DoorDash CEO Tony Xu is taking on the role of industry consolidator in food delivery
Tony Xu, co-founder and CEO of DoorDash Inc., smiles during the Wall Street Journal Tech Live conference in Laguna Beach, California, on Oct. 22, 2019.
Martina Albertazzi | Bloomberg | Getty Images
During the depths of the Covid pandemic, with restaurants around the country facing an existential crisis, DoorDash CEO Tony Xu had an unconventional proposal. He wanted to cut commissions.
Chief Business Officer Keith Yandell worried that such a move would result in a massive hit to profits ahead of the company’s planned IPO. But Xu made a persuasive case.
“If restaurants don’t thrive, we cannot,” Yandell told CNBC in a recent interview, recalling Xu’s perspective at the time. “We need to take a leadership position.”
The company ended up sacrificing over $100 million in fees, Xu later said.
Since starting DoorDash on the campus of Stanford University in 2013, the now 40-year-old CEO has navigated the notoriously cutthroat and low-margin business of food delivery, building a company that Wall Street today values at close to $90 billion. The stock has emerged as a tech darling this year, jumping 23%, while the Nasdaq is still down for the year largely on tariff concerns.
More than four years after its IPO, net profits remain slim. But that’s not getting in the way of Xu’s mission to become an industry consolidator, using a combination of cash and new debt to fuel an acquisition spree at a time when big tech deals remain scarce. Earlier this month, DoorDash scooped up British food delivery startup Deliveroo for about $3.9 billion and restaurant technology company SevenRooms for $1.2 billion.
“What we’ve delivered for a customer yesterday probably isn’t good enough for what we will deliver for them today,” Xu told CNBC’s “Squawk Box” after the deals were announced.
This week DoorDash announced the pricing of $2.5 billion in convertible debt, and said the proceeds could be used in part for acquisitions.
Doordash food delivery service in New York City on Feb. 13, 2025.
Danielle DeVries | CNBC
The San Francisco-based company has a history with scooping up competitors to grow market share. In 2019, it bought food delivery competitor Caviar for $410 million from Square, now known as Block. About two years later, DoorDash said it was paying $8.1 billion for international delivery platform Wolt. The deal was its last big transaction until this month.
When DoorDash entered the food delivery market, it had to face off against the likes of GrubHub and Seamless, which later joined forces. That combined entity was bought late last year by restaurant owner Wonder Group. In 2014, Uber launched Uber Eats, which is now DoorDash’s biggest competitor in the U.S.
“It’s a very competitive market, and I think merchants do have choice,” Xu said in the CNBC interview. “What we’re focused on is always trying to innovate and bring new products to match increasing standards and expectations from customers.”
DoorDash didn’t make Xu available for an interview for this story, but provided a statement about the company’s acquisition strategy.
“We’re very picky, very patient, and conscious that, for most companies, deals don’t work out in hindsight,” the company said. “When we see an opportunity that brings value to customers, expands our potential to empower local economies around the world, and has a path to strong long-term returns on capital, we tend to push our chips in.”
Taking on the suburbs
DoorDash differentiated itself early on by cornering suburban markets that had fewer delivery options, while other players attacked city centers. When Covid shut down restaurant dining in early 2020, DoorDash capitalized on the booming demand for deliveries. Revenue more than tripled that year, and grew 69% in 2021.
Colleagues and early investors credit a customer-first focus for much of Xu’s success. Gokul Rajaram, who joined DoorDash through its Caviar acquisition, described Xu as “the best operational leader in the U.S.” after Amazon founder Jeff Bezos.
Restaurants haven’t universally viewed DoorDash as an ally. Commissions can reach as high as 30%, which is a hefty cut to fork over. Many restaurants have reluctantly paid the high fees because of DoorDash’s dominant market share, which reached an estimated 67%. In 2021, the company introduced three tiers of pricing, with a basic option at 15% for more price-sensitive businesses.
DoorDash needs the high fees in order to stay in the black. The company’s contribution profit as a percentage of total marketplace volume hovers below 5%.
Colleagues who have known Xu for decades say the food delivery entrepreneur hasn’t changed much since the early days of the company.
Yandell said Xu once took advice from his young daughter, who complained about a routing issue while accompanying him on food delivery orders. All employees, including Xu, are required to complete orders and handle support calls every year as part of the company’s WeDash program.
In a part of the country known for the pomp of its wealthy founders, Xu has a very different reputation.
Early workers recall memories of Xu pulling up in a dilapidated green 2001 Honda Accord to team events, or participating in company knockout basketball games referred to as “knockys,” next to the animal hospital in Palo Alto, which DoorDash briefly called its headquarters. Xu also personally approved every offer for the company’s first 4,000 employees.
Xu spends many mornings answering customer service complaints. He often drops his kids off at school and, after tucking them in at night, hops on calls with international regions, colleagues say. Xu is an avid Gold State Warriors basketball fan but has a soft spot for the Chicago Bulls, having spent many years in Illinois. Once or twice a week, Xu squeezes in a morning run, and will often do so while traveling to explore different neighborhoods and stores.
Xu was born in China and moved with his family to Champaign, Illinois, in 1989. Growing up, he played basketball and mowed lawns to save up for a Nintendo. He told Stanford’s View From the Top podcast in 2021 that the experience, and watching his parents hustle, taught him how to “earn your way into better things.”
His “characteristics became the company’s values,” said Alfred Lin, an early DoorDash investor and partner at venture firm Sequoia.
Xu often attributes his entrepreneurial spirit to his parents. His mother worked as a doctor in China, and juggled three jobs in the U.S. for over a decade, saving up enough to eventually open a medical clinic. His father worked as a waiter while pursuing a Ph.D. Xu said on the podcast that watching his mom gave him a deep understanding of what it takes to run a small business, which came in handy in DoorDash’s early years as he was trying to convert restaurants into customers.
‘Ten times harder’
Employees say Xu has a reputation for detecting hidden talents among his colleagues. Jessica Lachs, the company’s chief analytics officer, was working as a general manager assisting with DoorDash’s Los Angeles launch when Xu guided her toward her passion for data.
“He believes in leaning into the things you’re really good at, rather than trying to be mediocre at a lot of things,” she said.
After Toby Espinosa, DoorDash’s ads vice president, lost a deal with a major fast food company during his early years at the startup, Xu told him to work “10 times harder” and become an expert in his field. A few years later, the company secured the partnership, Espinosa said.
Grit and struggle defined the early years of DoorDash. The founding team of four managed deliveries around Stanford and Palo Alto though a Google Voice number directed to their cellphones.
DoorDash emerged out of a Stanford business school course known as Startup Garage, taught by Professor Stefanos Zenios. The class requires students to present a business idea, test it, and then pitch it to investors.
Zenios said Xu stood out with his data-driven approach and natural leadership qualities. The team tested two different ideas, including a platform that helped small businesses better track the effectiveness of their marketing, he recalls. Zenios called the idea to target suburban areas a “brilliant insight.”
Xu and his team entered Y Combinator in the summer of 2013. The three-month startup accelerator program is known for spawning companies like Airbnb, Stripe and Reddit. Every session culminates with a demo day in front of some of Silicon Valley’s biggest investors.
The DoorDash idea excited Paul Buchheit, creator of Gmail and a partner at Y Combinator. But like many other potential investors, Buchheit was skeptical about the economic model.
“You had a talented team of founders working on what I thought was an idea that had potential,” he said. “That’s basically the formula for a good startup.”
On pitch day, the company failed to lure any venture firms, but Buchheit later participated as a seed investor.
Shortly after demo day, DoorDash encountered Saar Gur of Charles River Ventures. Gur had been looking for a food delivery platform to back and was conducting due diligence on another company when a friend led him to DoorDash.
By the end of their first meeting, they were “finishing each other’s sentences,” Gur said.
Sequoia’s Lin initially passed on DoorDash after the Y Combinator pitch, but kept in touch with the team. Lin said he wanted to see data that showed the platform could penetrate beyond Stanford and Palo Alto, and retain customers. He ended up leading two institutional rounds, attaining a 20% stake for Sequoia at the time of the IPO.
“Tony always believed that his company would succeed, or they’ll find a way to succeed,” Lin said.
A food delivery messenger is seen in Manhattan.
Luiz C. Ribeiro | New York Daily News | Tribune News Service | Getty Images
Shortly after its Y Combinator stint, DoorDash hit an early roadblock. Following a Stanford football game, a rush of orders bombarded its delivery system causing massive delays, Xu told Y Combinator’s CEO Garry Tan in an interview this year.
The founders refunded the orders and spent the night baking cookies, then driving them to customers early the next morning.
Oren’s Hummus co-owner Mistie Boulton said DoorDash still takes that approach. The team comes to meet with her every quarter and she serves as a beta tester for new products.
The restaurant, which started in Palo Alto and has since expanded to a half-dozen locations across the Bay Area, was one of DoorDash’s first clients, latching onto the opportunity to reach more customers beyond its small establishment that frequently had lines snaking out the door.
“We just fell in love with the idea,” Boulton said. “The number one thing that encouraged and enticed me to want to work with them was Xu’s passion. He really is one of those people that you can count on.”
Wall Street is now counting on Xu’s ability to execute big deals, even with the company having this month surpassed $10 billion in delivery orders worldwide.
The acquisition of Deliveroo, based in London, marks a renewed effort by DoorDash to expand its presence overseas, following the purchase of Finland’s Wolt three years ago.
The cash deal for SevenRooms, a New York City-based data platform for restaurants and hotels to manage booking information, takes DoorDash into an entirely new category. Xu told CNBC that DoorDash is a “multi-product company now that’s operating on a global scale.”
Following the acquisition announcements, which coincided with a disappointing earnings report in March, analysts at Piper Sandler reiterated their hold recommendation on the stock.
One reason for concern, they said, was that “integrating multiple acquisitions at once may create some noise near-term.”
WATCH: DoorDash CEO Tony Xu: Deliveroo & SevenRooms deals make us a multi-product company on a global scale
The Rebel-Quad is the second-generation product from Rebellions and is made up of four Rebel AI chips. Rebellions, a South Korean firm, is looking to rival companies like Nvidia in AI chips.
Rebellions
South Korean artificial intelligence chip startup Rebellions has raised money from tech giant Samsung and is targeting a funding round of up to $200 million ahead of a public listing, the company’s management told CNBC on Tuesday.
Last year, Rebellions merged with another startup in South Korea called Sapeon, creating a firm that is being positioned as one of the country’s promising rivals to Nvidia.
Rebellions is currently raising money and is targeting funding of between $150 million and $200 million, Sungkyue Shin, chief financial officer of the startup, told CNBC on Tuesday.
Samsung’s investment in Rebellions last week was part of that, Shin said, though he declined to say how much the tech giant poured in.
Since its founding in 2020, Rebellions has raised $220 million, Shin added.
The current funding round is ongoing and Shin said Rebellions is talking to its current investors as well as investors in Korea and globally to participate in the capital raise. Rebellions has some big investors, including South Korean chip giant SK Hynix, telecommunication firms SK Telecom and Korea Telecom, and Saudi Arabian oil giant Aramco.
Rebellions was last valued at $1 billion. Shin said the current round of funding would push the valuation over $1 billion but declined to give specific figure.
Rebellions is aiming for an initial public offering once this funding round has closed.
“Our master plan is going public,” Shin said.
Rebellions designs chips that are focused on AI inferencing rather than training. Inferencing is when a pre-trained AI model interprets live data to come up with a result, much like the answers that are produced by popular chatbots.
With the backing of major South Korean firms and investors, Rebellions is hoping to make a global play where it will look to challenge Nvidia and AMD as well as a slew of other startups in the inferencing space.
Samsung collaboration
Rebellions has been working with Samsung to bring its second-generation chip, Rebel, to market. Samsung owns a chip manufacturing business, also known as foundry. Four Rebel chips are put together to make the Rebel-Quad, the product that Rebellions will eventually sell. A Rebellions spokesperson said the chip will be launched later this year.
The funding will partly go toward Rebellions’ product development. Rebellions is currently testing its chip which will eventually be produced on a larger scale by Samsung.
“Initial results have been very promising,” Sunghyun Park, CEO of Rebellions, told CNBC on Tuesday.
Park said Samsung invested in Rebellions partly because of the the good results that the chip has so far produced.
Samsung is manufacturing Rebellions’ semiconductor using its 4 nanometer process, which is among the leading-edge chipmaking nodes. For comparison, Nvidia’s current Blackwell chips use the 4 nanometer process from Taiwan Semiconductor Manufacturing Co. Rebellions will also use Samsung’s high bandwidth memory, known as HBM3e. This type of memory is stacked and is required to handle large data processing loads.
That could turn out to be a strategic win for Samsung, which is a very distant second to TSMC in terms of market share in the foundry business. Samsung has been looking to boost its chipmaking division. Samsung Electronics recently entered into a $16.5 billion contract for supplying semiconductors to Tesla.
If Rebellions manages to find a large customer base, this could give Samsung a major customer for its foundry business.
Technology
Europe sets its sights on multi-billion-euro gigawatt factories as it plays catch-up on AI
Technology
India overtakes China in smartphone exports to the U.S. as manufacturing jumps 240%, report shows
Workers assemble smartphones at Dixon Technologies’ Padget Electronics Pvt factory in Uttar Pradesh, India, on Jan. 28, 2021.
Bloomberg | Bloomberg | Getty Images
India has overtaken China to become the top exporter of smartphones to the U.S., according to research firm Canalys, reflecting the shift in manufacturing supply chain away from Beijing amid tariff-fueled uncertainty.
Smartphones assembled in India accounted for 44% of U.S. imports of those devices in the second quarter, a significant increase from just 13% in the same period last year. Total volume of smartphones made in India soared 240% from a year earlier, Canalys said.
In contrast, the share of Chinese smartphone exports to the U.S. shrank to 25% in the quarter ended June, from 61% a year earlier, Canalys data released Monday showed. Vietnam’s share of smartphone exports to the U.S. was also higher than that of China at 30%.
The surge in shipments from India was primarily driven by Apple‘s accelerated shift toward the country at a time of heightened trade uncertainty between the U.S. and China, said Sanyam Chaurasia, principal analyst at Canalys. This is the first time India exported more smartphones to the U.S. than China.
Apple has reportedly been speeding up its plans to make most of its iPhones sold in the U.S. at factories in India this year, with the aim of manufacturing around a quarter of all iPhones in the country in the next few years.
Trump has threatened Apple with additional tariffs and urged the company’s CEO Tim Cook to make iPhones domestically, a move experts have said would be nearly impossible as it would push iPhone prices higher.
While many of Apple’s core products, including iPhones and Mac laptops, have received exemptions from Trump’s “reciprocal tariffs,” officials have warned that it could be a temporary reprieve.
Its global peers, Samsung Electronic and Motorola, have also been striving to move assembly for U.S.-bound smartphones to India, though their shift has been significantly slower and is limited in scale compared with Apple, according to Canalys.
Last-mile assembly
Many global manufacturers have been increasingly shifting their final assembly to India, allocating more capacity in the South-Asian nation to serve the U.S. market, said Renauld Anjoran, CEO of Agilian Technology, an electronics manufacturer in China.
The Guangdong-based company is now renovating a facility in India with plans to move part of its production to the country. “The plan for India is moving ahead as fast as we can,” Anjoran said. The company expects to begin trial production runs soon before ramping up to full-scale manufacturing.
While shipments, which represent the number of devices sent to retailers do not reflect final sales, they are a proxy for market demand.
Overall, iPhone shipments declined by 11% year on year to 13.3 million units in the second quarter, reversing the 25% growth in the prior quarter, according to Canalys.
Shares of Apple have tumbled 14% this year, partly on concerns over its high exposure to tariff uncertainty and intensifying competition in smartphones and artificial intelligence sector.
While the company has begun assembling iPhone 16 Pro models in India, it still relies heavily on China’s more mature manufacturing infrastructure to meet U.S. demand for the premium model, Canalys said.
In April, Trump imposed a 26% tariff on imports from India, much lower than the triple-digit tariffs on China at the time, before pausing those duties until an Aug 1. deadline.
— CNBC’s Arjun Kharpal contributed to this story.
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