DoorDash CEO: Customer Obsession, Surviving Startup Death & Creating A New Market
aired [03.26.2025]
Host: Garry Tan
Guest: Tony Xu.
Key Insights
Hands-On Learning: DoorDash’s success stemmed from direct engagement with merchants and customers, proving expertise comes from doing the work.
Suburban Edge: Targeting suburbs over urban centers tapped into unmet demand and better economics, defying conventional wisdom.
Long-Term Boldness: Slashing commissions during COVID prioritized decades-long trust over short-term profits, fueling resilience.
Action Breeds Mastery: Tony Xu’s rise from novice to logistics expert underscores the power of diving into the grind.
Physical World Matters: Untapped potential in real-world problems—like parking or inventory—rivals digital innovation.
1. The Macaron Epiphany That Birthed DoorDash
Xu and Stanford co-founders ditched a lackluster tablet app because they didn’t love it—passion trumped persistence.
Shadowing a macaron store owner uncovered a booklet of rejected delivery orders, sparking the DoorDash idea.
Quote: "We visited a macaron store owner... she had showed us a booklet of orders she had turned down. All of them were delivery orders."
Launched “Palo Alto Delivery” in under an hour with a basic site and Google Voice, testing demand via Xu’s Honda.
At Y Combinator, they validated three pillars: consumer demand, merchant need, and driver supply—starting with themselves.
“We visited a macaron store owner... she had showed us a booklet of orders she had turned down. All of them were delivery orders.”
2. Football Fiasco and Apology Cookies
A 2013 Stanford football game swamped DoorDash with orders, delaying deliveries by over an hour and costing 40% of their cash in refunds.
Quote: "Every delivery was at least an hour late... we thought the right thing to do would be to refund everybody."
Xu and co-founders baked and delivered apology cookies at 5 AM, cementing a customer-first ethos.
Despite killer metrics, YC Demo Day flopped, leaving them weeks from broke until one investor saved them.
A test offering drivers $5 more per hour to switch from Uber X saw just one taker, revealing a unique, diverse driver pool.
3. Suburbs: The Unexpected Goldmine
Competitors chased urban density, but DoorDash’s two years of DIY deliveries showed suburbs craved delivery more.
Quote: "The need was very, very strong outside of these city centers."
Families drove bigger orders, parking was simpler, and single homes beat high-rises—suburban economics outshone cities.
Fundraising stayed brutal—hundreds of nos from 2016-18—until a 2018 Series D bet on their retention edge paid off.
4. COVID Chaos: A $100 Million Gamble
COVID-19 in 2020 killed IPO plans, triggering 10 AM-to-2 AM workdays focused on safety, liquidity, and community.
Xu cut commissions by half, costing $100 million, and ran a TV ad boosting the whole industry—not just DoorDash.
Quote: "We cut our commissions by half... cost us over a hundred million dollars."
Long-term vision—empowering physical businesses for decades—drove these moves, not short-term gains.
Quote: "We're here to hopefully build a company that will grow and empower every physical business... that's not going to happen in one year, two years, five years, ten years."
5. Future Play: Mastering the Physical World
Xu’s advice to young entrepreneurs: jump in and work—expertise hits fast, from logistics to AI.
Quote: "There's no better way to be the expert than just to do the work."
DoorDash aims to solve physical-world riddles—like parking in storms or grocery stock—beyond digital hype.
Quote: "There's still this massive opportunity to understand the physical world."
Xu ties DoorDash’s future to city GDP growth, seeing prosperity as the ultimate win.