DoorDash Incorporated

This is a San Francisco-based on-demand logistics company that delivers prepared meals to individuals. It was founded in 2013 by Stanford students Andy Fang, Tony Xu, Evan Moore, and Stanley Fang. DoorDash is a technology company that uses logistics services to deliver food from joints and restaurants.

This company was launched in Palo Alto and has its headquarters in the Rialto Building in San Francisco, California. As of May 2019, it was being used in over 4,000 cities and offered dishes from over 340,000 stores across the United States and Canada. Its current worth is over $13 billion with over 7,500 employees and holds the position for the world’s largest third-party delivery service. This position was held by GrubHub till 2019.

History of the Company

DoorDash has raised over $700 million over time from investors like GIC, Khosla Ventures, Charles River Ventures, Kleiner Perkins, Softbank, and SV Angel. In May 2019, the company was evaluated to be worth over $12.6 billion. The CFO Mike Dinsdale left the company in October 2017 after working for less than a year.

In March 2018, it raised over $535 million after a Series D round conducted by the SoftBank Group with collaboration from Wellcome Trust, Sequoia Capital, and GIC. DoorDash partnered with Walmart in April 2018 to feature grocery delivery. In December 2018, the company surpassed Uber Eats to be ranked as the second in total US food delivery sales while the first position was held by GrubHub. March 2019 saw the company surpassing GrubHub in total sales by 27.6% in the on-demand delivery business.

In February 2019, DoorDash raised over $400 million which raised the company’s total funding to $1.4 billion and its net worth to $7.1 billion. In May 2019, it raised an extra $600 million in funds and in June 2019, they still sat first on the list of food delivery services in the US. The company, in August 2019, announced its procurement of Caviar, which is a service that offers food delivery from stylish restaurants that do not offer delivery, from Square Incorporated for $410 million.

The company publicized later in August 2019 its procurement of Scotty Labs which is a tele-operations startup company that concentrated on self-driving and remote-controlled technology for vehicles. However, the financial details of this procurement were not publicized. Also, in August 2019, they announced a partnership with Mercato, an e-commerce platform, to further expand their growth and reach to specialty stores and independent grocers.

This partnership allowed for same-day deliveries to over 750 independent grocers across twenty-two (22) states. On February 27, 2020, the company publicized that it filed papers privately to go public.

Criticisms and Lawsuits

1. In-N-Out Burger filed a lawsuit against DoorDash demanding trademark infringement and biased competition. The lawsuit was dismissed after two months and DoorDash no longer offers food delivery from In-N-Out Burger.
2. Burger Antics filed a lawsuit to stop delivery of their food by DoorDash after numerous complaints were reported by their customers.
3. The delivery workers of the company filed a class action lawsuit after being labelled “independent contractors”. The company accepted to pay $5 million.
4. CBC, on July 7, 2018, reported that DoorDash included a new restaurant to its list without the consent or knowledge of the restaurant’s owner. The restaurant consultant named Sharif Virani told CBC that several clients complained of the same issue and were not able to get in touch with DoorDash to remove their establishments from the list.
5. On May 4, 2019, DoorDash reported that sensitive information about over 4.9 million customers, merchants, and delivery workers were stolen using a data breach. However, those who joined after April 5, 2018 were not affected.

Tipped Wage Controversy

In July 2019, there were several criticisms against the tipping policy of DoorDash by publications such as Vox, The New York Times, and The Verge. This policy was described by the Gothamist as “really looks, feels, and smells like a swindle.” By default, DoorDash pays drivers a guaranteed minimum fee per order. If a customer adds a tips, it goes directly to the company instead of the driver.

This led to the company ceasing to pay the guaranteed minimum to drivers, and instead paying whatever was left of the tip after the minimum was subtracted. DoorDash announced its plans to alter its pay model after the story was published in the New York Times. A week after the article was published, a DoorDash customer filed a class action lawsuit against the company for its “materially false and misleading” tipping policy.

On August 20, 2019, an article was published by Vox with the title “DoorDash is still pocketing workers’ tips, almost a month after it promised to stop”. DoorDash publicized an alteration to its tipping policy on August 22, 2019, promising that it will “roll it out to all Dashers next month” (that is September 2019).

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