DoorDash is one of the most successful startups of the last decade, with a market cap of $56 billion. This morning, I watched their YC Demo Day pitch from 2013.
Founder Tony Xu shows us a huge problem and gives us strong evidence that he’s solving it. Let’s dig into his pitch…
Big Potential
Right away, Tony shows us a massive opportunity. People want food delivered, but the options are pizza…and more pizza.
Hey, pizza’s great. But sometimes you want pad thai or eggplant parm.
Every investor in the audience could relate to this problem. And if it’s a problem everyone has, solving it is a huge opportunity.
That’s important because VC’s only make money if a company becomes a giant. That’s the only way to pay for all the failures!
Rapid Growth
Okay, Tony’s on to a huge market. But can he actually capture it?
Tony has an innovative system that plugs directly into restaurants through an iPad. Then, he gets couriers through an app, just like Uber.
Tony gives us strong evidence that DoorDash is catching on.
Orders have quadrupled in the last 6 weeks, reaching nearly 100 a day. That’s a lot of business for an early stage company!
If I were in that audience, I’d be thinking, “This guy could be on to something.”
But What About Margins?
Tony has less than 3 minutes here, so he can only give us so much detail. But one critical question is going to be on every investor’s mind: what are the margins like?
DoorDash could sell you a $15 plate of pad thai for $20, then pay the driver $10. If they did that, they’d lose $5 on every order.
Half the town would be signing up for cheap pad thai, right? So order numbers would go through the roof, just like you see on Tony’s slide.
That would be a lot of fun for the people of Palo Alto. But it wouldn’t be a viable business.
I’d want to know if they can make money on each order.
Given the early stage, the business would probably still be burning cash due to fixed costs. But at least it would have a path to profitability in the future.
We also have no information on revenue here — but again, there’s only 3 minutes.
The Verdict
I wouldn’t have all the info I need after this pitch. But I would know that meeting Tony is worth my time.
I’m willing to bet investors swarmed him after this pitch, even if they still had a few questions.
Tony frames a huge problem and gives us real evidence he’s solving it. If you can do that, raising money gets a lot easier!
What do you think of Tony’s pitch? Leave a comment and let us know!
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