In late 2016, I had the opportunity to join DoorDash's HQs in San Francisco (at a time when the business team was still less than 50 people). In 2020, DoorDash's IPO valued the company at $39B (as the largest food delivery player globally). Recently, I reflected on some of the key lessons learned during my time at DoorDash.
#1 – Going where others aren’t:
I joined DoorDash to lead merchant partnerships in Sacramento. Within my first three months, Sacramento became our best performing market in the US. We were consistently getting merchant revenue-share agreements that were well ahead of other markets. And our growth rates in Sactown were well ahead of those in other markets. In many ways, Sacramento was proving to be the "model market" with great economics and sustained hyper-growth.
Larger markets like Austin, San Francisco, Chicago and New York had become competitive and saturated. Multiple food delivery players were investing aggressively in mainstream markets, deploying capital to win a limited base of customers. DoorDash, on the other hand, had started focusing on tier 3 markets (like Sacramento). In the absence of competition, these markets proved to be a huge success. They grew much faster and larger than the highly contested tier 1 markets. The ROI in these markets was incomparable to that in tier 1 cities.
Interestingly, when first proposed, the idea of experimenting with tier 3 markets seemed particularly strange. At the time, the conventional wisdom was that app-based food delivery worked best in areas with high population density (that create a high geography concentration of orders). It was only after we saw some of the early results that the importance of other factors became clear.
#2 – The art and science of experimentation:
At DoorDash, one of the most exciting observations was the emphasis around experimentation. Tony Xu, the Founder/CEO at DoorDash, had implemented an incredible rigour toward designing, running and measuring experiments. He took a particular interest in following and understanding ongoing experiments across the organisation, actively promoting a culture that rewarded original thinking and risk-taking.
A lot of our bold bets started off as well-designed experiments. These experiments started off with a clear and vetted thesis (which often initially seemed strange or non-obvious), and were run with immense discipline around measuring results, especially by controlling for positive and negative metrics.
Some of the greatest non-obvious insights and breakthroughs in business result from curiosity, experimentation and intellectual flexibility.
#3 – Embedding operational excellence into the cultural DNA:
Operational excellence is best defined as a set of behavioural tendencies that enable effective and efficient execution. The drivers or “inputs” for operational excellence vary based on the nature and domain of the business. At DoorDash, this meant scaling a certain set of best practices in how the business was run, managed and built.
Some of these best practices included an emphasis on continuous improvement at an individual and functional level, an imperative of measuring performance to drive results, an inclination to run well-managed experiments, a ruthless emphasis on recruiting high talent, and a culture that promoted bottoms-up innovation and breakthrough thinking.
Additionally, there were a set of habits that had become an indispensable part of our operating DNA – a tendency to move incredibly quickly, a general sense of admiration for determination, a non-territorial and non-defensible attitude, and a belief that anything is possible. The operational excellence was fine-tuned for an ops-heavy business. It formed the very basis of our ability to execute effectively at all levels.
#4 – The value of intensity as a founder trait:
As an operator, and as an individual, Tony was intense. And I particularly loved that.
His intensity translated into an environment of extreme determination, which then attracted other people that shared that drive and motivation to achieve big things. In all the companies that I've worked at, DoorDash was probably the only place where I received 7am in-person meeting invites. It was also the place where I found the overall levels of drive and motivation to be the highest.
Interestingly, intensity sometimes gets associated with undesirable behaviours – a tendency to not be a team player, or to not be a great listener. In the case of DoorDash, the intensity was coupled with high levels of professional, teamwork and emotional intelligence. There was a general understanding that teamwork was the bedrock that would enable success at the individual and the functional level.
#5 – A consumer-first mindset:
After achieving some level of initial success, most organizations begin to settle around a set of “core beliefs” that drive the company’s decisions. At DoorDash, one such core belief was to bring a consumer-first mindset to complex decisions.
As a three-sided marketplace (customers, delivery drivers and restaurants), our decisions had a significant impact on multiple stakeholders. In navigating complex decisions with broad implications, there was a general sense of recognition that the entire three-party ecosystem comes together to create a very specific customer experience. That was the end goal. A lot of our critical decisions were guided by a consumer-first mindset.
At the heart of DoorDash’s success lay a few key trends in customer retention. Managers and team leads often made decisions and advocated for priorities that were in service of a consumer-first mindset. Ultimately, the end goal was always to win the customer with a superior value offering.
#6 – Finding insights at low levels of detail:
There is a long list of strategic decisions that allowed DoorDash to operate very differently from the competition. From targeting tier 3 markets to having a differentiated strategy on the customer selection front, the common thread behind these decisions was the discovery of insight from operating at low levels of detail.
A lot of the best teams at DoorDash had a strong tendency to operate at low levels of detail. These teams demonstrated an impressive level of intellectual curiosity, and worked constantly to deepen their understanding of the core problems and decisions within their domain.
What sort of restaurants do customers prefer? What happens if we add a new category of restaurants (or a new cuisine)? Why is the impact of adding a new category different from that of adding more restaurant options within an existing cuisine? Can the same principle apply at an intra-category level (whereby category optimisation becomes more important than the sheer volume of available options)?
Guided by our own intellectual curiosity, we went deep on a given question. And oftentimes, true insight was discovered at low levels of detail. In a recent post on How to Do Great Work, Paul Graham refers to these as the frontiers of knowledge:
"Once you've found something you're excessively interested in, the next step is to learn enough about it to get you to one of the frontiers of knowledge. Knowledge expands fractally, and from a distance its edges look smooth, but once you learn enough to get close to one, they turn out to be full of gaps."