Tony Xu, CEO has declared through the medium of Twitter that the company DoorDash will be replacing its model for compensating Dashers which includes the DoorDash drivers and other delivery people.
It has revealed the basics of how DoorDash's new system will work.
Instacart has been reprimanded and prosecuted for similar practices, leading to a CEO apology and policy changes.
Xu has supported this program in the past.
When DashDoor declared growing a $400 million round shortly after the dispute broke, the CEO said the scheme was tested for many months and not just in a quarter or not in a month. Then and only then the system was implemented in 2017.
In the old model, the DoorDash drivers and other delivery people were promised the smallest payment per delivery, with DoorDash paying a $1 base. They were also promised to provide an additional payment boost when a customer’s tip wasn’t enough to meet the minimum. It was a system that made it seem that the tips by customers were being used to subsidize DoorDash payments.
The CEO, Tony Xu has also put in a blog post regarding the extra dollar that will go to the Dashers. The old system of DoorDash was developed in direct response to the feedback from the dashers but the new system will result in higher variability in total earnings from order to order. This variability is one of the numerous reasons that can explain why tipping is a flawed compensation model.
The new system makes sure that DoorDash will pay a base between $2 and $10 with additional bonuses from DoorDash. The exact payable amount will depend on the delivery distance and duration.
The DoorDash authorities thought that they were doing it right by making them whole if the customer is leaving no tip. But according to the recent feedback, there were a few of the DoorDash customers who left tips but felt that their tips didn't matter.
The DoorDash authorities wanted that all the users and the dashers have better customer experience and they also wanted to strike a better balance. The Dashers including the drivers and other delivery persons can now earn more money on average from DoorDash and overall. The CEO also declared that they are planning to roll out these changes to all Dashers next month.
The food delivery company DoorDash has raised $400 million in Series F financing. The Wall Street Journal reported that the company was expecting to raise $500 million at a valuation of $6 billion. However, DoorDash confirmed that the funding came at a $7.1 billion valuation.
The funding round was headed by Temasek and Dragoneer Investment Group. It also had participation from previous investors SoftBank Vision Fund, GIC, Sequoia Capital and Y Combinator, DST Global, Coatue Management.
The company has been raising money at an extraordinary rate, with a $535 million round last March accompanied by a $250 million round valuing the company at $4 billion in August.
The CEO said that the round is a reflection of superior performance over the past few years. It can be seen that the company is growing at a tremendous speed of 325 percent growth. The recent data from Second Measure shows that the service has overtaken Uber Eats in the US. DoorDash is now just second to Grubhub.
And when it comes to course and speed the company is on the track to be the number one food delivery business.
The company says its growth is because of three factors:
- Its geographic reach
- Selection of partners
- DoorDash Drive
The company is spread across the United States and Canada in 3300 cities. The company has partners like Walmart who are using its services for grocery deliveries. And the DoorDash drive enables the businesses to use the company's network to carry out their own deliveries. DoorDash is thus growing in a much-disciplined way. They are turning the markets towards profitability.
The fundings will enable the food delivery business to continue its investment in Drive and in its DashPass subscription service and in more hirings. In the subscription service, one pays 9.99 per month for free deliveries on orders of $15 or more from select restaurants. And DoorDash is currently available in 50 states and they are ready to expand to cover additional territory in the U.S. and especially Canada.
Acquisitions and Use of AI in DoorDash app
DoorDash has been on a mission of acquisition in these years. The latest target for the company is Scotty Labs. They have recently taken over Scotty Labs though the terms of the deal were not disclosed. After DoorDash acquired Caviar in a deal of $410 million they have acquired Scotty Labs. The company is a teleoperation company that is working on technology to enable people to remotely control self-driving cars. They have raised a $6 million seed round from Gradient Venture. The startup has worked earlier with Voyage for its self-driving cars in retirement communities.
At Scotty labs, they have believed in Autonomy and remote assistance is the future. They have considered themselves to be the anti-hype company and they have focused strongly on strengthening core foundation and algorithms to assure the safe deployment of autonomous vehicles.
DoorDash has silently made the two co-founders from Lvl5, a different company that had developed tech to construct high-resolution maps for independent driving using crowdsourced representation and computer vision to merge and process the images.
DoorDash is working on the new hires but they are not ready to comment about their new policies. But through the robot pilots and partnership with GM. The startup has made its intentions clear of its interest in traversing autonomous technology, specifically looking at how it can enhance the cost and efficiency of deliveries. They also want to have the in-house expertise to own and manage their projects.
The company has previously experimented with delivery robots. In the year 2017, DoorDash partnered with Starship Technologies and Marble to test food delivery by a robot. Now, DoorDash has partnered with GM Cruise to test the self-driving food delivery cars. They are also up to an in-house team of autonomous and navigation specialists.
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DoorDash says it is revising its policies around driver wages.
The excitement and potential of autonomous tech had led to startups building dozens of attractive products that concentrate on different features of this field.
The technology is becoming a key way for the packed arena of delivery startups. And to differentiate themselves they are investing in its own autonomous tech R&D. These disparate startups are trying to struggle and survive on their own. This is one way for DoorDash and companies who want to have their roots tightened in the food delivery business.
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