DoorDash Buying Caviar from Square for $410M (opens in new tab)

It's probably a mostly equity deal, i.e. most of the $410M is not real money. They recently raised $600M and I doubt they'd spend $410M of that on an acquisition.

It would be more interesting if we knew how much they actually paid in hard cash; the rest is effectively just promises of money in the form of a valuation that hasn't materialized in liquid form yet.

I'm guessing like most things in the US: investors are looking to consolidate so they can get into monopolistic positions and extract resources from the market once they have it cornered. The risk of legislative intervention into such anti-competitive market manipulations is virtually zero.

If they get big enough, next time they steal wages, they won't have to back down. Heck, if they get big enough, they can steal wages, drive the company broke, and then get a bail out to pay the higher ups that are making the decisions that drove the company into the ground in the first place.

We then have the gall to blame Adam Smith, who didn't even believe in separation of funding and management (i.e. he didn't believe in joint-stock companies)

food delivery service is blowing up because it's still extremely inefficient in the USA. you can get _anything_ delivered in Hong Kong for about $1. some hong kongers don't even have kitchens and live like that for years.

travis kalanick is investing millions of his own cash into this space.

They make a lot of profit, recycling it buy up and coming startups to maintain market share and the business model.

That’s not a bad idea.

What separates them is the ridiculous amount of VC funding they took and have used on a combination of marketing and buying exclusives. Every actual experience I've had with DoorDash has been rather poor though, and they've gotten in trouble many times (they even got sued by In-N-Out a while back when they re-listed In-N-Out against their wishes using a knockoff logo to avoid trademark infringement). The only reason I ever use them is if I really want something that they have an exclusive on, and even that is rare (usually I'll eat somewhere else rather than order from DoorDash).

> I’m so confused by DoorDash’s sudden rise. I think I may have used it once. What is separating DoorDash from UberEats, Postmates, Grubhub etc?

Network effects are pretty strong. Locally, I don't know anyone who uses anything other than SkipTheDishes.

I use doordash 2-3 times a week. It's convenient and cheaper than Uber eats with dashpass. Just remember that if your too amount is less than 6$ it doesn't go to the drivers. It's better to too them with cash

Honestly, more than anything it's just user preference.

There are some restaurants that are exclusive on certain platforms (UberEats for example is exclusive with McDonalds), so if you want that, there's only one game in town, but most people I know who use these platforms regularly (myself included) aren't using them for a specific restaurant. It's more like, "I want sushi! I wonder what is available on my platform of choice?"

Beyond they all have slightly different pricing models, but at the end of the day they all cost about the same.

When Grubhub acquired Eat24 from Yelp and removed the group order feature in favor of signing up for a "corporate" account, it sent much of my business to DoorDash.

DoorDash offers a lot of coupons and promotions and allows as many accounts as you care to make.

Here's a recent article that shows relative marketshares:

https://www.vox.com/recode/2019/7/11/20688108/postmates-acqu...

Looks like Doordash doubled its US marketshare in the last year mostly at Grubhub's expense while others have remained more or less flat.

My understanding is that each service dominates a set of markets. Caviar owns SF, Postmates owns LA, Seamless has NY (to the best of my knowledge).

I dunno, compared to drivers dedicated to a specific business, I've yet to have an experience with UberEats/Postmates/Grubhub/DoorDash that wasn't leaving me with food that was cold, either because they did not use insulated bags, or they simply took way too long to get to me. When a joint is 15 minutes away, it'd take the driver a literal 60 minutes to drive from the restaurant to me. Your mileage may vary, depending on your region, but it's just a waste of money and time if you ask me.

I’m not an expert but I know that DoorDash partners with large established chains, they power Chipotle and Wendy’s delivery services. GrubHub is getting in in this too: they power Taco Bell’s new delivery service. I bet these deals lead to a more simpatico relationship monetarily. I bet it also avoids stuff like what is said in this comment https://news.ycombinator.com/item?id=20588348

My experience is that it's somewhat regional, but it doesn't feel sudden at all to me. I've used DoorDash for years, and it's because in my area they have much more selection of restaurants, and often faster delivery (which I assume means more drivers). Uber Eats doesn't even deliver to my house even though Uber covers my area.

I don't get it either. They're considerably more expensive than Postmates, and have consistently acted shady in my dealings with them.

Personally, Foodler had some nice features I like and Grubhub bought and killed them so I'm not going to be using Grubhub. Can't say I have a strong opinion among the others.

As a user though, Caviar is the worst delivery service I have ever used though. Food is often cold & sometimes wrong across 3 cities. I have stopped using it, even when it is the only option for a restaurant I like.

It's funny, I know almost no two people with similar experiences (user or courier).

For example as a user I have literally never had a good experience with Caviar. It almost always wrong in different ways.

As a courier one time the guy called and said that the restaurant was taking so long that Caviar would no longer pay him to wait so we ended up paying him out of pocket to cover it (he said we could cancel and get our money back but that he'd also get nothing after waiting for a very long time).

Uber Eats, as a user, has usually worked pretty well. As a courier one of them told us they constantly have out of date restaurant menus, people order from them, the restaurant substitutes or ignores it completely and now they have to deal with an angry person.

It really feels like restaurants are not equipped to handle these types of services and all of the services don't train their people if at all, as well as treating them kinda like crap many times.

As a customer, I’ve quit Doordash. They used to have decent customer service, where, although your order was screwed up, they’d generally fix it. They had a weird habit of always offering a $5 credit though, sometimes even when the part of the order that was screwed up cost more. But you could reach a real person pretty easily.

A lot has changed since then, and we’ve had several pretty negative encounters with them including one where the CS rep basically accused us of lying about not receiving our food. (I suspect it was misdelivered because the map software they used put our address as our neighbors house two doors down.)

My last experience with them: The app told us to contact them for an ETA on our food. The actual status of our order wasn’t clear. We had a dasher and then we didn’t have a dasher. There was no way to contact them. We tried “Contact the dasher” and the number didn’t go through. We tried to use the chat functionality (which is ridiculously buried under four or five levels of clicks and even then not immediately obvious” when it used to be basically automatic if you clicked “help”) and it wouldn’t connect us. We tried another number which also didn’t go through. The website had a message about difficulty placing orders at that time but ours was already placed.

So there we sat in limbo not knowing if the food would ever arrive and no way to contact anybody. Should we just go out to eat? We didn’t know. We did use their web form contact them, but the response came way too late to not have ruined our meal time. Eventually our order was cancelled and to their credit they gave us $50 credits but meh.

This may have changed since I don't really use Caviar, but I'n not surprised since I think Caviar's delivery/service fees are the highest (which is why I don't really use it).

Sounds exactly like the Cash app.

It is not illegal to buy competitors (commenting only on US law). It can potentially violate antitrust laws if you eliminate all competition in a market by buying out competitors. But given the existence of Seamless/Grubhub, Uber Eats, and others, plus most of the restaurants still take phone & fax orders, it would be difficult to argue Doordash buying Caviar corners the delivery market.

IANAL, but as far as I know generally the standard is "is this likely to cause meaningful harm re: pricing/quality to consumers?" See https://www.ftc.gov/tips-advice/competition-guidance/guide-a... for a fair amount of context. Horizontal mergers happen every day in the private markets (like this transaction), and generally they're a good thing: you're likely to get a premium by selling to a strategic rather than a financial investor (e.g. private equity) since they can value synergy. And anyone who's taken an entrepreneurship course knows that having a larger variety of potential high-quality liquidity events incentivizes the creation of new businesses. The problem is when enough of a market is consolidated in a way that might allow the consolidator to adjust pricing in a consumer-hostile way, which isn't touched by this specific transaction.

To your more general question of "how is this not a play at eliminating competition" - consider it more "can we (DoorDash) make more money operating Caviar by finding synergies with our existing infrastructure, than we pay for Caviar based on a model that describes Caviar operating under Square without that benefit?" That's a question of efficiency, not competition, and it's generally a good thing.

Eliminating competition isn't illegal. Creating monopolies isn't illegal.

Using a monopoly in one industry to negatively affect businesses in another industry or gain a monopoly there is illegal.

In US law, eliminating competition is generally fine. It's only a problem when there is a monopoly or close to a monopoly. DoorDash doesn't seem close to having a monopoly on food delivery.

I'd recommend reading up on the Microsoft antitrust case. That's where most of us learned about antitrust law.

Because there is still a lot of competition? Grubhub, ubereats, and many others.

It would be very strange if all acquisitions of competitors were considered a violation of antitrust law. It's something that I would expect to be very common in a well-functioning, fiercely competitive market.

$2bn I believe. You can tell because of how eager they are to throw money away to drive customer acquisition.

Howdy! Software Engineer at Postmates here. Our CEO has put forth an opinion piece[0] on CNN talking about his views and actions concerning this very thing. You might find it interesting:

[0]: https://www.cnn.com/2019/07/18/perspectives/principles-gig-e...

they released earnings simultaneously and those earnings lowered revenue forecast for the rest of the year.

https://www.cnbc.com/2019/08/01/square-earnings-q2-2019.html

Yeah a bit strange. They’re making about 300M on the transaction and it was never that clean a fit.

I felt the same way about the name. I visited a coworker in 2014 and he was like "oh, hey, it's getting close to lunch, let's order some Caviar." And I was like, "uh, isn't that a little ritzy?"

Seriously, I don't know the logic behind behind that name.

Me too! $410M worth of caviar sounded like a lot of caviar!

It takes longer than a month to finalize a $410M acquisition.