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what's up

Welcome to slackingoff, where we have in-depth conversations on whatever is particularly interesting. Follow below.

burger with fees πŸ” 🍟 πŸ’°

burger with fees πŸ” 🍟 πŸ’°

ameet
What's up Anthony. I'm feeling hungry.

anthony
Do you want mediocre delivery you need to heat up? If so, you might want reconsider ordering from Munchery:

anthony
SFGate
Layoffs at Munchery as food delivery industry struggles
Layoffs at Munchery as food delivery industry struggles San Francisco food delivery service Munchery recently laid off 30 employees, a move that new CEO James Beriker said was necessary to streamline its operations.

ameet
Damn. I can't order from SpoonRocket either:

ameet
TechCrunch
SpoonRocket shuts down amongst on-demandΒ apocalypse
SpoonRocket informed its investors it’s shutting down its on-demand pre-made meal delivery service after failing to raise the necessary capital to continue operations.

anthony
Maple isn't doing so hot either with their "lose money on every order" strategy:

anthony
Recode
Leaked documents from startup Maple show the brutal economics of food delivery
On average, the restaurant-in-an-app lost money on each meal in 2015.

ameet
Tough break. I think investors are lukewarm on Postmates too:

ameet
WSJ
Postmates Raises $140 Million in Flat Funding Round
Postmates Inc. said it raised $140 million in a new funding round that failed to boost its valuation, reflecting investor ambivalence toward the once-hot on-demand delivery sector.

anthony
Finally rounding out the list, DoorDash with the startup kiss of death:

anthony
WSJ
DoorDash Raises $127 Million in β€˜Down’ Round
DoorDash said Tuesday it raised $127 million in its latest funding round primarily from existing investors, the latest sign of the delivery startup's struggle to secure a slug of capital.

ameet
That's pretty bad. I heard that "flat" is the new "up". Does that mean that "down" is now "really really down"? πŸ“‰

anthony
What did DoorDash do with all the πŸ’°? We should place an order.

ameet
One step ahead of you:

ameet

anthony
What is the "Selection Fee"?

ameet
Let's find out:

ameet

ameet
That's not very helpful. I'm still not quite sure what this is or why I'm being charged.

anthony
Fuck, all these additional "fees" and these guys still can't make money...

ameet
Are you sure they can't make money? Let's do the math for an average New York City delivery.

ameet
Let's assume that the average food item in NYC costs $8, and the average order consists of two items. Let's also assume that this mysterious "Selection Fee" is around 20% (which is what I've seen posted online):


Food: $16
Delivery Fee: $6
Selection Fee: $3
Total: $25


anthony
So let's clarify. The food cost goes to the restaurant, the Delivery Fee goes to the courier and the Selection Fee goes to DoorDash, right?

ameet
That's right, so DoorDash nets about $3 per order on a good day.

anthony
But let's not forget all those promo codes these companies give out. What is the average promo code worth?

ameet
About $5 is what I last heard, albeit limited to first time customers. How many customers acquired with a promo code are coming back for more?

anthony
According to this postmortem on Homejoy, the retention rate was pretty bad:

anthony
Forbes
What Really Killed Homejoy? It Couldn't Hold On To Its Customers
When housecleaning startup Homejoy shut down last Friday, cofounder and CEO Adora Cheung said that four lawsuits pending against the company were a "deciding factor." But former employees and industry sources say the company was bleeding money because it couldn't hold onto repeat customers.

anthony

Only about 15% to 20% of customers booked again within a month


anthony
So even with our simple math, DoorDash isn't looking too hot:
Selection Fee: $3
Avg. Blended Customer Acquisition Cost: $4 ($5 x 80%)
Doordash Proceeds: -$1


They are losing money on every order even before we account for fixed costs.


ameet
Seriously, and those fixed costs are substantial. To bring on all these Dashers and restaurants, DoorDash has city launchers, operations guys, salespeople, customer service personnel, and a bunch of expensive engineers in expensive San Francisco. πŸ’΅πŸ’΅πŸ’΅


Clearly this is a terrible business. Why do so many of these companies exist?


anthony
I think smartphones and mobile payment processing has opened to the door to these new "distributed" business models to flourish. Companies can now quickly mobilize hundreds of workers and partners directly through apps.

ameet
The smartphone was definitely the catalyst. What's more, the venture capital firms funding these companies (and almost all of them are VC-backed) totally buy into the pitch: everyone eats, everyone likes ordering food, why not combine a natural human need with the convenience of the smartphone?

anthony
These companies have shown that they can gain customer awareness and grow quickly. Venture capital funds have a lot of money they need to invest and they need to show hockey-stick growth on their investments πŸ“ˆ . Why not have the few winners in your portfolio pour money into marketing to juice the numbers?

ameet
I guess so. If you don't care about underlying business fundamentals and want to grow at all costs (and engage in some questionable tactics while doing so) then by all means light some of that venture capital money on fire. πŸ”₯πŸ”₯πŸ”₯

anthony
You must be alluding to this:

anthony
Business Insider
DoorDash, a food-delivery startup that's rumored to be raising at a $1 billion valuation, has some shady instructions for its delivery workers
A DoorDash training video obtained by Business Insider shows DoorDash telling Dashers to follow certain practices that could mislead businesses and customers.

ameet
That's pretty terrible. Check this out:

ameet

One Italian deli owner who does not partner with DoorDash complained to Eater that the startup was adding a few extra dollars to every menu item. One of his $15 paninis, for example, was listed at $21.95 on DoorDash.


ameet
Between mysterious "Service Fees" and randomly marked-up items, I'd say that people need to be super careful when ordering through one of these startups.

anthony
So the restaurant's prices are artificially inflated, making your food more expensive, the restaurant look bad, and zero additional revenue for the owner. This isn't a great deal for anyone but DoorDash.

ameet
So what's the lesson here?

anthony
There is a cost to this convenience. In this case, it comes in the form of several vague service fees tacked on to the bottom of your bill.

ameet
If you want to save a buck, the best thing you can do to make sure everyone is paid is pick up the stupid phone and call the goddamn restaurant.

anthony
πŸ”₯ ☎

march of the times πŸ‘Š

march of the times πŸ‘Š

#MAGA ⭐

#MAGA ⭐