DoorDash’s Toby Espinosa on helping local economies grow

Toby Espinosa, the VP of DoorDash ads, reflects on the tremendous growth of the delivery platform, saying the key to this is local businesses.   Episode Transcript Please note, this transcript  may contain minor inconsistencies compared to the episode audio.   Damian: [00:00:00] I'm Damian Fowler. Ilyse: And I'm Ilyse Liffreing Damian: And welcome to this edition of The Current Podcast. Ilyse: This week, we're delighted to talk with Toby Espinoza, the VP of DoorDash Ads. Damian: And Toby is responsible for connecting brands, local and national, to the more than 37 million customers who place orders on DoorDash marketplaces each month. Ilyse: At this point, DoorDash is a household name, no pun intended. It has more than 7 million couriers delivering orders for DoorDash from around 550, 000 merchants. Damian: 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. Ilyse: 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 [00:01:00] anything delivered to my dorm Toby: And where were you? Ilyse: In San Francisco. Toby: Francisco? No way. Oh, awesome. Ilyse: was like, yeah, it was like I was in the right place at the right time for sure. Yes. And, so how would you say has the company evolved from a food delivery platform to the platform it is today? Toby: When I joined the company, we were in 4, 5 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 [00:03:00] if you took this device, this mobile device, where now a dasher had a mobile phone, a consumer had a mobile phone, and actually 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. Ilyse: How would you say that growth has like translated on the ads marketplace side of things?  Toby: Yeah. The hard part about building something at the scale that DoorDash [00:05:00] 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. Once we have that, and once we have that, we want to continue to compound that over and over and over again About four, four years ago, five years ago, our merchants and so stores within our 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. It was a it's very fundamental. It's a core to who we are. It's a growth business. We have customers who want to grow [00:06:00] 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? So the best way to do that is to align incentives, uh, 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.  Damian: And cut to date to this rise of, 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? Toby: 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 places that, these brands [00:08:00] that we are absolutely in love with. What we quickly realize is that person, that customer, 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 accounting. We have to be great at customer service. We have to be great at creating a great product, which is food, right? 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 [00:09:00] 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 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, at one of my favorite, favorite places. And there was a restaurant right next door that had just opened a month in. A month in, and nobody in his restaurant. Completely empty. Maybe three or four people in a, in, 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 month day one of the month. It's one of the hardest things in this country. These small businesses that start [00:10:00] 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, really hard. for you to basically grow your business without having to also 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.  Damian: Could you talk about, a little bit more about how you [00:11:00] kind of expanded those relationships with both the national brands, tying that into the local, the business works at a local level fundamentally. Toby: 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, you're a small business owner. Really, the, the Starbucks, the Chipotles of the world that are corporately owned restaurants at scale are actually the smallest. They're the 10%, not the 90 percent 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. Um, that being said, we also just launched, uh, last week the our new product, which is our ad manager and our [00:12:00] ad manager for the enterprise restaurant segment is designed actually to help both the C. M. O. Of McDonald's and the owner operator franchisee within the system. And the way that we've done that is we've actually built the first of its kind way of buying or thinking about purchasing across A national media buyer, an agency at the national level, a district media buyer, most of these franchisees actually also have districts, or DMAs, where they have their own pools of funds that can be allocated for growth, and then also at the local level. Incremental to that, not only is if you're a franchisee and you own a couple McDonald's and a couple, uh, you know, 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 kind of work between local and national brand. We also, of course, support local. started to invest in larger CPGs. And there, you know, we really look at some of the other large retail media networks in the [00:13:00] space. You know, today I was reading the the amazing work that you all did with a woman who leads Kroger's retail media business and built it from scratch. We find a lot of inspiration from those folks learning, understanding how we can add an incremental service to folks that are already spending a lot of money at other retail media networks. And, um, and I think we found Uh, some very cool opportunities for us there,  Ilyse: Very cool. You were saying how it's about 90 percent SMBs and 10 percent um, big business. Um, how does that play out within the DoorDash platform? Toby: yeah. yeah. So so it's really and when I meant that it's kind of think about where the dollars are coming from. So You might think of DoorDash Volume as large businesses. You know, a lot of people are ordering McDonald's. But the reality is the, the spender, the buyer of media could be a local franchisee. So the brand is national, but the spend is still local. That's kind of what I was saying there. On [00:14:00] the, as you know, also on the CPG side, uh, large brands like Pepsi and Coca Cola and P& G, those are large, national, entrenched franchises. Brands. Those are timeless, timeless brands that have been around for a very long time. And so the question there is, how do we build products that are timely to help the timeless? And that's been a very interesting journey for us over the last two and a half years. It's a, it's a new space for us again, as I said. Um, but it's going swimmingly well. And, and today we have the opportunity to sit on stage with, with Pernod Ricard, which is, of course, one of the storied alcohol manufacturers. Ilyse: Um, can you talk a little bit about the Partnerships and how you actually go about working with like those brands and retailers that are using your platform so much  Toby: We, like I said, were founded as a growth helper. So built in our DNA is working with others to help them grow. We obviously have a [00:15:00] very large consumer marketplace that is that has helped those businesses grow. And so some of us think of in the same You know, uh, letters of other large consumer marketplaces like an Amazon, uh, like a Walmart e com. But we are fundamentally built in our DNA a partner oriented culture. What that means is first we get to partner with great local brands, mid market brands, national brands, add in the manufacturers, but that also means we get to do fun things like Add in Max, or add in Chase, or add in other folks where 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.  Ilyse: would you say that is captured users I guess and they're Toby: It's a, no, 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. And, and, you know, we'll be the first to say there are some partnerships [00:16:00] where it doesn't necessarily help that much. And then there's other partnerships where it has been critical. Think about our Chase partnership and, and the depth in which we've built that partnership over time, where everybody that has a, you know, a Chase credit card has the opportunity to participate in one of the largest subscription, local subscription programs, uh, in the world. And so, some work quite well, others are challenging, and we're a first principled company that, that tries to get better every single day. Damian: Just to 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 building those different partnerships. Toby: Yeah it's a collaboration Internally within DoorDash, we have, uh, general managers that run different business units, just as myself. We have functional leaders like our incredible, uh, CMO Kofi, who has built one of the world's largest brands in a span of years, not decades, which is incredibly, incredibly amazing, and he is a celebrity. If you ever want to feel like a [00:17:00] celebrity, just walk with Kofi in Cannes for about 15 to 20 minutes and it'll be the coolest thing you'll ever experience. Um, next year, exactly, exactly. Um, but It's a collaboration across different functions, and then it's a collaboration with a partner. You know, one of the most interesting partnerships that we've launched in the last two years, from my vantage point, is we are a close partner with Amazon in Canada. Now, a lot of folks, when you think of DoorDash and Amazon would say, competitors, that, that doesn't work. Right. But we work really, really hard to try to figure out anywhere, if possible, with the largest businesses and brands that we look up to, is there a place that we can collaborate and again, help local businesses grow. That's the fundamental premise behind the whole thing  Ilyse: very cool now what about when it comes to like an ad perspective. How are you working with these brands and partnering with them? Toby: Yeah, we are, I think in the ad ecosystem, you know, it's, it's, it's, there's a simple recipe that we're trying to follow. One is access. So can I [00:18:00] provide access for people to purchase? We, very early on, our first investment was in a self serve ad manager, so that local businesses could purchase our products, both promotions and our ad products, live themselves, without needing to talk to somebody. So that was first. So one is access. That's the news also from last week, where now we provide access to the largest restaurant brands, DMAs, and franchisees across the country. first of a kind product. Again, I know I keep saying that, but I'm very, very proud of it because not many people, not many technologists build for franchisees in this country. And they are one of the largest, um, one of the largest, most hardworking groups of individuals that that again, we look up to. Um, so one is access Two is providing the tools to get the best return possible. So that is, can I do better targeting? Can I? Are there new access points that I can, that I can get to? Along those lines, we've invested a lot in in better targeting again for those enterprise restaurants. [00:19:00] So today you can target new users, you can target lapsed users, you can do that if you're a brand, 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, is impressions. So, You know, 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 people, uh, for brands to reach those people using our data? And that was one of the announcements we made last week was as well. Ilyse: so 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. Ilyse: I know we saw [00:20:00] 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 Toby: maybe what's Yeah We have learned over time that these 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, 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 where you sell out your entire inventory at the staff up, you have to build for it. 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 both, both signs, [00:21:00] an incredible opportunity to reach consumers from an advertising perspective. Again, going back to partnerships, they're tricky. You have an advertiser who's excited to also 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, to again, drive local growth for our customers. Damian: I think one of the best gifts I ever got, was when my son was born somebody bought us a DoorDash gift card which was so helpful to have food delivered you know when you’re at home with this tiny little baby. Ilyse: Showing up at those occasions, but also, you know, just ongoing brand campaigns. How does that proximity, why is it important for brand building? How does this, like, enable you to extend into new categories? Toby: Yeah, have you? Um, Our Super Bowl commercial is a great example of this. This past year, uh, the words were a door to more DoorDash went from again being a single vertical single product company to a multi vertical multi product company in a very, very, very fast time frame. Now, consumers are incredible. They learn very quickly. Habits are harder to change and harder to adapt and move over [00:23:00] time. And so we are in the earliest innings of our consumers really understanding that now 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 in that moment, being able to kind of jump on these large consumer moments help from our vantage point. 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, now we're also the ability to get something, uh, to get something when you're feeling sick. And, um, and we're very, very proud to do that and very humbled to do that for our customers.  Damian: Yeah. that's uh, expanding the whole concept of, of of DoorDash. Um, speaking of expanding the concept, you know, you've also cultivated good partnerships with streaming partners, and you [00:24:00] mentioned Max a little bit earlier. Why is it that streaming and delivery seem to kind of work in synchrony?  Toby: it's again, I think it goes back to the moment. There's a very happy moment in my household when we finish work. And we have some, we get a little, a door, 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 Max 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 country and 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 company to help people, to help local economies grow, to help [00:25:00] save consumers time, to help Dashers make a little bit of extra money. That is what we are trying to do at Dash. And so, aligning ourselves in this moment of peace. This moment of just absolute happiness with a streaming service, which all of us experience, is a very nice moment to be right next to, uh, to be right next to these brands from a consumer perspective. And so they've been, they've been very, they've been great partnerships so far. We're very excited, uh, about, about thinking about finding more of those opportunities as time goes  Damian: about door dashes as a way to get time back, you know, but of course it does does Ilyse: There's too many things to worry about outside of that.  Damian: we're going to ask the inevitable question about AI and how, you know, obviously door dash must be integrated with AI technology. But how do you think about it as we look ahead? Toby: We, as a company were very [00:26:00] data driven company. We have been from our founding. Again, 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 to say that we want to be and continue to be students about how this next revolution will change, both from. from our merchants, consumers and dashers lives. We are in the very earliest innings and we're trying to learn as fast as possible. Um, I think what's very exciting if you kind of take a step back and you again put on the mindset of the shoes of we are trying to be an assistant for all of our customers across a bunch of different ways. Dasher Make, uh, from a financial services perspective, helping them make more money, helping them find more opportunities to make money, consumers saving time, and merchants making more. If you kind of put yourselves in all those shoes, and we're trying to be an assistant, 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 [00:27:00] see one of the largest increases in, in growth that we desperately, desperately need for those. Places that are our favorite coffee shop, Thai food place, uh, and, and, um, you know, and place to go pick up your, your, your meds when you're a little sick. And so it's, it's a pretty cool future. We're very excited for it. Damian: in his 50 seat Toby: I, we are absolutely, we, to be, to be clear, we DoorDash. He's now using our ad product. So if we can send them any incremental customers, it'll help them. It'll help them grow his business.  Damian: There's one more question, I guess. And it's a sort of like a forward looking question. And it's are there any innovations that you're thinking about into 2025 that can help with this growth mindset that you've been talking about?  Toby: we, We've done an okay job. We've done a great job of the access point, which is opening up an ad manager, [00:28:00] opening up a self serve sponsored listing, allowing CPG brands to access our consumers. We've done it. 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 so far to our customers' lives for most of our customers, our advertisers, and so our team is extremely excited, looking forward to continue to take more of the complexity out of our customer's 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.