Data Sheet—What DoorDash Plans to Do With Another Half a Billion Dollars of Capital

Delivery, of all things, has become the global investment flavor of the month. In China, for example, Alibaba reportedly is upping its stake in a major delivery concern, parrying, as is its wont, an investment from rival Tencent.

In the U.S., one needs a scorecard to track all the players in food delivery alone: A few include GrubHub (which bought Yelp’s Eat24); Postmates; UberEATS; Caviar (owned, counterintuitively, by Square); and the $700-billion gorilla, Amazon.

Then there is DoorDash, which is taking delivery on $535 million investment from the SoftBank, Sequoia Capital, and Singaporean sovereign wealth fund GIC. (According to DoorDash, the SoftBank investment is from the company’s balance sheet, not its $93-billion Vision Fund.) Tony Xu, DoorDash’s exuberant CEO, says the four-year-old company will use the cash to expand from 600 North American cities to 1,600 by year-end.

Xu says the funding proves that “the best investors are investing in the winners.” Maybe. It’s also possible that SoftBank’s Masayoshi Son likes to hedge his bets and that by staking DoorDash he’s simply placing another chip on the roulette table. After all, he owns a much larger stake in Uber. (Square, Amazon, and GrubHub are all public companies.) Just as it’s a certainty that not all the 50 self-driving car companies currently experimenting in California will exist five years from now, consolidation will come to this market too.

For now, though, DoorDash has a compelling business opportunity. Its “dashers,” otherwise known as drivers, are independent contractors, just like Uber and Lyft’s workers. The company charges restaurants a delivery fee of between zero and $5, and takes an undisclosed percentage of the food order. It lets restaurants plug into its app and also provides a white-label service called Drive so consumers can order directly from the restaurant but have their order fulfilled by DoorDash. Xu says expanding the white-label service will soak up another chunk of the newfound cash.

Although DoorDash currently delivers only cooked food, Xu suggests grander plans. “Drive can handle any kind of delivery of any size, any shape,” he says. “If you can do food you can do anything else,” including retail items large and small.

It almost makes makes logistics sound glamorous.

NEWSWORTHY

All the Stars (With SZA). Spotify made public its registration filing to go public. The lengthy document revealed that the world’s most popular streaming music service brought in $5 billion in revenue last year but lost $1.5 billion (mostly due to accounting rules about financial assets on its balance sheet). On an operating basis, Spotify lost $461 million. The full F-1 filing is here.

Love Lies. The Securities and Exchange Commission has opened a wide ranging probe into digital currency trading and so-called initial coin offerings, the Wall Street Journal reported. Weeks after SEC chairman Jay Clayton said "many" cryptocurrency promoters were not complying with securities laws, the agency has sent out dozens of subpoenas and information requests. The effort had little immediate impact on the prices of major digital currencies, however.

You Owe Me. Facebook is continuing to grapple with the problem of bogus posts, a trend largely driven by economics (or greed) not politics, the company’s COO Sheryl Sandberg said on Wednesday. Most false stories are designed to get clicks and make more ad money. “People want real news on Facebook, we want them to have real news on Facebook,” Sandberg said. “So, we’re working very hard in this area.” Meanwhile, Google's YouTube said it had mistakenly pulled videos from some right-wing channels and would reinstate the content.

Look Alive. The private valuation of super-secretive startup Palantir may have been cut in half to under $10 billion in the past two years, but CEO Alex Karp tells CNBC the company's data analysis services are in high demand. "This is a time when people are underestimating what we're doing," Karp said. "That time will be gone very quickly." Karp declined to say when the company might go public.

Getting Over You. Opponents of the National Rifle Association are organizing a boycott of Apple and Amazon on Thursday to protest the inclusion of the NRA TV streaming-video channel on the companies’ services. Boycott supporters used the hashtag #March1NRABoycott on Twitter.

Sober Up. The retail apocalypse hit Best Buy's line of small mobile phone stores. The retailer said it would close all 250 of its tiny outlets. "The mobile phone business has matured, margins have compressed and the cost of operations in our mobile standalone stores is higher than in our big box stores,” CEO Hubert Joly wrote to employees.

The Middle. Fourth quarter results at Salesforce came in slightly better than Wall Street expected. Revenue of $2.9 billion was up 24% from the prior year, bolstered by gains in subscription software sales, and adjusted earnings per share of 35 cents a share were up 25%. Shares of Salesforce, already up 14% in 2018, gained another 3% in premarket trading on Thursday. Online storage provider Box, however, disappointed the Street with its forecast, and its shares dropped 15%.

(Today's headline source: Spotify's Today's Top Hits playlist)

FOOD FOR THOUGHT

The Federal Communications Commission revoked its 2015 net neutrality rules in December, but many supporters of the rules are still at work trying to revive the protections. Brian Fung of the Washington Post dug into what he describes as a "massive yet inconspicuous alliance" of lobbyists, policy experts, and others strategizing to restore net neutrality as soon as possible.

Within the coalition are two factions: those pushing to play hardball on Capitol Hill by threatening to force uncooperative lawmakers from office in November, and those who'd rather see the debate settled at the congressional negotiating table sooner rather than later, even if it means making policy concessions to companies such as Verizon and Comcast. Leading the first camp are the advocacy organizations who decry the FCC's vote for repeal as an attack on consumer protections. Driving the other camp are the tech companies and industry groups for whom the partisan deadlock on net neutrality risks stalling business plans and distracts from other policy debates they'd prefer to be having.

“Just recently, we’ve had some heated discussion about whether we should be playing the legislative game,” the person said. “The public-interest folks in particular are afraid that you’d be lucky to get half a loaf with this Congress, and that that’s not good enough.”

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BEFORE YOU GO

Somewhere in the bowels of Harvard University is a very large but smelly lab. It's run by the school's Department of Organismic and Evolutionary Biology and contains over 1,000 anole lizards from six Caribbean islands. Scientists are trying to figure out how new species develop by studying what happens to the small reptiles when living conditions change radically. Oh yeah, they also eat 80,000 live crickets per week. Yum.