How I Built This with Guy Raz - DoorDash: Tony Xu

Episode Date: November 12, 2018

In 2013, Tony Xu was brainstorming ideas for a business school project when he identified a problem he wanted to solve: food delivery. For most restaurants, it was too costly and inefficient, leaving most of the market to pizza and Chinese. Tony and his partners believed they could use technology to connect customers to drivers, who would deliver meals in every imaginable cuisine. That idea grew into DoorDash, a company that's now delivered over 100 million orders from over 200,000 restaurants across the country. PLUS in our postscript "How You Built That," we hear from the winner of our 2018 HIBT Summit Pitch Competition: Ashlin Cook. She combined her love for dogs with an entrepreneurial itch to create Winnie Lou: a Colorado business that sells healthy dog treats in independent pet stores and from a food truck. See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.

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It had tall windows, beautiful old details, and plenty of space for all of us. And being in that home on Airbnb, right in the middle of Vienna, walking distance from so much of the city, made it feel less like a visit and more like we were actually living there. Plus, taking a trip is the perfect time to host your space on Airbnb. Your place with all of its personal touches and its amazing location could make someone else's vacation even better. Your home might be worth more than you think. Find out how much at Airbnb.ca.ca. Hey, it's Guy here. Just want to let you know that on November 13th, I'll be doing a live webinar with Gary Erickson of Cliff Bar. He'll be talking about how to build a business and a business culture that reflects your personal values.

The webinar is free. It's supported by GoToMeeting, and it's just one of the projects that grew out of our first How I Built this Summit in San Francisco. If you want to check it out, go to summit.npr.org slash webinar. That's summit.nepr.org slash webinar. And one more little thing. This Thursday, we're going to be running our first bonus episode from the summit. It's my live conversation with Jennifer Hyman of Rent the Runway. So be on the lookout for that. in your podcast queue, and now here's the show. It was not very scalable. I mean, all things that summer that we did were not scalable. I mean, we would take the orders as basically phone operators,

and then we would do the deliveries ourselves. And I remember graduating from business school, and two days later, while my classmates were flying out on their exotic vacations, I was delivering, you know, pumice in my Honda. From NPR, it's how I built this. a show about innovators, entrepreneurs, idealists, and the stories behind the movements they built. I'm Guy Raz, and on today's show,

the story of how a student named Tony Shoe went from delivering Thai food to dorm rooms to building one of the biggest meal delivery services in America. When I was in college, there was a student who used to roll a giant cooler down the corridors of the dorm. And he would shout out, Chinese food, man. Get your Chinese food. And every Tuesday and Thursday night, this very enterprising kid would go to a local Chinese takeout. He'd order a hundred bucks worth of chau main and fried rice and beef and broccoli and egg rolls, mark it up by about 20% and sell it to hungry college students at 10 or 11 p.m. that night.

This was kind of a big deal in the 1990s when the only real delivery option was pizza. But, of course, at a certain point, The novelty wore off and the Chinese food man got a job somewhere and that was it. Dorm room food delivery wasn't scalable. Except that today, this very concept pulls in an estimated $13 billion in annual revenue. Just imagine the following situation. It's 10 at night. You want meatloaf or a burrito or some fried chicken or a burger.

But you're binge watching some show and, well, let's face it, you don't want to get off the couch. You don't want to leave your house. So you grab your phone, you click on Grubhub or Uber Eats or Postmates or DoorDash, and boom, 30 minutes later, the food is at your door. Now, you might think all of these services got started to solve this exact problem. But actually, when Tony Shue co-founded DoorDash about five years ago, he wasn't really thinking about us, about the eaters. He was thinking more about the restaurants, the chefs and the owners who wanted to get more. of their food out into the world, but didn't have an easy way to do this. So when Tony was still a student in business school, he and some friends built a system

that linked local restaurants to hungry customers to the drivers who were available to deliver the food. They started with a simple web page, eight restaurants, and a Honda Accord. Five years later, DoorDash is valued at over $4 billion, and it's done over 100 million deliveries across the country. But getting to that point wasn't so simple. Tony didn't start out with lots of connections or money. In fact, he only started to learn English as a boy. Tony was actually born in Nanjing, China. And when he was four, his father got into an engineering program

at the University of Illinois at Urbana-Champaign. His mom left behind her career in medicine and started waiting tables. And as a kid, Tony got to work too, trying to fit in at his new American school. There wasn't a lot of diversity at that time, not in the late 80s and the early 90s. And so I had really two ways to learn English. And I really learned English on my own. One was watching lots of TV. And that's actually how I got my name.

Oh, your name is not Tony? No, my Chinese name was Xuxing. And when I got to the U.S., none of my classmates nor my teachers could pronounce my name. I was the only Asian kid in school. On the registration form, it said shushing. It said shu shing. It did. And as I was learning English, watching lots of TV to do it, I saw many episodes of Who's the Boss starring Tony Dantza.

And so pretty much at the age of five, I walked with my dad to the immigration office and legally changed my name. Inspired by Tony Danza from Who's the Boss? Absolutely. Did you do any like any businesses as a kid? Did you say anything? I did have a couple of businesses. So we didn't necessarily come with a lot of money. And so in order for me to buy Nintendo games or a new basketball,

I started working at a pretty young age. I would wash dishes inside my mom's restaurant. The one that you worked at. The one that you worked at. You were a dishwasher. I was a dishwasher. I'm a very good dishwasher today. And I have those days to think.

But I mowed lawns. And I realized actually at a very young age that, Well, because the lawns in Champaign were very large, you can actually make a business out of that. And I could actually charge money for different shapes for lawns. You invested in a lawnmower or? We invested in a old lawnmower. And I would just go door to door to door and ask if I can cut people's grass. And I started realizing over time, actually, if you cut grass at different heights, you can come up with different shapes and patterns.

Like the U.S. flag. You do, like, a mow the U.S. flag into someone's lawn? So I'd first use the mower to make the stripes, and I could cut them at different heights. And then what I would do is I'd ask if I can borrow one of their clippers as well as I am blanking. Oh, those trimmers? Yeah, the trimmers that are electric. Yeah, right. Yeah, the electric trimmers and effectively make different shapes in the lawn.

Wow. It's quite a lot, a giant American flag. Many hours. but when you really want a Nintendo and you have no money in the bank, you do what it takes. Did you ever have any inkling as a kid that your parents were struggling? I had a, maybe when I went to middle school, had small observations of it. For example, you know, we couldn't afford lessons for, you know, or sports uniforms. We lived in a fairly small apartment compared to some of my friends who had single family homes.

I lived off of the free lunch program for pretty much kindergarten through middle school. So I think it's small semblances of that, but I think for most of my childhood, I didn't think too much about that. And just to be clear, your mom was a doctor in China, right? She was. She was a doctor, and she effectively had to give up her credentials because, when she emigrated to the U.S., no institution in the U.S. would recognize her credentials from China. And so as a result, she kind of had to go backwards. So she worked as a waitress inside of a restaurant.

She worked as a babysitter. She worked at a hospice. And she did that for 12 years before she could save up enough money to open up a medical clinic and basically relive and reggae. gain her life in China. And while your mom was doing all that stuff, your dad essentially became an engineer, and I guess his first job was in California. So you guys move out there. How old were you when you moved to California? I was 15. So you guys move out to where? Where did you? We moved to San Jose. So you probably, given where you moved to, all of a sudden, were at a school where

there were people who looked like you, where you felt right? You were not the only Asian kid for the first time. Almost like going back to China. I'm one of maybe three kids now, right, in Illinois in my grade, that's Asian. But then I moved to San Jose. I'm like, wow. You know, this is a surprise. Yeah. And my opening conversation with the principal was one where he and other educators that assess that I was like two years behind everyone.

And it's mainly because I had no idea how competitive the school system is here. here in the Bay Area. You know, in the Midwest, especially where I grew up, you were recognized for your athletic abilities. Definitely it wasn't cool to be the smart kid in class. Out here, you know, there were math competitions. There were, there's so many academic lessons after school, and I worked my tail off. I was miserable. I mean, my first year, it was just day and night. All I did was pretty much, well, first catch up because I truly was behind. And then secondly, do a lot better. Sure.

And I remember looking the teachers in the eye and said, I'm going to graduate as valedictorian of your class. Wow. You said that as a freshman? I said that it was almost an instinctual response. Looking back, it was certainly a bit presumptuous. But four years later, that happened. You were the valedictorian of your high school? I was.

Wow. Okay, so you go to college at UC Berkeley, and then eventually you go to Stanford for business school, right? Yeah. And one of the things that you do in business school is you create a lot of projects. Yes. Which, spoiler alert, this is the sort of the beginnings of what eventually would become DoorDash.

But tell me about this project that you did for a class. What was it? Well, the assignment was working. on a customer audience that you're passionate about and try a bunch of things. And that was really what my co-founders and I kind of gravitated towards. You know, my co-founders and I, we all met really because of a shared interest for local businesses. Were they in a class with you? But they were. So you all sat around and said, how can we help local businesses, like scale or just make their operations more efficient? We didn't even know what problem to work on at first. It was just that

audience that we were passionate about. And, and, you know, each, each person has their own personal connection with a local business. Mine was clearly to my mom's business. I've watched her in the world of local business for 20 plus years growing up as a kid. So I've always been a fan. And we started by talking to a lot of businesses in the Bay Area, all sorts of businesses. What were you asking them? Asking them about if there was a magic wand and we could take away any problem for you this week. What would it be? So you would call up a restaurant and say, hey, we go in physically. You go, hey, I'm Tony.

I'm a student of Stanford. And we're working on a project. And if you had a magic wand, what's the one problem you could solve? That's what you guys would do? Yeah. What are they telling you? What's their problem? Well, there were a few.

I mean, we had heard a few. So we had heard challenges with staffing. We had heard challenges with how do we know where customers find out about us? And actually, the first idea that we had worked on was really an idea towards helping them better understand where their customers were coming from. It was more of a marketing solution where we put a tablet at the checkout and asked very simply when a customer was checking out, or how did you hear about this business? And that was actually the very first idea we worked on. All right. So where did that idea go? What happened to it?

We realize that while it's a helpful idea, that it wouldn't be the fastest way to help a small business. So maybe we can help and tell you where your customers are coming from and you can deploy more dollars into those marketing channels, or maybe we can just get you more customers. And that was when we started shifting our thinking and our attention towards how do we do that. So how do you do it? So while we started hearing about challenges with delivery and delivering like from restaurants, florists, some retail stores, and this is very bizarre because delivery has been around forever. Forever.

Yeah. And yet, outside of New York City, just about no one does delivery. 85% of restaurants in America don't deliver. So you were hearing from room restaurants saying delivery, delivery, delivery, and then what? So let me tell you about one customer. So this is a cake store owner, and her store is 500 square feet, maybe the size of your studio. And she would say things about turning down 10 to 15 orders a week. This is material.

This is very, very material. Especially when you're making cakes. Especially when you're expensive. They're expensive. And as I remember how many orders my mom would used to do in her restaurant in Illinois. I'm like 10 to 15 orders is a lot. She was turning them down. Why?

Because she had no way to deliver them. She didn't want to do it herself. Okay. She, you know, she was a one person show many of the days. So she could not afford to hire. So she could not afford to hire. Right. And when she did try to hire, you know, she had this challenge of, well, you know, only sometimes were the driver's busy.

Because, you know, when there was a spike in demand, then maybe the driver is very busy. But on most days, the driver was doing nothing. But she had to pay the driver, obviously, for both the up time and the downtime. She literally had copies of customers' payment information and details that she could not fulfill. Huh. And so this is just crazy. This is so un-American to turn down all these credit cards. And so that was really what turned our eye towards, is there an opportunity in delivery?

If so, what is it? So at that point, you guys started to do some research to find out. We did one. We did research to figure out why is delivery not a thing outside in New York City? And the second thing we did was can we run a small pilot here at Stanford campus to test out our idea? So on the first piece, we would, you know, do deliveries for services like Domino's or FedEx. And we would learn, how does deliveries actually work? What do you mean you would do deliveries?

You would go and... It would just be drivers. Oh, you mean you applied to Domino's for a job? Yeah, we'd just be a driver. You actually went to go work for Domino's? Yeah. So you guys were... You were students at Stanford, graduate school of business, but you also had these, like, part-time gigs working as drivers for FedEx.

and dominoes, just to really to learn about how this works? We were just trying to figure out how delivery works because none of us necessarily had a background in logistics. And so we learned a couple of pretty interesting observations. The first to us was it is so hard as a single store to know how many drivers to put in the store. You know, if there's, for example, a football game at Stanford, waytimes would skyrocket.

Sure. You know, we wouldn't know what to do. We wouldn't know how to flex up the number of drivers. You know, this would happen to add a florist, too. If there's Valentine's Day, good luck. You know, we're called, the store owners are literally calling all of their families and relatives. To deliver flowers. To deliver flowers on Valentine's Day.

Right? Because you can't, you can't flex up. Okay, but then think about, you know, a normal day of the week where literally we're folding pizza boxes, the drivers, because there isn't the volume. And so you have this very difficult and inefficient use of expensive labor. And so as consumption is becoming more last minute, isn't it strange that the way these goods are brought to us require advanced planning? And it was just this weird juxtaposition to us that says, well, maybe there's something here. And so we said, well, let's just run a test. Let's just do something on Stanford campus, something simple.

Let's pick one thing to deliver instead of trying to deliver everything. We chose restaurants because, well, people eat, 20 to 25 times a week, and we had researched that 85% of them did not do their own deliveries. In fact, all of the restaurants we had spoken to in the Bay Area had zero delivery. And so when we saw that, we said, well, okay, is that because nobody wants the deliveries, or is that because of something else? And so that was really the crux of what we wanted to test when we were at Stanford. All right.

So you decide to test this theory out. Yes. And how, and what did you do? What were you offering? And how did you do it? So on a Saturday, we built a website called Palo Alto Delivery.com. You guys all knew how to do this? We did.

Well, building a website fairly straightforward. And what we did was we put eight PDF menus on Palo Alto Delivery.com. From local restaurants. From local restaurants. Okay. There was a Google voice number that I had signed up for that would ring the cell phones of all of my classmates and now founders and me. And that was it. And did you partner with these restaurants?

You called them and say, hey, we're going to put. We did not do that. Did you ask their permission? We did not in the beginning. You did not ask that. In the beginning. And what did you just picked eight restaurants? We picked eight restaurants that we liked.

And what were they? Oh, there was Bangkok cuisine, which was a Thai restaurant. There was Orange Hummus, which was a Homest or Middle Eastern hummus food. There was a Chinese restaurant. There was an Indian restaurant. There was a salad bar. And people could call the number and just order off the menu. Yeah.

And so how are you? going to make money if the restaurants didn't know? Like, who was, you were just going to hope that they tipped you? Like, how is that going to work? We were not necessarily making money. So we were, so we would take the orders as basically, you know, phone operators and then we would do the deliveries ourselves. There was no app. There was no. It was just a website. It was a janky webpage. And you call the number. And you call the number. And you would say, hello, it's Tony from Palo Alto delivery. May I help you? Yes. And they would say, sure, I want a big bucket of Hummus and some pita and, you know, some Babaginous.

And you would say, great. And then how would you know how long that was going to take? We would make an estimate in the beginning. It would guess. You'd say 45 to an hour. We would say 45 minutes. And then we would drive to the store, the restaurant. Presumably you would call Oran's humus first and say, hey, hey.

We would call on the way. We'd call on the way. And we would place the order, pick it up on behalf of the customer, show up at the customer. and use, so I used to work at Square as well, so I would take a square card reader and use that. You did like a summer internship at Square? I did a summer internship at Square. And so I had many square card readers. I'm with me.

So I would plug them into my phone and use that to receive the payment. Essentially, meaning you were just being reimbursed for buying their food at the hummus bar. Yes, we weren't losing money. We just weren't making any money. And how quickly from the time you put it out there until the time your phones rang, did you start getting orders? We got our first order 45 minutes actually after launching. Wow.

And that was a very pleasant surprise. The only way this customer could have found us was by typing in Palo Alto delivery into the browser, hitting Enter, and finding us. Yeah. And, you know, this customer places an order at a Thai restaurant. Who delivered it? My co-founder and me. And then when you showed up at this place, did you say, thank you so much. We're grad students at Stanford Business School doing this research?

Or did you just say, here's your food? We actually did the former. We actually taped the whole thing. We actually asked for permission and that. You videoed it. With my phone. And asked them how you found out about us, you know, and a few other questions. He was just like, okay, thanks for the food or what?

He was really friendly. He was actually a visiting author. And he was a bit of entrepreneurial spirit himself. and he was very supportive of what we were doing. So you decide that you're going to keep this going. Yes. So how are you, if your Google voice phone was going to ring, presumably, 20 far as a day, and you and your co-founders had to do all the deliveries,

how did that work? Well, it was a bit of a limited service. So we only offered service when we were not in class. I see, okay. So it was really great technology there. Yeah, great. It's a killer app. I know.

We're available. from 9 to noon. We were available from 5 to 8 p.m. That was actually what we were available. And so this was certainly not a venture, but those were the early days. So how long did you guys do this for? We did this for five months. And what were you, I mean, every time you were doing a delivery, were you recording like how long it took you? Did you have like a book or like a spreadsheet that you were putting numbers in? Yeah, there were a few things. So there are three. major questions on our minds at the time. You know, number one was, do people want delivery and how much are people willing to pay for it? Yeah. Number two, we were interested in, you know,

our restaurant's interested in working with us. So as we started getting orders, we would talk to the restaurants and ask, you know, is this something that, you know, you find valuable? Is it, you know, would you pay for this service? In other words, instead of the customer paying a premium, would the restaurant pay you guys? Yes. Okay. And then the final question was, well, As you mentioned, we were in class at the time, and so sometimes it was difficult being in class and on a delivery at the same time. And so we started trying to recruit drivers at Stanford. And so we're trying to figure out, well, can we do that? Would people be willing to use their own vehicles?

Would people be willing to, you know, how much did they need to be paid, things like this? Those are the three areas that we're really interested in. And at what point did you and your co-founder say, this is our business? We're going to, like, what, what information did you get or did you gather that convinced you, this was going to be the thing we're going to try to do? Yeah, there wasn't, there wasn't that moment. We were doing such little volume. We were delivering maybe five to ten orders a day, half of whom from our friends. And so certainly from the data, it would have been too far a jump to say there's a business here. But, you know, I think two things kept us going. One was just enjoying working with one another.

And then second was we kept getting positive answers to the questions we were asking. You know, is this something that consumers wanted? Is this something that restaurants were willing to pay for? Is this something that drivers were willing to partner with? And so it was more incremental. And there wasn't these, you know, step function jumps per se. We were a very small service still at the time. Did you strike a deal with any of these restaurants in that time to pay you?

We did. We did. So some of them were like, sure, we'll give you like a percentage of the sale. Yeah, all of them, actually. Oh, wow. But it's not like you were bringing them a whole lot of business. No, the first check I remember cutting to a very popular store today was for $21 and some change. So this, I mean, at this point, this thing is not scalable. It was not very scalable. I mean, all things that summer that we did, not scalable. I mean, I remember graduating from business school, and two days later, while my classmates were flying out on their exotic vacations, I was delivering, you know, hummus in my

Honda. When we come back in just a moment, how Tony Shue went from delivering hummus in his Honda in Palo Alto to delivering just about every food you could imagine all across the country. Stay with us. I'm Guy Raz, and you're listening to How I Built This, from NPR. Hey, welcome back to how I built this from NPR. So it's 2013, and Tony Shoe's company Palo Alto delivery isn't really growing a whole lot. And it's clear he and his partners need more money to make this food delivery service thing grow. So they decide to apply to the Y Combinator Accelerator program, and, well, they get in.

So that's like, it's kind of the golden ticket, right? I don't know if we viewed it as a gold ticket as much as just the next step on the way of our project, because it was still very small at the time. We were, you know, we were high-fiving each other when we did 20 orders a day, right? This is not a very large service. So it was certainly not obvious that there would be a business here. So what does Y Combinator get you? Does it, do they give you, because they don't give you a whole lot of cash, right?

No, they gave us $20,000 at the time. And then they get a small piece of ownership. Yes. And but you're in this thing, which is very prestigious. And of course, all these VCs are like vultures circling around, Y Combinator looking for the next big thing. But then what? With $20,000, I mean, was it still a web page with PDFs of menus?

It was still a web page. It got a little bit more sophisticated. We evolved from the PDFs. Two? To actual store menu pages where a customer can order. It was still all web, though, nothing on your phone. So at the end of Y Combinator, it culminates into what's called demo day. Where you pitch.

Yes, where you pitch. And there are about 40 companies in our group. And all 40 companies pitch on stage to a group of investors. So let's say I'm an investor there. I'm going to listen to this and I'm going to say, Tony, you're really smart and impressive guy. You present really well. I just don't understand what's a big deal. Like, how is this going to be different than, you know, there's grub hub and there's this and there's that?

And I don't get it. What are you offering? What did you say? I said that we're building a logistics business, not a food delivery company. And, you know, our goal is to not just do food. But we need to start somewhere and we need to, you know, show value from day one. and this is the best way to serve businesses. So how much money did you guys, were you able to raise out of those pitches?

So we raised $2 million, $2.2 million in our seed round. In the seed round, wow. In the seed round. You said it was hard to raise money, but that's pretty amazing. It was. It was a bit of a harrowing experience because our bank account was dwindling quickly to $10,000 and $20,000. I had debt from grad school, as did my co-founders. I had a wedding also, upcoming, my own wedding, that I was struggling to pay for.

So I had to take a loan. You should have eloped. Should have loped. That's true. So, all right. So what was that $2 million going to get you guys? I mean, what did you need to do with that money? Well, we needed to prove that the service was viable in a market in one area.

And so we chose San Jose. But you couldn't do that with a webpage. You had to, at this point, I'm assuming, build an app. Yeah. So after graduating, Y Combinator, we launched our app in September, so the month after. And were you called Palo Alto delivery at that point or DoorDash? In Y Combinator, we launched as DoorDash. How did you come up with that name?

So it was a bit of a nerdy experience. But my co-founders and I, we had a few very very. simple criteria. We wanted a name that was easy to spell, a name that was two syllables or less, whose domain name was available. And those are the three criteria, and we ran a script across the internet to crawl, you know, many third-party services that list websites, the go-daddies of the world, and found DoorDash. And nobody owned it. Nobody owned it. So for $9.95, we were able to purchase DoorDash. Wow. And who were your drivers? They're mainly ourselves. It was my co-founders and me and the early employees at DoorDash.

We did all of the deliveries for the first, almost the first year. So you run the business and you were delivering? Yes. So it wasn't exactly 24-7, but it was very close. And what was it that you were in that year trying to figure out, what information were you trying to gather? Well, we were realizing that the most difficult part of what we do with consumers, merchants, drivers. You have three parties now, not just two, is that you have to build a lot of products that consumers don't see. How do you get the order to the restaurant? How do you reconcile

orders if they go wrong? What about payments? How do you actually tie to the accounting that restaurants are already doing? How do you know which door you should be entering if you're a driver delivering food? Because all these things save precious minutes. Which also saves money for consumers because if we can save costs out of the system, we can lower fees to consumers. So who was doing all of the coding and the data analysis and sucking all that stuff in and organizing it? So my co-founders led the engineering team and a lot of our early recruits, we had an unfair advantage of friendship. We would hire a lot of friends. Most of that initial early engineering team are actually still at DoorDash today. But that was really the early crew that

built the product. How did you get the word out about it? And yeah, how did you even start? Well, we employed a tactic that worked for us pretty well at Stanford campus, which was at the time we would print out flyers and we would stuff takeout bags at restaurants. Here's the challenge. The printing is not free. And we, you know, that summer, And when we were just testing this project out, we had printed out 100,000 plus copies of flyers. Wow. So I broke every single color printer on campus. And it's a mystery, right?

Schools out, you know, no students are supposed to be on campus, but yet all the color printers and the toners need to be replaced every day. And so when we launched San Jose, we did something very similar. We printed out flyers and we, you know, distributed them to the different restaurants, and the restaurants got the word out on our behalf. So were you on the phone all the time with restaurants trying to explain what you did, trying to get them to sign up with you or to partner with you? Absolutely. I went door to door to door to sign up our first 50 restaurants. And later on, we evolved into phone calls and other ways of reaching the restaurants.

After that first year in San Jose, when did you decide, okay, this is going to work? Let's go to the next city. Yeah. So San Jose, over a three, four-month period of time, it was growing very, very, very fast. And once we discovered that, that's when we decided to raise our next round of financing to see if we can take this beyond the Bay Area. And you needed that money to create new technology? To create new technology by hiring people, to hire salespeople. When we launch into a city, we have to make sure drivers are on the road.

And so we have to pay dashers on the road. We have to spend on marketing. It was really to operate the business. We needed the capital. So let's just talk about this for a minute because my understanding of DoorDash is there's an app for the user. Like I have DoorDash on my phone. And then the restaurant has a different app. And the driver has a different app.

Yes. That's really expensive to do all that back-end technology. It's even more complicated than that. we have to then build lots of systems to figure out, well, how long is it going to take for this delivery? You know, what's it going to be for deep dish pizza versus a salad? What if they come in in the same order? How do you even start to figure that out? Well, you get into the lowest level of details.

You have to, so this is why one of the best things that could have happened to our company was that every single person did deliveries and customer support every single day for the first year. And actually, we still do this today. We do this, you know, once a month instead of, you know, every single person. day, every single person in the company. And so as a result, you become an expert. You learn about different systems. You learn about the nuances of, you know, how difficult is parking versus if the food is in a different aisle from the drinks from a different aisle from the desserts. You learn how to collate those orders. You learn how to build that into the software so that you can scale this across the

country. So it's a little bit like Stitch Fix, which is, yeah, they sell fashion, but ultimately you're really a data company. Yes. Many ways we're an applied math company, right? We are collecting lots of information. We're trying to digitize the physical world. We're trying to understand where is every parking lot? We're trying to understand where is every construction zone?

Where's every alley? Where's every elevator inside of a mall? And how does it work? Because the delivery fee is how much? The delivery fee is a range from $1.99 to $5.99. So there's two ways that DoorDash makes money, you know, DoorDash makes money from the consumer, so a delivery fee,

and DoorDash makes money from the restaurant, a percentage of the order. Okay. And so it's really, you know, the combination that makes the model work. I'm curious, like, when you think about this disaggregated world we live in, right, can this industry, the logistics industry, support DoorDash, Grubhub, UberEats, Postmates, on and on and on. Do you think they can all coexist

in that world? Or do you think there's ultimately going to have to be one or two winners? So it is a very giant space, as you mentioned. There are, when we were doing our research starting the company five years ago, there were 800 plus companies just in third-party logistics. I know we know about the FedExes and the UPSs, of course, in the Postal Service. But there are 800-plus companies just delivering. parcel that we've researched. Around the country. Around the country.

The offline world is just so much bigger and disaggregated to your point. You know, the second thing I would say is when you look at our current industry, the restaurant industry, it is not yet even online. 95% of orders still happen through a phone call or an in-person visit. Only 5% occurs through an internet connection. I know we talk about a lot of these other services, but the fact of the matter is that we are in the very earliest endings of a gigantic industry.

We really remember this all started because of a want and desire to help local businesses. It's also given Doordash the clarity to go and get all the details right, even the ones that don't seem scalable. There's, for example, a cheesecake factory that we deliver from in San Francisco. it's on the sixth floor of a mall of Macy's. In downtown.

In downtown, in the Union Square, in the shopping district. Which is a nightmare to drive in. It's a night. It is very hard to make those deliveries. And to make that one deliveries from that one store happen, we have to find dedicated parking that we negotiate with the mall. We have to find dedicated access to a mall elevator that only mall employees and dashers receive, that we have to figure out how to get orders from different stores.

stations because that store is so large. So to make that one store happen... I am losing sleep just thinking about trying to figure that out. That's just one problem. That's one of 242 cheesecake factories. One of 200,000 businesses. Tony, I am really interested in just the pressure. You know, like, I want to try to get into the movie in your head, right?

Your sort of like internal dialogue. You guys have raised enough money now from different major investors where your valuation is $1.4 billion. If I'm you, I am like, who I'm nervous. I mean, of course you've got to project confidence and you got and you got to believe in this thing, but that's a lot of pressure. Does that feel like a lot of pressure? It's a lot of responsibility, but it's one that I feel very, very lucky to have. I mean, if you think about it. I just, are you you just wired to think of it that way? Are you just kind of an even keeled guy? I mean, so I don't necessarily focus on, you know, some of those metrics. You know, I, I, we started

this company again to help the businesses on the streets. Why are we doing that? We're doing that because the business is on the streets, even in Silicon Valley, produce 60% of the jobs inside every city. And we need to help them. We need to help more for their stores. We need to give them technology, we need to offer them logistics. I guess when my brain thinks about that, it thinks a bit less maybe about, you know, the company valuation or, you know, how much pressure necessarily we're under. I think more instead about the future. I think about how do we actually service that opportunity? How do we make the job easier for, you know, the dashers? How do we think about serving other types of businesses.

That's where my brain goes. Where do you see this in 10 years? If you are, you know, if you're building your sort of dream house vision, right? Like, you've got your magic wand. Like you ask these businesses early on, hey, you got a magic wand. You've got a magic wand. And DoorDash is what in 10 years? Is it the Netflix of delivery?

Is it the Amazon? What is it? Dornash is the biggest infrastructure for a city that connects consumers and merchants. We would be your first phone call if you wanted to start a company. We can help you start that business. We can introduce you to customers on that business. We would want to introduce all of the customers to all of your use cases, delivery being one of them. But certainly, I still envision even in 10 years, people,

going into stores. We're still social creatures. We're still going to go hang out with our friends or our co-workers or our spouses and partners. And we're going to do that in the physical world. Doordash will help you figure out which businesses to do that with and will be the best way to grow local businesses. When do you, I mean, I mean, there's different sort of different measurements, but from what I understand, you don't have the biggest market share, right? You don't have the biggest chunk of market share yet, but I have to assume that's a goal, right, to capture the greatest share of the market. Do you feel like you're heading in that direction? We've been the fastest growing service in the space for the past year, and we're actually the biggest service in about

60% of the population in the U.S. So we have ground to cover, as we were not the first service, but we feel very, very good about the trajectory. And we feel very, very good about the fact that the ideas that we had come up with a few years ago around servicing merchants in the best way have really proven out well. Yeah. Can you even imagine what you would do afterwards once this company goes public or is sold or whatever happens? You know, once everybody cashes out, what do you? you think? I haven't given that a lot of thought. You know, most of my days are pretty obsessed over the people that we have and the plans for the future. I am in the business. We haven't given

much thought about, you know, when I, so again, I go back to my life decision framework of where am I going to have the most fun and the least regret? And that's what I'm enjoying today. How much of your success do you attribute to skill and hard work and intelligence and how much of what is happening do you think is because of luck? There is a lot of luck involved in shaping a lot of the circumstances for me. It's absolutely a combination. That's a short answer. But when I think back in my life, I've come a long way on the shoulders of a lot of great people, who I was going to meet in school to things I studied. in the past that somehow have magically made its way back into my life today,

to people in Silicon Valley who, you know, before even having a, you know, a business partnership with me or the company who have more than volunteer the time to help me, there's been a lot of fortunate circumstances for me. On the flip side, of course, there's a lot of hard work. And I think, you know, the hard work, and skill is really not of one person. And I think that's the thing that sometimes people forget. I think we live in a world where it's easy to idolize the stars.

To me, the real heroes are my teammates. And the people whose collective hours, skills, hard work, and drive are, what has allowed me to be successful today. Tony Shue, co-founder of DoorDash. DoorDash has now delivered more than 100 million orders in cities across the United States. And if you happen to live in the San Jose area and use DoorDash on the right day of the month, you might get your noodles or breakfast or hummus delivered by Tony himself in his Honda Accord. It is the same Honda.

What kind of Honda is it? It's a 2001 Honda Accord. It's a sweet Honda Accord. It's an amazing Honda Accord. It's a great delivery vehicle. How many miles do you have on your Honda Accord? Nearing $200,000. I love it.

Today you're the CEO of a $4 billion valuation company, and you got a 2001 Honda Accord. It's a great car. Great. You should be driving that. I will do it for as long as it lasts. And please do stick around because in just a moment, we're going to hear from you about the things you're building.

Hey, thanks so much for sticking around because it's time now for how you built that. And today's story begins a few. years ago in Miami with Ashlyn Cook and her dog. So my dog's name is Winston and he is a German short-haired pointer. He is liver-colored. Anyway, Ashlyn was working in Miami in the fashion business and she met a guy named Dean who also had a pointer. We started hanging out and running with our dogs, taking the dogs to the beach and eventually it turned into more. Ashlyn and Dean and the dogs, Winston and Louis bonded. And eventually the humans and the story started dating. Now, things were going great, but then earlier this year, Dean got a job

offer in Boulder, Colorado. So Ashland decided that might be a sign to get out of Miami and head to the mountains. So the four of them, two humans, two dogs, relocated, and Ashlin had to figure out what to do next. I really wanted to do something on my own. I had had the entrepreneurial bug for over a year at that point, and I knew I wanted to do something with dogs, but with a little twist. So we had bounced ideas off of each other for dog food. And honestly, I just thought of a food truck for dogs just came out of my mouth. And we looked at each other like, is that a thing?

Well, it turns out food trucks for dogs were sort of a thing. There were a few scattered across the country, but nothing in Colorado. So Ashland and Dean pooled together their savings. They got a loan from Ashland's dad, and they bought a custom-built trailer that looks like one of those vintage models from the 1950s. They have that iconic paint job where half of the bottom is a different color and it has that canned ham shape with the rounded edges. And after she ordered the trailer, Ashland got together with a local chef to come up with

a bunch of recipes for healthy dog treats with no salt, no sugar, no fillers. And Winston, Ashland's pointer? He was a good taste tester for us because he is a picky dog of finding out like, okay, okay, he really liked this one. He didn't like this one. I remember I tried to make a dried banana treat, but he would put in his mouth and spit it out. So I realized, okay, Winston does not like bananas.

But Winston did like some of the other treats Ashland came up with, pumpkin apple spice cookies, zucchini squash biscuits, and one of his favorites, Bison Burger Jerky. It is made with just three ingredients, ground bison, which we do source from a local bison ranch, cranberries and organic flax seeds. And I know, this stuff sounds like food you might order at one of those farm-to-table restaurants, right? But of course, Ashland's target demographic was just dogs.

And the dog-centric nature of her business actually proved to be a problem when she started to apply for the permits she needed to launch the truck. The most challenging part was defining ourselves as a new category. A lot of the cities would say, well, we only allow food trucks. for humans. Other cities would say, well, no one's ever come to us with that type of business before. We have no idea how to define you guys. So we ended up going the route of just full on getting all the permits of a human food truck. So finally, this past June, Ashland started parking the truck at breweries, dog parks, and farmers markets all around Boulder. And since then,

things have been going pretty well. The treats are popular and a major sign of customer buying. And a lot of the dogs are starting to recognize the truck. Oh, absolutely. They will literally jump up to the counter with their two front legs and stand up at the counter. It is hysterical. The company is called Winnie Lou. It's named for Ashland's dog Winston and Dean's dog Louis. And in addition to that one food truck, Winnie Lou now sells treats online and at six independent pet stores in Colorado.

So there are thousands of pet stores in the United States, and we would love to be in all of the independently owned smaller pet stores that we can. To find out more about Winnie Lou or to hear previous episodes, head to our podcast page, How I Built This.NPR.org. And of course, if you want to tell us your story, go to build.npr.org. And thanks so much for listening to the show this week. You can subscribe wherever you get your podcasts. You can also write to us at Hibt at npr.org. And if you want to send a tweet, it's at How I Built This. Our show was produced this week by James Delahousie with music composed by Rumtin Arablui.

Thanks also to J.C. Howard, Nur Kudsi, Neva Grant, Sanaz-Meshkenthor, and Jeff Rogers. Our intern is Mia Venkat. I'm Guy Raz, and you've been listening to How I Built This from NPR. We all have moments where our limits are. tested. What I want to talk about is how we define those limits and what it means to exceed them. I'm Jay Williams. Check out my show The Limits, where I talk to people who have overcome theirs and achieved great things in business, sports, and culture. Listen to the limits from NPR.