How did 3 college students end up creating the DoorDash food delivery empire?
Three college students did just that, creating DoorDash, an online food ordering, and food delivery platform app. DoorDash is based in San Francisco, California. It’s the largest food delivery company in the United States.
Stanley Tang— a Hong Kong billionaire tech entrepreneur and one of DoorDash’s co-founders — spoke at the Imagine Talks annual symposium. Stanley Tang has a bachelor’s degree in Computer Science from Stanford University. The IPO of DoorDash in December 2020 made Tang's net worth an estimated $2.2 billion as of December 2020.
Learn more about Stanley Tang:
Visit his website 👉🏻 www.stanleytang.com
Below is our edited transcript of Stanley Tang’s talk, “The Road to IPO,” at the Imagine Talks Annual Symposium.
Who is the co-founder of DoorDash?
Gloria Zhu: Hi, everyone, my name is Gloria Zhu, and I’m here with Stanley Tang, who is the co-founder of DoorDash. Stanley and I have actually known each other for quite a few years because we invest in social impact documentaries and new media companies together via Bearcat. But of course, we are here to learn a little bit more about Stanley’s journey and about DoorDash. So just to get started here, can you tell us a little bit more about yourself?
Stanley Tang: Yes, thanks for having me, Gloria. So I actually grew up in Asia, so I was born in Japan and then my family moved to Hong Kong when I was two years old. And that’s actually where I was actually a city I grew up in. And then 10 years ago, I came to America for college when I got into Stanford to study on computer science and that was where I met my future co-founders, Andy and Tony, where we went on to start DoorDash together.
Gloria Zhu: Yeah. And did you always know you wanted to be an entrepreneur?
Combining technology with business & entrepreneurship
Stanley Tang: Yeah. I think for me, I’ve always loved technology. I’ve always loved building stuff, I mean, when I was growing up I was always surrounded by computers and I would just make websites for fun on the side, you know, initially I would just be really simple websites, mostly just content websites like how to—how to, you know, about soccer, about magic tricks. So, those are kind of the areas I really enjoy doing.
And then—and then one day I realized, actually—you can actually make money from this if you—just through, you know, Google Ads on it. And that’s kind of when I started realizing kind of this idea of combining technology with business and entrepreneurship. So I’ve always just loved making things, building things. You know, I think I also felt like a like a news aggregator reader, you know, eventually got into more complicated applications like a mobile app—like a mobile social network app.
I’ve also dabbled around with a scheduling tool and then I think the last thing, I guess, we were working together just happened to be DoorDash. I was the most successful one, so, yeah. So, for me I think it’s—it was more—I’ve always loved building things and that just happened to lead me to entrepreneurship.
Gloria Zhu: Yeah, it sounds like you’ve had quite a few entrepreneurial forays. And of course, with the recent IPO of DoorDash, can you tell us a little bit more about how you met Andy and Tony and that journey?
Having the passion for helping small businesses
Stanley Tang: Yeah, so I met—so Andy was actually in the same freshman dorm as me. So we— we’re good friends and then we met Tony actually through class. So he was at business school—Stanford Business School—you know, Andy and I were undergrads and we actually met through an entrepreneurship kind of design class together. And really initially it was kind of just like a— we got together to kind of just work on a class project together, like we didn’t know we were trying to start DoorDash, you know, a delivery company.
I actually —the reason the three of us sort of bonded together initially was because we all had the shared passion around helping small businesses. So the original idea was actually to work on a project around, you know, what, our software or products we can build to help, you know, the local small business owners. So so what we did was we just and, you know, decided to just talk to a bunch of these business owners nearby Stanford, you know, and we’ll just walk in whether these are— not just restaurants—but either like local retailers, flower shops, furniture stores, etc. just trying to understand what are the problems they were facing on it on a day-to-day basis for, you know, for to help with our—to kind of learn about challenges we can help solve for them.
Idea: a booklet containing canceled orders
And I remember one day—we walked into a macaroon store on University Avenue and Palo Alto and, you know, we’re chatting over and then I remember, in the middle of our conversation, she talked about this really thick booklet and she started turning over the pages and —and turns out this was actually a booklet of all the orders and something we noticed was all these orders, actually, a lot of these orders had the word “canceled” on it—just pages and pages, canceled orders.
And all these canceled orders had one thing in common: they were actually delivery orders, like, people called in.
Stanley Tang: They heard about their— the macaroons, they wanted these macaroons delivered to like maybe their office were for—for a party but the problem was the macaroon store owner didn’t have any capacity to actually fulfill these deliveries. She saw delivery—a sort of a great way to expand her business—grow her reach, but she didn’t have any drivers to actually go fulfill it. And that was kind of the light bulb moment for us and we talked to more small business owners and this delivery idea kept popping over and over again.
People saw a delivery sort of great potential to help expand their reach beyond just the customers who are just —who just happened to walk by their stores but there’s just weren’t any good solutions.
You know, as a small business owner, if you wanted to offer delivery, you really only have one or two choices. The first choice, you can do it yourself, hire your own delivery drivers, which is oftentimes the route most people take. But the problem there is then all of a sudden, you know, you’re managing this delivery fleet, right? You have to hire drivers.
DoorDash: a third-party company
You probably don’t have enough orders just as a single business owner to sustain like a full-time delivery person— it’s just, it’s just a lot of headache. So oftentimes, you know, most people just don’t deal with that at all or they do to themselves personally, right? Like, the owner or the manager will go duties—deliveries. It’s a huge headache for them.
So then the other option is, “OK, if you don’t want to do deliveries yourself, why don’t you just hire a third-party company?” Companies like FedEx, UPS exists to help deliver packages across the country. I’m sure there are services out there that can also deliver packages that’s maybe just three or four miles away across town. And again, we looked into this and it turns out actually there weren’t really any good solutions either. I think the closest thing we found was —we’re sort of these courier services that oftentimes are basically like bike messengers, maybe more specialized towards, you know, legal documents and medical supplies—that was often the used case.
But they definitely weren’t designed to handle kind of local-like-commerce, they’re not you know, they’re not designed to just deliver a box of chocolate or your dinner because, you know because oftentimes they’re really expensive. And usually weren’t technology companies are— they didn’t really use a lot of software, so they weren’t particularly efficient, so that was sort of where we saw this opportunity where, “OK, like, if we can actually build sort of a more efficient kind of delivery network and we use software and algorithms to kind of power this instead of pen and paper, could we actually build something that was a lot better, more efficient?”
Where did the idea of DoorDash come from?
Stanley Tang: And it’s almost, like, delivery as a service, like, if you’re a restaurant owner or a small business owner, you need a package delivered to your customers, you can just call us and we’ll send a driver over and we’ll fulfill it for you.
So, that was kind of where the idea came from— for DoorDash. So the way we then set about tackling this problem was we, you know if we decided to actually run a very simple experiment because, because we realized, you know, I mean, at the time, keep in mind, we were just three college students, like, you know, it’s not like we had delivery drivers ourselves either for like dispatch software or like trucks or any of that. So—but—so what we did instead was we decided, you know, instead of building all that stuff out, why don’t you just run an experiment first and see if customers actually wanted deliveries in the first place, because the customers aren’t really requesting deliveries from these local businesses. And it’s probably not really worth our time trying to build up this whole logistics network.
So we decide to run experiments and all —the experiment was pretty simple. It was —decided to start with restaurants first since a restaurant is like a, you know, use case that people —restaurant deliveries or use case that people are familiar with. Why don’t we find a bunch of restaurants in Palo Alto that didn’t offer delivery, which is most restaurants in Palo Alto, by the way.
Advertising Palo Alto Delivery — the precursor to DoorDash
Why don’t we go to the website, find their menus online, put our data, put it on this kind of landing page and—
And well— all this landing page said was, “Hey, do you want to have delivery— food delivered from these 10 restaurants we found for you? If so, call this phone number.”
Gloria Zhu: Yeah.
Stanley Tang: And that phone number was basically our personal phone—personal cell phone number, it was kind of a Google Voice number that ran on all of our phones and we put out there. And the idea was really just to see if we put this website out there, would people start calling this phone number?
If enough people started calling, then maybe we can take this data and go back to the— what is the macaroon store or the restaurant owners and say, “Hey, look, there’s a bunch of people calling, they want delivery, let’s work together and we can figure something out.” Like we weren’t exactly sure yet and, you know, it was a really simple website and we call that website PaloAltoDelivery.com and we put out there and actually, fun fact— if you type PaloAltoDelivery.com today actually redirects to DoorDash.
So this was January 2013—we put this website out there, we went back to our dorm rooms, we honestly weren’t really expecting anything. And all of a sudden, you know, a few hours in, maybe it was like an hour or two hours in, or we all sat and our phone rang, we picked up the phone and it was someone who came across PaloAltoDelivery.com.
The first delivery order for Palo Alto Delivery
Stanley Tang: No idea how he discovered it but he said— he called and said, “Hey, I want to order some Thai food.” From—I think it was Bangkok cuisine, it was shrimp pad thai and eggrolls—that was the order I remember really clearly. And he said, “Hey, I came across the website. I’m hungry, do you actually offer delivery?”
And originally the idea behind his website was if people called in we would tell them, “Oh, this is just a test. You know, it’s just an experiment, this is not a real delivery service, we’re just gathering data.” But I feel like we got that first phone call, you know, it kind of felt bad just telling him this is a fake service, you know, we can’t deliver your food.
So instead we decided, “You know what? It’s just one delivery, it’s not like we’re doing anything.” You know, I don’t think any of us wanted to do our homework that evening.
So we decided, “You know what? Why don’t we do this delivery. Why don’t we treat it just as a learning experience.” So we decided to call in a takeout order to the restaurant ourselves, got in a car, drove to a restaurant, picked up the food, and made our first ever delivery on through PaloAltoDelivery.com.
And then the next day we got another phone call and then the day after that it became by two phone calls, three phone calls, five phone calls.
Rebranded: DoorDash
Stanley Tang: And next thing you knew, everyone in Palo Alto and around Stanford campus started calling this phone number. That they’ve all heard about this food delivery service from this from their friends and kind snowball from there. And we were sort of the initial delivery drivers ourselves, we would be taking calls during class and then went to get out of class and then get in our cars and do this to do the deliveries. Everything was manual and it was pretty—it’s pretty crazy.
But I think that was when we knew we were onto something here, and we decided to take this a little more seriously. It’s not just a dorm project anymore. So we decided to come up with a new name—named DoorDash—rebranded and then launched that summer in Palo Alto and then sort of—and things just sort of snowballed from there.
Start-up challenges with DoorDash
Gloria Zhu: Yeah, and that’s an incredible origin story and it’s really interesting seeing how far you’ve come when looking back.
And so with that, I also want to ask, were there any challenges you faced during the early days or, you know, in the past few years when starting DoorDash?
Stanley Tang: Yeah, I think — I mean, it was definitely pretty crazy in the early days because everything was just manual, right? Like we were like sort of the initial delivery drivers and I think a lot of it was, you know, figuring out how to actually scale this thing, like, how do you actually handle the volume? We had to kind of build software and products on the fly and I think for our business, it was especially hard to scale because, you know, we’re—delivery is such a kind of a —it’s different scale in software, right? It’s not like you’ve built software once and then just clone it infinitely high.
Like, every incremental delivery you’re adding on is a real-world delivery, you know, that’s something that’s happening in the real world. And it only gets harder and harder because there’s just so many scenarios you have to account for, like doing deliveries in Palo Alto, it is very different and doing deliveries in New York, right? Like my traffic is different, weather is different, you’re dealing with different restaurants. So a lot of it is is learning how to scale the products in a way that were, you know, whether you’re doing 10 deliveries a day or a million deliveries a day, ensuring that every single one of those deliveries still goes 100% smoothly.
Dealing with real-world products you have no control over
Stanley Tang: And that’s really, really hard because— it’s —you’re dealing with real-world products and there are so many things you can’t control, you know, things are going to go wrong. There’s so many variables you have to, you know, and sure, you can still pull it off at scale, like doing 10 deliveries a day, you can probably manually look at, you know, look over everything on delivery to make sure that you’re right when you do a million deliveries a day—
It’s a lot harder. So how do you sort of scale your products and your technology as your volume ramps up? And is— was a huge challenge and I think the other piece when it comes to scaling is probably, scaling team and culture. How do you go from one to just —Tony, Andy, and I, you know, doing deliveries to them?
Also, you’re building on a team of engineers and salespeople and ops people, you know, you go from like 10 employees to 50 to a hundred, two hundred to a thousand and that becomes so much harder, right? Because when you’re, you know, when you’re your [a] small team, it’s relatively easy to enforce culture because everyone’s in the same room. You’re always together, you know, you can just sit —the way you communicate is pretty simple, you just shout across the table and everyone hears you. But then when you’re two thousand people distributed across 20 different offices, you know, you don’t know everyone personally.
Stanley Tang’s advice for aspiring entrepreneurs
Stanley Tang: How do you ensure the company is still sort of making decisions as if, you know, still just the three of us there. There’s no way we’re going to be able to be in every single conversation—every single meeting. So scale and culture becomes really, really hard, you know, getting a thousand people all pointing in the same direction, as much harder than just getting ten people winning and in the same direction. I think we were definitely been— those are definitely kind of big challenges that come to mind.
Gloria Zhu: Yeah. That definitely makes sense and that’s a really great insight into what it’s like to build a company and at scale. So I know in Imagine Talks there is a lot of attendees who are extremely creative, extremely ambitious. So do you have any advice for aspiring entrepreneurs?
Stanley Tang: Yeah, probably—probably can two things come to mind? I think —I think the first thing is, when it comes to entrepreneurship and building company, I think, the most important thing is making sure you’re solving a real-world problem. Companies—start-ups and companies, it’s all about problem-solving and addressing a need that hasn’t been fulfilled, right? Like, you’re actually solving —a problem or a specific customer pain point, or maybe it is an existing solution that doesn’t really work that well.
Solving real-world problems
Stanley Tang: You have to be really, really clear about what’s exact— what’s the exact problem you’re solving. And that’s, I mean, that’s the only reason why companies exist: to solve a problem, and you have to just know really well what that is and the best companies can actually articulate the problem.
Actually—that is actually a fairly simple way, it shouldn’t be really complicated, you know, sometimes when people describe what their company is doing and they explain for like five minutes at the end, you still don’t really know what exactly it does—what problem are they trying to address, so just being really clear about what you’re trying— what you’re solving.
I mean, when I —when I was in Y Combinator, they would constantly preach this model like me, build something or make something people want. And for us, it was our problem was pretty clear, it was —we are addressing deliveries for small business owners and small business owners need a way to deliver their products to the customers. They don’t have —no one to deliver for them, we’ll come in and help deliver, that was basically our problem that we were solving.
So I think that’s probably the most important thing is getting that right. And I think the second thing is—is probably starting small. I think —I think —I mean, obviously, like when people start companies or startups, everyone aspires to be this kind of huge thing one day and I think one of the biggest mistakes I see is people trying to—when they’re just starting out treating like their startup as if it was already a big company, right?
A problem that is actually worth saving
Stanley Tang: Whereas I think a much healthier way of thinking about it is treating your startup almost like a side project, right? For us, we treat it like it was just like a class project, it wasn’t a company. And I think it’s —this is kind of —I think it takes a lot of the burden off your shoulder or pressure off your shoulder of like, “Oh, this is like an actual company” and you— I think it just ends up distracting or you end up all this, like, company stuff, like, “Oh, I need to put together a business plan, a fundraising deck, you know. I need to get office space, hire employees.” And, you know, a lot of stuff that honestly have very little to do with actually build like —actually helping you like start in the first place, right?
I mean, you know, it’s —you know it —whereas if you kind of treat it more like a side project and it’s— there’s a lot less pressure, but there’s more room for to fail like, “Oh, it’s not a— It’s not a big deal. I’ll just move on to the next thing.”
And it’s only when you know for sure that, OK, you’re actually onto something. You actually found a need, a problem that’s actually— that’s actually worth solving. And you actually have a really unique solution that seems like you found a group of customers that really value it then you decide, “OK, maybe this should be a company and that scale from there versus you’re just trying to force yourself to start a company, right?
Are you the only product that people want?
Stanley Tang: And I think because I honestly like— in the beginning, like the only thing that matters is, are you the only product that people want?
None of —and none of the other— none of the other stuff like actually matters in the beginning.
Gloria Zhu: Yeah. It sounds like you have to build an MVP or a minimal viable product and don’t go too crazy in terms of hiring people, or thinking like you’re operating like, big companies. You can constantly iterate until you get to product markets.
Stanley Tang: Exactly. Exactly.
Gloria Zhu: Yeah, well, that was really inspirational. Thank you so much, Stanley. Again, Stanley is the co-founder of DoorDash, and thank you for the wisdom—points of advice. And hopefully, that can help our aspirational entrepreneurs in 2021.
Stanley Tang: Yeah. Thanks for having me and good luck, folks.
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