DoorDash Co-Founder Stanley Tang on founding story, lessons + First-time fund manager panel | E1759 | Summary and Q&A

TL;DR

Doordash co-founder Stanley Tang shares the founding story of Doordash and their approach to avoiding distractions, followed by a panel discussion with first-time fund managers.

Key Insights

• 🛩️ Doordash started as a small landing page and evolved into a successful food delivery service by addressing the needs of small businesses.
• ⛽ The company's growth was fueled by its operational efficiency and ability to adapt to changing market demands, such as during the pandemic.
• 🥘 Cloud kitchens have become a significant trend in the food delivery industry, allowing for better delivery experiences and increased efficiency.

Transcript

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Questions & Answers

Q: How did Doordash evolve from a landing page to a successful food delivery service?

The co-founders identified the need for a more efficient delivery service while interviewing small business owners and decided to apply software to build a local delivery service tailored for consumer goods.

Q: How did Doordash handle the exponential growth during the pandemic?

Initially uncertain about the impact of the pandemic, Doordash experienced accelerated growth rates as more people relied on food delivery. They adapted quickly by rolling out features like contactless delivery and reducing commission fees for restaurants.

Q: What role do cloud kitchens play in Doordash's business model?

Doordash recognizes the importance of separating the dining experience and convenience of delivery. Cloud kitchens, or virtual kitchens, allow for the efficient delivery of food from centralized locations, enabling better experiences for customers and increased efficiency for restaurants.

Q: How did Sophia Amarosa and Paige Doherty approach fundraising for their respective funds?

Sophia raised a fund through a public fundraising approach, leveraging her network and social media presence. Paige focused on smaller fund sizes and targeted strategic LPs, including founding partners, to form relationships and gain support.

Summary

This video features two talks from Jason's Angel Summit. The first talk is with Stanley Tang, co-founder of DoorDash, as he shares the founding story and the challenges they faced in the early days. The second talk is a panel discussion with fund managers discussing the changing landscape of investment in startups. The video highlights the growth of DoorDash and the impact of the pandemic on the delivery industry. It also explores the concept of cloud kitchens and the role of fund of funds in the startup ecosystem.

Questions & Answers

Q: Can you tell us about the founding story of DoorDash?

DoorDash started in 2013 as a landing page for one Indian restaurant. It was originally intended to be a class project at Stanford University, focused on building software for small businesses. However, during their research, the founders discovered a demand for local delivery services among businesses. This led to the idea of building a more efficient local delivery service for restaurants and other small businesses. They conducted an experiment by creating a basic website with menus and a phone number for ordering. The unexpected customer demand they received validated the need for a delivery service, and that's how DoorDash started.

Q: How did DoorDash navigate the challenges of being an operationally intensive business?

In the early years, DoorDash struggled to raise money because investors were more focused on software and digital apps. However, this constraint forced them to stay lean and focus on operational efficiency. They had to reach unit economics profitability and demonstrate their ability to execute with limited resources. This approach eventually paid off when they were able to raise funding in 2018. By that time, they had already built a strong operational foundation, giving them an edge over competitors.

Q: How did the COVID-19 pandemic impact DoorDash?

Contrary to expectations, the pandemic had a positive impact on DoorDash's growth. With the closure of restaurants, delivery became the primary means for customers to access food. This led to an acceleration in growth rates for DoorDash, with record-breaking weekends and high demand for contactless delivery. DoorDash had to rapidly adapt to new challenges, such as distributing PPE to drivers and implementing contactless delivery options. They also reduced their commissions to help alleviate the financial burden on restaurants. Overall, the pandemic highlighted the importance of having an e-commerce strategy for local businesses.

Q: How has the concept of cloud kitchens and virtual kitchens accelerated DoorDash's business?

DoorDash sees a bifurcation between the need for experience and convenience. Traditional restaurants are focused on providing a dining experience, while delivery requires a different approach. Cloud kitchens, also known as ghost kitchens or virtual kitchens, offer a separate space for delivery-focused operations. DoorDash believes that separating these two aspects of the restaurant industry will lead to greater efficiency and better customer experiences. They see cloud kitchens as part of the larger trend in adopting e-commerce strategies for local businesses.

Q: How does a fund of funds like Zendana work?

Zendana is a fund of funds that focuses on pre-seed and seed funds. They raise capital from foundations, endowments, and family offices to invest in these early-stage funds. Their goal is to provide access to a diversified portfolio of investments in startups. Zendana charges management fees and carried interest, aligning their interests with the success of the underlying funds. They focus on portfolio construction and fund sizing to ensure optimal performance.

Takeaways

The founding story of DoorDash showcases the importance of validating market demand and focusing on operational efficiency in the early stages of a startup. The challenges they faced in raising funds and their subsequent growth during the pandemic highlight the need for adaptability and a strong foundation. The concept of cloud kitchens and virtual kitchens represents a shift in the restaurant industry towards separate spaces for dine-in and delivery operations. Fund of funds like Zendana provide a way for investors to gain exposure to a diversified portfolio of startups while mitigating some of the challenges of managing individual relationships with funds.

Summary & Key Takeaways

• Doordash started in 2013 as a landing page for one Indian restaurant and gradually grew into a food delivery service by focusing on the unique challenges faced by small businesses.

• The co-founders used their connections and conducted interviews with various business owners to gather insights and develop a more efficient local delivery service.

• Doordash faced challenges with fundraising as investors were initially skeptical of operationally intensive businesses, but they persevered and became more efficient than their competitors.