The Exchanges

Q So talk to me, how did you meet Tony? Where did you meet him? And how was that first meeting?

A Yeah, we met Tony right after. So a few of us were doing office hours at YC. For lunch, we got to order from DoorDash. I really enjoyed ordering from a variety of restaurants rather than dining at the typical unappetizing buffet line. So we met Tony and Andy and Stanley and Evan later that afternoon to listen to their pitch, and their pitch was to become the FedEx of local. We met them in 2013. This is around 2013. We took a few meetings after that, but unfortunately, I guess we failed to dream with them, and we passed on the seed round in 2013. And so that was kind of unfortunate, but, uh, we stayed in touch. So I kept in touch with Tony and had, you know, got updates from him every few months. And in 2014, I was sitting next to him at a dinner, a networking dinner. This is a Asian American founder and VC networking dinner that Aileen Lee had sort of organized and Sequoia was sponsoring. And I happened to sit next to Tony and I was struck by just how observant And detailed oriented Tony was as he was systematically breaking down the restaurant that we were at. It was his chef choose in Los Altos and systematically breaking down why they're so efficient. And then he did the same thing about DoorDash's operation into, you know, what are the simple repeatable tasks that you have to get right? So after that dinner, I just, I went back to Sequoia and got the team spun up and we wen…

AI assessment note: “we met Tony and Andy and Stanley and Evan later that afternoon to listen”

Q moving to kind of the traction specifically, you know, I had Sarah Tavel though on the show recently, and she said chasing GMV and top line will lead you in the wrong direction. I'm interested with this kind of growth at all costs discussion that we're having here and that kind of GMV leading you potentially in the wrong direction. Do you agree? And how do you think about that?

A Well, I would never disagree with Sarah and the way she's phrased it, I think is, is a very true statement, which is chasing, chasing GMV. And it will lead you to the wrong direction because it'll lead you to the wrong behaviors. I think that that is something that I would like, you know, every founder to understand. You should figure out ways where the customer pulls you as opposed to chasing the customer down to force them to use your product. Look, you need GMV, right? Like in some sense, GMV for a marketplace, for a commerce company, For a consumer company is a sign of usage, right? Like if you don't have GMV in a marketplace, there is no usage. I always tell founders to break down their GMV into smaller and smaller pieces until they get into their input metrics. You know, when I was at Amazon and at Zappos, we always talked about the difference between input metrics and output metrics. GMV is an output metric. As an operator, you want to focus on the input metrics, things that you can control. Those are around number of merchants in selection. There's a number of customers that you decide to acquire. The AOV and how you can increase AOV. So you take GMV, it's, it's AOV times the number of orders. You can take orders and decompose that to orders per customer times the number of customer. You can take customers by old customers coming back plus new customers that you acquire…

AI assessment note: “the way she's phrased it, I think is, is a very true statement”

Q So talk to me, how did you meet Tony? Where did you meet him? And how was that first meeting?

A Yeah, we met Tony right after. So a few of us were doing office hours at YC. For lunch, we got to order from DoorDash. I really enjoyed ordering from a variety of restaurants rather than dining at the typical unappetizing buffet line. So we met Tony and Andy and Stanley and Evan later that afternoon to listen to their pitch, and their pitch was to become the FedEx of local. We met them in 2013. This is around 2013. We took a few meetings after that, but unfortunately, I guess we failed to dream with them, and we passed on the seed round in 2013. And so that was kind of unfortunate, but, uh, we stayed in touch. So I kept in touch with Tony and had, you know, got updates from him every few months. And in 2014, I was sitting next to him at a dinner, a networking dinner. This is a Asian American founder and VC networking dinner that Aileen Lee had sort of organized and Sequoia was sponsoring. And I happened to sit next to Tony and I was struck by just how observant And detailed oriented Tony was as he was systematically breaking down the restaurant that we were at. It was his chef choose in Los Altos and systematically breaking down why they're so efficient. And then he did the same thing about DoorDash's operation into, you know, what are the simple repeatable tasks that you have to get right? So after that dinner, I just, I went back to Sequoia and got the team spun up and we wen…

AI assessment note: “we met Tony and Andy and Stanley and Evan later that afternoon”

Q a couple of the other incumbents in the space, you know, sometimes because of market size and market thinking. Sequoia often has a market-first mindset. I love some of Don Valentine's early talks on market. I'm interested in When we kind of go to the memo, how did you break down the market when doing the evaluation for the investment? And how did that look like for you with DoorDash?

A So the memo just briefly talks about the takeout volume as of today, and only 15% of that was delivery. And I think the reason we sort of laid that out was, you know, you can sort of dream about markets in different ways. You can start with the initial market that you're going to address, or you can talk about the sort of restaurant Market, which is closer to six hundred billion or something in that range. You can't address all that. So as a startup, you have to figure out what is the market that you're addressing at the beginning. We think about that. And the takeout market is the delivery market is a delivery market. So it's pretty easy to go size and find out. And there are other companies that have gone public like GrubPod in their S-One, how big their, their takeout volume was and how much was being done on delivery. But the notion was that If delivery was more efficient, then the delivery market would be as big, if not bigger than the takeout market. And so you just need to sort of think about like, well, is the initial market big enough? And is it growing? And I think we're not attracted by just large markets. We're attracted by the market dynamics. And it's more important for us that you think about the wedge into this larger market called restaurants or food in general, but specifically where are you going to go attack? And remember, Tony's whole notion was not just fo…

AI assessment note: “the memo just briefly talks about the takeout volume as of today”

Q moving to kind of the traction specifically, you know, I had Sarah Tavel though on the show recently, and she said chasing GMV and top line will lead you in the wrong direction. I'm interested with this kind of growth at all costs discussion that we're having here and that kind of GMV leading you potentially in the wrong direction. Do you agree? And how do you think about that?

A Well, I would never disagree with Sarah and the way she's phrased it, I think is, is a very true statement, which is chasing, chasing GMV. And it will lead you to the wrong direction because it'll lead you to the wrong behaviors. I think that that is something that I would like, you know, every founder to understand. You should figure out ways where the customer pulls you as opposed to chasing the customer down to force them to use your product. Look, you need GMV, right? Like in some sense, GMV for a marketplace, for a commerce company, For a consumer company is a sign of usage, right? Like if you don't have GMV in a marketplace, there is no usage. I always tell founders to break down their GMV into smaller and smaller pieces until they get into their input metrics. You know, when I was at Amazon and at Zappos, we always talked about the difference between input metrics and output metrics. GMV is an output metric. As an operator, you want to focus on the input metrics, things that you can control. Those are around number of merchants in selection. There's a number of customers that you decide to acquire. The AOV and how you can increase AOV. So you take GMV, it's, it's AOV times the number of orders. You can take orders and decompose that to orders per customer times the number of customer. You can take customers by old customers coming back plus new customers that you acquire…

AI assessment note: “I would never disagree with Sarah and the way she's phrased it”

Q And then the final one, and this one's probably my favorite here, is what's your favorite or most memorable story from working with the company? Did you always remember and hold dear to you?

A It's not a happy story. It's my favorite story because it, it talks to Tony's having optimism and with a plan. I think when we, you know, he had a hard time raising the seed because people didn't, there's no like richness of data. Is this going to work everywhere? He had a fairly easy series A raise in my opinion, because he had five term sheets and we were competing with five term sheets and I had a jump on the competition, but it happened fairly quickly. He had a very easy series B B raise, and the Series C, and the Series D were quite hard to raise, but I never saw Tony ever be dejected. He's like, my business is growing. I know the underlying metrics of my business is good, and he gained more conviction about the need to focus on inputs and rather than outputs, and in some sense, the company valuation is a vanity metric. It's an output metric. It's not that important because you're You're selling a small portion of the company when you're raising money, and you personally, as a founder, you're not selling any shares, so it's not like you're selling at this price that you think is, is bad, but the Series C that Sequoia decided to lead was quite hard. I think the company had thought that because it had doubled or tripled GMV, and the unit economics was getting better, that the valuation from the B to the C would be double or triple, and in fact, it ended up being a slightly f…

AI assessment note: “It's my favorite story because it, it talks to Tony's having optimism”

Q a couple of the other incumbents in the space, you know, sometimes because of market size and market thinking. Sequoia often has a market-first mindset. I love some of Don Valentine's early talks on market. I'm interested in When we kind of go to the memo, how did you break down the market when doing the evaluation for the investment? And how did that look like for you with DoorDash?

A So the memo just briefly talks about the takeout volume as of today, and only 15% of that was delivery. And I think the reason we sort of laid that out was, you know, you can sort of dream about markets in different ways. You can start with the initial market that you're going to address, or you can talk about the sort of restaurant Market, which is closer to six hundred billion or something in that range. You can't address all that. So as a startup, you have to figure out what is the market that you're addressing at the beginning. We think about that. And the takeout market is the delivery market is a delivery market. So it's pretty easy to go size and find out. And there are other companies that have gone public like GrubPod in their S-One, how big their, their takeout volume was and how much was being done on delivery. But the notion was that If delivery was more efficient, then the delivery market would be as big, if not bigger than the takeout market. And so you just need to sort of think about like, well, is the initial market big enough? And is it growing? And I think we're not attracted by just large markets. We're attracted by the market dynamics. And it's more important for us that you think about the wedge into this larger market called restaurants or food in general, but specifically where are you going to go attack? And remember, Tony's whole notion was not just fo…

AI assessment note: “the memo just briefly talks about the takeout volume as of today”

Q Can I ask, does that still hold true in the insanely capital rich environments that we're in today?

A It's true if people are rational, and so I say that as a statement of, if people are irrational, then that's not going to be the case, and you're asking a very, very good question, right? Like, when I worked at Zappos, Every single marketing dollar had to pay back on the first order because we didn't have a lot of access to capital. Well, if that works with a little bit more money, you can allow the payback period to take one month. Okay. So at some point, everybody just pushes it from zero months to one month to, you know, six months to 12 months to 18 months. But at some point, if it's going to be 10 years, it doesn't work. This is not the transitive property so that if you could go from zero to one, one to two, two to three, you should go for infinite. At some point, it has to pay back. And so there has to be some level of rationality to it.

AI assessment note: “It's true if people are rational”

Q Absolutely, you can. Too interested not to ask there. How did you think about, and with the benefit of hindsight, How did you think about, and how did you advise and work with him in terms of the right time to expand beyond pure food to, as we said, the FedEx vision over time?

A These things are always both an art and a science, right? We started in Palo Alto. We then expanded, you know, sort of almost all of the Bay Area. We then go into San Jose, and so there's the geographic expansion, and today we are in more than food, but the majority of the business is still in food. I sometimes tell founders, like, the sort of desire to expand into other categories is sometimes a sign that you don't love your core business. I mean, if you think about great companies, they've scaled with their core business for a long, long period of time. And it's always much better that your customers pull you into a different area than if you just want to go into a different area. And so that's the balance that we sort of tell management teams. Like, you don't want to be, success sort of breeds a desire to expand, and Jim Collins talks about the undisciplined pursuit of more. We try to dissuade that. If you're being pulled by the customer or pulled by the market, that is a great sign. If you're pushing because you have aspirations of building an empire, that is less good of a sign.

AI assessment note: “it's always much better that your customers pull you into a different area”

Q Totally with you. In terms of kind of the efficiencies there, I mean, that often distills down into kind of superior unit economics, and you touched on it slightly, and in the memo, you know, you speak about the unit economics, and so I'm interested, how did you get comfortable with the unit econ, and kind of, especially kind of the customer acquisition costs in relation to the contribution margins?

A Well, I think that what is happening at the time, and then there's the reality of the situation, is going to look very, very different. The unit economics at the time, at a seed or a series A, is a sort of just a check on how thoughtful the founders are, and the management team is on exactly how they think about the business. If you see that the unit economics is all messed up, they don't really quite understand what's going on, and it's very, very sloppy, you know, then you kind of question whether they're operating the business at the lowest level, they're good operators, they're focusing on operational excellence. And of course, it's always messy at the beginning, but it's just a, like, magnitude of how things are going to, to play out later. And you also have to understand that the customers that you have at the beginning are, they're the early adopters. They're more likely to pay you more, order more, etc. So you also have to think about it from the standpoint of the unit economics may actually get worse, and how much worse you have to sort of think through and, and Be prepared for. And those are conversations you have with the founders to see how scrappy they are, how thoughtful they are, and et cetera, et cetera. But at the beginning, like, if you asked me, like, unit economics, it's really mostly about AOV. It's mostly about how often someone orders. It's about retentio…

AI assessment note: “unit economics at the time, at a seed or a series A, is a sort of just a check”

Q Can I ask, does that still hold true in the insanely capital rich environments that we're in today?

A It's true if people are rational, and so I say that as a statement of, if people are irrational, then that's not going to be the case, and you're asking a very, very good question, right? Like, when I worked at Zappos, Every single marketing dollar had to pay back on the first order because we didn't have a lot of access to capital. Well, if that works with a little bit more money, you can allow the payback period to take one month. Okay. So at some point, everybody just pushes it from zero months to one month to, you know, six months to 12 months to 18 months. But at some point, if it's going to be 10 years, it doesn't work. This is not the transitive property so that if you could go from zero to one, one to two, two to three, you should go for infinite. At some point, it has to pay back. And so there has to be some level of rationality to it.

AI assessment note: “It's true if people are rational, and so I say that as a statement”

Q Tell us, on the flip side, were there input metrics where you were like, huh, we need to work on this, and we need to rethink a strategy around this?

A The input metrics, and there are things that, you know, sort of, they needed to work on, and, but we felt like that those are doable things, like quality, right? Like, sometimes when you say that it's going to take 30 minutes, it took 45 minutes, or you showed up, and the order has everything except the fries, and those type of things are going to happen. This is an Adams business. It's not a Bits business. There's no error-correcting code on the other side, so you have to develop your own error-correcting code to make sure that the order Doesn't have any errors. And, you know, sometimes you, you actually have to be quite creative. Some of the people who are good process people in a bits world, they create these like great, like sort of academic processes, but then there's a human involved. And so you have to create processes where there is a certain level of human error or human and take that into account and to correct for that.

AI assessment note: “we felt like that those are doable things, like quality, right?”

Q Yeah, no, totally. Before we move into the quickfire, one final question is actually on Tony. And it's like, you know, having the seed alongside Tony and working with Tony, how did you see Tony evolve and change and develop as a leader? Over the incredible journey that, that was DoorDash as a private company.

A Well, he certainly has grown a lot as a leader, and I think the sort of thing I saw was, I often find hard for a lot of founders is to figure out how to work collaboratively as a founder and a founding team to sort of take the mantle of being a CEO and lead as the CEO versus being one of the founders. And I saw that change happen relatively quickly, somewhere between the The seed to the A, and somewhere past the A, and he sort of just kept stepping up. It wasn't just a division of labor, hey, I do this, you guys do that. It was leading by sort of setting strategy, setting the tone, setting the culture. As I said, like, some of the things that Tony said all the way back at the seed around the culture, he said back then, too. Like, today, you go to the S-One of DoorDash, you'll see some of the things that he laid out about how DoorDash operates. Many of those things that he talked about, operating at the lowest level of detail, thinking about and not either or, having optimism, but with a plan, those things weren't quite the same words at the beginning, but he was setting the tone back all the way back when I started working with them. And I would also point out that founders start companies despite everybody telling them all the reasons why it's going to fail. So they almost don't listen to And a CEO learns to listen and to listen very intensely and carefully and actively to eve…

AI assessment note: “to sort of take the mantle of being a CEO and lead as the CEO”

Q Can I ask, how did they have a differentiated strategy around merchant selection, and what was that?

A Differentiated strategy around merchant selection is just having the largest selection. There's always these debates about, like, I always hear about the paradox of choice. The paradox of choice is an individual issue, not a population issue. And on the population level, you and I Both love sushi, but our favorite sushi restaurants could be very different, and that's multiplied across all of your customers. So some people fail to see that the largest selection, you know, always wins, and having selection was quite important from the very, very beginning for DoorDash. The other thing is, like, how far are you willing to go? So maybe there's a great sushi restaurant in your local neighborhood. Are you willing to expand the radius so that you can Take that sushi restaurant to a place a little further. That was also a differentiated strategy, but you can only do that if you're more efficient, if you can batch more efficiently, if you have good prediction about how you route your customers, et cetera, et cetera, and DoorDash was always very much focused on making sure that they were routing orders properly, estimating time properly, so they can batch properly, et cetera.

AI assessment note: “Differentiated strategy around merchant selection is just having the largest selection.”

Q before you move into the quickfire, do you just have to ask, you know, In London specifically, you know, when we look at the likes of Deliver and many other players, driver acquisition is one of the most challenging battles there is. With hindsight, what did DoorDash do so well in terms of driver acquisition that really allowed them to scale in the way that they did, do you think?

A Well, at the beginning, they had a differentiated strategy with driver acquisition. It was people who wanted to be a driver for a service, but they, they couldn't drive for that service because they didn't have the right car. So you can take all those people. And then the other example is There are drivers who don't actually want to drive other people. They actually prefer to deliver packages. And so in the early days of DoorDash, they were focused on a different set of drivers than everybody else. On merchant acquisition, there was a lot of talk about how they would go down to the strip in these suburbs and try to, like, understand the dynamics and the sort of the market power of each restaurant and who are the influencers.

AI assessment note: “at the beginning, they had a differentiated strategy with driver acquisition.”

Q And then the final one, and this one's probably my favorite here, is what's your favorite or most memorable story from working with the company? Did you always remember and hold dear to you?

A It's not a happy story. It's my favorite story because it, it talks to Tony's having optimism and with a plan. I think when we, you know, he had a hard time raising the seed because people didn't, there's no like richness of data. Is this going to work everywhere? He had a fairly easy series A raise in my opinion, because he had five term sheets and we were competing with five term sheets and I had a jump on the competition, but it happened fairly quickly. He had a very easy series B B raise, and the Series C, and the Series D were quite hard to raise, but I never saw Tony ever be dejected. He's like, my business is growing. I know the underlying metrics of my business is good, and he gained more conviction about the need to focus on inputs and rather than outputs, and in some sense, the company valuation is a vanity metric. It's an output metric. It's not that important because you're You're selling a small portion of the company when you're raising money, and you personally, as a founder, you're not selling any shares, so it's not like you're selling at this price that you think is, is bad, but the Series C that Sequoia decided to lead was quite hard. I think the company had thought that because it had doubled or tripled GMV, and the unit economics was getting better, that the valuation from the B to the C would be double or triple, and in fact, it ended up being a slightly f…

AI assessment note: “It's my favorite story because it, it talks to Tony's having optimism”

Q Can I ask, how did they have a differentiated strategy around merchant selection, and what was that?

A Differentiated strategy around merchant selection is just having the largest selection. There's always these debates about, like, I always hear about the paradox of choice. The paradox of choice is an individual issue, not a population issue. And on the population level, you and I Both love sushi, but our favorite sushi restaurants could be very different, and that's multiplied across all of your customers. So some people fail to see that the largest selection, you know, always wins, and having selection was quite important from the very, very beginning for DoorDash. The other thing is, like, how far are you willing to go? So maybe there's a great sushi restaurant in your local neighborhood. Are you willing to expand the radius so that you can Take that sushi restaurant to a place a little further. That was also a differentiated strategy, but you can only do that if you're more efficient, if you can batch more efficiently, if you have good prediction about how you route your customers, et cetera, et cetera, and DoorDash was always very much focused on making sure that they were routing orders properly, estimating time properly, so they can batch properly, et cetera.

AI assessment note: “Differentiated strategy around merchant selection is just having the largest selection.”

Q Absolutely, you can. Too interested not to ask there. How did you think about, and with the benefit of hindsight, How did you think about, and how did you advise and work with him in terms of the right time to expand beyond pure food to, as we said, the FedEx vision over time?

A These things are always both an art and a science, right? We started in Palo Alto. We then expanded, you know, sort of almost all of the Bay Area. We then go into San Jose, and so there's the geographic expansion, and today we are in more than food, but the majority of the business is still in food. I sometimes tell founders, like, the sort of desire to expand into other categories is sometimes a sign that you don't love your core business. I mean, if you think about great companies, they've scaled with their core business for a long, long period of time. And it's always much better that your customers pull you into a different area than if you just want to go into a different area. And so that's the balance that we sort of tell management teams. Like, you don't want to be, success sort of breeds a desire to expand, and Jim Collins talks about the undisciplined pursuit of more. We try to dissuade that. If you're being pulled by the customer or pulled by the market, that is a great sign. If you're pushing because you have aspirations of building an empire, that is less good of a sign.

AI assessment note: “If you're being pulled by the customer or pulled by the market, that is a great sign.”

Q Yeah, no, totally. Before we move into the quickfire, one final question is actually on Tony. And it's like, you know, having the seed alongside Tony and working with Tony, how did you see Tony evolve and change and develop as a leader? Over the incredible journey that, that was DoorDash as a private company.

A Well, he certainly has grown a lot as a leader, and I think the sort of thing I saw was, I often find hard for a lot of founders is to figure out how to work collaboratively as a founder and a founding team to sort of take the mantle of being a CEO and lead as the CEO versus being one of the founders. And I saw that change happen relatively quickly, somewhere between the The seed to the A, and somewhere past the A, and he sort of just kept stepping up. It wasn't just a division of labor, hey, I do this, you guys do that. It was leading by sort of setting strategy, setting the tone, setting the culture. As I said, like, some of the things that Tony said all the way back at the seed around the culture, he said back then, too. Like, today, you go to the S-One of DoorDash, you'll see some of the things that he laid out about how DoorDash operates. Many of those things that he talked about, operating at the lowest level of detail, thinking about and not either or, having optimism, but with a plan, those things weren't quite the same words at the beginning, but he was setting the tone back all the way back when I started working with them. And I would also point out that founders start companies despite everybody telling them all the reasons why it's going to fail. So they almost don't listen to And a CEO learns to listen and to listen very intensely and carefully and actively to eve…

AI assessment note: “he certainly has grown a lot as a leader, and I think the sort of thing I saw”

Q Tell us, on the flip side, were there input metrics where you were like, huh, we need to work on this, and we need to rethink a strategy around this?

A The input metrics, and there are things that, you know, sort of, they needed to work on, and, but we felt like that those are doable things, like quality, right? Like, sometimes when you say that it's going to take 30 minutes, it took 45 minutes, or you showed up, and the order has everything except the fries, and those type of things are going to happen. This is an Adams business. It's not a Bits business. There's no error-correcting code on the other side, so you have to develop your own error-correcting code to make sure that the order Doesn't have any errors. And, you know, sometimes you, you actually have to be quite creative. Some of the people who are good process people in a bits world, they create these like great, like sort of academic processes, but then there's a human involved. And so you have to create processes where there is a certain level of human error or human and take that into account and to correct for that.

AI assessment note: “like quality, right? Like, sometimes when you say that it's going to take 30 minutes”

Q before you move into the quickfire, do you just have to ask, you know, In London specifically, you know, when we look at the likes of Deliver and many other players, driver acquisition is one of the most challenging battles there is. With hindsight, what did DoorDash do so well in terms of driver acquisition that really allowed them to scale in the way that they did, do you think?

A Well, at the beginning, they had a differentiated strategy with driver acquisition. It was people who wanted to be a driver for a service, but they, they couldn't drive for that service because they didn't have the right car. So you can take all those people. And then the other example is There are drivers who don't actually want to drive other people. They actually prefer to deliver packages. And so in the early days of DoorDash, they were focused on a different set of drivers than everybody else. On merchant acquisition, there was a lot of talk about how they would go down to the strip in these suburbs and try to, like, understand the dynamics and the sort of the market power of each restaurant and who are the influencers.

AI assessment note: “they had a differentiated strategy with driver acquisition.”

Q Well, that is very kind of you, but we're going to dive straight in today, and we're going to unpack the original DoorDash memo you wrote back in 2014, so I want to start with the story and some history and context. So, how did you meet the team? Where was the meeting? Paint that picture for me, if that's okay.

A Yeah, happy to do that, but let me take you back a little bit further than that, because my fascination with food delivery Goes back earlier than me meeting the team. I joined Sequoia in 2010, in late 2010, and I was trying to come up with a differentiated investment theme. Early 2011 at the TED Global Conference, I listened to a talk by Jeffrey West about the mass migration to cities, due partly because cities are just more efficient than other parts of the world. So growing up in New York City, I was always frustrated that services like that I saw in New York weren't available in the Bay Area, where there was a good Public transportation system, reliable taxis, or basic delivery surfaces, including restaurant delivery. And I love food, and I've always been, like, annoyed that food delivery wasn't more available. And actually, between 20 11 and 20 13, we evaluated opportunities to invest in Grubhub, in Caviar, in Postmates, in TaskRabbit, because I was fascinated with this space. We passed on each of those opportunities, not partly because we're somewhat concerned about market size, but more importantly, we felt like We didn't find the right founder market fit for this opportunity. And we wanted to look for founders who are obsessed with the operational details of the business and pursued operational excellence. And we found that when we met, uh, Tony and we realized that ther…

AI assessment note: “let me take you back a little bit further than that”

Q Well, that is very kind of you, but we're going to dive straight in today, and we're going to unpack the original DoorDash memo you wrote back in 2014, so I want to start with the story and some history and context. So, how did you meet the team? Where was the meeting? Paint that picture for me, if that's okay.

A Yeah, happy to do that, but let me take you back a little bit further than that, because my fascination with food delivery Goes back earlier than me meeting the team. I joined Sequoia in 2010, in late 2010, and I was trying to come up with a differentiated investment theme. Early 2011 at the TED Global Conference, I listened to a talk by Jeffrey West about the mass migration to cities, due partly because cities are just more efficient than other parts of the world. So growing up in New York City, I was always frustrated that services like that I saw in New York weren't available in the Bay Area, where there was a good Public transportation system, reliable taxis, or basic delivery surfaces, including restaurant delivery. And I love food, and I've always been, like, annoyed that food delivery wasn't more available. And actually, between 20 11 and 20 13, we evaluated opportunities to invest in Grubhub, in Caviar, in Postmates, in TaskRabbit, because I was fascinated with this space. We passed on each of those opportunities, not partly because we're somewhat concerned about market size, but more importantly, we felt like We didn't find the right founder market fit for this opportunity. And we wanted to look for founders who are obsessed with the operational details of the business and pursued operational excellence. And we found that when we met, uh, Tony and we realized that ther…

AI assessment note: “happy to do that, but let me take you back a little bit further”

Q Totally with you. In terms of kind of the efficiencies there, I mean, that often distills down into kind of superior unit economics, and you touched on it slightly, and in the memo, you know, you speak about the unit economics, and so I'm interested, how did you get comfortable with the unit econ, and kind of, especially kind of the customer acquisition costs in relation to the contribution margins?

A Well, I think that what is happening at the time, and then there's the reality of the situation, is going to look very, very different. The unit economics at the time, at a seed or a series A, is a sort of just a check on how thoughtful the founders are, and the management team is on exactly how they think about the business. If you see that the unit economics is all messed up, they don't really quite understand what's going on, and it's very, very sloppy, you know, then you kind of question whether they're operating the business at the lowest level, they're good operators, they're focusing on operational excellence. And of course, it's always messy at the beginning, but it's just a, like, magnitude of how things are going to, to play out later. And you also have to understand that the customers that you have at the beginning are, they're the early adopters. They're more likely to pay you more, order more, etc. So you also have to think about it from the standpoint of the unit economics may actually get worse, and how much worse you have to sort of think through and, and Be prepared for. And those are conversations you have with the founders to see how scrappy they are, how thoughtful they are, and et cetera, et cetera. But at the beginning, like, if you asked me, like, unit economics, it's really mostly about AOV. It's mostly about how often someone orders. It's about retentio…

AI assessment note: “unit economics at the time, at a seed or a series A, is a sort of just a check”