DoorDash reveals details of its new tipping model – gpgmail


DoorDash announced last month that it would be changing its controversial tipping model. Today it’s revealing the basics of how the new system will work.

Under the past model, Dashers (DoorDash drivers and other delivery people) were guaranteed a minimum payment per delivery, with DoorDash paying a $1 base, then providing an additional payment boost when a customer’s tip wasn’t enough to meet the minimum — a system that made it seem like tips were being used to subsidize DoorDash payments.

Under the new system, meanwhile, DoorDash will pay a base between $2 and $10 (the amount will depend on things like delivery distance and duration), with additional bonuses from DoorDash.

Most crucially, as CEO Tony Xu put it in a blog post, “Every dollar customers tip will be an extra dollar in their Dasher’s pocket.”

Now, you might think that’s how tips are always supposed to work, but Xu said the old system was developed “in direct response to feedback from Dashers,” while the new one will result in “greater variability in total earnings from order to order” (that variability several reasons why tipping is a flawed compensation model in general).

So why change?

“We thought we were doing the right thing for Dashers by making them whole if a customer left no tip, but the feedback we’ve received recently made clear that some of our customers who were leaving tips felt like their tips didn’t matter,” Xu said. “We realized that we couldn’t continue to do right by Dashers if some customers felt we weren’t also doing right by them. To ensure that all of our users have a great experience on DoorDash, we needed to strike a better balance.”

Plus, he said, “Dashers will [now] earn more money on average — both from DoorDash and overall.”

The company plans to roll out these changes to all Dashers next month.


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DoorDash acquires Scotty Labs – gpgmail


The Daily Crunch is gpgmail’s roundup of our biggest and most important stories. If you’d like to get this delivered to your inbox every day at around 9am Pacific, you can subscribe here.

1. DoorDash acquires autonomous driving startup Scotty Labs

DoorDash seems to be very interested in self-driving technology — not only did it acquire Scotty Labs (a startup enabling people to remotely control self-driving cars), it also brought on the two co-founders of Lvl5, which was creating high-resolution maps for autonomous driving.

“We’ll share more updates in the near future but for now, we’re really excited to be part of the amazing DoorDash family and looking forward to building something magical together,” Scotty Labs co-founder Tobenna Arodiogbu wrote on in a blog post.

2. Apple, Google and Mozilla block Kazakhstan’s browser spying tactics

Apple, Google and Mozilla have taken the rare step of blocking an untrusted certificate issued by the Kazakhstan government, which critics say it forced its citizens to install as part of an effort to monitor their internet traffic.

3. The 11 best startups from Y Combinator’s S19 Demo Day 1

We already rounded up all the startups that presented at the accelerator’s Demo Day 1, but now the team has selected their favorites. (Extra Crunch membership required.)

4. MoviePass exposed thousands of unencrypted customer card numbers

An unprotected MoviePass database included both customer cards (those are the debit cards used to purchase movie tickets) and personal credit card numbers.

5. Waymo releases a self-driving open data set for free use by the research community

The data set isn’t for commercial use, but Waymo’s definition of “research” is fairly broad, and includes researchers at other companies as well as academics.

6. PayPal-backed money lender Tala raises $110M to enter India

Tala looks at behavioral data gathered through an Android app to build a customer’s credit profile. The new round values the company at $750 million.

7. Join The New Stack for Pancake & Podcast with Q&A at TC Sessions: Enterprise

Popular enterprise news and research site The New Stack is coming to gpgmail Sessions: Enterprise on September 5 for a special Pancake & Podcast session with live Q&A. (And we’re dead serious about the pancakes.)


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DoorDash acquires autonomous driving startup Scotty Labs – gpgmail


DoorDash has been on an acquisition tear of late, with Scotty Labs as its latest target. Terms of the deal were not disclosed, but this comes after DoorDash acquired Caviar in a deal worth $410 million.

Scotty Labs, a tele-operations company that is working on technology to enable people to remotely control self-driving cars, raised a $6 million seed round from Gradient Ventures, with participation from Horizon Ventures and Hemi Ventures, last March. The startup had previously worked with Voyage for its self-driving cars in retirement communities.

“Our core belief at Scotty has always been that Autonomy + Remote Assistance is the future,” Scotty CEO Tobenna Arodiogbu wrote on Medium. “We have intentionally always considered ourselves to be the anti-hype company and focused intensely on developing core infrastructure and algorithms to ensure the safe deployment of autonomous vehicles.”

Meanwhile, DoorDash quietly brought on the two co-founders from Lvl5, another company that had built tech to create high-resolution maps for autonomous driving using crowdsourced imagery and computer vision to merge and process the images. In April, Lvl5 announced it was shutting down after the acquisition.

Details of how Scotty Labs and Lvl5 will fit into DoorDash’s business are nonexistent, but you could imagine DoorDash using Scotty’s technologies to remotely control delivery robots or other types of autonomous vehicles.

“We’ll share more updates in the near future but for now, we’re really excited to be part of the amazing DoorDash family and looking forward to building something magical together,” Scotty Labs co-founder Tobenna Arodiogbu wrote on Medium.

From what we understand, the Lvl5 deal was more of an acqui-hire and did not include any of the maps that were built using the company’s technology. Instead, startup Mapillary obtained that trove of hundreds of millions of images.

DoorDash would not comment on what the new hires are working on, but through its robot pilots and partnership with GM, the startup has made no secret of its interest in exploring autonomous technology, specifically looking at how it can improve the cost and efficiency of deliveries, and it would make sense that it would also want to have in-house expertise to own and manage those projects.

DoorDash has experimented with delivery robots before. In 2017, DoorDash partnered with both Starship Technologies and Marble to test food delivery via robot. More recently, DoorDash announced a partnership with GM’s Cruise to test self-driving food delivery cars. DoorDash is also beefing up its in-house team of autonomous and navigation specialists.

This investment in autonomous tech through its acquisition of Scotty Labs and acqui-hire of the team from Lvl5 comes at a time when DoorDash says it is revamping its policies around driver wages.

The enthusiasm and potential of autonomous tech had led to startups creating literally dozens of interesting products that focus on different aspects of this field. But it will take a village to get this tech off the ground, which means that consolidation is inevitable.

DoorDash — operating on the principle of economies of scale — has been pretty aggressive in positioning itself as one of those consolidators. We have heard it tried to merge with Postmates. It bought Caviar this summer. And it has raised an absolute ton of money. In May, DoorDash raised a $400 million round, valuing it at $12.6 billion. Meanwhile, DoorDash’s main competitor, Postmates, is gearing up to go public this quarter. Just this month, the company received the first permit to deploy autonomous delivery bots in San Francisco.

As technology becomes a key way for the crowded arena of delivery startups to differentiate themselves, investing in its own autonomous tech R&D — by way of picking up some of these disparate startups that may have struggled to survive on their own — is one way for DoorDash to build out that tech cred.




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Domino’s launches e-bike delivery to compete with UberEats, DoorDash – gpgmail


Domino’s will start using custom electric bikes for pizza delivery through a partnership with Rad Power Bikes, as it aims to become more competitive with on-demand apps like DoorDash, GrubHub and UberEats.

Hundreds of e-bikes will be deployed across corporate-owned stores later this year in Baltimore, Houston, Miami and Salt Lake City, the company said Tuesday.

The e-bike announcement comes as Domino’s, which specializes in pizza, faces increasing competition from on-demand delivery apps like UberEats that offer customers far more choice. Domino’s could never offer enough menu options to compete with DoorDash or UberEats, but it can compete on service and delivery times.

The e-bikes are part of that plan. The company has also partnered with companies like Ford to test pizza delivery using autonomous vehicles. Earlier this summer, it launched a new pilot for self-driving pizza delivery in Houston in partnership with Nuro. Domino’s will use Nuro’s R2 vehicle, its second-generation autonomous electric test car, which will go into service later this year.

The e-bikes supplied by Rad Power Bikes are equipped with small integrated motors to assist with pedaling, and can run for 25 to 40 miles, depending on the user, before needing a recharge, according to the company. The bikes are equipped with lights in the front and back, reflective materials for driver safety and have a top assisted speed of 20 miles per hour.

Importantly, the e-bikes have been customized to hold pizza, drinks and sides. One e-bike can hold up to 12 large pizzas.

The company tested the e-bikes and discovered that service and delivery times improved, Tom Curtis, Domino’s executive vice president of corporate operations, said in the announcement. The e-bikes also opened up the labor pool for the company, allowing it to tap into candidates who might not have a car or driver’s license.

Some franchisee owners were already using e-bikes and found they are essential in hilly urban areas.

“While delivery on a traditional bike solved many of our traffic and parking issues, the hills in Seattle were tough on even our best cyclists,” Greg Keller, Seattle Domino’s franchisee said in a press release announcing the e-bike program. “E-bikes were a game-changer for us, and we’ve been delivering with them for three years now. We have been able to save money, provide better service, increase hiring and maintain a happy workforce.”


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DoorDash gets a taste of Caviar – gpgmail


Hello and welcome back to Startups Weekly, a weekend newsletter that dives into the week’s noteworthy startups and venture capital news. Before I jump into today’s topic, let’s catch up a bit. Last week, I wrote about SoftBank’s second Vision Fund. Before that, I noted some challenges plaguing mental health tech startups.

Remember, you can send me tips, suggestions and feedback to kate.clark@Gpgmail.com or on Twitter @KateClarkTweets. If you don’t subscribe to Startups Weekly yet, you can do that here.

What’s new?

This week DoorDash announced an agreement to acquire Caviar, an on-demand delivery business, from Square. DoorDash says it will pay $410 million for the company in a combination of cash and stock. If you’re thinking that seems like a lot of money, you are very much correct.

It’s so much money that all of us over here at gpgmail were scratching our heads trying to understand why DoorDash would shell out that kind of cash. After all, Square paid only $90 million in stock for Caviar when it acquired the company back in 2014. However, DoorDash is VC cash-rich. The business, still privately-owned, has raised an astronomical sum of venture capital. This year alone it’s raised $1 billion, including a Series G funding of $600 million that valued it at $12.6 billion.

When a company raises that many huge rounds so close together, you can only assume it’s burning through a lot of cash. When it comes time for DoorDash to begin pitching Wall Street for an IPO — we’re thinking late next year — established subsidiaries like Caviar will at least help bolster its IPO-ready narrative.

With monster companies like DoorDash, Grubhub and UberEats owning the food delivery space, we will no doubt see more big M&A deals and more startups die. (Remeber the insane fall of Munchery, anyone?) But will any of these efforts ever become profitable? Or will DoorDash burn through cash until there’s just no more cash left to burn?

#Equitypod

If you enjoy this newsletter, be sure to check out gpgmail’s venture-focused podcast, Equity. In this week’s episode, available here, Equity co-host Alex Wilhelm and I attempt to make sense of DoorDash’s acquisition of Caviar. Equity drops every Friday at 6:00 am PT, so subscribe to us on Apple Podcasts, Overcast and Spotify.

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Extra Crunch

Here’s your weekly reminder that for a low price — a complete bargain really — you can learn more about the startups and venture capital ecosystem with a subscription to Extra Crunch. We offer exclusive deep dives, Q&As, newsletters, resources and recommendations, and fundamental startup how-to guides to our subscribers. Here are some of the best EC posts of the week:




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DoorDash is buying Caviar from Square in a deal worth $410 million – gpgmail


DoorDash has reached an agreement with Square to purchase on-demand food delivery and catering business Caviar . DoorDash has agreed to pay Square $410 million in cash and preferred DoorDash stock.

Square bought Caviar about five years ago in a deal worth about $90 million. Now, Caviar has found a new home with DoorDash, the on-demand delivery startup that had been under fire for months regarding how it pays its delivery workers. DoorDash finally did right by its workers just last week.

“Today’s announcement is another important step forward on our mission to empower local economies,” DoorDash CEO Tony Xu (pictured above) said in a statement. “We have long-admired Caviar, which has a coveted brand, an exceptional portfolio of premium restaurants and leading technology. The acquisition further enhances the breadth of our merchant selection, enabling us to offer customers even more choice when they order through DoorDash. We look forward to welcoming the Caviar team to DoorDash and expanding our partnership with Square in the future.”

With Caviar joining DoorDash, Square’s Caviar lead, Gokul Rajaram, along with all the other Caviar employees will join DoorDash once the acquisition closes. The deal is expected to close sometime this year.

“Caviar has built a trusted brand with customers and many of the best restaurants,” Rajaram said in a statement. “DoorDash has national scale, complementary restaurant selection, a tremendous logistics platform, and a team that shares our passion and commitment to better serve restaurants, couriers, and customers. I’m incredibly excited to be joining, with the rest of the Caviar team, to help build the future of local commerce.”

For Square, this deal provides the company with an opportunity to focus more on its products for businesses and individuals, Square CEO Jack Dorsey said.

“We are increasing our focus on and investment in our two large, growing ecosystems — one for businesses and one for individuals,” Dorsey said. “This transaction furthers that effort, and we believe partnering with DoorDash provides valuable and strategic opportunities for Square.”

Meanwhile, Square just reported its Q2 2019 earnings with net revenues of $1.17 billion (44% y/o/y growth), adjusted revenues of $563 million (46% y/o/y growth) and a net loss of $7 million.

This story is developing…


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