Fireside Chat with DoorDash CEO: Starting and Scaling a Business is “A Game of Inches and Details”

At CommerceIQ, we regularly bring together senior business leaders and founders in the ecommerce space to share their story or discuss a particular topic. In the years prior to the pandemic, our industry summit took the form of a lively dinner. Although we cannot recreate an identical intimate experience online, we still want to play a part in building community among our industry’s leaders. 

CommerceIQ’s summit moved online this year and featured Tony Xu, co-founder and CEO of DoorDash, which had its IPO in December 2020. Tony shared the company’s origin story, how they grew to dominate competitors without startup capital, the sudden shift in consumer demand created by COVID and where the company may be headed in a post-COVID world. 

He talks about the importance of being nimble and responsive to consumers, which led to the expansion of DoorDash delivery for groceries as well as restaurant food. Listening to Tony struck a similar chord to the same conversations I was having with customers who relied on CommerceIQ’s insights during COVID to manage unprecedented demand shocks for certain products like toilet paper and cleaning supplies.   

This recap highlights key points from our conversation with Tony and his Q&A with attendees.

Building DoorDash

• Tony’s story epitomizes the American dream. His parents emigrated from China to the United States when he was 5 years old, and Tony grew up working as a dishwasher in his mom’s restaurant. Fast forward to 2013, this ambitious Stanford MBA candidate and his co-founders sought to create a solution that would address the key challenges faced by local business owners, like Tony’s mom. 

• The co-founders’ research revealed that these merchants often didn’t have the right resources, infrastructure and tech talent to capitalize on new opportunities that could grow their business, such as those available through the digital space. DoorDash was born to expand the reach and capabilities of local businesses while bringing convenience and choice to consumers. It began with a focus on deliveries for restaurants, as the co-founders believed their platform would receive the highest order density with these merchants. 

• Their vision focused on three key areas: developing an affordable platform, offering an unmatched, high-quality selection of merchants and providing delivery of products in minutes, not hours or days. “The business can’t just be great at one or the other—you have to get all three right,” Tony said. He admitted, though, that finding balance in a three-sided marketplace is a complex undertaking. “It’s a game of inches and details and getting one percent better everyday. Operating at the lowest level of detail is the hallmark of the company.”

• DoorDash was not the first such business in the market, but Tony and his co-founders’ maniacal focus on providing a better product experience led to DoorDash becoming the largest on-demand logistics platform for the delivery of products in the US. They’ve acquired 23 million monthly active consumers—3x that of their peers—with a high frequency of use. “I can tell you all of the strategic choices that were made, but it’s the execution that’s going to make all of the difference,” Tony said. 

Scaling the Business

• Restaurants considerably outnumber grocers and convenience stores. By focusing DoorDash’s deliveries on restaurants first, they could scale quicker geographically and achieve high order density and frequency. “That’s why we had to take a pretty long time serving restaurants before we could enter some of these other categories,” Tony explained. “We now are up there literally tied with the Postal Service in terms of our coverage of homes, which is more than anyone else.”

• With millions of engaged MAUs, Tony and team were ready to navigate new waters and bring consumer packaged goods from popular brick-and-mortar businesses to the ecommerce platform. They launched DashMarts in 2020 as a unique online store offering a curated set of products for delivery in under 30 minutes. To win on speed, selection and price, the company built micro fulfillment centers across the country to house thousands of SKUs—from local retailers and large CPG companies—closer to consumers. 

Looking to the Future

• The pandemic acted as a chief transformation officer for almost every company, instigating widespread change. He believes this experience will cause brick-and-mortar businesses to continue this line of thinking and not require in-store dining or shopping to be the only option.  “Once consumers start habits, they tend to stick,” he said. “We will absolutely go back inside restaurants and will absolutely continue ordering delivery. Thing I’ve learned about convenience is that it only moves in one direction.”

• While stores are exploring operational changes, Tony is looking to DoorDash’s user base for the company’s next move.  “One of the things we’ve learned is that 75 to 80 percent of our 23 million monthly active consumers have never shopped on a grocery delivery or convenience delivery platform before,” he observed. “That’s actually why we decided to enter those categories. It was the pull from these customers and their search results and their activity through our app and our website that we started figuring out, OK maybe it makes sense to serve them in these other ways.”

• Even though DoorDash is now a publicly traded company, Tony said that life has not changed much. “I think a lot of this is about expectation setting, just like with all things in life,” he said. “When you set the appropriate expectations, it’s easier to manage the kind of inevitable ups and downs, and I still believe we’re just so early in our journey.”

• Building neighborhood interactions between consumers and local merchants is core to DoorDash’s business, and what they seek to facilitate more of. Tony wrapped the summit expressing that sentiment: “The goal of growing and powering local economies has been something we wrote on a napkin in my living room when we started, and it remains to be the company’s mission today.”

If you’re inspired by Tony’s story and want to see how your brand can thrive on ecommerce in a post-COVID world, learn how CommerceIQ can help here. 
If you enjoyed my interview with Tony, stay tuned for my next Fireside Chat with the president of Instacart on April 29. This conversation comes on the heels of last week’s news from CommerceIQ about our omnichannel support for Instacart, and I’m especially excited for “Winning With Omnichannel: The Insider’s Story of How Instacart Became a $39 Billion Behemoth” so be sure to register here.