13 ms·

DoorDash Buying Caviar from Square for $410M

177 points by bharris315 7y ago

pwinnski 7y ago
I wonder whether the timing of this is related to DoorDash finally backing down on handling of tips.
- minimaxir 7y ago
  It takes longer than a month to finalize a $410M acquisition.
  - pwinnski 7y ago
    The other way around: if you're in the final stages of finalizing an acquisition, you might not want even a whiff of controversy tied to your company.
deleted 7y ago
[deleted]
joemaller1 7y ago
This seems like a smart move and a good thing for both parties, but Square’s trading lower on the news?
- mikeryan 7y ago
  Yeah a bit strange. They’re making about 300M on the transaction and it was never that clean a fit.
  - wufufufu 7y ago
    How much do you think Square invested into Caviar, though?
- huac 7y ago
  they released earnings simultaneously and those earnings lowered revenue forecast for the rest of the year. https://www.cnbc.com/2019/08/01/square-earnings-q2-2019.html https://www.cnbc.com/2019/08/01/square-earnings-q2-2019.html
XMPPwocky 7y ago
For what it's worth, the general vibe I've gotten from couriers has been that Caviar is one of the best food delivery apps for them, and that DoorDash is among the worst.
- berberous 7y ago
  This may have changed since I don't really use Caviar, but I'n not surprised since I think Caviar's delivery/service fees are the highest (which is why I don't really use it).
- BinaryIdiot 7y ago
  It's funny, I know almost no two people with similar experiences (user or courier). For example as a user I have literally never had a good experience with Caviar. It almost always wrong in different ways. As a courier one time the guy called and said that the restaurant was taking so long that Caviar would no longer pay him to wait so we ended up paying him out of pocket to cover it (he said we could cancel and get our money back but that he'd also get nothing after waiting for a very long time). Uber Eats, as a user, has usually worked pretty well. As a courier one of them told us they constantly have out of date restaurant menus, people order from them, the restaurant substitutes or ignores it completely and now they have to deal with an angry person. It really feels like restaurants are not equipped to handle these types of services and all of the services don't train their people if at all, as well as treating them kinda like crap many times.
  - theturtletalks 7y ago
    Interestingly, that is exactly what Square planned to do with Caviar: integrate with Square POS so both use the same system and build a tightly integrated marketplace.
  - seem_2211 7y ago
    I live in a building that has a confusing relationship with it's name vs. the street its on. Uber (and Uber Eats) has never worked for me properly, and I always have to meet the courier at the door. Caviar always delivers directly to my door.
nickdandakis 7y ago
Question from someone that's not familiar with law, or I guess specifically antitrust (anti-monopoly?) law. How are these acquisitions not in violation of these laws. Especially from the Big Tech Cos that slurp up literally any small competitor. From the article: "DoorDash's acquisition of Caviar creates a highly differentiated company with a unique brand and wide-ranging selection." How is this not a play at eliminating competition?
- closetohome 7y ago
  I'd recommend reading up on the Microsoft antitrust case. That's where most of us learned about antitrust law.
- outericky 7y ago
  Because there is still a lot of competition? Grubhub, ubereats, and many others.
- lacker 7y ago
  In US law, eliminating competition is generally fine. It's only a problem when there is a monopoly or close to a monopoly. DoorDash doesn't seem close to having a monopoly on food delivery.
- epc 7y ago
  It is not illegal to buy competitors (commenting only on US law). It can potentially violate antitrust laws if you eliminate all competition in a market by buying out competitors. But given the existence of Seamless/Grubhub, Uber Eats, and others, plus most of the restaurants still take phone & fax orders, it would be difficult to argue Doordash buying Caviar corners the delivery market.
- baddox 7y ago
  It would be very strange if all acquisitions of competitors were considered a violation of antitrust law. It's something that I would expect to be very common in a well-functioning, fiercely competitive market.
- btown 7y ago
dewitt 7y ago
The price seems high for something Square presumably needed to unload. Who else would have been bidding it up? And why are food delivery businesses still in a bubble? That's not a slam on businesses in a bubble phase, either. Many industries go through one before settling into a steady, sustainable state. Just surprised that delivery is still in one, while related industries, like ride-share are cooling off.
- loceng 7y ago
  They make a lot of profit, recycling it buy up and coming startups to maintain market share and the business model.
  - MegaButts 7y ago
    > They make a lot of profit I have always heard food delivery as a business is a great way to lose money. Do you have any examples of companies doing it profitably?
    - AmericanChopper 7y ago
      Different market, but Gojek does it profitably. They do delivery, ride hailing, and a bunch of other stuff, and all of their segments are profitable, except ride hailing. They also have a slightly different model, which might not work in other markets. They don’t need to onboard merchants in the same way, because with them the driver pays for the order, and then the customer pays the driver, either in-app or with cash.
      - bduerst 7y ago
        Interesting business model, but Jakarta is insanely dense (largest city in APAC) which is probably why its more profitable. In the U.S. you have urban sprawl and suburbs, which increase variable costs of delivery.
        AmericanChopper 7y ago
conwaytwitty 7y ago
Was super confused for a while thinking this was about actual caviar...
- goerz 7y ago
  Me too! $410M worth of caviar sounded like a lot of caviar!
  - umeshunni 7y ago
    A quick online search seems to show that 1g of caviar costs $7-$10 (presumably in bulk, not retail). $410M is about 60 metric tonnes of caviar. Still a better deal than buying a tier-3 food delivery company.
- SilasX 7y ago
  I felt the same way about the name. I visited a coworker in 2014 and he was like "oh, hey, it's getting close to lunch, let's order some Caviar." And I was like, "uh, isn't that a little ritzy?" Seriously, I don't know the logic behind behind that name.
atonse 7y ago
We're going to see more consolidation, but are any of these companies addressing the treatment of their delivery drivers, or issues that are starting to crop up, like delivery drivers eating food that they're delivering?
- lytedev 7y ago
  Howdy! Software Engineer at Postmates here. Our CEO has put forth an opinion piece[0] on CNN talking about his views and actions concerning this very thing. You might find it interesting: [0]: https://www.cnn.com/2019/07/18/perspectives/principles-gig-economy/index.html https://www.cnn.com/2019/07/18/perspectives/principles-gig-e...
deleted 7y ago
[deleted]
eridius 7y ago
Just how much VC funding does DoorDash have?
- lavezzi 7y ago
  $2bn I believe. You can tell because of how eager they are to throw money away to drive customer acquisition.
sibeshk96 7y ago
Still cheaper than actual caviar
pgrote 7y ago
Perhaps keeping it separate is a good thing technically. DoorDash app and website are a dumpster fire with usability and bugs galore. The issue is as a user is if you bring this up to DoorDash support they have no internal process for handling reported issues with the app and website and letting the development team know.
- lavezzi 7y ago
  Sounds exactly like the Cash app.
wufufufu 7y ago
This is the kind of announcement where all three companies put out a happy blog post and no one knows the actual reasoning behind the acquisition or sale. New business model for Square?: Acquire companies, onboard them onto Square's business platform, sell them
- erikpukinskis 7y ago
  That’s not a bad idea.
mm202018 7y ago
I’m so confused by DoorDash’s sudden rise. I think I may have used it once. What is separating DoorDash from UberEats, Postmates, Grubhub etc?
- zippergz 7y ago
  My experience is that it's somewhat regional, but it doesn't feel sudden at all to me. I've used DoorDash for years, and it's because in my area they have much more selection of restaurants, and often faster delivery (which I assume means more drivers). Uber Eats doesn't even deliver to my house even though Uber covers my area.
- tdmule 7y ago
  When Grubhub acquired Eat24 from Yelp and removed the group order feature in favor of signing up for a "corporate" account, it sent much of my business to DoorDash.
- amiantos 7y ago
  I’m not an expert but I know that DoorDash partners with large established chains, they power Chipotle and Wendy’s delivery services. GrubHub is getting in in this too: they power Taco Bell’s new delivery service. I bet these deals lead to a more simpatico relationship monetarily. I bet it also avoids stuff like what is said in this comment https://news.ycombinator.com/item?id=20588348 https://news.ycombinator.com/item?id=20588348
- Symmetry 7y ago
  Personally, Foodler had some nice features I like and Grubhub bought and killed them so I'm not going to be using Grubhub. Can't say I have a strong opinion among the others.
  - shados 7y ago
    Foodler had some nice features such as not being completely horrible. I miss Foodler so damn much.
- gandutraveler 7y ago
losthobbies 7y ago
I'm so tired, I thought this was fish eggs.
chipotle_coyote 7y ago
It's odd, in that I never really thought about Caviar as a competitor to DoorDash -- but that's because I know them mostly as the company that bought Zesty (just before Caviar itself was bought by Square). Zesty specializes in catered group meal delivery. The company I'm at now uses Zesty once a week; the company I was at before used them five days a week, and the company before that used a competitor (ZeroCater, I think) five days a week. As far as I know, DoorDash wasn't in that space before; I wonder if that's part of the reason for the acquisition. (The alternative is that they may not be interested in that side of the business at all and shut it down.)
abalone 7y ago
I think this is good for Square. Maybe not a good reflection on their previous, scattered product strategy but they appear to be getting more focus on fairly horizontal services for SMBs. Caviar was always a bit nichey for them. I’m trying to figure out if their Developer API is a chasing-Stripe distraction for them or a good defensive move.
bookofjoe 7y ago
Imagine this headline 30 years ago: you'd think it was word salad from someone with mania (politically incorrect now but not then).
DarthMader 7y ago
Everyone's seemed to gloss over this but this deal seems to be as much an acqhuisition as an acquisition. Do some research on who Gokul Rajaram is. He ran ads at FB and Google was a very significant leader. I don't think the margins of food delivery have changed. Remember Square couldn't get Uber to pick up Caviar for $100 million around the time Square had its IPO. Also I imagine the price involves DoorDash seems to be banking on a closer relationship with Square as well.

177 points by bharris315 7y ago

pwinnski 7y ago

I wonder whether the timing of this is related to DoorDash finally backing down on handling of tips.

minimaxir 7y ago
It takes longer than a month to finalize a $410M acquisition.
- pwinnski 7y ago
  The other way around: if you're in the final stages of finalizing an acquisition, you might not want even a whiff of controversy tied to your company.

deleted 7y ago

[deleted]

joemaller1 7y ago

This seems like a smart move and a good thing for both parties, but Square’s trading lower on the news?

mikeryan 7y ago
Yeah a bit strange. They’re making about 300M on the transaction and it was never that clean a fit.
- wufufufu 7y ago
  How much do you think Square invested into Caviar, though?
huac 7y ago
they released earnings simultaneously and those earnings lowered revenue forecast for the rest of the year. https://www.cnbc.com/2019/08/01/square-earnings-q2-2019.html https://www.cnbc.com/2019/08/01/square-earnings-q2-2019.html

XMPPwocky 7y ago

For what it's worth, the general vibe I've gotten from couriers has been that Caviar is one of the best food delivery apps for them, and that DoorDash is among the worst.

berberous 7y ago
This may have changed since I don't really use Caviar, but I'n not surprised since I think Caviar's delivery/service fees are the highest (which is why I don't really use it).
BinaryIdiot 7y ago
It's funny, I know almost no two people with similar experiences (user or courier). For example as a user I have literally never had a good experience with Caviar. It almost always wrong in different ways. As a courier one time the guy called and said that the restaurant was taking so long that Caviar would no longer pay him to wait so we ended up paying him out of pocket to cover it (he said we could cancel and get our money back but that he'd also get nothing after waiting for a very long time). Uber Eats, as a user, has usually worked pretty well. As a courier one of them told us they constantly have out of date restaurant menus, people order from them, the restaurant substitutes or ignores it completely and now they have to deal with an angry person. It really feels like restaurants are not equipped to handle these types of services and all of the services don't train their people if at all, as well as treating them kinda like crap many times.
- theturtletalks 7y ago
  Interestingly, that is exactly what Square planned to do with Caviar: integrate with Square POS so both use the same system and build a tightly integrated marketplace.
- seem_2211 7y ago
  I live in a building that has a confusing relationship with it's name vs. the street its on. Uber (and Uber Eats) has never worked for me properly, and I always have to meet the courier at the door. Caviar always delivers directly to my door.

nickdandakis 7y ago

Question from someone that's not familiar with law, or I guess specifically antitrust (anti-monopoly?) law. How are these acquisitions not in violation of these laws. Especially from the Big Tech Cos that slurp up literally any small competitor. From the article: "DoorDash's acquisition of Caviar creates a highly differentiated company with a unique brand and wide-ranging selection." How is this not a play at eliminating competition?

closetohome 7y ago
I'd recommend reading up on the Microsoft antitrust case. That's where most of us learned about antitrust law.
outericky 7y ago
Because there is still a lot of competition? Grubhub, ubereats, and many others.
lacker 7y ago
In US law, eliminating competition is generally fine. It's only a problem when there is a monopoly or close to a monopoly. DoorDash doesn't seem close to having a monopoly on food delivery.
epc 7y ago
It is not illegal to buy competitors (commenting only on US law). It can potentially violate antitrust laws if you eliminate all competition in a market by buying out competitors. But given the existence of Seamless/Grubhub, Uber Eats, and others, plus most of the restaurants still take phone & fax orders, it would be difficult to argue Doordash buying Caviar corners the delivery market.
baddox 7y ago
It would be very strange if all acquisitions of competitors were considered a violation of antitrust law. It's something that I would expect to be very common in a well-functioning, fiercely competitive market.
btown 7y ago

dewitt 7y ago

The price seems high for something Square presumably needed to unload. Who else would have been bidding it up? And why are food delivery businesses still in a bubble? That's not a slam on businesses in a bubble phase, either. Many industries go through one before settling into a steady, sustainable state. Just surprised that delivery is still in one, while related industries, like ride-share are cooling off.

loceng 7y ago
They make a lot of profit, recycling it buy up and coming startups to maintain market share and the business model.
- MegaButts 7y ago
  > They make a lot of profit I have always heard food delivery as a business is a great way to lose money. Do you have any examples of companies doing it profitably?
  - AmericanChopper 7y ago
    Different market, but Gojek does it profitably. They do delivery, ride hailing, and a bunch of other stuff, and all of their segments are profitable, except ride hailing. They also have a slightly different model, which might not work in other markets. They don’t need to onboard merchants in the same way, because with them the driver pays for the order, and then the customer pays the driver, either in-app or with cash.
    - bduerst 7y ago
      Interesting business model, but Jakarta is insanely dense (largest city in APAC) which is probably why its more profitable. In the U.S. you have urban sprawl and suburbs, which increase variable costs of delivery.
      - AmericanChopper 7y ago

conwaytwitty 7y ago

Was super confused for a while thinking this was about actual caviar...

goerz 7y ago
Me too! $410M worth of caviar sounded like a lot of caviar!
- umeshunni 7y ago
  A quick online search seems to show that 1g of caviar costs $7-$10 (presumably in bulk, not retail). $410M is about 60 metric tonnes of caviar. Still a better deal than buying a tier-3 food delivery company.
SilasX 7y ago
I felt the same way about the name. I visited a coworker in 2014 and he was like "oh, hey, it's getting close to lunch, let's order some Caviar." And I was like, "uh, isn't that a little ritzy?" Seriously, I don't know the logic behind behind that name.

atonse 7y ago

We're going to see more consolidation, but are any of these companies addressing the treatment of their delivery drivers, or issues that are starting to crop up, like delivery drivers eating food that they're delivering?

lytedev 7y ago
Howdy! Software Engineer at Postmates here. Our CEO has put forth an opinion piece[0] on CNN talking about his views and actions concerning this very thing. You might find it interesting: [0]: https://www.cnn.com/2019/07/18/perspectives/principles-gig-economy/index.html https://www.cnn.com/2019/07/18/perspectives/principles-gig-e...

deleted 7y ago

[deleted]

eridius 7y ago

Just how much VC funding does DoorDash have?

lavezzi 7y ago
$2bn I believe. You can tell because of how eager they are to throw money away to drive customer acquisition.

sibeshk96 7y ago

Still cheaper than actual caviar

pgrote 7y ago

Perhaps keeping it separate is a good thing technically. DoorDash app and website are a dumpster fire with usability and bugs galore. The issue is as a user is if you bring this up to DoorDash support they have no internal process for handling reported issues with the app and website and letting the development team know.

lavezzi 7y ago
Sounds exactly like the Cash app.

wufufufu 7y ago

This is the kind of announcement where all three companies put out a happy blog post and no one knows the actual reasoning behind the acquisition or sale. New business model for Square?: Acquire companies, onboard them onto Square's business platform, sell them

erikpukinskis 7y ago
That’s not a bad idea.

mm202018 7y ago

I’m so confused by DoorDash’s sudden rise. I think I may have used it once. What is separating DoorDash from UberEats, Postmates, Grubhub etc?

zippergz 7y ago
My experience is that it's somewhat regional, but it doesn't feel sudden at all to me. I've used DoorDash for years, and it's because in my area they have much more selection of restaurants, and often faster delivery (which I assume means more drivers). Uber Eats doesn't even deliver to my house even though Uber covers my area.
tdmule 7y ago
When Grubhub acquired Eat24 from Yelp and removed the group order feature in favor of signing up for a "corporate" account, it sent much of my business to DoorDash.
amiantos 7y ago
I’m not an expert but I know that DoorDash partners with large established chains, they power Chipotle and Wendy’s delivery services. GrubHub is getting in in this too: they power Taco Bell’s new delivery service. I bet these deals lead to a more simpatico relationship monetarily. I bet it also avoids stuff like what is said in this comment https://news.ycombinator.com/item?id=20588348 https://news.ycombinator.com/item?id=20588348
Symmetry 7y ago
Personally, Foodler had some nice features I like and Grubhub bought and killed them so I'm not going to be using Grubhub. Can't say I have a strong opinion among the others.
- shados 7y ago
  Foodler had some nice features such as not being completely horrible. I miss Foodler so damn much.
gandutraveler 7y ago

losthobbies 7y ago

I'm so tired, I thought this was fish eggs.

chipotle_coyote 7y ago

It's odd, in that I never really thought about Caviar as a competitor to DoorDash -- but that's because I know them mostly as the company that bought Zesty (just before Caviar itself was bought by Square). Zesty specializes in catered group meal delivery. The company I'm at now uses Zesty once a week; the company I was at before used them five days a week, and the company before that used a competitor (ZeroCater, I think) five days a week. As far as I know, DoorDash wasn't in that space before; I wonder if that's part of the reason for the acquisition. (The alternative is that they may not be interested in that side of the business at all and shut it down.)

abalone 7y ago

I think this is good for Square. Maybe not a good reflection on their previous, scattered product strategy but they appear to be getting more focus on fairly horizontal services for SMBs. Caviar was always a bit nichey for them. I’m trying to figure out if their Developer API is a chasing-Stripe distraction for them or a good defensive move.

bookofjoe 7y ago

Imagine this headline 30 years ago: you'd think it was word salad from someone with mania (politically incorrect now but not then).

DarthMader 7y ago

Everyone's seemed to gloss over this but this deal seems to be as much an acqhuisition as an acquisition. Do some research on who Gokul Rajaram is. He ran ads at FB and Google was a very significant leader. I don't think the margins of food delivery have changed. Remember Square couldn't get Uber to pick up Caviar for $100 million around the time Square had its IPO. Also I imagine the price involves DoorDash seems to be banking on a closer relationship with Square as well.