DoorDash CEO turns to Deliveroo to boost global growth

DoorDash chief executive Tony Xu first met Will Shu, founder of UK-based rival Deliveroo, in a coffee shop in San Francisco more than a decade ago, soon after they had both launched food delivery start-ups.

“At the time we were just two young founders with the same sort of idea,” says Xu.

Their ideas brought different amounts of success. DoorDash grew to become the US industry leader, with a market capitalisation of more than $110bn and a share price now at a record high, while Deliveroo faltered, unable to hold on to a sharp rise in demand during the Covid pandemic.

But the men, who share a background as children of Asian immigrants to the US, maintained a good relationship. That culminated this week in DoorDash completing a £2.9bn acquisition of its British rival, paying less than half the £7.6bn Deliveroo listed at in March 2021.

Xu says he sought out the deal to bolster DoorDash’s plans to expand abroad and take his company into the UK and several other new markets across Europe and the Middle East. “You don’t have to grow a global business . . . you really have to choose to want to do it. And now? We’re all in,” he says.

He tells the Financial Times the initial agreement with Deliveroo, announced in May this year, was reached in a “short number of weeks”, fleshed out during trips to Shu’s favourite London pubs and the Michelin-starred Dorian restaurant in Notting Hill. “It just made a lot of sense and so both sides were incentivised to move quickly.”

With US sales growth decelerating and competition in the food market mounting — Prosus, the European investment arm of South African group Naspers, acquired Europe’s biggest food delivery group, Just Eat Takeaway, in a €4.1bn deal in February — the 41-year-old Xu has been on a multibillion dollar buying spree in recent months to enter new markets. DoorDash has acquired restaurant booking platform, SevenRooms, and advertising company, Symbiosys.

Xu must now piece together the different parts of his business into a coherent global competitor and answer investors’ questions on where growth will come from. “The big thing for those guys is what comes next,” says one rival executive.

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Born Xu Xun in Nanjing, China in 1984, the DoorDash co-founder’s family migrated to Chicago, Illinois when he was four. The move followed his father receiving a place on the University of Illinois’s engineering programme. His mother gave up a career as a doctor to work three jobs, including at a restaurant.

“I was really raised by my grandmother for the first 12 years of my life. And so I had a lot of free time to make my own decisions,” Xu says. “I don’t think my parents checked my report card, ever. I’m told that’s pretty rare.”

Xu’s family moved to San Jose, California, when he was a teenager. He worked at McKinsey and eBay after graduating and met DoorDash co-founders, Andy Fang, Stanley Tang and Evan Moore, while studying for an MBA at Stanford. They established restaurant delivery service, Palo Alto Delivery, which they rebranded DoorDash after it gained a place on Y Combinator’s incubator programme.

In classic Silicon Valley fashion, they initially built the business out of a house across the road from Stanford’s campus. Xu, his co-founders and early employees sometimes napped in sleeping bags on the floor while working a demanding schedule fulfilling orders.

DoorDash received backing from Khosla Ventures and Sequoia Capital before SoftBank’s Vision Fund led a $535mn investment round in March 2018, which valued the company above $1bn. It overtook Uber Eats and then its largest rival, Grubhub, to become the biggest food delivery app by sales, although only turned its first operating profit in 2024.

One former Uber executive says: “I think we would tell ourselves that we never really thought about the other platforms . . . But I always worried about DoorDash. They were operationally excellent.”

Andrew Munday, DoorDash’s first permanent employee and former director of operations, says Xu was determined to be across “every detail”. He recalls the DoorDash chief would often wake early to read metrics before firing off texts to various staff members. “It pushed you to know the details.”

One way Xu gathered data on how the business functioned was through personally making deliveries and handling customer support — a similar idea to Uber chief Dara Khosrowshahi driving around passengers.

“Operating at the lowest level of detail is a requirement in this business and that just happens to be how I’m wired,” Xu says. “It also happens to be what it takes to actually build scalable technology for the physical world”, where random occurrences happened “every single hour of the day.”

Xu also credits his family history for making him aware of the demands on small business owners, something that spurred his decision to halve commissions for independent restaurants during the pandemic. “That was a decision made in a few minutes,” he says. “It’s not like somebody at DoorDash losing their job . . . This is someone who loses their identity and will perhaps never recover.”

One controversy during his leadership was when DoorDash was forced to backtrack after it used tips paid to “Dashers” — what it calls its gig workers — to make up promised earnings to drivers, rather than pay them out as a bonus. Xu acknowledged the policy was a mis-step.

Deliveroo has also faced scrutiny over its treatment of gig workers, after undocumented migrants were found to be borrowing or renting accounts from riders to work illegally. The company joined Just Eat Takeaway and Uber Eats in partnering with the government this summer to curb the practice but the issue remains rife.

Xu is aware of the challenge of making the deal work. “The track record for M&A is littered mostly with failure and so my ongoing thought on M&A is, why is it going to be any different for us,” he says. “The bar remains extremely high.”

“You can’t just do it because it looks good on a sheet of paper or an Excel model . . . For me it’s: can we execute against it?”

He has been encouraged by the integration of Finland’s Wolt, a company DoorDash acquired for €7bn in 2021, which expanded the business into nearly two dozen new markets. Revenue from its international operations grew at more than 50 per cent in 2024, significantly faster than the roughly 20 per cent in the US. Revenue growth picked up in the latest quarter to June, with the company citing a rebound in US orders.

Xu and Shu are now going their separate ways, with the Deliveroo chief executive stepping down after 13 years running the business. In his place will be Miki Kuusi, DoorDash’s head of international and the co-founder of Wolt.

“We believe in a culture of directly responsible individuals,” says Xu. “If you are the lead, you will make the final calls. That requires trust. It also means enabling and allowing mistakes, tolerating them and moving forward.”

Kuusi says Xu is focused on retaining a “start-up level of intensity” as DoorDash chases global market share. “For our international journey it’s still very early.”

Investors and others within the industry have questioned the extent to which the Deliveroo deal will boost DoorDash. One former industry executive says they are sceptical about the benefits from Wolt and whether Deliveroo would be any different. “It really was just the only option that was left,” they said about the latest acquisition.

Xu told investors during an earnings call in May that the Wolt acquisition had taught the business there was potential to “generate great investment returns”. He noted the potential to introduce new products including premium subscription services.

For him, scepticism about what DoorDash can get out of Deliveroo mirrors Wall Street’s early doubts around its ability to make a profit as it chased growth. “If you’re going to just do what investors want you to do . . . you can do that, anyone is entitled to do that,” says Xu. “That’s just not how DoorDash runs.”