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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

#41

Post by Dirlewanger »

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…

When one hires everyone under the sun as a contractor, it's bound to attract society's ne'er-do-wells.

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

#42

Post by Mitchhhs »

WisNorCan wrote: post #38
Mitchhhs wrote: post #3

"Xu said the company became “contribution margin positive” in the last year, which means that it’s profitable on a per-order basis. In fact, DoorDash has become profitable in its earliest markets." Its funny this is a milestone for a company at this stage. Congrats you aren't losing money on every order!

> 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…

Yeah that's the problem here its really hard to tell the difference between the two. Sometimes it feels like a "new economy" excuse.

Question, what is a good example of a market place that is now highly profitable where the unit economics/contribution margin were negative for a very long time.

Amazon is not an example, I guarantee they were making contribution margin on every book sold fairly early on.

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

#43

Post by teambljck »

WisNorCan wrote: post #38
Mitchhhs wrote: post #3

"Xu said the company became “contribution margin positive” in the last year, which means that it’s profitable on a per-order basis. In fact, DoorDash has become profitable in its earliest markets." Its funny this is a milestone for a company at this stage. Congrats you aren't losing money on every order!

> 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…

Possible to share link to said papers? I'd love to get up to speed on the first principles behind the frameworks

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

#44

Post by not_that_noob »

WisNorCan wrote: post #38
Mitchhhs wrote: post #3

"Xu said the company became “contribution margin positive” in the last year, which means that it’s profitable on a per-order basis. In fact, DoorDash has become profitable in its earliest markets." Its funny this is a milestone for a company at this stage. Congrats you aren't losing money on every order!

> 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…

Basically, it's like Indy Jones with the leap of faith - there's a an inordinate amount of hope in the future.

https://thumbs.gfycat.com/PoorImperfectAdouri-size_restricte...

Thankfully, the world is afloat with cash looking for a home, and so we can continue with this game for a while. At least, I think the portal will stay open till the round closes. Which is enough mostly.

BTW, traditional economics can well model this using advanced options equations, but the answers won't come close to justifying the valuation they got.

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

#45

Post by not_that_noob »

Mitchhhs wrote: post #42
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…

Yeah that's the problem here its really hard to tell the difference between the two. Sometimes it feels like a "new economy" excuse. Question, what is a good example of a market place that is now highly profitable where the unit economics/contribution margin were negative for a very long time. Amazon is not an example, I guarantee they were making contribution margin on every book sold fairly early on.

Investors found that particular religion with Google. Losing money hand over fist till they put in adwords. They had to fight investors to put in one of the most profitable models on the planet. Ever since then, the game has changed. Investors now believe fervently, and founders realized investors may not know everything. Everyone else who came after drafted in Google's wake (I'm looking at you Zuck)

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

#46

Post by jtmcmc »

wskinner wrote: post #20
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

Correct me if I'm wrong, but couldn't the preferred price stay flat, even with dilution? The company issues new shares and sells them at e.g. the current preferred price. Now there are more outstanding shares, and a higher post-money valuation, but a close to flat pre-money valuation. In this case the preferred price in real percentage of the company terms is higher since there are now more shares outstanding, but th…

yeah but all the employees probably have common stock not preferred so they are in fact getting screwed.

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

#47

Post by [deleted] »

Mitchhhs wrote: post #42
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…

Yeah that's the problem here its really hard to tell the difference between the two. Sometimes it feels like a "new economy" excuse. Question, what is a good example of a market place that is now highly profitable where the unit economics/contribution margin were negative for a very long time. Amazon is not an example, I guarantee they were making contribution margin on every book sold fairly early on.

[deleted]

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

#48

Post by Mitchhhs »

not_that_noob wrote: post #45
Mitchhhs wrote: post #42

Earlier quoted context omitted.

Yeah that's the problem here its really hard to tell the difference between the two. Sometimes it feels like a "new economy" excuse. Question, what is a good example of a market place that is now highly profitable where the unit economics/contribution margin were negative for a very long time. Amazon is not an example, I guarantee they were making contribution margin on every book sold fairly early on.

Investors found that particular religion with Google. Losing money hand over fist till they put in adwords. They had to fight investors to put in one of the most profitable models on the planet. Ever since then, the game has changed. Investors now believe fervently, and founders realized investors may not know everything. Everyone else who came after drafted in Google's wake (I'm looking at you Zuck)

Yeah but thats different. Theres a difference between charging zero to get a network and losing money as a business vs selling a product and losing money on every single unit of that product being sold.

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

#49

Post by ghaff »

WisNorCan wrote: post #38
Mitchhhs wrote: post #3

"Xu said the company became “contribution margin positive” in the last year, which means that it’s profitable on a per-order basis. In fact, DoorDash has become profitable in its earliest markets." Its funny this is a milestone for a company at this stage. Congrats you aren't losing money on every order!

> 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 really seem like an area that's crying out for "disruption."

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

#50

Post by not_that_noob »

amitutk wrote: post #17
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

Most likely earlier share holders sold their stakes, so not much dilution. Perhaps founders took money off the table too. In these cases, there is not much dilution because new shares are not issued (but not much capitalization either).

That's right, but it is usually minimal. This is a very dilutive round. But they need the cash, as the general MO is to try and drive competition out of business by pushing prices down. So not much of a choice here.
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