Key Points
- During the pandemic, DoorDash cut commissions to help restaurants, sacrificing $100 million in revenue.
- DoorDash recently acquired Deliveroo ($3.9 billion) and SevenRooms ($1.2 billion) to expand its global presence.
- Employees, including CEO Tony Xu, engage in delivery tasks via the WeDash program.
- Xu’s vision blends bold acquisitions with long-term profitability and operational discipline.
DoorDash CEO Tony Xu is spearheading an aggressive expansion strategy, leveraging acquisitions to shape the company into a global tech powerhouse despite slim profits and fierce competition. In the early days of the COVID-19 pandemic, Xu made a bold move to cut commission fees to support struggling restaurants. This decision cost the company over $100 million but reinforced its commitment to partners and long-term growth.
Founded in 2013 at Stanford University, DoorDash has grown into a $90 billion public company and the leading food delivery service in the U.S. market. While competitors like GrubHub and Uber Eats initially dominated city centers, Xu focused on suburban markets, allowing DoorDash to thrive during the pandemic. The company’s revenue surged, supported by high market penetration and a customer-first philosophy.
Now, DoorDash is entering a new era of international expansion and vertical integration. It recently acquired UK-based Deliveroo for $3.9 billion and hospitality tech platform SevenRooms for $1.2 billion. To fund these moves, DoorDash issued $2.5 billion in convertible debt, signaling confidence in continued growth.
Tony Xu, known for his hands-on leadership and humble background, has maintained a unique culture within DoorDash. Employees participate in annual delivery shifts and support calls as part of the “WeDash” program. Xu himself still responds to customer complaints and involves himself in daily operations.
Despite criticism over high commission fees—up to 30%—DoorDash introduced flexible pricing tiers to serve restaurants better. Its contribution profit remains under 5%, emphasizing the tight margins of the business.
The company’s success stems from Xu’s leadership and a data-driven, customer-centric approach. Backed by early believers like Sequoia and Y Combinator, DoorDash has processed over 10 billion deliveries worldwide and is poised to expand its influence in global markets.
