By Saar Gur
Venture capital is a business model that relies on outsized wins. But it’s also a very hard business with huge loss rates and a lot of disappointments along the way — the vast majority of venture investors are never able to generate enormous returns. In baseball terms, CRV’s investment in DoorDash is a grand slam — one of the biggest in our firm’s 50-year history.
And while many VCs use a revisionist narrative to justify decisions in the past, CRV is different.
We operate as a team. DoorDash was not MY investment, it was OUR investment. We all played a role and everyone on the team deserves credit. Let me explain.
We’ve been around for half a century because we’ve built a partnership that is built on trust. Trust is not a buzzword — it’s the foundation of our firm. We’ve learned over the past five decades that the best early-stage investments are made when a partner feels conviction about a founding team and space. Our entire process at CRV is designed to allow partners with that conviction to make early, bold bets on founders.
I joined CRV, which historically was a firm focused on enterprise investments, to help grow our consumer practice. Early on at the firm, I chased a lot of consumer projects and became overwhelmed with how much beachfront I had to cover.
In 2013 I approached my partners with a new thesis — I wanted to focus only on higher-margin consumer bets that relied on best-in-class software. The aim of the strategy was to minimize risk on product by only investing in companies that had already built a product but didn’t yet have much market validation. I called this strike zone “post-product/pre-traction.” Because of our high level of trust, my partners fully supported the approach, although at the time there were questions about what kind of projects I could unearth in that somewhat narrow space.
Later that year, I started exploring an investment in the food delivery space. There were a lot of companies trying to become the “Uber for X,” attempting to leverage on-demand services. At the time my wife owned a local chain of yogurt stores (called Fraiche) so we knew firsthand how difficult food delivery was. And as parents, we were keenly aware of how a late delivery could trigger a toddler meltdown (where’s my food!!??!!). I truly believed software could solve this mess.
We met with a lot of companies. One that I found interesting was a startup called Fluc. At CRV, we build conviction by deeply understanding markets, which almost always means talking to dozens of customers big and small. One of the businesses evaluating Fluc was Oren’s Hummus, the Israeli food chain in the Bay Area. I reached out to a friend, Mistie Cohen, who is one of the owners and she said that while Fluc had better marketing materials, DoorDash was the company that actually took the time to “build a relationship” with the restaurant. This turned out to be a critical insight because, as she put it, the delivery company is a “reflection on the restaurant.”
Mistie sparked my interest in DoorDash and I dropped everything to meet the team. My colleague Annie Kadavy, a recent Stanford business school grad, was able to tap her network and help us connect with the founders, also Stanford MBAs. When I met Tony later that week, what impressed me was his overall vision for what DoorDash could become. He was not focused on building a food delivery business, but rather a software platform that could be used for last-mile logistics for delivering anything — food, groceries, medicine, you name it.
At the time, DoorDash was just nine weeks into its launch. The team took the time to truly understand how a restaurant is run and managed. This inspired them to build software that actually works in a restaurant environment. For instance, they placed iPads in the kitchen so that orders could be delivered directly to cooks, allowing front-of-house staff to prioritize customers in the restaurant. In month three, DoorDash was delivering meals in Palo Alto — just about 90 orders per day — but managing to get meals to homes in 44 minutes, about 20 minutes faster than the competition. When customers are ordering hot meals, every minute matters. The DoorDash team was highly analytical and running a logistics company, even in month three. Tony had a vision that DoorDash could become the “FedEx for local.” That resonated with me and gave me the conviction to propose to my partners that we lead their seed round.
Tony and his co-founders presented to our partnership in Palo Alto on Sept. 12, 2013. During our discussion after the meeting, I laid out my thesis for the investment and why I could see DoorDash solving real-time local delivery for businesses and consumers. It was difficult to make that case with so little data, but I felt that Tony’s performance-driven mindset (as well as his past as a competitive basketball player) made him uniquely qualified to deliver on that dream (no pun intended).
Seven years later, Tony and the entire DoorDash team have done just that. They have built a highly-complex business that uniquely serves three constituencies: businesses (primarily restaurants today), Dashers (the drivers), and customers. They never lose sight of the delight that a warm meal, delivered on time and tracked to the minute, can provide for working parents, single moms, and the everyday consumer.
At CRV, we are proud of what DoorDash has accomplished. We are excited about the company’s future and honored to have played a small part in their seven-year journey from seed to IPO. The DoorDash ride feels like it’s just getting started.