Early Life and Lessons

Born in 1986 in Nanjing, China, Tony Xu immigrated to the United States with his parents when he was just 5 years old due to his father’s acceptance into a graduate engineering program. His family settled in Champaign, Illinois which was a completely different environment from the life they had known. Tony’s mother had been a respected medical doctor in China but her credentials were not valid in the United States. She now found herself working multiple jobs such as being a waiter in various Chinese restaurants to provide for her family while his father studied away. Tony was introduced to the world of working from a young age as he washed dishes alongside his mother. Witnessing the daily grind of his mother and the other workers at the restaurant left a lasting impression. Inspired by his mother, Tony developed a strong hustle mindset early on which manifested itself in various ways throughout his childhood. A prime example is when Tony wanted a Nintendo gaming console but knew he couldn’t ask his parents for one. So he started lawn mowing around his neighborhood and even added unique grass patterns in order to earn the cash to buy the gaming system. Not only did these childhood experiences instill in Tony a sense of grit, but they also led to a greater appreciation for the hard work small businesses put in every day.

Venturing into Entrepreneurship

After 12 years of working at various restaurants, Tony’s mother was able to open up her own clinic in California, where they moved after his father landed a job at Intel. With an interest in cancer research, Tony finished his undergraduate studies at Berkeley. After college, Tony worked in various roles from consulting and private equity to even founding his own company called Lark Technologies which focused on AI healthcare. However, Tony kept thinking about the small businesses his family worked at during their first decade in America and decided to further pursue business. He applied and got into Stanford’s Graduate School of Business and enrolled in their Startup Garage course. Despite not knowing what business Tony wanted to create, he knew the target audience: small business owners. 

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The Birth of a Game-Changer

Tony and his co-founders (then classmates), Evan Moore, Stanley Tang, and Andy Fang began by interviewing small business owners and getting feedback for an initial app they had. One of their interviews was with a store manager named Chloe who managed a small macaroon store in Palo Alto. They learned about her day-to-day life, but in the end, their app didn’t solve her most pressing problems. However, as the group was leaving, Chloe shouted out “Well, there is one thing I wanted to show you.” and proceeded to pull out a thick booklet with pages and pages of delivery orders. She said it drove her crazy doing them all herself due to there being no drivers to fulfill them. That was Tony’s lightbulb moment. 

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Transforming Food Delivery

Over the course of the next few weeks, Tony and his co-founders interviewed over 200 small businesses and kept hearing the same thing over and over again: deliveries are painful. They noticed most restaurants in Palo Alto didn’t deliver, so they decided to do something about it. On January 12, 2013, Palo Alto Delivery was born, and half an hour later, they got their first order. Next thing Tony knew, they were delivering food every single day all over the Standford campus, and was quickly growing. In March, they received $120,000 in funding from Y Combinator. They later changed their name to DoorDash in June.

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What made DoorDash stand out from the other delivery companies at the time was the fact that they hired and managed their own drivers so that smaller businesses without drivers could finally deliver. This allowed all types of restaurants to begin delivering, which gave consumers more options than just Chinese food or Pizza. Another key aspect was that it partnered with both small and large businesses not just from the city but also from the suburbs. Additionally, DoorDash used technology such as using machine learning to determine a user’s preferences while maintaining a simple interface.

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In October 2013, just 9 months after launching, DoorDash secured a $2.4 million investment from investors such as Khosla Ventures and SV Angel. Then in May 2014, they raised $17.3 million in a series A round led by Sequoia Capital. DoorDash kept growing and eventually expanded its operations outside of the Bay Area and into Los Angeles and Boston. Then in 2015, DoorDash raised $40 million from Series B led by Kleiner Perkins, which valued the company at $600 million. By the end of 2015, DoorDash was all across the United States in more than 250 cities and even expanded globally for the first time to Toronto. Over the course of two years, DoorDash kept improving its services while also expanding into more and more cities. By 2017 DoorDash operated in 56 markets and over 600 cities. In March 2018, DoorDash received $535 million in funding led by SoftBank and became a unicorn valued at $1.4 billion. In 2020, during the pandemic, DoorDash began its #OpenForDelivery campaign that reminded people that restaurants were still open. While it was an effective campaign for DoorDash, it reflected Tony and his co-founders’ original vision of helping small businesses. In December 2020, DoorDash went public with an initial price of $102 but ended the day off at $189.51, valuing the company at $72 billion. 

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Rapid Growth and Controversies

Yet, DoorDash has not been without its controversies with its practices having been the subject of multiple lawsuits and public criticisms. In 2020, DoorDash settled a lawsuit for $2.5 million over allegations that it had misled consumers and used their tips to pay the delivery drivers, rather than adding the tips on top of the workers' wages as the company had promised. This incident led to a backlash against the company, resulting in a significant shift in its tipping policy. Additionally, many restaurant owners have accused DoorDash of predatory practices, claiming that the company lists their menus and delivers their food without their consent. These controversies have raised questions about the sustainability of DoorDash's business model and its responsibility towards its workers. In response to these controversies, DoorDash has repeatedly affirmed its commitment to its workers and partners and continues to refine its practices in response to these challenges.

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Tony Xu's story shows how empathy in business, combined with a personal solution to a common problem, transformed the food delivery industry. While starting off locally in Palo Alto, DoorDash was able to grow into a global company currently valued at $35 billion with a revenue of $7 billion in 2023. Despite facing controversies and criticisms, Tony and his team were able to address them effectively while continuing to remain steadfast in their growth. Tony's strong dedication and influence have greatly transformed food delivery, underscoring the significance of innovation fueled by a sense of purpose for both industries and communities.

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