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DoorDash raises $535M, now valued at $1.4B

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Re: DoorDash raises $535M, now valued at $1.4B

#51

Post by jartelt »

Gasparila wrote: post #2

Wow that's a lot of dilution for a late stage round. I feel bad for the employees that suddenly have their equity cut by 60%. If I'm doing my math right, ($865 MM pre-money) then it means even with the higher valuation preferred price goes down

Some reports put the post-money valuation after the Series C at $700M. For this round, the pre-money is reported to be $865M and post-money is $1.4B.

If I had a 1% stake in DoorDash after the Series C, it was worth $7M ($700M * 1%). Assuming all the Series D round was new shares issued (we don't know the details), my stake in DoorDash would be diluted from 1% to 0.62% after the Series D (1% * $865M/$1.4B). However, the value of my stake would have grown from $7M to $8.68M (0.62% * $1.4B) because the valuation went up.

This obviously ignores things like value of preferred vs common stock. But, it is not straightforward to say everyone's stakes were diluted by 60% and it's bad. They were diluted, but the value of their holdings theoretically went up.

Re: DoorDash raises $535M, now valued at $1.4B

#52

Post by Spivak »

thisisit wrote: post #30

I haven't used DoorDash but my experience with food delivery services has been average. As a bachelor I loved them until I found out these companies use multiple ways to add up charges. Most of the time restaurant cost in-shop vs cost app varies a lot. Then they charge some kind of "packing charges". Including delivery fee some times the delivery price is 25% more than restaurant prices. When I talked to some of the…

YMMV but I haven't noticed any change from places that list on delivery services. The local places around here typically just inflate their prices in the app to cover the delivery cut and then push customers to order directly with coupons, or takeout deals.

You could be right and it might not last forever, but independent customer acquisition has a tangible value and I'll be basking in the 35c wings because I'm okay with calling in my order for as long as possible.

Re: DoorDash raises $535M, now valued at $1.4B

#53

Post by dahdum »

pavanred wrote: post #40
ac29 wrote: post #35

Earlier quoted context omitted.

DoorDash doesn't mark up menu prices any more, at least in my market. Supposedly restaurants didnt like the hidden markup, so they moved all of their fees into the delivery fee and the service fee. Its not terribly fair to consider taxes and tip as "hidden charges", IMO. The taxes you pay even if you go to the restaurant yourself, and the tip is the majority of what the drivers get paid -- they dont work for free. I'…

I agree taxes are not hidden charges, but it does sound a little deceitful to me that doordash bundles taxes with their service fee as one line item on their checkout page. And, I don't share the same sympathy for the doordash drivers. I was already charged a delivery fee and a service fee separately, why is it still my responsibility to make sure the drivers get paid enough and not doordash's. Besides, the idea of t…

The crazy thing is with all those fees, service charges, and markups they are still just barely contribution margin profitable.

Amazon Prime Now / Restaurants guarantees a delivery driver a certain wage (say $XX/hr, depends on market). However what that really means is while your tip is technically going to the driver, until they exceed $XX/hr, you're just saving Amazon from having to pay them instead. I still tip, but my generosity went down when I realized that most of my tip is really just a handout to Amazon.

Re: DoorDash raises $535M, now valued at $1.4B

#54

Post by bduerst »

thisisit wrote: post #30

I haven't used DoorDash but my experience with food delivery services has been average. As a bachelor I loved them until I found out these companies use multiple ways to add up charges. Most of the time restaurant cost in-shop vs cost app varies a lot. Then they charge some kind of "packing charges". Including delivery fee some times the delivery price is 25% more than restaurant prices. When I talked to some of the…

Same here. On top of that, the delivery itself can be pretty sub par. I had one delivery person not understand the concept of entering in a code on a keypad to get into an apartment building. Not having difficulties entering the code, mind you, but not knowing what the keypad was even for.

Re: DoorDash raises $535M, now valued at $1.4B

#55

Post by ggg9990 »

traviswingo wrote: post #25

Unfortunately I no longer use DoorDash. The concept was amazing, but I’ve had one too many questionable people deliver my food that the last time it happened I didn’t even eat it. I’m a huge fan of the “1 million jobs” type of companies like this, but there’s a level of trust that comes with allowing someone to handle the food you eat. I’m not even a judgemental individual, and I hate people that are, but I shouldn’t…

My mom never used to let us order pizza delivery because she didn’t want a pizza delivery guy to know who we were and where we lived. Remember going out to the pizza shop in 5 degree F weather with my dad.

Re: DoorDash raises $535M, now valued at $1.4B

#56

Post by seizethecheese »

ghaff wrote: post #49
WisNorCan wrote: post #38

Earlier quoted context omitted.

> Congrats you aren't losing money on every order! I think this misunderstands how marketplaces are built. Traditional economics would agree with you and say that selling $1 at $0.90 is insanity. Traditional economics have been slow to catch up with marketplace economics although there have been some recent papers that start explaining a better framework. If you know that a marketplace has strong network efforts and…

I'm not sure I even understand what the network effects are here. I guess there are some potential efficiencies with having a single delivery company that handles deliveries rather than individual restaurants but it seems like a stretch. People I know who live in cities tend to just have a stack of take-out pizza/Chinese food/etc. menus for places that deliver (or not). Maybe I'm missing something but it doesn't real…

Restaurant delivery people will be utilized 50% (trip there and back). If the network effect can do better than that, then there's a business.

Re: DoorDash raises $535M, now valued at $1.4B

#57

Post by kels »

I really want to like all of these services. I've used Grubhub, Uber Eats and DoorDash. My problem with them is that it costs way more than eating at the restaurant. It's usually 30% - 40% of the cost of the food for delivery, service fees and tip.

I've always wondered why it wasn't cheaper to do take out than eat at a restaurant. I'm not taking up a parking space, table, using facilities, or taking up as much of the employees time but I still incur that overhead.

Re: DoorDash raises $535M, now valued at $1.4B

#58

Post by capsulecorp »

ghaff wrote: post #49
WisNorCan wrote: post #38

Earlier quoted context omitted.

> Congrats you aren't losing money on every order! I think this misunderstands how marketplaces are built. Traditional economics would agree with you and say that selling $1 at $0.90 is insanity. Traditional economics have been slow to catch up with marketplace economics although there have been some recent papers that start explaining a better framework. If you know that a marketplace has strong network efforts and…

I'm not sure I even understand what the network effects are here. I guess there are some potential efficiencies with having a single delivery company that handles deliveries rather than individual restaurants but it seems like a stretch. People I know who live in cities tend to just have a stack of take-out pizza/Chinese food/etc. menus for places that deliver (or not). Maybe I'm missing something but it doesn't real…

Maybe its where you live? I live in Las Vegas, and with the 24 lifestyle that often includes drinking, these services have absolutely blown up out here. Granted its a pretty special case in terms of city density coupled with a larger than normal group of restaurants that are open late or 24 hours. That and the 215 beltway makes it so even if someone wants something from across town its not much of a hassle (lest its during rush hours obviously). I always wondered if it was the same in other cities, I just don't see it as sustainable without the 24 hour life style and the city density.

Re: DoorDash raises $535M, now valued at $1.4B

#59

Post by arkades »

kels wrote: post #57

I really want to like all of these services. I've used Grubhub, Uber Eats and DoorDash. My problem with them is that it costs way more than eating at the restaurant. It's usually 30% - 40% of the cost of the food for delivery, service fees and tip. I've always wondered why it wasn't cheaper to do take out than eat at a restaurant. I'm not taking up a parking space, table, using facilities, or taking up as much of the…

Food is priced to existing overhead; delivery is added to that. Whether or not you walk in the door doesn’t shift their fixed costs, and the marginal cost of the busboy cleaning one more table is trivial.

Re: DoorDash raises $535M, now valued at $1.4B

#60

Post by mmanfrin »

kels wrote: post #57

I really want to like all of these services. I've used Grubhub, Uber Eats and DoorDash. My problem with them is that it costs way more than eating at the restaurant. It's usually 30% - 40% of the cost of the food for delivery, service fees and tip. I've always wondered why it wasn't cheaper to do take out than eat at a restaurant. I'm not taking up a parking space, table, using facilities, or taking up as much of the…

  I've always wondered why it wasn't cheaper to do take out
  than eat at a restaurant. I'm not taking up a parking 
  space, table, using facilities, or taking up as much of the 
  employees time but I still incur that overhead.
You're also not buying high-margin drinks or being swayed to buy the specials (which are often used to balance inventory).
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