Ben Gilbert: evaluation

Transcript context

…The leadership principles, exactly, but I think understanding what that really means. Tony talks a lot about this in interviews and he uses the example of The Cheesecake Factory in San Francisco which is in Union Square. The Cheesecake Factory is on the sixth floor of a mall in Union Square. There's no dedicated parking out front, you need to take an elevator to get up there and they have a bunch of different serving stations. You've got customers even in San Francisco who like to order from Cheesecake Factory and they live a 20-minute car ride away in the city, how are you going to get them their cheesecake in a high quality timely manner? The only way you can do that is by doing things, he talks about well, okay, we went to the mall and we're like can we get a dedicated elevator shaft for us? Great. We went to the restaurant and we're all like can you give us a dedicated serving station? Great. I went to the parking garage there and they're like can we get dedicated Dasher parking spots? Great. You can't do that when you're sitting in an office writing code. Right, and only paying attention to averages. I think another great embodiment of this is I think it's Michael Block, that's how you pronounce his name on Twitter and he's an early employee. In food delivery, you can compete on four things; price, speed, selection, and quality. They looked around, realized that they weren't necessarily going to beat Uber on price or speed because they didn't have the density yet that was in cities. They didn't have the broadest selection yet, they did have high quality restaurants, and one of the very interesting things that they zeroed in on is speed. They're like well, how fast do we need to be? And he says that our analysis shows that there was a limited marginal benefit to customer conversion or retention rates under 42-minute ETAs. As long as deliveries were sub 42-minute, customers didn't really care how long they took. It's just this amazing lightbulb that by diving into it, this flies in the face to what I said a moment ago because this is an average number and not a per customer, per location, per type of food tail number, but the idea that they can learn that 42 minutes is their food delivery equivalent of that magic five-minute mark for Uber where I don't care if an Uber's two minutes away or five minutes away, it's the same thing. I do care if it's 5 minutes away versus 15 minutes away, those are very different things. I think his point, in his Twitter thread—which we'll link in the show notes—is that when they were competing against Uber, Uber wasn't a constant optimization race to get the food to you faster, and DoorDash was realizing actually, that might be a waste of resources. Anyway, it's the Amazon leadership principle dive deep, being deeply analytical, which they need to be able to operate at the margins that they're operating at. All right. Last section before grading is value creation and value capture. This is the section that we started doing based on actually a lot of listener demand that has two parts. The first part is how does the value that they are capturing compared to the value that the company creates? Is it like Wikipedia where they capture a tiny little percentage and could be capturing way more, or are they capturing plenty, like Google who makes a ton of money from the value that they create in the world? There's that component. The second is how does the value created for the world, not just for shareholders, compare to any value destruction that they've done in the world? I think let's address this in order. On that first one, they seem to be capturing basically the maximum amount that they possibly could. Any more and consumers probably wouldn't die. It's effectively a 40% markup on your food in order to pay DoorDash and then to pay the Dasher. The market actually feels relatively constrained to me of people who are willing to pay 40% more for their food to have that convenience. I don't think they can be destructing anymore. pay the Dasher. The market actually feels relatively constrained to me of people who are willing to pay 40% more for their food to have that convenience. I don't think they can be destructing anymore. That's any more from consumers, any more on the restaurant's side and the restaurant probably couldn't take their doors open. I think DoorDash does a lot of research and figuring out how much of the trip we need to give to restaurants so they'll continue to be our suppliers and not turn off the platform? Either because they don't like us or because they just can't operate at all. I think they're doing a reasonably good job of maximizing the value that they possibly can take.…

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