DoorDash CEO Tony Xu says the company is cash-flow positive in some of its early markets — but the company still has to invest in its growth. That’s the reason the company raised $127 million in a new venture financing round. But it wasn’t without hiccups: DoorDash reportedly wasn’t able to get the $1 billion valuation it was looking for, and had to settle for a flat round.
Still, Xu and Sequoia Capital partner Alfred Lin said on stage at TechCrunch Disrupt NY that it basically doesn’t keep them up at night. And DoorDash has still become one of the most highly valued startups in the on-demand ecosystem, fundraising challenges aside.
“Companies, their ultimate success is never dictated by a number at any point in time,” Xu said. “It’s interesting, all us in the ecosystem have shifted the discussion toward valuations, that’s never happened before. I’d focus on what actually matters, what are you now learning about your customer that you’ve never known before. That’s what we focus on, and in the long run the score will take care of itself.”
The on-demand delivery market is arguably one of the most challenging markets to be successful in — hence some resetting of expectations in some financing rounds for these types of companies. DoorDash looks to be successful and build out a playbook to make money and become a sustainable business, which requires the company to not only build good tools for consumers and businesses, but also the company’s delivery fleet as well, Xu said. And at the same time, it still has to continue to build an efficient logistics platform in order to keep everything running smoothly as it scales up.

“Hardest part is keeping everything in balance,” he said. “There’s a couple dimensions to this: how do you invest the company’s capital effectively; how do you best serve the marketplace of three audiences, consumers/merchants/dashers; and how do you keep that in check. If you have too many of one, it’s a challenge, and we have the unique challenge where we have to solve product market fit across three audiences.”
But the company can’t focus entirely on becoming cash-flow positive across the board, nor can it focus on hyper growth, Lin said. Essentially, DoorDash has to keep growing in order to head off competition from other delivery startups like Postmates, which are also growing very quickly. And it also has to keep growing if it’s going to capture the market of hundreds of thousands of restaurants it hopes to sign on — and potentially expand beyond just food delivery.

“There’s this continuum: growth at all cost and cash-flow generation at all cost,” Lin said. “I don’t think great companies are on one extreme or the other, the great companies that become enduring businesses, they have both. It’s striking a balance and the ability to say and, not either/or.”
There are plenty of doubters about whether or not the unit economics will work. And for good reason: A lot of on-demand companies in various markets, like on-demand parking startups Zirx and Luxe, have faced significant challenges and had to also raise new financing as they figure out their business model. Despite being cash-flow positive in some markets, every market is different and requires some flexibility when it comes to building a playbook.
But, at the same time, there were doubters for companies like Amazon that would go on to become some of the largest companies in the world, Lin said.
“If you asked in 1997 about Amazon, you’d assume that no e-commerce company was gonna make it,” Lin said. “That turned out not to be true. We’re in the business of starting companies and building up a business over time. At the beginning it’s not going to be as profitable as you like, but, it’s a large market, they’re executing extremely well, they’ve inched themselves into market leadership in a much shorter period of time than competitors that have been around for a few years longer.”
