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DoorDash and Airbnb prove corporate giants can scale in small towns
- totalZero 6y agoCounterpoint: An IPO is a sale of equity. DoorDash and AirBnB wouldn't be going public if they really believed this rush to suburbs and smaller urban areas were sustainable and accretive to long-term profit. Either the pandemic goes away and they go back to business as usual, or it doesn't and the economy gets a lot worse. In both cases, this moment is potentially the best it's gonna get for DoorDash and AirBnB, and an IPO is a way to hedge against that.
- cjbenedikt 6y agoCounterpoint to the counterpoint: Door Dash and Airbnb realized that things won't improve so their management and investor decide it may be better to cash out now and leave the little guy holding the can...just saying
- totalZero 6y agoThat's kind of my (counter)point.
- jariel 6y agoNo, it's a good time for an IPO as markets have a longer term view of things (rationally or otherwise). Investors see AirBnB is very viable, they know the pandemic will pass. AirBnB and DoorDash are in completely different scenarios: one has massive labour force issues, the other is a digital service, the pandemic has nearly killed AirBnB while it's been a boon for DoorDash. AirBnB is pushing through with a regularly planned IPO, DoorDash is probably being more opportunistic.
- satya71 6y agoDoorDash will never be profitable, because there are three businesses that need a cut from a sale: driver, restaurant, and doordash. That just makes it very expensive.
- zymhan 6y agoThat is not a convincing argument. Middlemen exist in many markets.
- satya71 6y agoNot three middlemen in every transaction. At most two. Everyone needs ~30% cut. 1.3 * 1.3 * 1.3 = 2.2
- gamblor956 6y agoThere is only the one middleman, DoorDash, in two separate but related transactions. The restaurant is the company making the food for the customer, and the delivery person is the person delivering the food for the restaurant. DoorDash doesn't provide any food-related service except being in between the restaurant/customer and the restaurant/delivery person.
- bigbubba 6y agoThe credit card processor almost certainly being used by the customer adds another middle man.
- gamblor956 6y agoA middleman refers to someone whose role in the transaction is to bring the actual transacting parties together. While credit card processors are involved in the transaction between the customer and restaurant, they are not a middleman to the transaction because they don't bring the parties together; the parties or a third party does that. Additionally, credit card processors provide services to both sides of the transaction: they provide non-cash payment collection services to restaurants, and they provide customers a means to pay for things without immediately exchanging cash or other assets.
- dx87 6y agoTell me about it. My company gave everyone a Doordash gift card because we normally do quarterly meetings with a catered lunch, and it was $55 for 2 drinks, two burgers and 1 fry from Five Guys. Plus it took over an hour for it to be delivered.
- Aperocky 6y agoYes, it did prove that they can scale on investors money.
- hn_throwaway_99 6y agoThere is really no evidence at all to back up the author's assertion when it comes to AirBnB. I certainly recall AirBnB booming in large cities before it really spread. Here is the one quote the author provides re AirBnB: > Airbnb's top 10 cities — London, New York, Paris, Los Angeles, Rome, Barcelona, Tokyo, Toronto, San Diego and Lisbon — collectively account for only 11.9% of Airbnb's revenues, and no city has more than 2.5% of Airbnb's total market. I mean, all that proves is that AirBnB is in a lot of cities.
- t-writescode 6y agoDoor Dash? You mean the company that takes 30% on top of the driver fees and delivery fee? That company? The company that, when you call restaurants, they’ll ask you not to use because it’s so expensive for them that they’re losing money on the already thin margins of food sales? That one can scale? I believe it can scale, sure. But some company that only takes 5-10% cut will some day eat its lunch, I hope. I like reasonably priced food.
- MattGaiser 6y agoI think the problem is even taking 30%, the model barely/still does not work financially. Having someone drive halfway across town to deliver food is never going to be cheap.
- crispyporkbites 6y agoThis is it - we can’t all afford personal delivery services and our own chauffeur. It’s nice when it’s vc funded though
- t-writescode 6y agoYet somehow local pizza shops have been able to do it for decades. There would probably be more benefit in having small sets of delivery drivers for all deliveries and all businesses in a small, square mile or 3, area; and probably something that isn’t trying to power a whole country’s purchasing habits.
- jfim 6y ago> Yet somehow local pizza shops have been able to do it for decades. Pizza is a really high margin business. From this article [0]: > Consider the ingredients – flour, yeast, water, sauce, cheese and toppings. None of these are expensive, particularly when purchased wholesale. To build a small cheese pizza the cheese is the most expensive ingredient at $0.60, with the dough adding about $0.24 and the sauce $0.05. That adds up to $0.89 for a basic cheese pizza that could be sold for many times that amount. [...] One estimate of the cost of a meat pizza with pepperoni and sausage is $1.90 for food costs and an average retail cost of $14.00, which translates to a 636 percent markup. [0] https://smallbusiness.chron.com/much-profit-margin-pizza-62139.html https://smallbusiness.chron.com/much-profit-margin-pizza-621...
- coffeefirst 6y agoI don’t see how you write this with no mention of the pandemic. AirBNB is helping city dwellers escape their tiny apartments. Delivery companies are benefiting from me being temporarily okay throwing 30% of an order into tips and fees. This will pass.
- jariel 6y agoAirBnB is getting destroyed by the pandemic, they've had to layoff 25% and take out $2B in loans. 'It will pass' yes, but it's not been a boon for them.
- whymauri 6y agoAirbnb in April is very different from Airbnb today.
- ghaff 6y agoAnecdotally, AirBnBs in rural locations seems pretty popular at the moment. You can stay with your "pod" (or by yourself), you can prepare at least some of your meals yourself, and you just generally have a lot less contact than in the case of a hotel. I don't even normally stay at AirBnBs and I just booked one after the holidays as a hiking base and change of scenery. ADDED: That said, the fact that self-contained rural properties are pretty popular at the moment doesn't mean that a business that depends on people traveling is necessarily doing great.
- deleted 6y ago[deleted]
- romanoderoma 6y ago> AirBNB is helping city dwellers escape their tiny apartments In my experience, both personal and relative to my country, kicking out AirBNB from cities has helped people escaping from their tiny apartments because a lot more apartments have returned back on the regular mid/long term rental market.
- __jem 6y agoIt's amazing how well you can scale when you don't have to make money.
- tachyonbeam 6y agoYes exactly, DoorDash is an OPM company (OPM = Other People's Money). Kind of like WeWork. They are hoping to do an IPO in 2021 AFAIK. They will likely try to pump and dump the stock.
- rdiddly 6y agoDid "A money-losing business can lose money wherever it wants" need proving?
- jariel 6y agoOne company has a massive labour force, difficult to balance in remote situations, the other is a digital service - they are not very comparable.
- deleted 6y ago[deleted]
- postingawayonhn 6y agoI guess it depends on how you define small towns. As someone from Australia/NZ I definitely wouldn't call Palo Alto a small town, it's just one of San Francisco's suburbs.
- pasttense01 6y agoA small town has maybe 1,000 or so people. While maybe a tourist area could get some Airbnb traffic, there is no way DoorDash would be in this town.