5 Lessons from Tony Xu of DoorDash

On Infinite Games, Operating at the Lowest Level of Detail, and more!

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5 Lessons from Tony Xu of DoorDash

In the seventh installment of my 5 Lessons series, we have Tony Xu, Co-founder and CEO of DoorDash

I wrote a deep dive into Tony’s story back in March 2023 and today I’m sharing some lessons from his journey.

1. Take a Full Stack Approach

A key to DoorDash’s dominance.

There are many sides involved in this delivery ecosystem: consumers, drivers and merchants.

Traditionally, most delivery companies only focused on one of the three sides. For example, we have lead-generation companies, like Grubhub and Seamless, that merely pass delivery orders onto restaurants. On the other hand, we see many local courier services that only focus on providing drivers.

But we took a different approach. We started DoorDash because we wanted to build the best local delivery service.

From first principles, the only thing that made sense was to build a full stack delivery service. By partnering with merchants, contracting our own fleet of drivers, and building our own logistics software, we were able to control the entire delivery experience to make it more efficient for everyone.

Taking such a “full stack” approach offers us several benefits:

- Superior experience. Instead of being at the mercy of individual merchants, we can design the delivery experience the way we want it to be

- Better pricing. Instead of putting the full burden on one side, we share the delivery cost: we can charge lower delivery fees for consumers and take lower commissions from the merchants

- Increased efficiency. Since we have deep integration within merchants and drivers, we can fulfill the same number of deliveries with less time and far fewer drivers, by eliminating inefficient transactions and driver downtime

2. Play Infinite Games

The measure of successful organizations.

The measure of success isn’t some dollar sign or valuation target or score. Actually, if we’re doing this right, business is really an infinite game and it should keep going.

The real successful organizations are generational because they have this enduring component about them and it’s really hard to do that because it’s very against human nature. We like it to have a start and a stop.

Tony Xu

3. Stay Close to the Problem

Even as your company grows.

One of the best things that could’ve happened to our company was that every single person did deliveries and customer support every single day for the first year. And actually we still do this today, we do this once a month instead of every day. Every single person in the company. And so as a result you become an expert. You learn about different systems.

Tony Xu

4. Operate at the Lowest Level of Detail

How DoorDash first started to think about solving the delivery problem.

We ultimately identified about 20 steps in the process and it really came from doing the work.

When problems arose it’s classic asking “five why’s” analysis to get to the lowest branch of what the actual problem is because most of the time what we realized was in something that seems as quote on quote “easy” or mundane as delivery if you’re at the surface level, you’re never going to actually realize what the problems are, they’re always hidden somewhere.

It may be a restaurant is delayed one day because someone didn’t show up to work, but you never would have guessed that if you’re just looking at the data of how long it takes them to prepare something, for example, that would never probably register on your dashboard.

So operating at the lowest level of detail is pretty much trying to find your way to the right problem and it almost never is at the surface.

Tony Xu

5. Most Fun, Least Regret

A great way to approach life.

I’ve always had a very simple decision-making framework for my life choices versus say some of our business choices which is, “where am I going to have the most fun and the least regret” and I think that’s going to be exactly where I am.

Tony Xu

Insights from World-Class Founders

The world’s best founders are voracious learners.

I’ve seen it repeatedly in my 1,000+ hours of researching and writing about world-class founders in the past year.

Tobi Lütke, co-founder of Shopify, studies how great companies are made by reading biographies, describing them as “cheat codes” for his life.

Apoorva Mehta, co-founder of Instacart, said “Great founders are learning machines” and described how the more you know, the better decisions you can make.

Patrick Collison, co-founder of Stripe, and Christina Cacioppo, co-founder of Vanta, both have public reading lists filled with books.

It goes on and on.

You can avoid a lot of pain and discover a breakthrough from the right ideas.

Now, after a year of researching world-class founders, I’m sharing their best lessons in my Insights product.

Get insights on everything from customer acquisition to hiring to decision-making and more.

V1 of the product is now available.

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Thanks for reading,

Justin Gordon

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