DoorDash won’t be getting into the marijuana delivery business anytime soon, but nonetheless the Silicon Valley startup has high aspirations for its next chapter.
Earlier this year, the five-year-old food delivery company got a $535 million investment from SoftBank, Sequoia Capital and Singaporean sovereign wealth fund GIC, giving DoorDash a $1.4 billion valuation—as well as ammunition to serve even more cities and markets to stave off ever tougher competition.
The shot in the arm will help the company speed up what has been a deliberate approach to building up its market share, said DoorDash CEO Tony Xu at Fortune’s Brainstorm Tech conference in Aspen, Colo. on Wednesday.
Today only 5% of U.S. restaurant sales are online, leaving DoorDash with an enormous untapped market to try to service. The company currently services some 1,200 cities in Canada and the United States, and will add as many as 600 cities in 2018, Xu said. “We have long ways ahead in terms of serving the millions of restaurants out there,” he added.
The Softbank-led investment is necessary gunpowder for staving off fierce competitors that are also making their moves on the enormous market opportunity. DoorDash’s rivals include GrubHub (which bought Yelp’s Eat24), Postmates, UberEATS, Square-owned Caviar and of course, Amazon. (When pressed on whether DoorDash might use some of the $535 million to acquire or merge with the likes of Postmates, Xu demurred and said DoorDash would focus on hitting its goal of remaining independent and a market leader.)
DoorDash’s model works as such: Its drivers, called “dashers,” are independent contractors who deliver orders for the company, which charges restaurants a delivery fee of between zero and $5, and takes an undisclosed percentage of the order. These establishments can plug their menu items into DoorDash’s app. Diners can order directly from the restaurant, which can have DoorDash fulfill their order. Expanding that direct-from-restaurant service will be part of what DoorDash uses its new cash for. DoorDash is used by 90% of the largest U.S. restaurant chains, such as Cheesecake Factory, Xu noted.
But DoorDash wants to also increase its presence beyond restaurant orders. In April, Walmart said it was testing online grocery delivery in Atlanta with DoorDash, with plans to expand to other markets if it works out. Walmart uses a number of rival services for grocery delivery.
When one Brainstorm Tech attendee asked whether DoorDash’s service could extend to delivery of marijuana, now legal in more and more states, Xu said no, citing the complexities of payment for products like pot and alcohol. In any case, Xu said, there is still a lot to do in DoorDash’s sweet spot.
“We’re just getting started,” Xu said. “Food is a fantastic category.”