How I Built This: DoorDash: Tony Xu
|David Senra||Nov 16, 2018|
Tony’s early life story: Tony was born in China. His family moved to the United States when he was 4. He learned English by watching TV. No one could pronounce his Chinese name. He legally changed his name to Tony. He was inspired by Tony Danza from Who’s the Boss?
He started working at a young age: Washing dishes and mowing lawns. He made a business out of mowing different designs and shapes into people’s lawns.
Did you know your parents were struggling? I had small observations that was true. We couldn’t afford sports uniforms. We lived in a small apartment. I was on the free lunch program.
Tony went to Stanford for business school: One of the projects he created in business school eventually became Door Dash.
How Tony found a problem to solve: Tony would go into local businesses and ask: If there was a magic wand and we could take away any problem for you, what would it be?
We started hearing about challenges with delivery: That was bizarre. Delivery has been around forever. Outside of New York City, 85% of restaurants in America didn’t deliver.
How they learned how delivery works: We’d get jobs at places like Dominos Pizza and FedEx and do deliveries. We learned a couple of interesting observations. It was really hard for a small business to know how many drivers they need. They couldn’t deal with special events like a football game or Valentine’s Day.
How Door Dash got started: We built a website called Palo Alto Delivery. We put up eight pdf menus from local restaurants. We had a Google Voice number that would forward to our cell phones. That was it. We did not ask permission or partner with these restaurants.
Two things kept us going: 1) We were enjoying working with one another. 2) We kept getting positive answers to the questions we were asking. Is this something consumers wanted? Is this something restaurants were willing to pay for?
All the things we did at the beginning were not scalable: I remember graduating from business school and two days later I was delivering hummus in my Honda.
It was not obvious there was a business here: It was still very small. We’d high five each other on days when we had 20 orders.
How Tony thought about Door Dash: We are building a logistics business not just a food delivery company. Our goal is not to do just food. We had to start somewhere and show value from day one.
How they figured out the name Door Dash: We had a few very simple criteria. 1) A name that was easy to spell. 2) Two syllables or less. 3) The domain name had to be available. We ran a script to crawl 3rd party sites that list websites and found Door Dash. It cost us $10.
Early distribution tactic: I went door to door to sign up our first 50 restaurants.
One of the best things to happen to our company: Every single person did deliveries and customer support for the first year. As a result you become an expert. You learn about different systems. You learn about the nuances.
How does Door Dash make money? Delivery fees from the customer. A percentage of the order from the restaurant. The combination makes the model work.
The opportunity for Door Dash: 95% of restaurant orders happen in person or over the phone. We are in the very early standings of a gigantic industry. This has given Door Dash the clarity to go and get all the details right. Even the ones that don’t seem scalable. [Urban dense places, limited parking, etc..]
Where is Door Dash in 10 years? The infrastructure for a city that connects consumers and businesses. The best way to grow a local business.