If someone could pay Doordash $16 a pizza, and Doordash would pay his restaurant $24 a pizza, then he should clearly just order pizzas himself via Doordash, all day long. You’d net a clean $8 profit per pizza [insert nerdy economics joke about there is such a thing as a free lunch].
He thought this was a stupid idea. “A business as successful a Doordash and worth billions of dollars would clearly not just give away money like this.” But I pushed back that, given their recent obscene fundraise, they would weirdly enough be happy to lose that money. Some regional director would be able to show top-line revenue growth while some accounting line-item, somewhere, would not match up, but the company was already losing hundreds of millions of dollars. I imagined their systems might even be built to discourage catching these mistakes because it would detract, or at a minimum distract, from top-line revenue.
So we put in the first order for 10 pizzas.
He called in and placed an order for 10 pizzas to a friend’s house and charged $160 to his personal credit card. A Doordash call center then called into his restaurant and put in the order for those 10 pizzas. A Doordash driver showed up with a credit card and paid $240 for the pizzas.
Ranjan Roy on.
On the one hand this is lol funny story but, more importantly, it’s demonstrating exactly how VC over-funding for all these unprofitable Uber-for-X serives distort markets and fucks over small business owners.