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DoorDash co-founder Andy Fang joins Yahoo Finance Live's Akiko Fujita from the Collision Conference in Toronto, Canada, to discuss profitability, inflation, rising gas prices, and the outlook for global growth.
AKIKO FUJITA: Well, shares of DoorDash are taking a hit in the session right now, down nearly 3%. The stock has been up more than-- still more than 70% off of its 52-week high, though, caught up in the tech selloff. I caught up with co-founder and CTO Andy Fang at the Collision Conference in Toronto last week to discuss the recent declines in tech, and asked him how the food delivery giant is balancing its growth ambitions with investor expectations for profitability.
ANDY FANG: People ask us, "Should I focus on growth, or should I focus on profitability." And what we always tell people is the best companies figure out how to do both. And actually, if you rewind back to, probably, 2015 to 2017, we actually were struggling a lot to raise money back then. And we actually had to operate that way because there is no additional cash coming in the bank, and we had to figure out how to grow at the same time.
And so I think that's been a really good focusing principle that's really help educate the teams and figure out how to think creatively. Because when you think creatively with those types of constraints, you can really disrupt and innovate really in ways you wouldn't have even thought were possible previously.
AKIKO FUJITA: Inflation, obviously, a very big concern. And I'm thinking about DoorDash and your-- you know, your core business with restaurants. I mean, Dashers with gas prices, as well as restaurants with food prices getting hit on both ends, how have you seen that impact?
ANDY FANG: We've-- we are-- we want to continue to have a dialogue with merchants and Dashers to figure out ways in which-- where we can continue to help them during these types of situations. And so we've had a lot of conversations with the Dasher, advisory councils that we've spun up in different regions and different markets, figuring out ways in which we can help them. We have gas rewards so that they can basically redeem rewards to pay for gas.
And one thing that we've done that's been very unique in our industry is we haven't raised prices for merchants or customers during this inflationary time period. And so we want to continue to find ways to support all three sides of our marketplace. And, you know, we-- I think it's just really important for us to continue to keep a close ear to the Dashers and merchants and continue to stay agile in terms of how we can react.
AKIKO FUJITA: You just closed a very big acquisition, Wolt, which, as I understand, it allows you to expand to, what, more than 20 countries, is that correct?
ANDY FANG: Yes, that's correct. Yes.
AKIKO FUJITA: How does that change the scale with which you see the business? I mean, you've, obviously, been operating in Canada, largely still North America, though, this really takes it to another level.
ANDY FANG: Absolutely. I think we've always had an ambition to be a global company. But with the partnership with Wolt, I think we're going to be able to fast forward those ambitions. We're really excited about making the leadership team. I think we're very closely in-line with the leadership and with the company in general. And we have a lot of faith and trust in their CEO, Micky, to run the DoorDash international joint business.
And so I think it's going to be accretive to what we've been able to accomplish so far. And, obviously, given it's just closed, there's a lot of excitement around what we can accomplish moving forward with them.
AKIKO FUJITA: But as you think about your global ambitions, is it still primarily going to be focused on restaurant and food delivery outside of the US? You've obviously dabbled in convenience business, you've got other growth areas now, the global level. What's going to be the focus?
ANDY FANG: I think this industry is very hyperlocal, so our success in the US doesn't necessarily translate 100% to success outside the US. And so I think we really want to just listen to the customers that are in the various markets and figure out ways in which we can satisfy their convenience needs. And something that's been very consistent has been, can you deliver things outside of restaurant food to me? And, you know, the convenience and grocery verticals have been very successful early innings for us.
You know, for example, in Canada, we just announced a partnership with Loblaw to do grocery delivery, and that's been something that the teams have been very excited about. And so just in these other countries, figuring out ways in which we can partner with grocers, with merchants, to figure out ways in which we can deliver anything in your city to you.
AKIKO FUJITA: That was DoorDash co-founder and CTO Andy Fang. And, Brian, you know, going back to his first answer, I think that's kind of an interesting point that we've heard from some tech companies, where he says, back in 2015, 2017, they were kind of in a position where they didn't have money. So they-- you know, his argument is we've been here before, the difference is, of course, now they are a publicly traded company that has to answer to shareholders.
And as we've seen with their competitors, like in Uber, they have come out and said, "Look, this is not the time necessarily to talk about growth at all costs and that profitability is more important." He's arguing, we can do both at the same time and that their business case, the fact that the business has still been sticky, people are still asking for food delivery and grocery deliveries proves the point that they can do both.
BRIAN CHEUNG: Yeah. And look, I mean, you know, when you take a look at the stock, it's down, what, 50% year-to-date. I mean, that's worse than we've seen in the majors, but not anything unusual compared to a lot of tech companies. So, yes, the stock price itself is perhaps some indicator of how investors feel about the company. But at the end of the day, I think what they're saying is what a lot of other companies are saying as well, which is that, you know, this is an environment where it's not going to be as easy to do fundraising.
It's very much a story about cash flow and growing from your own cash flow, that's something that Tony Chu, the CEO, has talked about as well. So I think that for the underlying business, what we were hearing from Andy in your interview, is essentially that they're just going to continue with the strategy right now. They've been in this type of operating environment where it's tough to fundraise before. But look, they're a larger company now than they were in 2015 and they have more cash flows to go from now than they did about 7 years ago.
AKIKO FUJITA: Yeah. And there's one other headwind that, you know, we did talk about, not initially in that interview, but off camera, which is about what they're facing with regulators. And we saw the city of Seattle, for example, most recently moved forward with this plan to require these companies, including DoorDash, to pay these delivery workers per minute, per mile. And, you know, his argument is that, look, our thinking behind this platform still being a flexible platform hasn't necessarily evolved, but those conversations with government officials are continuing.
You know, that's another thing that we don't talk about as often, but that's still exists because so many different cities have put forward different types of regulation that could affect these, you know, DoorDashers, Ubers of the world in a big way.
BRIAN CHEUNG: Yeah. And DoorDash in its short corporate history as a publicly traded company, I'm sure, has invested a lot into just kind of the legal side of things, there are regulatory affairs division to deal with all those issues, which actually as you mentioned, are going to be different depending on what locality you're looking at. It means you've got to have a lot of bodies on hand on that team to make sure you can handle all of those issues. But great interview. And you can catch this full thing, by the way, on yahoofinance.com.