4 Things Businesses Can Learn from DoorDash
DoorDash's value has risen to $12.6 billion, up from a $7 billion valuation, after the company closed a $600 million investment round led by Darsana Capital Partners. The company successfully raised $1 billion in three months and a total of $2 billion since the company's founding in 2013.
DoorDash is a prime example of a company that smaller companies can learn from to expand market share and boost revenue.
Funding rounds have allowed the company to operate in nearly 1,800 locations spread across all 50 states.
Businesses can emulate DoorDash's success by:
1. Not Focusing on Growth Through Discounts
DoorDash claims that the company has never focused on price wars with their competitors. "Our growth has not come on the back of any discounts," states CEO and cofounder Tony Xu. The company has focused on expansion as well as offering new products through DoorDash Drive.
Discounts bring in sales at the risk of profit margins.
A strong product, expansion and innovation are what have helped DoorDash remain an interesting company for investors.
2. Every Business Has to Start Small
Bootstrapping is very real, and founder Stanley Tang recalls the early days of the company. He claims that he would spend afternoons at University Avenue handing out flyers in an attempt to drum up business.
The company didn't rely on fancy point-of-sale systems, and they relied on Square to charge all of their customers.
Orders were all tracked using Google Docs. When it came time to track all of the drivers for the company, DoorDash used Apple's "Find My Friends" to keep track of all of their drivers. Small businesses have to use the resources at their disposal, and DoorDash used Google Docs (free for anyone to use) and a built-in Apple app that allowed them to get the initial sales they needed to find success.
3. Focus on a Need
Stanley also claims that one of the keys to success for the company has been focusing on a "need." DoorDash claims to never have worried about competition because it really doesn't matter at the beginning.
The company focused heavily on serving the demand of their consumers.
When you try to fill a void in a market, it allows you to focus on just that void and increase sales. Don't focus entirely on what the competition is doing; focus on building your brand and improving your offering.
4. Initial Success Often Doesn't Utilize Scalable Strategies
DoorDash handed out flyers in the beginning stages of their business, and it was all about those small, initial sales that brought in $15 to $20 an order. Teespring did something similar, talking directly to customers and gaining their feedback to acquire new users.
The problem is that a lot of small businesses focus on scalability from the beginning.
When you have to make initial sales and bring in users, you're going to need to use strategies that often don't scale well. It's about initial exposure and traction, but at some point, the same strategies you used in the beginning of your business may not be viable when your business has 10% market share.