Introduction to Success
Garry Tan, President and CEO of Y Combinator, interviewed Tony Xu, co-founder of DoorDash, in a conversation that revealed useful insights on how to research a niche before building a business around it. The discussion highlighted the importance of understanding pain points and why following competitors is not always the best path for long-term success. Building a strong brand is crucial for competing in today’s AI-saturated environment.
The Humble Beginnings of DoorDash
DoorDash began with a non-scalable $10 domain and PDF menus on a static HTML web page, taking orders over Google Voice. The founders were able to scale that to the nationwide success it is today by focusing on three actionable principles, which allowed them to grow past their initial shortcomings and build on their strengths. These lessons are especially important in today’s digital marketing environment, where the importance of building relationships with customers has accelerated due to the advent of AI-powered search and AI assistants.
About Y Combinator
Y Combinator is a Venture Capital and startup incubator responsible for dozens of the biggest digital brands, including Airbnb, DoorDash, Quora, Stripe, Webflow, and Zapier. The Y Combinator video podcast interviews bring real insights directly related to digital marketing, entrepreneurship, and the daily work involved in keeping businesses running today. Their podcast’s tagline suggests finding a place within the digital technology economy, and the DoorDash experience shows how to do it.
Three Key Takeaways
Tony Xu relates the beginnings of DoorDash and how it grew to become a successful company. It wasn’t a matter of getting a lot of money thrown at him and then finding success. He and his team struggled to figure out how to make the business successful. Perhaps a key to their success was that they founded the company on three ideas, creating a strong foundation upon which to build success.
- Choose Business Niche By What Feels Meaningful
- Customer Obsession As A Strategic Philosophy
- Don’t Follow The Competition: Follow The Opportunity
Choosing Your Best Niche
Tony Xu explained that the DoorDash team started by exploring different projects that felt interesting to them and ultimately settling on the one that felt the most meaningful and exciting. The idea for DoorDash came about by observing a local macaroon shop that had to decline delivery orders because they lacked the infrastructure. What’s interesting about DoorDash is that they’re in between two customer bases, the merchants and the end users. They opted to not conduct surveys but rather the founders immersed themselves in the merchants’ daily routines to identify the pain points for growth and expansion and to identify where DoorDash could help.
Customer Obsession As A Strategic Philosophy
Tony Xu shared that their early customer base was mainly young families, and that ended up shaping their service through direct feedback. Another example of allowing the business to be shaped by the customer is an event that went badly and resulted in many upset customers. DoorDash settled on the customer-first approach by choosing to refund all the customers after a service meltdown during a Stanford football game, at the cost of 40% of the founder’s bank balances. Further, they stayed up overnight to bake and hand-deliver apology cookies the next morning at 5 AM before their customers awakened.
Don’t Follow The Competition: Follow The Opportunity
Conventional wisdom assumes that established players have done the research and that there are good reasons for why competitors do what they do. What Tony Xu revealed is that isn’t necessarily true. He doesn’t explain the reasons why competitors missed a golden opportunity, but it’s easy to surmise that competitors build based on conventional assumptions and are unaware that demographics and user habits change, which results in opportunities. Tony shared that their competitors focused on dense urban markets because the conventional wisdom was that this was where more people made it more profitable to serve the densely populated areas. DoorDash went a different direction by focusing on suburbs because they discovered a customer need in that suburban customers had fewer nearby restaurants, and it was that fact that made a delivery service more valuable.
Conclusion
Many smaller independent sites today fail to differentiate themselves to site visitors. They follow what their competitors do, and because of that, virtually all recipe sites, all mom sites, all travel sites look exactly the same. Becoming the same as your competitor is not the way to beat your competitors. That’s why the skyscraper and 10x content strategies are so lousy because they presume that being the same as the competitor “but better” is what your users want. Circling back to Tony Xu, he found success by being customer-obsessed, so the question is what does that mean for you and your site visitors? Becoming customer-focused isn’t a new age feel-good thing to do, it’s a practical and proven approach to creating a successful business. It informs every choice you make, from the design of the site, the service, and the content, and it becomes a strength that no competitor can copy and steal from you. Lastly, it’s satisfying and easier to focus on a topic that is meaningful. If there’s a way to build an ecosystem that might be even better, as it can become a moat around the business.