Margins

Aside: The piece on DoorDash and Pizza Arbitrage is always a great read [0] Not sure if it's still working out for A.J.'s Pizza, but that it did at any time should tell you everything you need to know about DD's internal structure; there is no there there. [0] https://www.readmargins.com/p/doordash-and-pizza-arbitrage

A good read: https://www.readmargins.com/p/doordash-and-pizza-arbitrage

This is the best write-up of the Softbank business model: https://www.readmargins.com/p/softbank-robinhood-and-a-margins?s=r In short, the background of Softbank founders is in plumbing of the financial system. They intentionally bid up dubious companies into obviously unsustainable valuations, with the aim to make them highly illiquid. Faced with illiquid stocks, many of the assumptions behind trading models break down, and obscurities of the financial plumbing come to fore - the water Softbank knows really well. Eventually, index funds include a portion of the bid-up companies on their balance sheets, FOMO investors roll in - that's when Softbank unloads their bags

This Matt Levine guy who writes these really knows his stuff, he is rather good at cutting through the noise. Another great article of this stuff. https://www.readmargins.com/p/is-web3-faking-it

> Why can't the takeaways just go rogue and offer independent deliveries? Because many of these delivery 'ad-hoc contractors'[0], sometimes even eating cost [1]. Pre-covid, you were often best off as a business either doing something that was 'known' to be delivery offered (i.e. pizza) or your next best option was to aggressively advertise it and have an extra staffer on hand willing to do the deed. Then, you've also got the other form of arbitrage (or perhaps a cost thereof), of smaller independent restaurants/chains being unwilling or unable to handle the costs of properly covering drivers [2] and their pay when not driving [3]. Some restaurants started doing delivery during covid and kept it going. However most around here dropped because the volume wasn't worth it to them, on top of the 'streamlined flow' (don't need to give a route, the app the person picking up the 'pick-up' order is handling, does that for them.) I'm not saying I like it but I get how it got here. [0] - Remember that in the early days some of these companies would do all sorts of weird things like just have someone order on behalf. [1] - There's an article about this involving 'pizza arbitrage' here https://www.readmargins.com/p/doordash-and-pizza-arbitrage [2] - To be clear, both the startups as well as locals have a checkered history when it comes to proper coverage... [3] - One can argue that such a person can be made 'useful' during the waiting time, however it becomes a complicated…

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Note: the Verge article links to this blog post, describing the situation in more detail: https://www.readmargins.com/p/doordash-and-pizza-arbitrage

Thank you, this was a fun rabbit hole to dive down. That blog also has a well-argued article about Zero Interest Rate Policy which relates to the doordash story: https://www.readmargins.com/p/zirp-explains-the-world

This exact arbitrage, performed by Doordash, was exploited. https://www.readmargins.com/p/doordash-and-pizza-arbitrage

So, someone actually did it? https://www.readmargins.com/p/doordash-and-pizza-arbitrage

Doordash and the Pizza arbitrage is a mandatory read on the economics of the delivery apps. https://www.readmargins.com/p/doordash-and-pizza-arbitrage

A good meditation on that: https://www.readmargins.com/p/-the-zombie-apocalypse-scale > I call this scale the Zombie Apocalypse Scale. It is a measure of how many days a company could run for it all its employees were turned to zombies overnight. The more days you can operate without any humans the more of a tech company you are.

A good article about a somewhat similar scheme by Taboola https://www.readmargins.com/p/taboola-outbrain-and-the-chum-supply

The original post that BBC links to has more interesting details. https://www.readmargins.com/p/doordash-and-pizza-arbitrage Is this actually legal or is it a gray area that nobody has challenged at all? All I'm seeing is the restaurants themselves suffering the most, or left holding the bag - and it even seems Yelp is knowingly aiding the deceivers.

There's an interesting article somewhere about a pizza place that iirc arbitraged VC subsidies by ordering pizza from itself through some delivery app that was buying the revenue by selling the pizza below the actual price. Edit: https://www.readmargins.com/p/doordash-and-pizza-arbitrage

>doordash of all places Doordash is into extremely sketchy territory. Here is a good link if you want to know more.also read the top rated comment from former grubhub executive. https://www.readmargins.com/p/doordash-and-pizza-arbitrage

https://www.readmargins.com/p/doordash-and-pizza-arbitrage Smells like it could have become a case of it.

https://www.readmargins.com/p/zirp-explains-the-world Is probably one of the better explainers.

DoorDash also sets prices independently of the restaurant menu. In some cases this means DD prices are higher than the store, in others DD prices it lower than the restaurant, and takes a loss in hopes of gaining market share. This results in fun opportunities like Pizza Arbitrage https://www.readmargins.com/p/doordash-and-pizza-arbitrage

Not necessarily, considering how DoorDash adds restaurants to their site without their knowledge and foists the customer service burden onto them. e: Yes, the original article makes it clear that he didn't sign up for this: https://www.readmargins.com/p/doordash-and-pizza-arbitrage

> The restaurant voluntarily entered a relationship with that food delivery company though?? In many cases, no. https://www.eater.com/21537215/restaurants-sue-third-party-delivery-se… > Grubhub has explicitly made this false partnership part of their business strategy. Last October, CEO Matt Maloney said the company would be piloting a new initiative of adding more restaurants to its searchable database without entering into an official partnership with them, so customers would believe they had more delivery options with Grubhub, and wouldn’t switch to competitors. Re: your edit... > To be charged a 30% fee... If you don't have a deal with them, they can raise prices to get their cut. Shitty customer experience; they'll likely blame the restaurant for gouging them. Same if they list items not available from an old menu; restaurant gets blamed. There are some funny arbitrage opportunities with the non-consensual listings: https://www.readmargins.com/p/doordash-and-pizza-arbitrage