Sarah Hofstetter (2:47)

O help me, can you Refine that question a little bit.

Rachel Tippograph (2:51)

Like, what I'm going in my head is there's pretty much now established players in Last Mile Delivery. Like, every single time a new entrant tries to come to bear, it just ends up going out of business. So, like, the space is mature.

Sarah Hofstetter (3:02)

Yes.

Rachel Tippograph (3:02)

And so literally, like, what's going to be next for Last Mile Delivery?

Sarah Hofstetter (3:06)

Yeah. And has this place become too crowded at this point for a new entrant to realistically show up? Yeah. Or have we solidified what we've got? It's interesting. You know, if we look at, even just at the super bowl ads, we saw some stuff from Instacart, we saw some stuff from Grubhub. Last year was a big year for DoorDash.

Rachel Tippograph (3:24)

And then Uber Eats, I think, also advertised Uber Eats.

Sarah Hofstetter (3:27)

Absolutely. And Uber Eats was a big sponsor in addition to having a spot in the Super Bowl. So I think you're starting to see the cream rise at the top. A lot of the smaller companies have either been gobbled up or gone away. So the question is, how do they maintain their value proposition both to consumers and to the suppliers that make them, you know, continue to be essential? I think that's the big question, is what makes one essential when you have so many different choices of where and how to get your stuff. And to me, I think the way I've been looking at Last Mile, a lot of it has been about Last Mile replacing the convenience store. You and I've been going through a pretty cold winter here in the Northeast. I think about Rachel Tippograph, new mom who needs more diapers. You're not leaving your house?

Rachel Tippograph (4:19)

No. I ordered car washer fluid from DoorDash the other week.

LinkedIn Ads Announcer (4:24)

Right.

Rachel Tippograph (4:24)

Like, I'm not going anywhere.

Toby Espinosa (4:26)

Right.

Sarah Hofstetter (4:27)

So if the idea is that basically Last Mile is a new convenience and you know that you're willing to spend a little bit more, just like if you went to a 7 11, you would spend a little bit more on most things other than soda. That becomes the big value prop is that basically these Last Milers are the new convenience store. And therefore you're. You're willing to pay more. And the trade offs are clearly there. So if somebody knew where to come in at this point, they would have to have some other value prop. It could be money, but then they'll probably get run out of business. But I don't know, 100%.

Rachel Tippograph (5:02)

So, I mean, yeah, the established players are clear. The DoorDashes, the Uber Eats, the Instacarts of the world. And now not only have they won over consumers hearts, minds and wallets? But they've now had the opportunity to build massive advertising businesses around that consumer data. And who better to hear the DoorDash advertising story than Tobi, who has been leading that business unit since day one. So let's bring Toby onto the show today. We are so excited to have Toby Espinosa, the VP of DoorDash ADS, onto the show. Hello, Toby.

Toby Espinosa (5:39)

Hello. Hello. Thank you so much, Sarah and Rachel, for having me.

Rachel Tippograph (5:42)

Well, I feel like congratulations are in order because you were recently named to A.D. ages 40 under 40.

Toby Espinosa (5:50)

Yeah, thank you.

Rachel Tippograph (5:52)

Major congrats. Sarah, were you ever named to that list?

Sarah Hofstetter (5:56)

Indeed I was.

Rachel Tippograph (5:56)

I thought so.

Sarah Hofstetter (5:57)

Whoa. All right. It's a really long time ago because, like, I don't know, at this point I feel like I'm in the 50 over 50 shtick. But yes, I, I was a 40 under 40.

Toby Espinosa (6:09)

That's awesome.

Rachel Tippograph (6:10)

We're building the alumni work here. Well, Toby, you were named to the list because you are leading the charge at what I believe is the fastest growing retail media network, DoorDash ads.

Toby Espinosa (6:23)

Yep. As claimed by all of the large LLMs, Claude, ChatGPT, Gemini, whichever one you want to do, they confirmed that this is true. Yes, I lead the, the ads business here at DoorDash. I've been here for over 10 years. And yes, we announced about this time last year that we were the fastest retail media network to reach a billion dollars in revenue. And we continue that trajectory and we're very proud of it.

Rachel Tippograph (6:46)

I mean, it's pretty phenomenal. And what is also so fascinating is that you did not grow up in advertising.

Toby Espinosa (6:54)

No.

Rachel Tippograph (6:54)

And you essentially have grown up at doordash.

Toby Espinosa (6:57)

Yeah, that's right. I love stories though. Maybe that helps with the leaning into advertising over time. But no, I did not grow up in advertising as a category sector. I did not know what a retail media network was or a commerce media network was up until about four years ago when I asked our founder and CEO Tony Hsu if I could start our ads business. But I think that naivete kind of helps me a little bit in the sense that most of the systems and structures around us are built by people. You know, what is that quote? Built by people no smarter than us. And so I think our approach, my approach has been when I joined DoorDash 10 plus years ago, my entire world and thought process was I joined it because I love small businesses. There's something so amazing about a person, family that builds something from nothing in this country and others that is running a Small business. And so I was obsessed with that. Doordash's core founding principle is to help local economies grow. I have always spent my time really on the kind of what we call the merchant side or the customer side of our ecosystem. First by running our large national brand business and then by starting our retail media network. And it was all about how do we keep building tools to help people grow within our ecosystem faster. And now with the acquisition of Symbiosis in July, helping people grow outside of our ecosystem faster too.

Rachel Tippograph (8:18)

So proud investor. So thanks for doing that.

Toby Espinosa (8:21)

Oh. Oh, wow. Amazing.

Rachel Tippograph (8:23)

Yeah.

Toby Espinosa (8:24)

Look at that. That's amazing. Well, Rachel, thank you for investing in such an amazing group of people. They are. They are truly, truly special folks.

Rachel Tippograph (8:32)

I think it also says something about DoorDash that you are at the helm, an industry outsider of the fastest growing ad network, and they continue to bet on you. Not a lot of organizations operate that way.

Toby Espinosa (8:46)

Yeah, I think it goes to just arguably my favorite DoorDash internal value, which is truth seek. There's just a fundamental remaking and reshaping in pursuit of the truth, which, regardless of experience in a specific sector, that sector could be changing radically depending on forces outside of it or within it. And in some sense, experience then kind of goes by the wayside and what you're left with is the fundamental truths of what drives outcomes in the moment. And so I think that, again, kind of going back to that naivete, I mean, I look up to folks like the Symbiosis crew, which was a part of the original Hook Logic team. That was the technology that powered Criteo's ad platform. And just kind of with that kind of outside mental model looking in and realizing that there's a lot more opportunity than the current world might think there is. And so, yeah, I guess it's a testament to our organization that we're all kind of outsiders looking in, just trying to continue to truth seek and help local economies continue to grow.

Sarah Hofstetter (9:53)

Can I unpack the local economy thing? Yeah, I think it's great. How do you recon.

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Sarah Hofstetter (11:43)

file that whole like the local economy with the fact that you for the most part are working with these national chains. And on the one hand, everybody says, you know, even the national guys say, oh yeah, we're all about the locals. But there's obviously a lot of tension in that.

Toby Espinosa (11:58)

Yeah, has about 550,000 merchants on the platform. The majority of those are still small businesses. And then of the rest, even within the large restaurant category, the vast majority of those folks, you know, the 90 plus percent of restaurateurs in the large restaurant category, so think your McDonald's, your chick fil A's are all owned locally. They're all local owner operators. So in the restaurant side of our business, and then I'll touch on the CPG side. In the restaurant side of our business, the opportunity set that we saw was, you know, historically franchisor, which is again, your McDonald's corporate CMO and franchisee never were able to really collaborate from a marketing standpoint. They've tried historically without technology. Right. So you create a local ad fund and they'll deploy money out of there. We came along, we built a product we announced last year that allows this sort of collaboration to occur. And so I would say, Sarah, that actually the vast majority of Our advertising dollars that we kind of absorb today are local in nature. Whether they're coming from franchisees or small local owner operated restaurants, merchants, etc. When you start to go towards the the kind of the CPG business so these large natural, the Campbells of the world, the can views of the worlds, et cetera that think about national scale and want to buy media at a national scale, we start to kind of think about how to decompose the problem or the opportunity. And large CPGs are first they have a product innovation, right. So tomato soup. Then they become two massive organizations within one. One is your sales organization that works closely with retailers that can be local in nature, your suppliers that can be local in nature or regional in nature and your large media brand buying dollars and retail media networks sit in this weird cross between the two. And depending on the organization our relationship might exist with these large brand dollars or on the retail side with sales. And so I think this is a really long winded way of saying over time people love to think about media opportunities and ad dollars in this large scale mental model linear I can buy at scale. That's where all the profits are. Our belief at Doordash is that if you actually look at the problem or the opportunity locally, half of the dollars sit locally in the trade bucket or the sales generating bucket and half sit in national media. It's our job to unlock both, provide consistent reporting and that. So over time we can yes build a large massive business but also provide outcomes for the customer that are efficient across both. So really long winded way of answering that question, but I do think there's opportunity for both.

Sarah Hofstetter (14:45)

No, you're definitely picking at a frequent theme here on Brave Commerce where we talk about the constant reconciliation of who owns the budget. Especially when it comes to things like retail media and overall omni commerce in general sales and marketing. And I do believe that your outsider. I don't know how you could be an outsider if you've been there for so long.

Toby Espinosa (15:04)

Insider to doordash maybe. Yeah, yeah.

Sarah Hofstetter (15:06)

Have you been in the commerce space since before code?

Toby Espinosa (15:08)

Totally.

Sarah Hofstetter (15:08)

Okay then, then I'm sorry because everything started then.

Toby Espinosa (15:11)

I'm a consummate insider now. Thank you. I've been rebranded.

Sarah Hofstetter (15:14)

Don't get me wrong, it's fine. I started my career in journalism but that was 30 years ago so who gives a shit? Like but, but I think and I've only, and I've only been in commerce for six years. There's a part of this where we're relative newcomers to relatively new lines of business. But we are not the holden to the advertising industrial complex where organizations mirror media organizations, and anybody that supports the supplier mirrors what they've seen in the past. Instead, you're saying, here we are. We understand that what we can do at Doordash, how we can ultimately help the company be more successful, is by bridging those gaps for an ultimate outcome, which I think is just harder and harder to do, because this isn't just about building relationships with the CMOs. It really is. So as you think about this, how do you build those, you know, without giving away competitive secrets, obviously. But how do you think about even mapping your relationships across these large organizations? And let's talk. Just for now, let's just talk about cpg. And I'm going to put in a twist at the end. Throw in the complexities of food service. So let's say you're Heinz ketchup. And so you're not only a supplier that's getting delivered through all the different networks you've got, but Heinz ketchup's also a condiment that is served in many establishments that are within the restaurants that you also serve. So let's unpack that one and then I'll shut it up.

Toby Espinosa (16:48)

Yeah, no, no, I. I love these questions. This is like total nerd, deep commerce tracks right now, which is epic. Okay, so I think. Let me start on the second one, which is the food service concept. Food service is fascinating. Just take a step back and look at the business. Right? So just think of anybody that sells both products within a restaurant and within a traditional, you know, grocery store, retailer, convenience store. Some of those brands, like you said, Heinz ketchup, Pepsi, obviously, Coca Cola. So the large beverage brands. The interesting thing is, even though there aren't a lot of, like, the food service engine provided us, like, if you just look at it in terms of just simple dollars and say to yourselves, like, is there a large opportunity from a food service standpoint to activate this sort of sales within the restaurant? I think the short answer is absolutely yes. Have we done a good job of it? I'd say we've gotten, you know, a B minus, C plus, B minus on that only because the repeatability of the model is somewhat difficult. Right. And like, consumer preference is not as simple as I might be trading a very specific type of beverage. I'm grocery shopping and I'm just going to trade, you know, Dr. Pepper with something else. I'm in the food service. I'm in a restaurant, and my preferences when I want a burger versus I want this might actually be very specific from a consumer standpoint. So I think the massaging of that has actually been harder than folks have imagined because of the consumer preference strength within food service. That all being said, I think the most interesting thing is the food graph because even if you're a consumer packaged brand and you might not actually sell, you know, Campbell's isn't selling a bunch of soup while they might be from a white label food service perspective, I'm not actually sure about that business. But let's say they're not the folks behind the soup at Olive Garden. Let's say that they're just primarily at 7:11. They still might find that food graph super interesting from a targeting standpoint to drive more efficiencies when they're trying to build a media plan. And so I think food service just to be very concise with that food service has been harder to activate from a consumer standpoint, has been way more interesting from a targeting standpoint to drive efficiencies within the core grocery business for advertisers. So that's the first one, the food service one. If you go back to just like mapping, you're absolutely right. I mean I think if we weren't at a founder led, founder owned and operated business, still, I think the longevity for building a really true long standing CPG business needs to take a decade plus. And the reason is because, you know, to your point, every organization is in a slightly different place from a, from just a strategic standpoint. For some brands that I've met with, they want everything to be done through their agency of record so they're much closer to the media organization. For other brands. Our top contacts don't even know who their agency of record is. Right. And so, and these are both top 10 global CPGs. If that's where we are. I think it's going to take a lot of like a good sales motion to understand and collect information on where the organization is. But then it's also up to us to keep activating. We simply want to do two things over the next two, three years. Activate more points of dollars. Right. So allow dollars to flow. Don't be myopic, don't charge for dollars to flow. Why should we charge? Let them flow. And then provide consistent measurement to the extent that we can all have a standard of what does a sponsored product mean when you buy it on Kroger or Dash or Uber? If everybody has a consistent understanding of what that's driving from a measurement standpoint, I think more dollars will Flow.

Rachel Tippograph (20:18)

It's interesting. So it sounds like you're placing your bets on measurement.

Toby Espinosa (20:22)

Absolutely, yeah.

Rachel Tippograph (20:23)

Do you believe that's going to become the point of differentiation for doordash ads is measurement.

Toby Espinosa (20:29)

So the advantage of retail media is that one has a physical shelf. The disadvantage for us because we really only have our dashmar business, that's our physical shelf. We are mostly a digital shelf. When you only have a digital shelf, the traditional trade, the sales engine percentage of your business, you don't actually have access to as much. And so yes, we should try to activate those dollars within our ecosystem. So how can you bring trade into the digital self that is DoorDash and but then the bigger opportunity that everybody wants us to work on is national media. And so then the question is who from a historical perspective in media has done a really good job activating national media at scale? And then the second question is, has anybody done it without consistent measurement? And the answer to that is nobody has. So if you really want to go get agency in these national media dollars, we all have to work together on measurements. All of us will benefit and more importantly our brands will benefit, which is I think the biggest unlock.

Rachel Tippograph (21:30)

So okay, well you, you answered the big one. But I would be remiss if I don't get this question in before we have to ask you our famous last question which is if the bet is measurement to go after national digital media dollars, what is your view on how AI is going to impact that? For doordash ads and the end Advertiser,

Toby Espinosa (21:52)

the entire AI CapEx drive is being funded by two sources. One is sovereign wealth dollars and the second is advertising dollars. If you look at one or two of the others and on the advertising front, the way that folks like Meta and Google have front loaded, that is with really enhanced measurement within their kind of closed wall ecosystem. If I'm Google I have search and YouTube in a bunch of places and enhanced measurement and then much better targeting, that's automatic. Like I don't have to be hands on keyboard, I'm getting higher yield from the same dollars. Both of them have done that over the last two, three years. Those incremental profit dollars are going towards building CapEx for AI. Okay, wonderful. We need to do what they did better signaling so providing the ability for folks to get more out of the same dollar that they invest in our platform. So that's kind of one. But I think the larger opportunity going back to the last question is if it basically costs us zero to build incremental software and we're Having. We're having conversations, live conversations to today with partners. In order to do this, there should be no such thing as integration fees. There's no cost for us to bring our technology stacks together anymore. And so said another way, like if everything is super cheap, in order to bring information closer together, data closer together, then what we should be doing is a massive integration sprint. We will pay for it because it will cost us zero, close to zero. And then once you have that, then it goes back to measurement. Right. So then you build targeting tools on top and then you measure in a consistent fashion. And if you bring all of that data together into one place, commerce media will have a. Will benefit from kind of the. The drop in the cost of SAS AI tools on top of the ability to do better measurement and return with the same dollar. So we'll get both.

Rachel Tippograph (23:39)

Yeah. It's a powerful vision. It sounds similar to the path that Google and Shopify and other vendors have taken with ucp. So very excited to see you bring that to life. We gotta ask you our famous last question, which is, what's the bravest thing you've ever done?

Toby Espinosa (23:55)

Definitely, by a long shot. 100x is proposing to the man I love. And that was a gentleman named Trevor. But the sad story, or the inside scoop is that he proposed to me right before I got to propose to him. So. Aw, it was brave. My guts. The guts were there, but I didn't actually get to execute. But yeah.

Rachel Tippograph (24:14)

Ah, I love that. Did the marriage happen?

Toby Espinosa (24:17)

It's in progress. Okay, we're on the way.

Rachel Tippograph (24:19)

All right. He might beat you to the altar.

Toby Espinosa (24:22)

He is faster. He's a runner, I'm a water pole player. It's a massive disadvantage. So. Yeah, there you go.

Sarah Hofstetter (24:26)

Is there a proposal story you can share?

Toby Espinosa (24:28)

Sure. We, you know, we met in San Francisco, but we lived in New York for a while. I was planning on proposing in France on a Thursday. He got in front of it and proposed in New York in Gramercy park on a Tuesday. So he took the wind slightly out of my sails, but that was by far the bravest thing I've ever done. So. Love is scary. It's a very scary thing.

Rachel Tippograph (24:46)

Absolutely. Well, Toby, thank you so much for sharing. We are excited to see what you continue to build at Doordash and. And if anyone wants to follow the latest, find him on LinkedIn.

Sarah Hofstetter (24:59)

Hey. And maybe even after he's 42.

Toby Espinosa (25:03)

Exactly. Exactly. Exactly. Thank you both so much. It was so fun.

Rachel Tippograph (25:09)

If you like what you heard and you want to think about convenience as a channel and how it's being disrupted from a totally different perspective. Go check out the episode we did with John Ferriss, the president of Bosch and Lamont. And please tell your friends on LinkedIn if you're enjoying listening.

LinkedIn Ads Announcer (25:48)

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Chelsea Bakken (26:21)

Does using social media ever make you feel like you're just yelling into an algorithmic void? That feeds have started to feel a lot less, you know, social? Well, we're doing something about it. I'm Chelsea Backin, Head of Audience Development and Social at Adweek, and I'm so excited to invite you to Social media week this April 14th through 16th. We're bringing together creators, marketers and social leaders in a vibrant IRL space in New York City for three days of connection, collaboration and learning. You'll get the chance to dish on the latest tools and tricks, hear fresh perspectives on the year's most viral moments, and get the slot free inspiration you need to connect with your audience and optimize performance. Head to adweek.com events to learn more.

Toby Espinosa (27:03)

Hi, I'm Jackie Cooper, Global Chief Brand Officer at Edelman and the host of Touch of Truth, a new podcast launching on the Adweek Podcast Network. My dad gave me this incredibly smart piece of advice.

Sarah Hofstetter (27:16)

Meet everyone once.

Toby Espinosa (27:17)

As a result, I've met some of

Sarah Hofstetter (27:18)

the most fascinating and inspiring people on the planet.

Toby Espinosa (27:21)

Now on Touch of Truth, we're coming

Sarah Hofstetter (27:24)

center stage and sharing the mic to experience stories of truth, insights and visions

Toby Espinosa (27:28)

for the future that will challenge your way of thinking. Touch of Truth is available wherever you listen to podcasts. New episodes come out every Tuesday. I do hope to see you there.