Doordash just launched their IPO with shares selling about double what was anticipated.
What does this mean for those of us who deliver for Doordash? How will this impact us?
We talk about:
Articles referenced:
My article from November 2019 questioning if Doordash would ever get to go public.
CNN Business article on how food delivery might be in for a reality check after the pandemic
Last week's episode discussing how the market is ripe for an alternative to the major delivery companies
Market Insiders article: Doordash is the most ridiculous IPO of 2020
Episode 7: Have an Exit Plan.
More about the EntreCourier
You can get more tips and ideas at our website, Entrecourier.com
Our Podcast page is at DeliverOnYourBusiness.com
Sign up for our weekly Courier Nation Motivation email
Get in touch with us
Follow us on Facebook
Folow us on Twitter
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Doordash just launched their IPO with shares selling about double what was anticipated.
What does this mean for those of us who deliver for Doordash? How will this impact us?
We talk about:
Articles referenced:
My article from November 2019 questioning if Doordash would ever get to go public.
CNN Business article on how food delivery might be in for a reality check after the pandemic
Last week's episode discussing how the market is ripe for an alternative to the major delivery companies
Market Insiders article: Doordash is the most ridiculous IPO of 2020
Episode 7: Have an Exit Plan.
More about the EntreCourier
You can get more tips and ideas at our website, Entrecourier.com
Our Podcast page is at DeliverOnYourBusiness.com
Sign up for our weekly Courier Nation Motivation email
Get in touch with us
Follow us on Facebook
Folow us on Twitter
Connect with us on Linkedin
Follow us on Instagram
Well, hello, Courier Nation. Welcome to the Deliver on your business podcast, where you are the boss. Each week we talk about how to make the most of your business as an independent contractor, as a courier delivering for gig economy apps like Grubhub, DoorDash, Postmates, Uber Eats and so many others. Well, hello, Courier Nation, welcome back for another week on the Deliver on Your Business podcast, and as I record this, it is Wednesday night, December 9th, 2020, and DoorDash has just finished their IPO or their initial public offering. They went public here. It's a moment that I never thought was going to arrive. You know, they've gone public. Day one is in the books, and it actually went a lot better than than what I expected anyway. I think better than what anybody would have expected for it, at least for today. So what does all this mean for us and what? What does it mean to go public? We'll talk about that a little bit here as we go into this today. You know, is this going to make any difference to those of us who are independent contractors for DoorDash? Will. Will the IPO make a difference to us? Will it change anything? And will the success for DoorDash continue with this thing? So let's start. We're just going to talk a little bit about, you know, what is this whole IPO thing even mean? What does it mean to go public? And in a nutshell, basically what it boils down to is DoorDash is now owned publicly and not privately. In other words, you can buy your shares of stock in the company now on the stock market, you can buy it publicly. Whereas before they went public, if you wanted to own a part of it, you had to know one of the people that that had an ownership piece in the company and you had to buy that directly from them. And so maybe here's an oversimplified way of explaining it. You know, Tony had some great ideas on how to provide deliveries where they couldn't be done before, but he needed money to get it done so he could borrow money or he could sell shares in his company. So like, think of a TV show Shark Tank, if you ever watch that, you know those guys, they're not out there just handing out money. They're not doing grants. They're not doing loans. What they are doing is people come to them and say, Hey, I've got this business idea, and they'll say, Yeah, we'll invest in your company or no we're going to pass. And what happens then is when they make an investment now they own a part of that business. So that's the idea, and that's basically what's happened with DoorDash at some point, you know? Their business idea was working, it looked like it had some potential, so people would invest and the company grows, but now they need more money to be able to grow some more so they get more people to invest or they get their investors to kind of chip in a little bit more. You know, and it's kind of rinse and repeat several times over. And if you've ever heard the stories or read the stuff about how they raised cash in the past, that's basically what's happened is you had somebody, you know, come in and they, you know, bought a little bit more of ownership in the company in exchange for that money that they're giving. So all of this time, all these investors own part of the company, but they own it privately, it's like it's it's a private thing, you know? But if you wanted to own any of it, you'd have to buy directly from another owner. But the difference now is that with them going public, you can now do things pretty much like any, you know, major corporation where you can go to the stock market and you can purchase shares in the company and now you are a part owner of the company. And the funny thing about this whole round of all of this going on when they keep raising this money, you know, they're never making money, they're losing money hand over fist and they're not showing any signs of profitability. And and you start wondering, why are these fools continuing to give them money? Because this is the thing about going public is that when they sell these, their shares, they sell their ownership up on the stock market. And the whole idea of this angel investing of this early. Investing in these companies like this before they go public is that the value of the company, whatever that is, ends up being, you know, stock or potential stock owners. Kind of expect that the value of the company is going to be more than what these guys put in to invest, and that's when they make their money is when the company goes public. But like I said, you know, once once they are now public, like DoorDash is, now you can you can just you can go on to the stock market, you can go to E-Trade or any of these places. You can buy your stock in the company. You don't have to know an investor. You don't have to convince them to, you know, sell part of their stake in the company or anything like that. So that's what's happened today. And how did it go? You know, this is the first day that they made the stocks available on the public market and early talks where they're going to sell them for 75 or 80 dollars per share. DoorDash set their price at 102 before then, and I thought they were nuts. Well, it tells you what I know, because then throughout the day, stocks are actually selling at about $190 per share. I mean, it's almost double what they were doing and like two and a half times what the original estimates were going to be. What that basically means is the original owners, the investors, they're getting more than double what anybody thought that they would for their shares that they have in the company. It's kind of like if I was going out and thinking of selling my old Buick for $750 and I decided to go ahead and offer for a thousand. But then somebody comes in, offers me $1500. It's it's that kind of deal. Nothing changed about the Buick, but for some reason somebody thought it was worth more. So I made more. And that's kind of what happened with DoorDash today. And I'm going to say is, I'm recording this right now. There's a big party going on among, you know, Tony Xu and the other founders of DoorDash and all the investors like SoftBank, because they're probably in a really good mood right now. They've got a lot more than I think anybody thought they were going to get for it. The thing about it is this this whole thing, I think it's just a miracle, and that's that's the thing that is just so fascinating to me. Now, obviously, I'm not a stock market expert because I just thought there's no way this would go well. You know, I just I figured that people were going to be smarter than this. And about a year ago, in fact, I was really kind of convinced that, you know, that the IPO was never going to happen because DoorDash has been trying for a couple of years trying to go public. And there were some disasters with some other tech companies that were right around that time. I got a link in the show notes to having talked about this almost exactly a year ago, and I said back then I said, I'm not sure things look so great for the gig economy delivery industry, at least as things are right now because it's just not a sustainable model. And I still feel the same way. But then who saw 2020 coming, you know? And if you wanted to create this dream scenario for DoorDash and as well as for Grubhub, Uber Eats and everybody else, you know, you couldn't have come up with much better for them than than what this last year has been, because all of a sudden, you know, everybody's at home. Nobody could eat in the only way that you could get food, you know, if you want, other than cooking it yourself. And sometimes that was a challenge because all of a sudden all the grocery stores were bare. So for a lot of people, all of a sudden they explored this new. Idea, or at least new to them that maybe they never really considered or didn't consider as much. And it was delivery. And like I said, you know, DoorDash has been wanting to do this IPO for a couple of years. They had some real debacles with tech companies back in 2019 like Uber and we works that honestly, it was, you know, the mood was shifting and a lot of people were understanding that that all of a sudden people were not as willing to go for these IPOs because they started looking at, it's like, Hey, these these guys have to have some kind of chance of being profitable. And when you looked at DoorDash, it was like, Yeah, there's there's not much that says they're going to start making money at some point in the near or even distant future. And so the environment was just totally against them having much of a chance of doing it. And it was at a point, I think, where they were going to start running into some problems because when they start running out of money, you know, usually what they could do is they could go to investors who would bail them out because those investors would make their money back when there's an IPO. But if it's not looking good for that IPO to happen. All of a sudden, you're going to have a hard time getting those investors. And and so there was just this whole chain of things like that that was starting to make it look like, you know, you had this giant house of cards that who knows when it's going to collapse, you know, unless something happens, you know, unless you get some kind of wild circumstances that inflated the numbers, inflated your sales and made people forget what a disaster those earlier iPods were. Well, hello, COVID, you know? Now, does the success of this IPO, maybe these guys know something. I don't know. That's that's always very possible. There's a lot of stuff I don't know. But I just I have trouble understanding what's going on with this. So does this mean that maybe some people understand that, OK, maybe there is better chance for profitability than I thought? You know, I thought it was kind of interesting. Michael Block, who is he's on the team at DoorDash and he was among, I think, one of the first 50 to ever be hired as, you know, actual employees of the company. And he was involved in launching a lot of different things like that, and he wrote a series of tweets about all the things that led to where DoorDash got to where they were. And DoorDash did some things that were smart. Yeah, they went out and they were the first ones to really say, You know what? We can go to the suburbs, we can go to the smaller towns even. And so they opened up to some different markets and they were able to make those markets work. But I thought it was really interesting because somebody responded to the tweet and they said, Yeah, but what about profitability? And his response was, Well, hey, we had we showed a full quarter of profitability. And I remember just looking at that and thinking, yeah, but if you want to take a unicorn like the second quarter of this year based on everything that's happened, you know, go right ahead. But the problem is the quarter after that, they lost more money than what their profits were. You know, third quarter was was a lot more losses than what the profits were in second quarter. And it was just like even in the midst of this pandemic, it was like this golden platter. I guess it's a silver platter that delivery and all these sales are just handed to DoorDash, and they still can't make a profit. And I just look at that, and I think if you can't make money during this pandemic, let's face it, guys, you suck, you know? So I don't know what this all means, because as far as how this is going to play out for DoorDash, because you just look at some of the things ahead and it's like, OK, what's going to happen when they get past this pandemic? You know, what's it going to be like? What happens when things go back to normal? Now, maybe that's a bad question, because I'm not sure that there's ever going to be a normal, you know, there's a lot of things that are never going to be what they were. And that's not necessarily good news for delivery companies, though, you know, now Sarah Ashley O'Brien, she had a good article. I'll put a link in the show notes in CNN Business, where, you know, about a week ago she put this out news talking about, you know, delivery companies might be facing a reality check that it's like when this pandemic is over, when business slows down, when things start drying up. You know, what's that going to mean to them? What happens when everything opens up again? I think that there's some toothpaste you're never going to get back into the tube, you know? I mean, a lot of people are going to continue to work from home. I think it was interesting listening to I think it was one of the executives wants from Uber and Uber Eats talking about during this pandemic. They had a big shift that in the past dinner was their busiest time, and now lunch has become their busiest time for deliveries. It's because of so many people that are working from home. Some of that's going to stay, but a lot of people are going to be going back to work. A lot of restaurants, they'll continue to focus on delivery, but as they start getting people back in. You know, what happens to those restaurants that feel like, OK, maybe we don't need that delivery as much or maybe we need to find other options because this is costing us so much money to do delivery the way things are right now. You know, and the thing is, though, I just look at this and I say, you've had more business than you could have dreamt of this year. But a lot of that's going to go away. And so how are these companies going to handle that drop? And. I think the big question that comes to my mind is how well is DoorDash going to do it and burning the bridges? You know, because I look at all these different things, like the fact that DoorDash, they might have had unprecedented revenues, but they burned a lot of bridges to get there. They've they talked in their in their filing, they talked about how they've got this three sided market customers, dashers and restaurants. And my question is, what are their chances of thriving long term when all three sides of that market hate them right now? You know, there's there's this growing feeling among restaurants there's there's been a growing resentment among restaurants that that basically they feel like these companies have exploited the pandemic and taken advantage of them that. They're kind of held over a barrel that if they wanted to stay in business, they had to go to delivery. And so these companies could charge just pretty much whatever they wanted. And so there's a lot of resentment over the commissions, the fees, the treatment of the restaurants and. What are your prospects when things start to slow down and there's that feeling out there? How many of those restaurants are going to walk away when they don't feel the need for a third party delivery partner or if somebody comes along and does something a little bit better? You know, I also see a lot more hatred when I look at the forums, when I look at the Facebook groups and look at Reddit. When I see all the communications, when I listen, you know, when drivers talk to me, I hear a lot more hatred towards DoorDash than I saw before this ever happened. You know, so many problems with the lack of support the app crashes. How little drivers were paid, there's there's a lot of resentment out there over this $3 orders and different things like that. And all of that kind of stuff, that service has been a problem, getting the deliveries actually done has been a problem. The app going down as badly and as frequently as it does as a problem that it's the kind of stuff that's alienating the Dashers and the customers alike. So DoorDash might be dominating right now, but the question is. How well can they carry that on when they have? Upset all three faces of that three faced market, you know? And I think the door is left wide open for, I think, an alternative to come in. Now, what does this mean, I guess, for the investors who bought the stock because I I want to ask you a question if you paid one hundred and ninety dollars for a share of stock or for several shares of stock? Are you crazy? Because I don't get it. I just I don't understand. I don't understand, is it is it that there is? Ben, just so much of a need for wanting to get in early on this great opportunity. You know, how much of this is FOMO? You know, people that want to get in on the next Amazon or something, they don't want to miss out on that next big. IPO or something like that and. I don't know. You know, the reality is there's a lot of room for growth even still in the market. It's not like delivery has been fully tapped out. You know, and that that's been a big part of their selling point on this IPO. But and it the fact that you've already got a dominant player. So maybe those are some of the things. But the bottom line is you've got to ask this question can the company actually pull it off? Because DoorDash is a tech company whose tech doesn't work. And they're not scoring points with any side of them, are any one of those three sided, three faced markets, you know, that they're dealing with? And there was another article that once again, I got a I got a point, you know, the show notes for the link to it, but this was on Markets Insider that Emily Graf and I'm sorry, I totally probably butchered her name there. She published an article, though, that just basically an interview with a stock analyst. And essentially what it came down to was his. His statement was this is the most ridiculous IPO of 2020. In fact, as you read it it, you probably wouldn't want to limit it to 2020. And you read his comments, though, and it's a good read. So definitely go to the shownotes or go to entrecourier.com/101, which is the the blog post version of it, and that'll be linked to in that also. And then we'll follow that over to that article because it just it had some interesting things. Just talking about why really, the only thing this is doing is bailing out the investors that bought it in the first place. But, you know, it was interesting because he mentioned the timing of the IPO that they announced the IPO. Like almost immediately after the word came out from, I believe it was from Pfizer that they're just about ready to release the vaccine. And the bottom line was, you know, kind of the what he was saving stating was there is a short window of time where an IPO would work because we're still in the midst of this whole pandemic thing where all this delivery is happening. But how much is going to change once the vaccine is out there once the pandemic is fading away? Things like that. And so it's I don't know, it's going to be interesting to see what happens now. I don't know why it's gone so well. Maybe I don't know enough about how the stock prices work. But I just got trouble thinking that it's going to be anything less than a disaster for anybody who shelled out that much money for DoorDash stock. I cannot imagine. That. It can continue to hold that $190 price, not when it was expected to start at half of that less than half of that. And but, you know, like I said, there's this piece that I don't know enough. I know enough to know what I don't know, I guess, because I sure couldn't imagine it would ever have gone as high as it's going in the first place. Now some folks will say, Yeah, but what about these other tech companies that succeeded? You know, didn't. Didn't we all say the same things about Facebook and Twitter or Amazon when they went public? Because you always heard the same thing, especially you heard. Yeah, they're never going to be profitable. They are losing so much money. They're never going to be profitable. And so maybe it's the same thing here again. And you know, if you bought early on any of those, you're doing pretty good right now, you know? But here's the difference that I see with those companies. They were great at what they did. You know, they were great at. Delivering on the product that they were delivering. DoorDash was I think there were brilliant at identifying the opportunities. They were brilliant at figuring out where they could go, and they were awesome at getting out there and kind of building up their company and taking advantage of the fact that the other companies weren't doing as well. And so to become that dominant, you know, that's that's great from a marketing perspective, that's a great from understanding opportunities. But the problem is, they've never really been great at what they actually do. You know, they still suck at delivery. They still have a huge problem with customer satisfaction. They still got a huge problem with satisfaction of all three facets they deal with. Now what set them apart is their vision for the markets. And I think at the same time, they benefit from the fact that all of their competition sucks just as bad as they do. But that's not a recipe for profitability. You know, it's great. It's great that they understood the opportunities, but they've never demonstrated that they could be awesome at delivering what they're actually providing. They're just not. Significantly worse than anybody else, and that's that's not a recipe for profitability. The bottom line, I guess, kind of that question that you got to ask then is what does that going to mean for us? What is all this going to mean for Dashers, for delivery folks, contractors? And that's a really good question and as question that probably couldn't tell you that I've got a real good answer for because I don't know that actually the IPO is going to mean a whole lot one way or the other. It means more cash for DoorDash, it means more cash for all the investors. And with more money in the company, that means that they're going to be able to stick around a bit longer. Now what do they do with that extra money that they just raised? You know, maybe that's the big question. Are they going to? Is it just going to be used for trying to grow their markets more? Is it going to be used to fix the problems that they've got? I'd be encouraged if I felt like they were doing things to fix the things that were the issues, but I don't see any signs of that happening. Are they going to pay drivers anymore? No, no. In fact, I think what you're going to find as time goes on, there's more pressure for profitability. And so this is one area paying the drivers more. Is it going to fit into that? Are you going to fix their tax tech issues? God only knows on that, I mean, I don't know, it's it's like. If they haven't done so yet. I don't know what's going to light a fire under their rear ends, you know, to try and get it fixed now, so. You know, ultimately that's that's the question. Are they going to use their money to make things better? Are they going to use their money to actually turn them into an excellent delivery company? I don't see it happening. But who knows? I think really the future depends an awful lot more on what happens with the economy really than than what happens with the DoorDash IPO. I think the bigger things to watch for what are the what are the results of this pandemic? You know, are things going to get better now that a lot of this new influx of drivers returns to work? And does that mean that the market's not as saturated with so many drivers that we can start getting more orders again? Are things going to get worse because these drivers, they're not going to give up that extra income now that they could do that? You know, you've got an awful lot more. People have understood what delivery has to offer. So I don't know. As far as that goes, I. I'm not as optimistic, I guess, but because the biggest question is what's going to happen with the economy? You know, my belief really is that right now, everything is just been held up by smoke and mirrors. I mean, just as many places have gone out of business as many people that have lost their jobs and all of this. The only reason that we're still moving along at any pace has to do with all this money that's been put out by the government. And a lot of that was fake money. We didn't have the money. They just printed it basically. And at some point, is there going to be a reckoning for all of that? You know, it's all that can come back and bite us in the butt in some way. I don't know because I thought that it would happen back in 2008 when we spent all that money back then. So I've got ideas, but it never happens and doesn't always happen the way I think it's going to. So, you know, it's hard to say. I don't think that we've begun to see the real impact of this pandemic. Yet just so many people lost their jobs. So many businesses have closed. And I think you're going to see a lot of others that don't. How many restaurants are not going to survive being shut down again? You know, the ones that kind of limped along and they made it. And then all of a sudden they closed down the in-seat dining again because things have gotten worse again. So. You know that that's the stuff it's going to be what happens there. I think that is going to make more of a difference to us than what happens because of this IPO. Now, I don't know. I was wrong about 2008, or at least I haven't seen it happen yet. What I thought was going to happen, so I hope I'm wrong about 2020. But the biggest thing that I want to tell you out of all of this is it's not so much this IPO, but it's just watch what's going on out there, watch what's happening with the economy. Now, I still believe that delivery can be a great way to make some money. I still think that right now you could do this full time if that was your choice and if you did it right. I don't know what that's going to be six months from now. No, the fact is I had all those same doubts last November. You know that I that article that I told you about then from on November 24th, and I'll have the link in the show notes for that because I wasn't sure where things were going to be here. But then who saw 2020 coming, you know? And so the thing is, I mean, like I said, you know, I had those doubts. And yet 2020 was, I think for many, it was the best year you could have hoped for for doing deliveries. So my best advice is you hang on to your delivery business opportunities as long as the opportunities are out there, but keep an eye on things and have an exit plan. If you don't have an exit plan, start working on it. Start making plans. Start looking for other things that you can do because things can change. How do you stick with the keep your options open? Don't stick with just one company. Treat this like a business because you're not at the mercy so much if you're taking control. As you are, if you just kind of act like you're an employee for DoorDash or for any of these companies. So be smart about how you're doing things right now. But start having an eye on where do you go from here? What do you start doing from here? And you know what, if you love the heck out of doing this whole, being in business for yourself, then start looking for work and I take that, you know, have an exit plan. Go check out episode seven on the podcast. We talked about that and and start thinking, start planning and start looking for what you can do from there. The biggest thing I tell you to do is just keep an eye on things. No one has time to execute that exit plan. And Frances, a wrap this up, I want to ask you this question, has this podcast, has this website, have any of this helped you out in your delivery business? Because if it has, could you do me a favor and just spread the news? Let people know, tell people about us because that helps us get found. And if we can get found, that just means more people that we can help out. And the one thing that I just really, really want to encourage you as we go, you know, just talked about this whole idea having an exit plan and the big thing that I always try to encourage people, you know, master your business attitude, you know, have this idea that you're running a business, think about it like you're running a business. And here's the deal. When you're running a business, you always have things like this that that you can have things that are outside of your control that can impact your business. What will happen with restaurants this year, right? But if you're smart and running your business, you're always keeping your eye out for work and you go nonstop, you know, in driving with defensive driving courses, one of the biggest things they tell you is always have an out. Always make sure that there's somewhere that you can go when things happen. And that's the thing that I really encourage you to do is think like a business owner and think, like, think in terms of what do you do when things change? That's one way that you can take control. And that's the thing that I encourage you to wrap this up to do is do exactly that. Take control and be the boss.