Students can now gain access to food delivery within 45 minutes from over 60 restaurants in Palo Alto and Mountain View thanks to DoorDash, a Stanford alumni-founded startup hoping to leverage the needs of local small business owners and hungry clientele.
Funded by top-tier investors in the valley, the company stands out among other online food delivery platforms—like the recently merged Seamless and GrubHub—by performing the deliveries themselves.
“When you place your order with Seamless and GrubHub, they send your order to the restaurants and the restaurants help you to deliver,” said Evan Charles Moore, MBA ’13, cofounder of DoorDash. “Restaurants have a hard time managing logistics and drivers.”
The four founders started working on DoorDash last spring with the initial aim to empower small business owners with modern technology.
“We interviewed over a hundred [small business owners],” Moore said. “We kept on hearing this problem about delivery where they turned down requests to deliver their products.”
In an interview with a restaurant owner on University Avenue, the DoorDash co-founders learned that based on actual demand and the number of drivers required to hire, it costs $50 on average to deliver a package from Palo Alto to Mountain View.
To solve this problem, the four created a quick prototype of an online delivery platform called PaloAltoDelivery.com in just one afternoon and immediately received their first online order.
Moore added that before joining Y Combinator— Silicon Valley-based start-up incubator—in the summer, the four delivered a couple hundred orders on their own to Stanford.
Despite low student presence on campus during the summer, DoorDash orders increased 10 times, while the number of drivers has also grown from four to 30—half of whom are Stanford students.
“Now that the Stanford students are back, we’d love to serve [them] again and we actually expect that number [of orders] to continue to grow faster,” said Tony Xu MBA ’13, cofounder of DoorDash.
According to Xu, one of the key ways for them to keep cost down is through crowdsourcing, which approximates the delivery cost across multiple restaurants.
“What we do is that we have a pool of drivers who are spread across 60 restaurants and as a result we can manage that demand a little bit better because we can pool our drivers,” Xu said.
DoorDash drivers provide their own car, insurance and gas. For one hour of delivery service they are offered a $14/hour rate plus extra tips.
“As long as they have their smartphones they can work for us and they can choose their own hours,” Xu said.
According to Moore, their delivery fee is sufficient to pay for drivers. DoorDash charges a flat rate of $6 for delivery under $100 and $12 for anything above.
“It more than covers the drivers’ cost because we can do more than one delivery in one hour,” Moore said.
Meanwhile, the provision of coordinated drivers makes DoorDash popular among local restaurants.
“We actually find that it’s very easy to sell to the restaurant,” said Andy Fang ’14, co-founder of DoorDash. “Restaurants are experiencing significant increases in their revenue. They’re promoting us on their own.”
While the company is currently operating only in Palo Alto and Mountain View, it’s looking to expand to a larger geographical area and to serve the Stanford community.
“We’re looking to add more restaurants and we’d love to get feedback—the best from students—on what kinds of restaurants they’d like to have,” Fang said.