The story of DoorDash: How it conquered the food delivery market with first principle thinking

On 5/29/13 (my birthday!), I filed to incorporate Palo Alto Delivery Inc., later renamed DoorDash Inc.

It’s mostly not my story to tell. But I’ll share a bit today about how it started.

My goal is to give aspiring entrepreneurs a window into one founding story.

You’ll hear people say the team was obviously impressive, or they had conviction in the vision, but we were not special, it was not a hot space, and no one thought it made sense at first. Starting from the belief that we had to “earn every inch,” as Tony often said, was integral.

Tony and I had discussed ideas for awhile without much progress. During our second year in b school, we wanted to build something. I met Stanley in a class and asked if he wanted to work together. He brought in Andy, and the four of us met up.

We came together without an idea, but a shared desire to build something we’d be proud of, and a common interest in serving small businesses.

We went door to door and asked business owners to tell us about their work. The most useful question, for me, was “tell me everything you’ve done since getting here today.”

We tried a few things. One of them was a short marketing attribution survey placed on ipads at retail point of sale. We realized that a surprising % of people would answer 1 question while waiting for their card to process. It was a nice-to-have, not obviously compelling.

Delivery first came up at a macaroon shop. We were wrapping up an interview when we overheard the manager turn down a delivery order. If there was a lightbulb moment, this was it – why couldn’t businesses send things across town, on-demand? There should be an on-demand Fedex!

Then we found that restaurants had a more acute pain point. Most didn’t deliver, and the few that did HATED doing it. It made no sense for a restaurant to have its own delivery people when they could have 5 orders one day, 20 the next – a pooled resource would obviously be better

So we thought we could build “delivery as a service.” Businesses would feed us their orders and we’d deliver them. With our pooled service, all the restaurants in the ‘burbs could now deliver!

But immediately we saw it’d be hard to get restaurants to change their behavior.

The most important hypothesis, for this to work, was that excess consumer demand existed. We’d also have to prove out the labor economics for delivery, and that restaurants would be open to delivery. But consumer demand was clearly the driver that would convince restaurants.

Hours later, Tony and I were driving home when we got the first order. I grabbed a notebook and wrote down what the guy wanted from a local Thai restaurant. We placed a takeout order, drove to the restaurant, bought the food, took it to the customer and charged him with Square.

We kept the experiment going. We sent the link to some Stanford students. We were open a few hours per day, around dinner, and we took turns answering the phone and driving to deliver. We used Find My Friends to see each others’ locations and dispatched orders via text.

We quickly had trouble keeping up. I remember running out of class to answer the phone more than a few times. We started hiring others to help us deliver, from craigslist, flyers, and by ordering pizza and hiring that driver on the spot.

I’d start my day by taking out cash from the bank. I’d go to multiple Safeways and buy the max allowed number of Green Dot cash cards, give them to drivers to pay for food, then I’d dispatch and drive, collecting the cards at the end of the day and pay drivers in cash.

We probably took “do things that don’t scale” too far. It was absurd. But there was a major upside to doing so many orders ourselves: we understand the details:

The best alley parking spot for each restaurant, which expeditor at Orens Hummus forgets the hot sauce, how to deliver to large apartment complexes, what happens when you lose cell signal in Los Altos, how a hangry parent looks at you when her order is late … every detail.

We knew the unit economics weren’t terrible because somehow as we were doing this, the bank account wasn’t going down. (It was still running out of my personal account. What an irony that while at Stanford b school we didn’t know the first thing about starting a business)

Soon, the conversation with restaurants totally changed. “I see you here all the time — why are you buying so much food? How can we work together?”

Our first restaurant partner showed us how they receive orders from GrubHub via fax and asked us to do the same. I was excited to have a programmatic way to send orders, and then noticed one more thing — GrubHub took a huge commission!

GrubHub didn’t even do the deliveries, they just forward orders, so if we were doing both, surely we could generate a similar commission.

That restaurant delivery was such a large opportunity was counterintuitive even to us. There were many (crummy) local services around. But at this point the latent demand for restaurant delivery was slapping us in the face.

A few months in, we explicitly decided to reset our lives, move in together, and devote 24/7 to building DoorDash. After YC, we made the same commitment again. A business like this doesn’t get built without sacrifice. I can only imagine what it’s been like to do this for 6 years.

Our friends were like “oh interesting” in a way that we knew actually meant “this is weird why are you delivering food.” But it’s fun to have discovered a secret. We had more than enough evidence to endure being misunderstood for awhile.

There was another startup that launched the same week in the same town with the same model. They spread lies about us to restaurants and tried to poach our drivers. They met our eventual seed investors before we did.

We ignored them. We stayed focused on delighting customers, merchants, and drivers. That company is long dead.

We were maniacal about growth – 10% weekly. We wrote down on a whiteboard the number of orders we needed per day to hit that target, and the result at the end of the day. We made a simple order counter that we could obsessively check from our phones while we were out driving.

One of our most memorable lessons from YC was “do all the things.” We came with a list of 20 ideas for how to grow, and asked the YC partners which to prioritize. I think it was @paultoo who said something like “How would I know? Do all the things.”

There was no shortcut. We had to do everything, fast and well, and double down on what worked. (Later I’ll write down how this became a simple growth framework I’ve used since)

We did everything to grow — from standing on the street talking up strangers, going to a birthing convention to figure out how to reach new parents, competing on who could hang more door hanger flyers in a day… most of it didn’t work but some did.

We worked out of a few houses, and at one point had about 15 people working from a two bedroom apartment. We liked the cozy vibe, especially since we were there all of our waking hours, and some of us slept there.

When one of our first employees arrived for her first day, Tony was sleeping on the floor of the apartment. I tried to quickly deflate and hide the air mattress while he distracted her out front. We wanted to seem like a real company. I’m sure we did not.

I’ll stop for now and make a couple points. (there is no climax, sorry, this is just a tiny window into the very beginning)

We would never have come up with this idea in a conference room on a whiteboard. We needed to be with customers trying things out, learning until we found a set of insights that were obvious only in retrospect.

The idea of a prototype is not mutually exclusive from pursuing product excellence. We rapidly found insights, and then built a business on them, with a clear definition of quality for our customers and relentless pursuit of it.

We never slapped the Uber model onto delivery. We solved our problem from first principles. I won’t explain it but we were able to be far more efficient than our competitors even before our series A, just from smartly solving for an on-demand model with three sides.

Even today, I can recognize people who worked at DoorDash by their intensity. Founders like @ryanbroderick and @therealmikechen are carrying it forward and building more great companies. I’m sure more will follow.