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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

by Nimi 12y 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 12y 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".
- Nimi 12y 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.
  - 2pasc 12y ago
    Doordash brings delivery + demand (beyond technical chops). That's a lot for a small local restaurant.
- 2pasc 12y 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 12y 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/why-uber-is-joining-the-race-to-dominate-urban-logistics/ http://www.washingtonpost.com/blogs/wonkblog/wp/2014/04/08/w...
tpeng 12y 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
- Nimi 12y 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.

by Nimi 12y ago

cft 12y 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".

Nimi 12y 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.
- 2pasc 12y ago
  Doordash brings delivery + demand (beyond technical chops). That's a lot for a small local restaurant.
2pasc 12y 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 12y 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/why-uber-is-joining-the-race-to-dominate-urban-logistics/ http://www.washingtonpost.com/blogs/wonkblog/wp/2014/04/08/w...

tpeng 12y 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

Nimi 12y 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.