How DoorDash Experimented to Find Product Market Fit
DoorDash recently IPOed in December of 2020 and I thought it would be a good time to revisit how they began.
This piece is inspired by Evan Charles Moore opening up on Twitter about what DoorDash was like in the early days, when it was called Palo Alto Delivery.
1. Interviewing Restaurant Owners
Early on, the founders went door to door interviewing restaurant owners and asked open ended questions. These interviews are useful for extracting customer jobs, pains and gains. It takes a bit of patience to stay quiet while they speak, but it can really pay off.
One of the questions they asked was “Can you tell me everything you’ve done since getting here today?”
During this interview process, they encountered a macaroon shop manager who was on the phone declining a delivery order.
Sometimes it isn’t just what you hear from the interviewee, but also what is going on around you while conducting the interview.
2. Researching Delivery
Once they started to dig into the delivery problem they observed, the founding team realized through customer discovery that many small restaurants didn’t deliver.
Those that did deliver, did not enjoy doing so.
It was hard to staff up for such an unpredictable market demand. Some days they’d have 5 orders and other days they’d have 20. I can be difficult to have full time staff that justified such an uneven revenue stream.
They began to see that a “delivery as a service” for restaurants could be a potential solution.
3. Palo Alto Delivery Landing Page
The founders next created a really basic landing page to test demand.
In Evan’s words, it was static html page with a Google Voice number and few PDF menus from local restaurants. It started at $6 per delivery with no minimum order size.
Too many teams stress out over the quality of a landing page but as you can see, it only has to be good enough, not perfect.
4. AdWords Campaign and Search Trend Analysis
People don’t magically find a landing page, so the founders started running adwords campaigns. They were able to see if people were searching for this unmet need for restaurant delivery in Palo Alto, CA.
5. Concierge Minimum Viable Product
This wasn’t just about a landing page and ads though, the founders began accepting orders and fulfilling them for real customers.
They used a notebook to write down the first order from a local Thai restaurant, then placed the takeout order, picked it up and delivered it themselves to the customer. They used Square to charge the customer on receipt of the Thai food delivery.
It didn’t scale, but that was ok early on.
They needed to learn the ins-and-outs of this process from start to finish, such as:
- where are the best spots to park when picking up an order
- what happens when an item is forgotten by the restaurant
- how to deliver to large apartment complexes
- what to expect from the customer when the order is late
6. Turning Insights Into a Business
From there, the founders started to use what they learned by running experiments first hand to inform the design of the business.
They began to hire drivers from Craigslist to help meet demand as they scaled. In doing so, the founders had to work out how to pay the delivery people for both the orders and their time.
The challenge of the business moved from front stage (desirability) to back stage (feasibility). This often happens with new businesses as founders need to work out how to operationalize what they’ve learned to scale.
This is usually the make or break part of any new business. Validating demand is often the easiest part. It’s the logistics of making it work and sustain financially that are the most difficult.
7. Get Out of the Building
Fast forwarding to the IPO, it can be easy to forget how DoorDash began. I’ll leave you with this quote from one Evan Charles Moore, one of the founders:
We would never have come up with this idea in a conference room on a whiteboard. We needed to be with customers trying things out, learning until we found a set of insights that were obvious only in retrospect.
I still personally think DoorDash has some long term viability challenges, but that certainly isn’t reflected in my 2020 DoorDash credit card statements.
Interested in how to test your business ideas? Feel free to contact me.