Tony Xu is cofounder and CEO of DoorDash, an on-demand food delivery service. DoorDash lets you order from nearby restaurants via its website or mobile app, and then “dashers” will bring your food to you by car, bike, foot or scooter.
DoorDash was founded in June 2013 and is currently available in 21 cities, including San Francisco, where the company is based, as well as Los Angeles, Denver, and Toronto. The company employs more than 150 people and serves fare from “tens of thousands” of merchants. Today you can order pepperoni pizza and spicy pad thai through DoorDash, but Xu’s long-term vision includes shoes, wrenches, and baby dolls — anything sold by a business near you. Xu founded the company with Evan Moore, a classmate at Stanford Graduate School of Business (both graduated Class of 2013), and Andy Fang and Stanley Tang, whom he met while they were studying computer science at Stanford University (both Class of 2014). Xu talks to us today about how evolving trends in our home and work lives are changing the way Americans eat.
In 10 words or fewer, what is the big idea behind your business?
To build the world’s first and largest software-enabled logistics company.
We started off with an idea that we wanted to help small businesses. Before we started DoorDash, we interviewed a lot of business owners. We learned they consistently had three problems: making sure their employees were going to show up for work, figuring out where their customers were coming from, and getting more business. Meanwhile, we saw they had clipboards full of orders they turned down because they were unable to handle deliveries. We did the research and saw 85% of restaurants don’t deliver; 99% of small businesses don’t deliver. DoorDash offers a new revenue stream.
Demand is also coming from consumers. The U.S. Department of Agriculture reported that in 2013, for the first time since they started tracking this in the 1960s, Americans now spend equal amounts on restaurants as we spend on groceries. People are getting busier. There are more and more homes where both parents work full time, so it’s harder to prepare a complete dinner every day. People are seeking convenience more often.
How has DoorDash’s platform helped meet this demand?
The rise of mobile devices has given us access to an on-demand, flexible workforce. In the past if you wanted to get John to show up to work or see if Tiffany could cover his shift, what would you do? Call them? Send them a fax? It was all written down on a clipboard in the back room. Now people have computers in their pockets. The nature of work has changed, and people value freedom and flexibility. Some people are working to pay for their education, others have more than one job.
When we first started, we were the drivers ourselves. We also experimented by delivering for other services. After six months of doing deliveries, you learn it’s really complicated. You have to get lots of things right in a short time. All the orders for lunch come in at the same time! Humans are not good at parallel processing, which is what you need to do to solve peak demand. Software can solve these problems.
How do you describe your primary target audience?
Young families are some of the most time-starved people out there, especially when both parents are working.
What are your biggest challenges right now in building your business?
The most important first hurdle for a new business is finding product market fit. We found that. Now it’s: Can you maintain quality of service? This is not a product you buy once every two years. People eat three times a day. Every impression matters.
What is the best advice you’ve ever received?
Many people have told me to double down on your strengths and worry less about your weaknesses. This is not how school is set up, but it helps you deliver the best productive value and brings you the greatest levels of personal satisfaction.
What advice would you give other entrepreneurs on how to build a great business?
DoorDash is not yet a success. The most important thing is to build something people want. Without that, everything else is irrelevant.
If there was one thing that enabled you to be successful as an entrepreneur, what was it?
Holding a very high bar for intellectual honesty. It’s easy to get caught up in “Everyone else is doing it!” It’s important to have your own point of view.
How do you come up with your best ideas?
I go on long runs. I used to do marathons. Golden Gate Park is an escape from the city life. Ignoring the noise helps me think independently.
What is your greatest achievement?
Recruiting a group of people far more talented than myself on this long and ambitious mission.
What do you consider your biggest failure?
When I was younger, my biggest fear was what other people thought of me. You want so desperately to find a new environment to which you can belong. My failure was in not focusing on what I was good at and what I was interested in. I did the things I was supposed to do.
What values are important to you in business?
Thinking in first principles. It helps you focus on what’s most important for your customer.
What was your first paying job?
Mowing lawns with a friend when I was 9. I was born in China and my family immigrated to Illinois. We mowed lawns and charged more for designs, like a checkered lawn. I learned you can do more than you think you are capable of doing. I could barely reach the handle of the mower!
What is the best business book you have read?
What businessperson do you most admire?
Jeff Bezos. Building a business is way harder than starting one. It’s not like it gets easier when you get bigger! I admire his ability to go the distance — the endurance, the horsepower to last 20 years.
What do you think is the greatest innovation in the past decade?
The mobile phone revolution. It makes the world a more accessible place for everyone.