had me spending $6 on top of a $9 dollar meal (not including tip). And that was "free" delivery for the first time I ever used the service.
cocktailpeanuts 9y ago
This is a business that should be run by a company that can afford to lose money while subsidizing it by connecting the userbase to their other businesses, for example Amazon. Basically they're sandwiched between both the vendors and the users who both want cheap price--users want cheap delivery, vendors don't want to pay a lot for delivery service. Just look at the dilution based on this single raise, I'm guessing the founders are so diluted out at this point that there's not enough motivation to go on further unless there's a black swan type success to their business. I'm guessing the only reason they're raising this much is so they can work the same strategy of growing userbase with no viable plan and then selling to a larger company like Amazon or Google, or try to merge with companies like GrubHub. Personally, I've only used doordash for their "free delivery" options, but stopped using them when I realized their "free" is not actually free, and they have hidden their cost into other parts of the price, which actually makes it much more expensive, not to mention it's unethical.
anonytrary 9y ago
DoorDash seems to cater to the 1%. Even when we had free lunches at work ($10^7 funding), we avoided using DoorDash. For two people, we would end up paying the equivalent cost of three people. I enjoyed DoorDash's interface and checkout experience, but +50% is a high premium for delivery, especially if you're close to food. If I live in the middle of a city and I'm only getting food for a few people, I usually just walk. I wonder if DoorDash would be more useful for very large parties (N > 10).
prepend 9y ago
I had bad experiences with doordash. I ordered a pizza. It showed up 40 minutes after the estimate. It was cold. It was all messed up. Driver apologized and said she dropped it and took off. Being an Uber eats user I wasn’t worried as I went into the app and said what happened. App did nothing immediately. In a few minutes got a template email saying “sorry, we’ll give you your $5.99 delivery fee back” Didn’t happen. Emailed support saying what happened, no response. Uber Eats is on top of food orders. Any errors result in new deliveries to replace or refunds on food. I assume that a company with bad customer service agorithms has other problems. I tried again and it was ok. But don’t use them as alternatives are way better.
fapjacks 9y ago
DoorDash in particular is exorbitantly expensive. Absolutely terrible markup and horrible experiences ordering through them. They're on my list of personal trade embargoed companies along with Dell and Domino's. Hmm. All three are "D" companies (and also their names start with the letter "D").
cjcfjrf 9y ago
Why would you sell a third of your company? Do you need 0.5b to run ops? Who would invest so much when the "value" is 1.5b? Unless they already think it's worth multiple times more? But then the opposite party doesn't think so? Can somebody explain please?
mesozoic 9y ago
Just put $1 billion into a bank account for your lemonade stand and claim you started the newest Unicorn! ...

107 points by smaili 9y ago

Wow that's a lot of dilution for a late stage round. I feel bad for the employees that suddenly have their equity cut by 60%. If I'm doing my math right, ($865 MM pre-money) then it means even with the higher valuation preferred price goes down

LethargicStud 9y ago
Do you mind sharing the math? Isn't impossible to know how much the equity is cut by because we don't know how much dilution there was (vs. liquidation)?
amitutk 9y ago
Most likely earlier share holders sold their stakes, so not much dilution. Perhaps founders took money off the table too. In these cases, there is not much dilution because new shares are not issued (but not much capitalization either).
- wskinner 9y ago
  It's hard to infer much from this article since it lacks all relevant detail. If the earlier share holders are selling common stock, it's not clear how that affects the preferred price.
- not_that_noob 9y ago
  That's right, but it is usually minimal. This is a very dilutive round. But they need the cash, as the general MO is to try and drive competition out of business by pushing prices down. So not much of a choice here.
wskinner 9y ago
Correct me if I'm wrong, but couldn't the preferred price stay flat, even with dilution? The company issues new shares and sells them at e.g. the current preferred price. Now there are more outstanding shares, and a higher post-money valuation, but a close to flat pre-money valuation. In this case the preferred price in real percentage of the company terms is higher since there are now more shares outstanding, but the price per share is flat. I imagine the 409a (common stock price went down), but I don't think you can infer from this that the preferred price went down. The missing figure is how many shares were issued.
- cgb223 9y ago
  Is there like a good blog post out there that can explain the difference between preferred and common stock, dilution, and all the other nuanced things about equity?
- jtmcmc 9y ago
  yeah but all the employees probably have common stock not preferred so they are in fact getting screwed.
jartelt 9y ago
Some reports put the post-money valuation after the Series C at $700M. For this round, the pre-money is reported to be $865M and post-money is $1.4B. If I had a 1% stake in DoorDash after the Series C, it was worth $7M ($700M * 1%). Assuming all the Series D round was new shares issued (we don't know the details), my stake in DoorDash would be diluted from 1% to 0.62% after the Series D (1% * $865M/$1.4B). However, the value of my stake would have grown from $7M to $8.68M (0.62% * $1.4B) because the valuation went up. This obviously ignores things like value of preferred vs common stock. But, it is not straightforward to say everyone's stakes were diluted by 60% and it's bad. They were diluted, but the value of their holdings theoretically went up.
- spookthesunset 9y ago
  This is something a lot of the "all dilution is bad" commenters don't seem to understand. Dilution isn't automatically bad. What matters is the total dollar value of your stake in the company. Did it go up or down? What percentage of the pie you hold isn't really relevant.
  - hkmurakami 9y ago
    The main takeaway imo is that door dash did not have the metrics to command a favorable valuation. The funding terms inform us of the immediate prospects of the company.

Mitchhhs 9y ago

"Xu said the company became “contribution margin positive” in the last year, which means that it’s profitable on a per-order basis. In fact, DoorDash has become profitable in its earliest markets." Its funny this is a milestone for a company at this stage. Congrats you aren't losing money on every order!

notyourday 9y ago
Creative accounting at its finest. Company is either GAAP profitable, pro-forma profitable, EBITDA profitable, cashflow profitable, cashflow neutral or money losing. All other metrics are creative accounting that put lipstick on a pig masking money losing status. DoorDash is money losing.
- bfrog 9y ago
  Which is amusing given they don't have to pay the actual labor to deliver goods or make food. Are they set up in the valley paying mega wages perhaps?
  - ac29 9y ago
    Not sure why you think they don't pay their drivers. The exact amount is unclear, but according to this FAQ [0], it is "at least $1" per order, and at least a variable "guaranteed amount" that door dash will pay up to, regardless of customer tips. [0] https://dasherhelp.doordash.com/new-dasher-pay-model-faq https://dasherhelp.doordash.com/new-dasher-pay-model-faq
thesimon 9y ago
>> became “contribution margin positive” in the last year, which means that it’s profitable on a per-order basis. >Congrats you aren't losing money on every order! Seems like an overstatement as fixed costs are still not covered when they are "contribution marigin positve".
- apendleton 9y ago

Pigo 9y ago

This is purely anecdotal, but I've never had a good experience with this service. But I have some friends that are so lazy they don't care if it takes 2 hours for the food to arrive, so that works in their favor.

tootie 9y ago

Food delivery has officially become a very frothy market. Is GrubHub/Seamless actually vulnerable? They seemed to be the 800 lb gorilla of the market. And based on my observation, the competition seems to be private labelled delivery service.

bfrog 9y ago
They're all pretty much mediocre. GrubHub especially I avoid after having several orders simply disappear without warning. Waiting an hour only to check by calling up the place and finding out they never got the order is frustrating. Twice and I was done, I just call now for delivery.
danvayn 9y ago
Just my personal experience but Grubhub has kind of declined a bit while DoorDash has become more useful. The most popular restaurant in my town has appeared to partner with DoorDash -- I can no longer order from them through doordash but if I do it through their restaurant website I get a delivery with a receipt from DoorDash. I can't order it anywhere else. So maybe you're right about the private delivery service.
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simonbw 9y ago

I'm surprised I've never heard of them before. Are they doing the same thing as Uber Eats, Postmates, Eat24, GrubHub, Amazon Restaurants, etc? That seems like a really tough market to succeed in. How is so much money being funneled into it?

eridius 9y ago
DoorDash is literally a Postmates clone.

martin_bech 9y ago

If you are "Per order profitable", why do you need 535M USD? I dont get valley valuations/Metrics..

thesimon 9y ago
Because you need money to cover fixed costs.
- martin_bech 9y ago
  But if you need 535M USD to effectively deliver pizzas... I think you are doing it wrong. Specially if you make money on every order.
ProAm 9y ago
"Per order profitable" is a made up term by DoorDash to lure unknowing investors. They are still not profitable.
ac29 9y ago
This could be early investors/founders/employees taking the opportunity to sell equity. Its possible that DoorDash itself is getting little or nothing from this deal.
- martin_bech 9y ago
  That would be a hardsell for an investor. I put in 535M USD, and nothing goes towards making the company grow, everything goes towards payouts?
rkho 9y ago
It could be Softbank forcing it -- they're known to overfund a round as a take-it-or-we'll-go-to-your-competitor tactic.

i0exception 9y ago

I really hope they use some of this money to better screen dashers and improve customer support. We used to order lunch on Doordash once a week till things got so bad that we decided never to use Doordash again. Orders would regularly have missing or incorrect items. Some dashers would leave the food in the lobby, text me, and leave. Delivery was hardly ever on time and there was no way to get in touch with a human on customer care except through some unlisted numbers. We've switched to Caviar(https://www.trycaviar.com https://www.trycaviar.com) since and have no complaints.

nextstepguy 9y ago

I swore not to use doordash anymore after a few bad experiences even if after placing a complain for each occurence I got $10 off the next order (resetting the fee and the tip.) Beside some of their fees are high. Mind you, I would still use them if the service was great. From incomplete orders to bad CS to cold food on arrival to even missing the basics of delivering location, I can't believe this is getting popular.

concernedctzn 9y ago

I won't use them after I tried one of their 'free delivery' codes and then the next time I went to place the same order it came out to the exact same price with delivery included, they seemed to have increased the price of the food to cover it the previous time.

pavanred 9y ago
The problem I have with doordash is that though they say the delivery fee is $x, there are a lot of hidden charges. You are actually paying a lot more than that, a markup on food items + a delivery fee + 8% service fee + taxes + 15% tip (optional but selected by default) + a small order fee (if your order is less than a predefined min order value) For instance, there's a a particular dish served at a local restaurant that I like, and I recently noticed that it is $11.99 at the restaurant but in doordash it's priced $13.99, delivery fee of $4.99, service fees of $1.88 and optional but pre-selected tip of $3.81. And, of course taxes in addition to this. At this point in some cases, its perhaps more economical to take an uber/lyft to the restaurant and back.
- afterburner 9y ago
  Agreed, their fees are annoying. The website also always glitches for me the first time I press the final order button. It looks nice but it's making me look at other similar companies more these days. I enjoyed the early days with no fees and no glitches.
- ac29 9y ago
  DoorDash doesn't mark up menu prices any more, at least in my market. Supposedly restaurants didnt like the hidden markup, so they moved all of their fees into the delivery fee and the service fee. Its not terribly fair to consider taxes and tip as "hidden charges", IMO. The taxes you pay even if you go to the restaurant yourself, and the tip is the majority of what the drivers get paid -- they dont work for free. I'd prefer a flat driver's fee, though, its not twice as much work for someone to deliver $50 of food vs $25, so I generally don't make large orders on DoorDash.

mooreds 9y ago

My guess is they're raising to follow the path of deliveroo: https://techcrunch.com/2017/09/24/deliveroo-raises-385m/ https://techcrunch.com/2017/09/24/deliveroo-raises-385m/ which is opening kitchens to allow restaurants to increase production (and, who knows, maybe create a few brands of their own). Ah, middlemen. There's always a peril in letting someone else own your customer.

traviswingo 9y ago

Unfortunately I no longer use DoorDash. The concept was amazing, but I’ve had one too many questionable people deliver my food that the last time it happened I didn’t even eat it. I’m a huge fan of the “1 million jobs” type of companies like this, but there’s a level of trust that comes with allowing someone to handle the food you eat. I’m not even a judgemental individual, and I hate people that are, but I shouldn’t feel uncomfortable about my food delivery. I now go get my own food. Oh well.

Dirlewanger 9y ago
When one hires everyone under the sun as a contractor, it's bound to attract society's ne'er-do-wells.
ggg9990 9y ago
My mom never used to let us order pizza delivery because she didn’t want a pizza delivery guy to know who we were and where we lived. Remember going out to the pizza shop in 5 degree F weather with my dad.
- dexterdog 9y ago
  I'm well into my 40s with numerous kids and I still drive to the pizza place to pickup whenever I order. I never understood delivery unless there is some urgent need to stay home.
  - tudelo 9y ago
    It's Sunday. You're extremely hungover. Chinese food sounds great. What's not to understand about ordering delivery? Ultimately it boils down to convenience.
  - ghaff 9y ago
    I don't have any of this available where I live. But there are definitely times when I'd be willing to pay for something to be delivered rather than having to hop in my car and drive 10 minutes or whatever to pick something up.

tyingq 9y ago

Doordash is a tire fire. 10x worse than Uber Eats for basic service. My experience is less than 50% success at delivering what I ordered. Missing items, wrong items, wrong totals, completely failed deliveries, and non-equitable compensation. Then, shit follow up when they fail. I’ll savor in more than a little Shadenfreud when they fold.

tyingq 9y ago
Downvote at will. But be brave enough to offer some counterpoint. They truly suck at delivering on their promise. That includes direct comparison to their competitors.
- tyingq 9y ago
  Lol, cowards. I ordered 15x times in a row. This isn't an isolated incident. They suck, badly. Less than 50/50, on basics in DFW. Put up, or shut up. You're terrible in Dallas/Fort Worth right r ,,,N
dmode 9y ago
I have ordered with Doordash 10-15 times. It failed me only once when the "dasher" delivered my food to a random neighbor (who actually ate all of it)
- tyingq 9y ago
  Guess it's a regional issue then. Upvoted. Dfw is honestly terrible. Less than 50/50. I'd be embarrassed.
thoughtpalette 9y ago
Anecdotal but I've only had one issue (not delivered) on 50+ orders here in Chicago. Their customer service was quick and made sure the delivery was expedited, only received it 40 minutes late. They are also one of the only on-demand providers to serve a lot of common fast food in my area, which is handy when I'm feeling non-healthy food.

thisisit 9y ago

I haven't used DoorDash but my experience with food delivery services has been average. As a bachelor I loved them until I found out these companies use multiple ways to add up charges. Most of the time restaurant cost in-shop vs cost app varies a lot. Then they charge some kind of "packing charges". Including delivery fee some times the delivery price is 25% more than restaurant prices. When I talked to some of the restaurants, they said these guys can take up to 30% of the food cost. It means DoorDash et al, can take up to 50% of an order. So, I find it surprising that these guys still struggle to become profitable. I also think that this whole phenomena might actually end up pushing restaurant prices up to the detriment of consumers.

Spivak 9y ago
YMMV but I haven't noticed any change from places that list on delivery services. The local places around here typically just inflate their prices in the app to cover the delivery cut and then push customers to order directly with coupons, or takeout deals. You could be right and it might not last forever, but independent customer acquisition has a tangible value and I'll be basking in the 35c wings because I'm okay with calling in my order for as long as possible.
bduerst 9y ago
Same here. On top of that, the delivery itself can be pretty sub par. I had one delivery person not understand the concept of entering in a code on a keypad to get into an apartment building. Not having difficulties entering the code, mind you, but not knowing what the keypad was even for.
- gfosco 9y ago
  Postmates delivery folks never ever read the delivery instructions, I have to send them all the callbox code via the app when they are close, and 25% of them still call and have no idea what to do. DoorDash folks at least read the instructions..
jackmodern 9y ago
every time I order from food dash I overpay and the food is cold. won't order from them ever again.

partycoder 9y ago

Doordash has frequent system-wide outages. https://twitter.com/DoorDash_Help https://twitter.com/DoorDash_Help During their outages your items will never arrive, your order may still appear as active and customer support may handle your case in 48 hours. Plus, their outage messages are misleading. On the other hand, Amazon almost never has outages, you can live chat with support at any moment, and if they're slightly late they will even give you money.

glitch003 9y ago
>On the other hand, Amazon Amazon does restaurant delivery?
- partycoder 9y ago
  as a part of Amazon prime now

foepys 9y ago

I deeply despite those third-party food delivery services. The people delivering the food are often working for less than minimum wage and are mostly using their private equipment (smartphone, bicycle, car) for delivering. One might argue that people then should not work for those services but on the contrary why don't the services pay a fair wage and provide vehicles and devices necessary for the job? If the price gets too high, then maybe there is no market. All of this ignoring that SV venture capital is subsidizing the erosion of other comparable jobs at small businesses that try to pay their delivery drivers a fair wage.

gehwartzen 9y ago
I could probably develop a network of 5 driving-age teens in my neighborhood, call in an order at a restaurant, and then send out a "who wants to make 10$ cash picking this up for me?" group SMS. I'm sure the service would be better and I'm sure they would make more money than through DoorDash.

kels 9y ago

I really want to like all of these services. I've used Grubhub, Uber Eats and DoorDash. My problem with them is that it costs way more than eating at the restaurant. It's usually 30% - 40% of the cost of the food for delivery, service fees and tip. I've always wondered why it wasn't cheaper to do take out than eat at a restaurant. I'm not taking up a parking space, table, using facilities, or taking up as much of the employees time but I still incur that overhead.

Consultant32452 9y ago
In January I caught the flu and was down for 2 weeks. Amazon Prime Now and food delivery services like Uber Eats were a blessing. The reason why takeout isn't cheaper is they want to encourage you to sit in the restaurant. You're more likely to order drinks, desserts, and have a more controlled/positive emotional response to the eating experience.
arkades 9y ago
Food is priced to existing overhead; delivery is added to that. Whether or not you walk in the door doesn’t shift their fixed costs, and the marginal cost of the busboy cleaning one more table is trivial.
mmanfrin 9y ago
I've always wondered why it wasn't cheaper to do take out than eat at a restaurant. I'm not taking up a parking space, table, using facilities, or taking up as much of the employees time but I still incur that overhead. You're also not buying high-margin drinks or being swayed to buy the specials (which are often used to balance inventory).
- Falling3 9y ago
  The impact of drinks really can't be overstated. As a booze-loving city, Portland restaurant's economy is especially interesting. At least half of the meals I eat out are at bars and you can get a quality meal for $8-12. But this all hinges on drinks subsidizing the rest of the meal.
9y ago

dawnerd 9y ago

Since moving just outside of Portland, none of these delivery companies cover my area with the exception of uber eats. It's insane considering how many large corps are all around (intel, nike, etc). Edit: Apparently grubhub decided my address was in their area, nice!

ghaff 9y ago
The availability of most of these delivery services seems to be very dependent on density and demographics. You get out of the core metro areas of relatively large cities and the options for these types of services tends to decrease dramatically.
- dawnerd 9y ago
  I think in my case its more of my address being brand new. Hell, the zipcode fails validation on a lot of sites even since they just recently split it apart.

ben174 9y ago

One of the big players should launch a giant warehouse - serving as a giant kitchen. Capable of cooking all kinds of different varieties of cuisine and tons of automation. And a huge staff of well-trained chefs cooking, and delivering to a ~50 mile radius. I'd imagine they'd open this in - say Fremont - and deliver to the entire bay area. It would be great, because I could order Mexican food for me, Indian food for the wife, and the kids could have a couple hamburgers. Seems like something Amazon would be good at.

ghaff 9y ago
Honestly? Sounds awful. Industrialized, lowest common denominator fast food. Plus pretty much any time I've eaten at a big restaurant offering options from a bunch of different cuisines, the experience has been somewhere between mediocre and awful. ADDED: As others have pointed out, you can put together something that's effectively managed like a high-end food court. But it seems as if the economics are tough.
- not_kurt_godel 9y ago
  Yep, sounds like one step above Soylent.
- hahamrfunnyguy 9y ago
  My experience has been that the more things on the menu the worse the lower quality the food is, however it can be executed successfully. Wegmans, one of the grocers in the area has a huge variety of prepared food options. Despite the number of dishes, the quality is consistently high. They put a substantial effort into developing an entre before it goes into stores, and also own a few restaurants that probably help with this. Just one example of how it can be executed successfully.
longerthoughts 9y ago
Isn't this basically what Munchery does (although their meals are delivered cold)?
jt2190 9y ago

econner 9y ago

Wow, seems like everyone is taking 40% dilution on this deal and SoftBank probably has huge liquidity preference. I believe DoorDash's last round was also done with a multiplier on the liquidity preference. Crazy.

contingencies 9y ago

In China where delivery of all kinds is omnipresent (the other day we even ordered someone to go shop for us and had the makings for breakfast arrive within half an hour!) it feels to me that people are beginning to see the limitations of prepared food delivery. While it's always great to get some food when you're hungry, the waiting involved in a typical order is 45min+ and the experience never matches eat-in or self-made due to factors like post-cook cool-down while in transit, corresponding ingredient visual and textural degradation, timing unpredictability (what if I need to bury myself in work or have a conference call? I don't want someone at the doorbell suddenly interrupting), etc. Limited hours of availability also suck, as do random phone calls about parking/access/are-you-around/etc. Some of these problems are impossible to completely solve as orders tend to be heavily grouped at peak periods, and driver and vehicle fleet size cannot be realistically optimized for short term burst demand patterns without substantially increasing costs.

faluu101 9y ago
Except unlike here in NA, the cost of a delivered meal in China is often times less than their in-restaurant equivalent. The delivery platforms there are still offering large discounts, and it's not only for new users. For example is common to see restaurants offering, 15 rmb off for orders over 50 rmb.
- contingencies 9y ago
  The cost is less because: (1) the restaurant has limited sit down space and chef time during peak periods; (2) eating times in China are highly regimented (office lunch hour dominates); (3) delivery customers by default can tolerate higher volatility in meal completion schedule; (4) the actual cost to the restaurant for a 50RMB meal outside of the the limited sit down space represented by high rental costs and the chef's salary (already paid by peak hour sit-down customers) is negligible, often under 10RMB including ingredients, cooking energy and packaging; (5) delivery platforms are battling for market share. In short, the primary issue running a conventional restaurant is limited temporal and spatial bandwidth to serve customers. Delivery takes advantage of resources already spent toward the primary issues, so can be substantially discounted without loss.

natethinks 9y ago

I don't understand the appeal of DoorDash, I had an ad pop up for free delivery for a first time user and I happened to not have my car that day so I thought I would give it a go. "free" delivery only got rid of 1 of 3 service charges which had me spending $6 on top of a $9 dollar meal (not including tip). And that was "free" delivery for the first time I ever used the service.

cocktailpeanuts 9y ago

This is a business that should be run by a company that can afford to lose money while subsidizing it by connecting the userbase to their other businesses, for example Amazon. Basically they're sandwiched between both the vendors and the users who both want cheap price--users want cheap delivery, vendors don't want to pay a lot for delivery service. Just look at the dilution based on this single raise, I'm guessing the founders are so diluted out at this point that there's not enough motivation to go on further unless there's a black swan type success to their business. I'm guessing the only reason they're raising this much is so they can work the same strategy of growing userbase with no viable plan and then selling to a larger company like Amazon or Google, or try to merge with companies like GrubHub. Personally, I've only used doordash for their "free delivery" options, but stopped using them when I realized their "free" is not actually free, and they have hidden their cost into other parts of the price, which actually makes it much more expensive, not to mention it's unethical.

anonytrary 9y ago

DoorDash seems to cater to the 1%. Even when we had free lunches at work ($10^7 funding), we avoided using DoorDash. For two people, we would end up paying the equivalent cost of three people. I enjoyed DoorDash's interface and checkout experience, but +50% is a high premium for delivery, especially if you're close to food. If I live in the middle of a city and I'm only getting food for a few people, I usually just walk. I wonder if DoorDash would be more useful for very large parties (N > 10).

prepend 9y ago

I had bad experiences with doordash. I ordered a pizza. It showed up 40 minutes after the estimate. It was cold. It was all messed up. Driver apologized and said she dropped it and took off. Being an Uber eats user I wasn’t worried as I went into the app and said what happened. App did nothing immediately. In a few minutes got a template email saying “sorry, we’ll give you your $5.99 delivery fee back” Didn’t happen. Emailed support saying what happened, no response. Uber Eats is on top of food orders. Any errors result in new deliveries to replace or refunds on food. I assume that a company with bad customer service agorithms has other problems. I tried again and it was ok. But don’t use them as alternatives are way better.

fapjacks 9y ago

DoorDash in particular is exorbitantly expensive. Absolutely terrible markup and horrible experiences ordering through them. They're on my list of personal trade embargoed companies along with Dell and Domino's. Hmm. All three are "D" companies (and also their names start with the letter "D").

cjcfjrf 9y ago

Why would you sell a third of your company? Do you need 0.5b to run ops? Who would invest so much when the "value" is 1.5b? Unless they already think it's worth multiple times more? But then the opposite party doesn't think so? Can somebody explain please?

mesozoic 9y ago

Just put $1 billion into a bank account for your lemonade stand and claim you started the newest Unicorn! ...