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DoorDash announced that it is eliminating some 1,250 corporate jobs, or about six percent of its workforce, as it acknowledged that its expenses continue to outgrow its revenue, especially in a post-pandemic e-commerce climate.

The Associated Press notes that "DoorDash said early this month that revenue rose 33% to $1.7 billion in the third quarter, but costs also ballooned and it almost tripled its losses from $101 million during the same period last year, to $296 million in 2022."

Here are some excerpts from an internal email to employees from CEO Tony Xu:

"This is the most difficult change to DoorDash that I’ve had to announce in our almost 10-year history. Today, we are reducing our corporate headcount by approximately 1250 people and saying goodbye to many talented teammates. If you are among those impacted, I am truly sorry and I apologize to have some of you wake up to this news as opposed to reading it during more normal hours.

"I know that for many of you, today’s news will come as a shock, especially because our business remains strong and continues to grow. That is why I think it is important that I explain how I arrived at this decision, what we are doing for those departing DoorDash, and why I’m optimistic about our future.

"As with all things, I want to start and discuss the factors in our control that led to today’s announcement and take accountability for this decision. Prior to COVID-19, DoorDash was actually undersized as a company. The pandemic presented sudden and unprecedented opportunities to serve the evolving needs of merchants, consumers and Dashers. We sped up our hiring to catch up with our growth and started many new businesses in response to feedback from our audiences.

"Most of our investments are paying off, and while we’ve always been disciplined in how we have managed our business and operational metrics, we were not as rigorous as we should have been in managing our team growth. That’s on me. As a result, operating expenses grew quickly.

"Now, let’s acknowledge the macro situation. Our business has been more resilient than other ecommerce companies, but we too are not immune to the external challenges and growth has tapered vs our pandemic growth rates. While our business continues to grow fast, given how quickly we hired, our operating expenses – if left unabated – would continue to outgrow our revenue.

"I did not take this decision lightly. We have and will continue to reduce our non-headcount operating expenses, but that alone wouldn’t close the gap. This hard reality ultimately led me to make this painful decision to reduce our team size."

Xu goes on:

"DoorDash has always been a resilient company. For the first half of our history, we were constantly cash-starved and under-resourced compared to our peers. Today, we are a market leader that is still in its early innings of becoming the defining local commerce company globally. We’ve grown from one business (our US Restaurants Marketplace) in one country, into five businesses serving 27 countries, across merchants in every category of local retail on both our Marketplace and Platform. Our business – just like the local economies we serve – has been resilient and our execution has been dynamic in the face of a global pandemic, persisting inflation, an energy crisis, recessionary demand, and a war. The runway ahead is massive and we’ve built tremendous momentum. If we can achieve our mission to grow and empower local economies around the world, not only will we prosper as a business but I also believe much good will be achieved as we create a world where millions of merchants can thrive, bringing out the best of our neighborhoods’ ethos and personalities. 

"Just as our mission hasn’t changed, neither has our strategy. Our business fundamentals remain strong. But as I’ve said before, what got us here won’t necessarily bring us to the next stage and we have to tailor some of our tactics. Looking ahead, we’re confident that we have reset the size and shape of our organization to match our strategic priorities. We must keep this level of discipline moving forward and act with the hunger, efficiency and creativity of the younger startup we once were while leading with the responsibility of the market leader we’ve become. One outcome from this approach is that we’ll continue to hire and add back recruiting capacity in a more targeted and rigorous way … We must remember that it’s always the people who build the business; everything is derived from them and how we treat one another. Your talents, energy, and relentless pursuit of excellence are what keep me going."

KC's View:

Same deal as with everyone else in this space.  Irresistible force meets an immovable object.