← The Big Impression
The Big Impression
DoorDash’s Toby Espinosa on helping local economies grow
00:19:48
Toby Espinosa, the VP of DoorDash ads, reflects on the tremendous growth of the delivery platform, saying the key to this is local businesses.
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- [00:00]
A
I'm Damian Fowlam.
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B
And I'm Ailee Slifring.
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A
And welcome to this edition of the Current podcast.
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B
This week we're delighted to talk with Toby Espinosa, the VP of DoorDash ads.
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A
And Tobi is responsible for connecting brands local and national to the more than 37 million customers who place orders on DoorDash marketplaces each month.
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B
At this point, DoorDash is a household name, no pun intended. It has more than 7 million couriers delivering orders for DoorDash DoorDash from around 550,000 merchants.
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A
Hard to believe that the company was founded just over 10 years ago, in 2013, and Toby joined the company in 2015. So he's seen DoorDash go from strength to strength. Naturally, we start by asking him about how the company has changed over the last decade.
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B
So, Toby, DoorDash celebrated its 10th anniversary last year. And I. I remember when you guys launched, I would just say, because I was like a hungry college student at the time and it was like perfect timing to get anything delivered to my dorm room.
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C
And where were you?
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B
In San Francisco.
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C
In San Francisco. No way. How awesome. Very cool.
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B
Yeah, it was like I was in the right place at the right time.
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C
Our fifth market. Wonderful.
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B
Yes. And so how would you say has the company evolved from a food delivery platform to the platform it is today?
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C
When I joined the company, we were in four, five metros and we were completely focused on one product in four or five markets. And back in 2015, when I joined the food delivery market, as you remember, seamless reigned supreme in New York, grubhub was in Chicago, and everywhere else. Food delivery was Pizza, Domino's, Papa John's, Pizza Hut, and a few local restaurants that were able to afford having couriers. The market everybody thought was saturated. We entered the company had a thesis that the market itself, given the advent of mobile technology, we believed that if you took this mobile device, where a dasher had a mobile phone, a consumer had a mobile phone, and restaurants had access to this mobile superhighway, that if we connected all of them, there would be a larger opportunity for growth. Growth being the key word there. Because as much as DoorDash has changed over the last 10 years, we have gone from a one product, one market business to a multiple product, multiple geography business. With 37 million monthly active users, over 15 million monthly active subscribers to our platform. If you go back to our founding story, Tony, Stanley and Andy, when they started DoorDash walked down University Avenue in Palo Alto and they went from store to store, asking Every local business, how can I help you grow? That was the founding question. It wasn't, can I build a logistics network? It wasn't can I build an ad business. It was, hey, how can I help you grow? And the opportunity they found was let's do a restaurant oriented delivery network for everybody across suburban markets. And that's what took off.
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B
How would you say that growth has translated on the ads marketplace side of things?
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C
Yeah, the hard part about building at the scale that DoorDash operates is the consumer side. Building a consumer promise and then making that promise better and better and better every day, getting faster and cheaper. That is actually the harder part to find product market fit from a consumer perspective. And once we have that, we want to continue to compound that over and over again. About four years ago, five years ago, our merchants within that ecosystem raised their hand and started to ask us, hey, do you have any tools to help me grow even faster? That's how the ad business started. Core to who we are, it's a growth business. We have customers who want to grow faster. And what we then tried to figure out was how can we help serve this promise for these customers while also helping our marketplace continue to grow. And so the best way to do that is to align incentives. Show us the incentive and we'll show you the outcome that we're driving towards. Our ad team is incentivized both by driving incremental return from a spend perspective for advertisers, as well as driving incremental volume for our consumer marketplace, which is very different than most advertising platforms. Most advertising houses, you have product and tech on one side driving growth and you have ads trying to monetize it on the other side. We wanted to bring those together to make sure we were able to continue to grow on both sides and serve our customers best.
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A
And cut to date to this spectacular rise of retail media, which of course is one of the hottest topics right now in our space. Doordash, of course has built its own retail media network in recent years. Could you talk a little bit about how you took some of those concepts you just talked about and built the network?
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C
Yeah, absolutely. So we again, we wanted to be completely aligned with the customer. So the first customer that we started to think about was the SMB owner, operator, restaurant that we all know that's in our town. In San Francisco, it's Suvla. In New York, it's Electric Burrito. These brands that we are absolutely in love with. What we quickly realize is there's two fundamental things that are very difficult. The first is that they have to be an expert at 15 different things. So if we own a local restaurant, a local retailer, we have to be great at real estate, we have to be great at marketing, we have to be great at financials, we have to be great at at customer service, we have to be great at creating a great product, which is food. And so when we look at this core customer, they're supposed to be an expert at 15 different things. Our job is to go after one of those and make sure that they don't have to think about that growth as much as they used to by putting a little bit of the burden of that growth on our shoulders. What that means in practice. When we launched the business for SMB customers, we focused on building an economic model that worked for them. Last week in San Francisco, I went and picked up a salad at one of my favorite places and there was a restaurant right next door that had just opened. I talked to the owner standing in the front a month in, nobody in his restaurant, maybe three or four people that could otherwise have a capacity of 50. And I went online and I looked. He was running advertising across a bunch of different channels that we all know. Snap, Google, Meta, etc. This person was in the red day one of the month. It's one of the hardest things in this country, these small businesses that start negative every single month. And on top of that, they also had to layer in more spend on Google and Meta to try to get out of that hole. We took the premise of we want to be your growth assistant. And we took the premise of it's really hard for you to grow your business without having to add more money into this negative cash cycle. And we said, let's build a product where you do not have to pay us unless you get an order. So unless we send you money, you do not have to pay us. And those two things together have helped us build one of the fastest growing retail media networks, particularly focused on a customer that was completely underserved.
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A
Could you talk a little bit more about how you kind of expanded those relationships with both the national brands, tying that into the local, that the business works at a local level, Fundamentally, Yeah.
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C
So in the restaurant space, the vast, vast majority of restaurants on Main street are local, even if you are a McDonald's franchisee. So you have one of the largest brands, you're a small business owner, really. The Starbucks, the Chipotle's of the world that are corporately owned restaurants at scale are actually the smallest. They're the 10%, not the 90% in the U.S. and so our ad product, designed on a CPA based level where we can be the growth assistant for all these owner operators is really for the 90. It's built for the majority. Our ad manager for the enterprise restaurant segment is designed to help both the CMO and of McDonald's and the owner operator franchisee within the system. We've built the first of its kind way of purchasing across a national media buyer, an agency at the national level, a district media buyer, and then also at the local level, incremental to that. If you're a franchisee and you own a couple McDonald's and a couple Subways and a couple other brands now you can also manage your business across brands. It's really the first of a kind product in its space designed entirely to work between local and national brand.
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B
Very cool. You were saying how it's about 90% SMBs and 10% big business. How does that play out within the doordash platform?
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C
Yeah, yeah. So kind of think about where the dollars are coming from. So you might think of doordash volume as large businesses. A lot of people are ordering McDonald's, but the reality is the buyer of media could be a local franchisee. So the brand is national, but the spend is still local. As you know, also on the CPG side, large brands like Pepsi and Coca Cola and P and G, those are large, national, entrenched brands. Those are timeless brands that have been around. And so the question there is how do we build products that are timely to help the timeless?
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B
Can you talk a little bit about partnerships and how you actually go about working with like those brands and retailers that are using your platform so much?
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C
We were founded as a growth helper. So built in our DNA is working with others to help them grow. We are fundamentally a partner oriented culture. What that means is first we get to partner with great local brands, mid market brands, national brands. But that also means we get to do fun things like add in Max or add in Chase. There are a lot of people, if given the opportunity, want to help local businesses grow. Our job is to help figure out a way to make that happen.
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B
How would you say that has captured users?
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C
It's a great question. The underlying thing is how do we do it in a way that continues to compound our consumer promise, which is faster, better, cheaper. Think about our Chase partnership and the depth in which we've built that partnership over time where everybody that has a Chase credit card has the opportunity to participate in one of the largest local subscription programs in the world. And so some work quite well, others are challenged. And we're a first principled company that tries to get better every single day.
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A
Just on that point, are you very strategic about looking for new partnerships? You know, that's an interesting one, Chase and of course there are many others. But how do you think about it and go about you know, building those different partnerships?
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C
Yeah, it's a collaboration. It's a, you know, internally within DoorDash we have general managers that run different business units. We have functional leaders like our incredible CMO Kofi who, who has built one of the world's largest brands in a span of years, not decades, which is incredibly amazing and, but it's, it's a collaboration across different functions. It's a collaboration with a partner. One of the most interesting partnerships that we've launched is with Amazon in Canada. Now a lot of folks when you think of DoorDash and Amazon would say competitors, that doesn't work right. But we work really, really hard to try to figure out anywhere is there a place that we can collaborate and again help local businesses grow. That's the fundamental premise behind the whole thing.
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B
Now what about when it comes to like an ad perspective, how are you working with these brands and partnering with them?
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C
I think in the ad ecosystem there's a simple recipe that we're trying to follow. One is access. So can I provide access for people to purchase? Very early on our first investment was in a self serve ad manager so that local businesses could purchase promotions and ad products without needing to talk to somebody. So one is access, first of a kind product. Again, I know I keep saying that but I'm very, very proud of it because not many people build for franchisees in this country and they are one of the largest, most hard working groups of individuals that we look up to.2 is providing the tools to get the best return possible. Can I do better targeting? Are there new access points that I can get to? We've invested a lot in better targeting again for those enterprise restaurants. So today you can target new users, you can target lapsed users. You can do that if you're a small brand, like a single owner operator. You can do it if you're a national restaurant and you can also do it if you're one of the largest brands in the country. So one is better targeting tools and incrementality and then the final is impressions. So DoorDash, again, we are humbly one of the favorite and largest marketplaces in the country. But we very well know there are other people that are hungry on a daily basis who are not eyes on DoorDash. And so can we provide the ability for brands to reach those people using our data. And that was one of the announcements we made last week as well.
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B
One of the things I feel like DoorDash is almost known for in the advertising marketing space is it aligns itself to big occasions throughout the year. I know we saw DoorDash for the Super Bowl Mother's Day. Can you talk about how you plan for such occasions and maybe what's your favorite one to work at on and be like present.
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C
We love occasions because we learned from our core customers, both the consumer and merchants, that these occasions are important to them. So if you think of super bowl, imagine you are a local owner operator of a wing restaurant in Tulsa. Super bowl is your Super Bowl. Right. It is the biggest day of the year. We wanted to follow our customers into that moment. Mother's Day, huge moment. Both for folks where it's a special day to remember somebody or for folks that are trying to be a mother for the first time. Right. So you have this opportunity to reach consumers from an advertising perspective. You have an advertiser who's excited to follow you into that occasion. And what we try to do with these three way partnerships, we've done them with Wendy's, we've done them with Roku, we've done them with many others trying to find three way alignment of incentives to drive local growth for our customers.
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A
I know for a fact that one of the best gifts my family ever got was after our first son was born and somebody bought us a DoorDash card, which was so helpful to be able to have food delivered. You know, when you're at home with.
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B
This tiny little baby totally showing up at those occasions. But also ongoing brand campaigns. How does that proximity enable you to extend into new categories?
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C
Our super bowl commercial is a great example of this. This past year, the words were adore to more. We are in the earliest innings of our consumers really understanding that you could actually get a pair of sneakers delivered to you on DoorDash when you need a new pair, like I did this weekend in order to go for a run. And being able to jump on these large consumer moments, our 37 million monthly active users start to understand that really doordash is here as an assistant in your life across all of these categories and verticals whenever you need us. We aren't just Thai food. We're also the ability to get something when you're feeling sick.
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A
Yeah, that's expanding the whole concept of doordash Speaking of expanding the concept, you've also cultivated good partnerships with streaming partners. And you mentioned Max a little bit earlier. Why is it that streaming and delivery seem to kind of work in synchrony?
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C
I think it goes back to the moment. There's a very happy moment in my household when we finish work, we get a little ring on our door and there's a package outside and it's filled with two burritos and we get to turn on Macs and watch industry. There's a sliver of moment in time where we're just feeling absolute happiness and joy. Now that is a moment that a lot of consumers around the world feel. We're trying to give everybody a little bit of time back again. This concept of putting the weight of other things on our shoulders as a, as a company to help people, to help these, to help local economies grow, that is what we are trying to do at Dash. And so aligning ourselves in this moment of peace, of this moment of just absolute happiness with a streaming service is a very nice moment to be right next to these brands from a consumer perspective.
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B
You paint a nice little picture there, really.
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C
Yeah.
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A
I never thought about DoorDash as a way to get time back, you know, but of course it does offer.
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B
There's too many things to worry about outside of that.
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C
Yeah.
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A
We're going to ask the inevitable question about AI and how obviously DoorDash must be integrated with AI technology. But how do you think about it?
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C
As we look ahead, we are riding on the backs of one of the largest technological revolutions of our time, the Internet and then the Internet plus mobile. And so we want to continue to be students about how this next revolution will change our merchants, consumers and Dashers lives. We are trying to learn as fast as possible. I think what's very exciting if you take a step back and you put on the mindset or the shoes of we are trying to be an assistant for all of our customers across a bunch of different ways. Dasher helping them make more money, consumers saving time and merchants making more. If you put yourselves in all those shoes, AI as a technology will only help accelerate our mission of doing that and then unlocking growth for local. I think we're going to see one of the largest increases in growth that we desperately, desperately need. Our favorite coffee shop, Thai food place and place to go pick up your meds when you're a little sick. And so it's a pretty cool future. We're very excited for it.
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A
Are there any innovations that you are thinking about into 2025 that can help with this growth mindset that been talking about.
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C
Yeah, we've done a great job of the access point which is opening up an ad manager, opening up a self serve sponsored listing. We've done a great job at that. We've done an okay job at the second two which is once you open up a lot of this inventory and help find ways to grow, it gets complex. I think we've added incremental complexity to our customers lives for most of our customers and so our team is extremely excited to continue to take more of the complexity out of our customers lives as we layer in more complexity on the product and engineering platform that we've built internally. And that is a very hard problem to solve. But I have one of the best teams to help us go solve that and we're very excited to take it on.
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A
And that's it for this edition of the Current Podcast. We'll be back next week, so stay tuned.
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B
The Current Podcast's theme is By Love and Caliber. The current team includes Kat Vesse and Sydney Cairns.
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C
And remember, the brand is national, but the spend is still local.
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A
I'm Damian. And I'm Ilise and we'll see you next time. And if you like what you hear, please subscribe and leave us a review. Also tune in to our other podcast, the Current Report.