LIVE: DoorDash’s Tony Xu and Miki Kuusi Talk Scaling Operational Excellence

Hi everyone. Today we're excited to share a bonus conversation with you. This season we heard about the crucible moments that define DoorDash and how the team's non-obvious strategies propel them to category leadership. At a closed event in Europe, we hosted a live conversation with DoorDash co-founder and CEO Tony Xu, Head of International Miki Kusi, and Sequoia partner Alfred Lin. They pulled back the curtain on how DoorDash operates with meticulous detail at a global scale. Crucible Moments Season 2 will return with new episodes on Robinhood, Dropbox, and more. See you soon.

Just so people know, DoorDash was founded by Tony in 2013, Volt was founded by Mickey in 2014, and together they merged in 2022. and if you, anybody know the numbers? If you don't, I have them because they're public. So you can take the Q2 numbers and if you annualize them, there was about $80 billion of GOV from the Q2 numbers, which was 10 billion in revenue and 1.7 billion in EBITDA, which is approximately free cash flow. So yeah, so the reason that they're gonna be gap profitable is because I just say grow faster and be more profitable at the same time. Fastest growing in their category. They have a market cap of $60 billion. And the reason that is, is because these two get up at 7:00 a.m. this morning even being jet lagged and went for a run in the rain with the rest of the team.

True story.

All right. First question. Going back to the early days when you started 10 years ago, did you believe you could accomplish what you guys accomplished in a decade?

Believe perhaps actually think we could do it?

No.

But believe it takes you far.

I don't know. I don't think any founder that at least I've spoken to maybe thinks about the forecast that way. Maybe some are just better at math than I am. I tend to think the way these things go is it's just important to get going and it's important to know what the end state is or have a point of view on what the end state is, which for us was always to be infrastructure for every city in the world. But that doesn't make any sense for like four people in an apartment. And so, you know, working backwards to know like, okay, well the first thing we're gonna do is restaurant delivery and there's a long story of how we got there. And then figuring, okay, great, from there, what's the first thing we're gonna do? We're gonna do deliveries on campus from restaurants that never offered it before. From there to, you know, building eight PDF menus and a Google Voice number to test whether or not people would care about delivery. I think that's probably more likely the story for most founding stories. I mean, certainly, it was our case where it was really just, you know, a sequencing of things to think about where would you get started? And then I think you update, you know, your prognosis, right? Based on information you get. And I think you have a point of view on where the end state is and you move around as you kind of get there.

And for us, like, perhaps it was like mostly curiosity. So, like, internet was more or less part of our everyday life, part of everything. And it felt like all these, like, shops and stores and restaurants and all these physical places, we're not going online in the way that they should go. So it was kind of a curiosity of how should this play out.

10 years in, are you guys enjoying your jobs?

Yeah, a lot of people ask me that, we did the Dordas transaction and at the end of 21, closed in 22. So that was like two and a half years ago. A lot of people ask me, Mickey, you're an entrepreneur, what are you going to do next? And I'm like, I have difficulty figuring out something more interesting and exciting to do than the things that I do in my everyday life and the things that we do as a company. I think it's a very unique position to be able to witness how the world is literally going online and how that is changing entire industries, starting in our case with the restaurant industry and continuing with grocery and so many other industries. Genuinely, I don't like my job. I love my job. I love the opportunity that I get with what we do every day.

Yeah, I mean the answer is yes, short answer is yes. The longer answer is, I mean it's a version of, it's a version of, I mean you have to find the union of, I mean what it is that you love to do and what it is that you're responsible to do. And you know, I think one of the best ways to find that union is to work with people that are friends. I mean it doesn't start that way perhaps, but I mean I actually tend to think that when you look at the longest tenured organizations, they generally have those kinds of vibes, or at least the ones that I would want to be a part of. It doesn't have to be a company. It could be, I don't know, a school team, a sports team, a church group, whatever it is. I think they tend to have those characteristics. And I've kind of understood after 11 years why that's true. It's very hard to kind of just do the same grind even if you love the mission, if you don't enjoy the people around you. At the end of the day, they're the ones who make the day-to-day actually go forward.

We heard from Bill McDermott calling operational excellence as pain. And I don't know of any company that is more operationally excellent as well as operationally intense as your business. Certainly much more operationally intense than just a software business. And so how painful is it?

There's this one evening I think back to every now and then. This was in 2015 fall. Early, like Vault launched delivery in the summer of 2015. And in the fall of 2015, I remember this one Friday evening, we had maybe 20 couriers online, 15 restaurants, maybe there was like a 50 customers ordering, and everything got fucked. Like, I remember like I was calling restaurants, refunding orders, calling customers, like, you know, we're trying to like hustle and make this thing grow because we were growing very quickly from the start. And I remember thinking to myself, like, how is this ever gonna scale? How is this ever gonna work? It seemed like so impossible. to be able to do this well at scale, efficiently with good customer experience and so forth. And I think that that's ultimately the foundation of like, you know, that we've had to build at DoorDash and at Walmart. Like, you know, it's easy to have an amazing, not easy, but it's easier to have an amazing customer experience or a world-class efficiency, but it's very difficult to make those two true at the same time at massive scale, at high level of growth. And I think ultimately that's the problem that we need to still solve for every day. And we love details in this company. We love trying to understand how do you make a delivery seconds better for the customer, seconds more efficient for the courier, seconds faster for the merchant to prepare. And ultimately that's the business.

How do you guys define customer service at this point? How do you make it excellent every single day? You guys do approximately from my account, 7 million deliveries every single day. How do you make each one of them excellent?

Well, we don't. I mean, I guess, to start with the obvious, but like, I mean, look, I mean, everything is in this kind of business in particular, and I would argue probably any kind of business, every product, I mean, it's a portfolio of outcomes, right? And you are always, you have to first know what excellence is, and then you have to keep getting inspired and it's really easy when I get like 600 emails a day about like why we suck, you know, or why we could do better and reading through those, you know, very quickly to kind of get to the next level. And then so every day you're actually getting better without knowing it in some ways because what you're doing is you're raising kind of the bar for what excellence looks like. On the flip side, you're trying to figure out like which one of the distributions in this like probability function matters and that's how you kind of prioritize and I think you just have to do that for all of the things. I think you have to do that for the product, you have to do that for, I mean, the people you hire, you have to do that for understanding of a function or when a function changes, you have to do that on business strategy. I mean, that's the name of the game. And all the employees, Dash?

Yeah, so we still do that.

Yeah, so I still do support. I mean, I was just doing it this morning. I was jet lag partially, so I just did it for longer. But like, I did, I don't know, 4:00 AM to 6:00 AM, I was doing support this morning. And so every day I do about 15 minutes on average. We do deliveries once a quarter required for everyone, but I think most people probably once a month something like that.

I've done deliveries I think in seven countries in the last year, including for a competitor, which was very insightful.

We've invited you to this conference before and you never come. You guys are here for another reason.

Yeah, so this is actually a funny one. So like I wanted to come, I was not able to come last year and I asked my assistant, Can you look into flights from our leader leadership offsite that was in Berlin, you know, to come here. And then my assistant is like, yeah, like we have this two-day thing after our leadership offsite in Berlin. Like, it's in the same location as this thing. So we technically didn't come. We just didn't leave.

I see. So what were the takeaways from your European offsite? It must be a very important continent for you. You started Vault, you wanted to win Europe from Finland, you won Finland, you won other minor markets that people didn't pay any attention to like Malta, you have 85% market share in Malta. I heard recently that you have 45% market share in Berlin, which means that you must have some entree into cracking larger markets. So you went from small markets to large markets.

So like we didn't actually go to small markets because we wanted to go to small markets. Like we just didn't have a lot of funding. Like, you know, one thing to realize about our company is that like we found it all in 2014, there was no delivery industry. Back in 2014, delivery was like pizza and kebab places that did delivery. That was kind of a sideshow of the restaurant industry. And there were some companies taking this business online, aggregating those restaurants that did delivery themselves. And we started with the problem of how is the restaurant going to be? How is the restaurant going to operate when in an online world? How is the fact that every consumer is online going to make the restaurant better as an experience or more efficient as a business and so forth? And we ended up with delivery and this kind of whole industry appeared around us in 2014, 15, 16, 17. So that's how we ended up with restaurant delivery. But when this industry came to being around us, we noticed that we're suddenly a very small company in an industry of a lot of companies raising funding. So we just realized that we did the math and we're like, if we want to go to a city like London, 100 million doesn't even get you started in winning in these cities. So that's why we just took bets that we could win. We invested in the markets where we saw that we can see the investment to actually a profitable market. And then as we became bigger, we could take bigger bets. Like we expanded to Japan and Germany as well, basically after we raised our Series C, which was 100 million, because that was the first time we could see that actual capacity to invest enough into these markets. But if I look at winning in Berlin, it's not really that different from winning in Tromsø in Norway. That's one of our cities, Oslo, Fleisch in Georgia. Ultimately, it's about building the best possible service for consumers, couriers and merchants and being consistent at it. not just for years, but ultimately for decades. And I think there's a lot of sprinting in our industry, but ultimately this is a marathon and you only win if you win in the marathon. And we don't focus on the sprint. We like to sprint as well, but we like to focus on the marathon. We talk about not being the first, we talk about being the last to go to a market.

How has either of your leadership styles or culture changed as the company has scaled?

I mean, I think the culture's largely stayed relatively the same. I think the mechanisms to keep it that way or to scale it have changed. It's obviously different when it's just a few of us, you know, as founders, to now 15,000 people around the world in 32 countries, right? So, I mean, by definition, some things have had to have changed if you wanted to keep constant one of the things that you think is really important. I actually, I'm starting to, I used to think that maybe this wasn't true, that perhaps how you do things is perhaps the only real permanent or longest term moat that a company can have. I'm starting to think maybe that is actually starting to become true, especially in a business where, I mean, it really is a detail-oriented business that is different by the neighborhood, by the store, by the category. by the geography. And I think the first thing is just realizing that you have to be more and more in love with the problems as opposed to solutions. I think, you know, that's the first thing that you have to do to scale yourself as you go from, you know, founder to manager to leader to CEO of a larger company. That's probably one of the hardest things for me to learn. I think the second thing is just actually it's It's pretty important to make sure that everyone is quite aligned, not just on what are the priorities of what's important, but also how you debate some of the organizing principles or tenets on how to settle a debate. If that's not true, then generally bad things can happen. I think the third thing is just recognizing that your culture is going to be most I guess scale through the incentives that you have or the incentives that you don't have. I think one of the things that we've been lucky to get right and maybe spend a lot of our time on is just building a lot of people from within. I actually think that when you look at the most successful companies, I don't know if this is causal, but for some reason, the people at the top seem to be there for a long period of time. And that seems to be quite consistent across industry, across time span, across the nonprofit or the for-profit sectors, across science, sports, business, and those are things that we work quite hard on. So I think the mechanisms change. I don't think the culture at DoorDash actually has changed that much from day one. I mean, I think our best tell is we always ask, especially folks who are a bit more senior who joined the company, what are their observations? And we literally write down those five words and see if it matches what the five words we wrote down when we started the company were.

Yeah, and I think like one thing I've been thinking about is that like when you're growing up as a company, like I at least I'm a very impatient person, so I've had to learn a lot about patience because like, you know, building a company takes a lot of time. Like I remember there's an investor who told me that like Mickey, you know, when I was finding Walt at Mickey, like you realize you have to do this at least five years. And I remember thinking like, okay, that's a crazy long period of time. And that was a decade ago. It takes a long time to build a company and you do have an enormous amount of patience when it comes to not just thinking about like the week and the month, but the year and multiple a couple of years. However, if I think about myself today, I've had to relearn impatience. Because what happens when your company becomes big is obviously you have a lot of impact. Your ability to create impact is immense. But at the same time, things just end up taking more and more time. And if you talk with people that work closest with me to this day, my number one word I use is velocity. I talk about velocity, how can we do things faster? How can we fight the status quo of Hey, we're gonna do this in Q4. And I'm like, why do we talk about quarters when we used to talk about weeks or months? Let's not talk about quarters, let's talk about weeks. So just pushing everything to be a little bit faster, a little bit more ambitious, a little bit more compressed. And that's something that has happened with the virtue of the scale that we have.

So you guys are pushing harder and harder and harder. Trying to-- Brain the intensity.

Look, I mean, your job really as the leader, I mean, whatever you want to call yourself, whether you're a, founder of a two-person startup or, I don't know, the room size here, CEO of a thousand-person startup or, you know, CEO of a 500,000-person company or something is you're setting the bar for excellence. You're setting the bar for what is the how, the speed, the way in which you treat people. I mean, those are, yeah, that ultimately is your job. And the more that you can do that, you know, in all the things, I think it's really important. As companies scale, you need management systems, right? And obviously the management system to do something from zero to one is very different from the management system in which you run a tens of billions or hundreds of billions of dollar kind of scaled business that has a rhythm. On the flip side, you also want to try to try different management systems to shock each system. How do you, one exercise we go through a lot in our core businesses and we try to have internal teams try to kill the core business. just as we have teams try to bring rigor to some of the early stage bets that are actually working.

Yeah. And like the way I think about it is that the superpower of the founder is to be in the detail, to be able to do a lot of these things that we do at the early stage of a company like yourself with your own two hands. And the superpower of the CEO is to build a team, have a vision, make sure that there's the right model, the right direction for the team to go. And as a founding CEO, you try to find the best of these both worlds. and that's where you can do something unique.

How do you, oh, I want to follow up on that. How do you make sure that the team is cohesive if you're having one team trying to kill the core business and another team trying to expand somewhere else? How do you give Mickey his autonomy in Europe and doing things differently because Vault and DoorDash grew up differently and have different cultures?

Yeah, I mean, this is where the word alignment becomes more and more important. I actually think that alignment can happen actually really quickly. This is where, I mean, I get the unique privilege of setting some of these tenets in terms of whether it's direction or calling out what trade-offs or outstanding questions there are. I mean, we had this offsite with at least 30 outstanding items. I mean, I better get to those 30 within the next week. because the faster I get to those 30, the faster we're aligned in those 30, the faster we ship, the faster we test, the faster we execute. And I think that, you know, I think it also is really important that you team up with people that are, they're not like you in the sense of, I don't know what they look like or, you know, some of their personal beliefs, things like this, but that they're like you in terms of what they believe excellence is, how do you achieve that excellence, what are the right ways to treat one another, I think that's a pretty big deal. If you get that part wrong, I almost think all of your management techniques probably don't have nearly the same amount of impact. I think if you can start by getting that right every single time, really evaluating every single role, and then moving people around to also help build not only longevity, but also institutional knowledge and resilience and redundancy in your team, and then you mirror that with this very fast ability to reconcile any differing points of view on especially strategic direction. Generally, those are the ways in which we try to keep people happy, let founders do their thing. But yeah, it's hard. It's not perfect.

Any questions from the audience?

I actually had breakfast with Mickey at the first version of this Europe 100 in 2022, and I asked a pointed question. of all of the delivery companies, he was still independent and a CEO back then, which one is the best? Literally, in a heartbeat, he said, DoorDash. So, marriage of love. Now that you guys, I gotta make the marriage work. That's right. So, now that, you know, this is the big first acquisition for DoorDash, you know, and you got acquired, give us some of the lessons learned of both acquiring companies as well as being acquired.

Yeah, I think some of this depends on your philosophy. And for instance, when we looked at companies to team up with, one of the things we prioritized the strength of the team probably more than what a traditional M&A exercise would have maybe scored it. And our view on this is that this is a business where you might be winning in the, I don't know, temporal next x years, but then losing y years later. And so if you think that way and you actually believe the leadership matters, then what seems the reason that that should be maybe the most important thing. But I think there's a temptation sometimes where the numbers kind of talk louder somehow than this particular point. So I think for us it started with that. Then it turned into, well, if you truly believe in this, you kind of have to go all the way through the logic and take it to its natural limit, which is, well, Mickey kind of has to run everything. Because if you truly believe that you're teaming up with the best operator for what we wanted to accomplish, that was kind of what we did. Even the DoorDash operations that were not a part of Volt, but outside of the United States for DoorDash, reported into Mickey. I think then the third was actually just figuring out by trial by fire and trial and error, and we're still obviously making sure that we can do this, but reconciling the kind of arguments as quickly as possible, just what I mean by these organizational tenets. Because it's not just the what or the strategy, that's actually quite straightforward, I think, in most cases. I think it's the how you do things that is where all the tension is. And I think, you know, it helps though if you find a team that you actually think very similarly about the how. And so I think that's probably some of the most important things that we worked on.

To maybe add a perspective, like, I think DoorDash and Volt is a very unique partnership. Like, you know, one thing I learned about M&A is that, like, people talk about M&A as if it's like, one topic, like different M&A transactions or partnerships are very different in nature, very different. Like, you know, two companies of like 10,000 plus people coming together is a very unique thing versus something else. But I think like why DoorDash and Walmart work ultimately from my perspective comes back to Tony and who Tony is as a founder and the trust he has placed in both myself and by extension our team. And that's ultimately what it comes down to. even as it's a massive transaction when you think about it.

Take one final question and then I have another one.

Yeah, hi. I was wondering if you could compare both of you operating more in the States, operating more in Europe about the labor laws in Europe and how do you deal with that and if you believe that Europe should reform It's labor laws at least for part-time workers or people who work less than 20 hours a week.

So I can start like, should we as societies change our laws around like prescription drugs and apothecaries because of the internet? Like kind of makes sense. Like, you know, we came up with a lot of regulation for a lot of different industries like in a world, you know, predating the internet. I find it funny that when we talk about this in the context of labor and labor regulation, we're kind of like, no, we have the perfect labor regulation. We figured it out in late 1800s. Like, it's a ridiculous thing. Like, every aspect of society is being redefined by the internet. And what the internet does for labor in specific is that it allows for a whole new category of work. And that's ultimately, like, you know, the kind of work that we are able to enable, not just on the career or dasher side, but also on the on the merchant side of the equation. And like, you know, it doesn't take a rocket scientist to say that, okay, we should probably regulate this in a way that makes sense that enables this kind of unique freedom and flexibility and self-directedness of this kind of online enabled work with like, you know, protections and predictability and safety nets of like labor systems that we've spent 200 years building. When it comes to, you know, how is this similar or different across like the US or Europe, like every country is different. There's no European labor regulation. Like, Volt operates in 17 European Union countries today. And I can tell you that no two countries are alike. The countries are very different. And there is a lot of that goes to the detail of how the laws have been written in each of the countries and what that means. I will raise my hat to Estonia, who's done a lot on this front, to Greece that did a labor reform that figured out a way to regulate this kind of IC work, to CBAs that have been done in France and the UK. So I think this is ongoing. But it's going to take some time. This is not a painless transition we're going through.

Final question. Looking out a decade from now, what are your skills of ambition? And how do you know those are aspirations versus delusions?

Yeah, I don't know if my brain necessarily like, I mean, you definitely maybe earn a little bit more credibility to think longer term as, I mean, when the company's like 11 days old, probably thinking about 11 years out is, a bit tricky, but when you're 11 years old, can you think about the next 11 years? It's probably a bit more straightforward. I actually think in general, it's fairly straightforward where things are gonna go. I think the question is the sequencing of how you do that. So, I mean, right now, obviously, in the online world, there's this massive investment cycle into figuring out how this is gonna play out. Most of you participate in it. funded or some version of these things. There's a similar physical version of this happening. It's just happening a lot slower, right? For example, one of the things that I think this was mentioned in one of the previous sessions that has allowed these LLMs to be somewhat useful is this ability to actually scrape lots of information that's available on the internet. Well, a lot of information in the physical world is not actually available anywhere, you know, whereas the last parking space in downtown San Francisco or how many apples are in this aisle in the Revé store or, you know, et cetera, et cetera, et cetera. I mean, those are all things-- I mean, we're just in an earlier stage than that in the physical world versus maybe where things are in the digital world. And then if you think, okay, well, the first thing is then you got to go and rewind and think historically about how you would actually go and do that. And if you can do that, I think another pretty interesting piece is you're gonna have to reorganize the atoms inside these cities once you have that information. In the US, to give this example, we have very large square footage for most retail stores, whatever they sell, bananas to couches to TVs to iPhones. And while it probably doesn't always need to work that way, things on the internet got more and more efficient, things in the physical world will too. The question is like how and it's a little bit more complicated because you're talking about real estate and people and labor and a lot of other things. And so, I mean, that's what's gonna happen in the next 10 years. And I think it's quite straightforward. I mean, I actually think the general like ending of where it goes is pretty straightforward in terms, but I think the sequencing of kind of how you get there and when, things around automation, the reorganization, the business model innovation is actually gonna ultimately get there, right? Because if you think about it, if we ultimately wanna bring you everything inside the city and enable every retailer to compete against anyone with any kind of business model, I mean, those are the kinds of things that we're ultimately gonna have to do in order to make successful these transitions.

I think it's kind of crazy that we are now in Switzerland and if there's a book that you would like to order as a physical copy, That book is likely going to be in so many different shops and stores around this place, but they're not listed anywhere online. And literally the easiest way to probably get that book is to go online and order it and it's going to be transported from another country to your location. Someone needs to book all of those books and all those other items in these stores and shops and restaurants and so forth online. And until 100% of them are online, we are not done.

Well, thank you, Micky. Thank you, Tony. I hope you guys know why Jordash is a long-term hold in the Sequoia Capital Fund. Thank you.

Thanks, all for it.

Thanks, man.