The Story behind how DoorDash Captured 67% of the US Food Delivery Market and Left Uber Eats in the Dust

Welcome to The Growth Spurt, a fortnightly newsletter with curated insights that will challenge your thinking as an aspiring creator, marketer or tech-enthusiast.

Read time: 5-6 mins

Today at a Glance:

• 🥗 Storytime: Have you felt guilty getting too much UberEats?
  🖐️ RAISE YOUR HAND🖐️ 

• 🚚 Case study: The Untold Story behind how DoorDash Captured 67% of the US Food Delivery Market and Left Uber Eats in the Dust

• ✨ Career Frameworks from Alex Brogan: How to Find and Do What You Love

  Share The Growth Spurt

Storytime⚡

Yesterday, I looked at the last 7 transactions on my bank account. It was all from UberEats.

‘‘Oops..’’

Have you felt guilty getting too much Uber Eats?

🖐️ RAISE YOUR HAND🖐️

(or DM me your favourite takeaway 🍝 )

From personal indulgence to business growth, let's dive into a story of how one company managed to dominate an entire industry.

Case Study: The Untold Story Behind How DoorDash Captured 67% of the US Market and Left Uber Eats in the Dust

Initially, DoorDash started as a website called PaloAltoDelivery.com.

With PDF menus of restaurants in Palo Alto, California,and printed flyers across Stanford University, the founders wanted to test if merchants were willing to pay $6 for delivery.

Now, DoorDash is a tech unicorn, actively expanding to Australia after taking over the US delivery app market.

💣️ WTF is DoorDash?

DoorDash is a food delivery marketplace, similar to UberEats. Building a marketplace is difficult but easy to scale due to built in distribution.

In the AI age, built-in network effects are one of the few CVPs that is bulletproof.

The success of DoorDash ‘s growth depends on its 3 main audience segments

(1) Merchants - businesses selling food
(2) Customers - who buy food
(3) Dashers - drivers who deliver the food

Let’s explore how DoorDash grew from a small startup to a market leader.

💡 How did DoorCash Get Its First Customers?

(1) Getting the First Merchants aka restaurants

In the early days, Tony Xe (co-founder of DoorDash) went door to door trying to convince restaurants (merchants) to sign up. He made a shift in his business pitch CVP which led to initial traction.

❌Selling revenue and features does not work for early businesses.
‘‘You should sign up because our mobile technology is good and food delivery saves your time’’

✅ Customers don’t care about you. So let them know it doesn’t cost them anything to sign up.
‘‘Sign up with us. You will only pay when you get a sale’’

(2) Getting the First Customers (aka people who want food delivered home)

Source: Strategy breakdown

1: Prioritise high-value customers 💹 

According to Pareto Principle, it is wise to assume that generally, 80% of customer revenue comes from 20% of users.
DoorDash capitalised on 1 major winning audience segment - outer suburbs with large family homes

They were
1. Outside Urban areas (less competition)
2. Wealthier suburbs - higher order value and better unit economics.

‘‘Competition is for losers’’ -Peter Thiel

Uber was competing for urban areas along with GrubHub.
This meant fighting on rates with places already delivering to customers who already ordered delivery.

It was a bloodbath 🩸 

DoorDash did not want to play the same game.
They knew riches are in the niches.

2. Niches are in the riches 🤑 

Unlike urban areas, restaurants in these outer suburbian areas were less tech- savvy. They did not have modern delivery services.

DoorDash capitalised on that.

And these restaurants have existing customer bases that fit the niche profile for DoorDash- so voila!

⚡️ How did DoorDash know it hit PMF?

(Source: Lenny Rachitsky)

It took DoorDash 9 to 12 months to find PMF.

👊 What is the evidence of PMF?

Step 1: Track North Star metrics that tie directly to the revenue over 6 months and longer.
For Doordash: Retention, and order frequency ties directly with revenue

Step 2: Make sure all other costs remain fairly stable
Marketing spend was stable (cost), while revenue and retention were growing at the same interval.

Step 3: Is the strategy scalable?
There are many times of scalable growth tactics.

For DoorDash, when they were able to scale a similar growth playbook that yielded success in another city, that is a sign of scalable growth (aka PMF).

Scaling Strategy: How DoorDash replicated its growth over and over again? 🚀 

DoorDash ‘s vision was to be an on-demand Fedex, not a delivery company.

DoorDash differentiated itself by its product experience [logistics] for both its merchants and customers, which was essentially scalable.

Network effects. Period.

Check out Tom Adler‘s Strategy Breakdown if you want to fall into the rabbit hole of DoorDash ‘s exponential growth.

✨ Career Frameworks from Alex Brogan: How to Find and Do What You Love

Now that we’ve explored how DoorDash business grows, let’s shift gears and focus on our personal growth.

The tech market is in a whirlwind right now.

💛 If you are confused with your career, just know you are not alone💛 

Check out Alex Brogan‘s linkedin carousel post that explores career frameworks that help you find the career you love while getting the $$$.

Here are my Top 2 favourite frameworks

1. Source: Elad Gil (Entrepreneur/Advisor to Airbnb Coinbase etc.)
- Overindex network, market and growth rate ,optionality and brand
- Unindex Role and Compensation (while being early career)

2. Source: Nate Soares (Director of Machine Intelligence Research Institute)
‘Most of your outcome will depend on luck, timing, and your ability to actually get out of your own way and start’

Refer Friends & Help Us Grow the Tribe🥳

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