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"Just because you confidentially file ... it doesn't mean that you're going to go public tomorrow, and it also doesn't mean that you have to go public," Xu said in a meeting at DoorDash's nearly-empty San Francisco headquarters this week.
- In his first published interview since DoorDash said it had filed confidentially to go public, CEO Tony Xu talked with Business Insider about the prospects of an IPO as the markets respond to the coronavirus pandemic.
- Xu said DoorDash is eyeing an IPO as a way to deliver liquidity and make investments that it can't as a private company.
- He also said he's not worried about competition, despite media reports about possible industry consolidation.
- For more BI Prime stories, click here.
Two weeks after food-delivery startup DoorDash said it had filed confidentially to go public, the world looks very different.
The coronavirus has been declared a pandemic and stock markets have swung wildly, pushing into bear territory. Companies are pausing deals and IPOs as they wait out volatility and better understand how the pandemic will impact their bottom lines.
Against that backdrop, DoorDash CEO Tony Xu talked with Business Insider in his first published interview since the company filed to go public - in what would be one of the most-anticipated IPOs of the year.
"Just because you confidentially file ... it doesn't mean that you're going to go public tomorrow, and it also doesn't mean that you have to go public," Xu said in a meeting at DoorDash's nearly-empty San Francisco headquarters this week.
"A lot of this work was done a long time ago ... Obviously it's impossible to predict certain types of situations, whether it's a virus outbreak or a change in markets or whatever it might be. This was true in all of DoorDash's life."
Business Insider has talked to top tech bankers in recent weeks, who noted that for IPOs, two options are emerging - make a go at it before things potentially worsen, or hold off entirely.
The IPO market was rocky even before the outbreak
DoorDash was valued at $13 billion in a November 2019 funding round and has raised over $2 billion to date since its 2013 founding, per Pitchbook data. The company was on track to lose $450 million last year, The Information reported in December. And its losses were likely wider than that, because that figure excluded things like depreciation and amortization of capital expenditures.
Xu said he could not speak specifically about profitability, either for DoorDash or the industry as a whole because DoorDash was subject to pre-IPO quiet period restrictions.
The IPO market was already looking uncertain for DoorDash and other richly valued, money-losing startups even before the coronavirus outbreak. Many of the large venture-backed companies that have gone public in the last year have had rocky IPOs - if they were even able to go out at all - and seen their shares fare poorly once they were public, as investors have increasingly focused on companies' bottom lines over sheer revenue growth.
WeWork failed to go public. Casper, which went public in January, is now trading at less than half its IPO price, and its valuation is now less than a fifth of what it was about a year ago when it had it its private last funding round. Uber and Lyft, likewise, have consistently traded below their IPO prices since they debuted last year.
Other companies have seen that morass and put their own plans to go public on hold.
DoorDash rival Postmates, for example, announced that it had filed confidentially to go public in February 2019, but decided to wait after eyeing Uber and Lyft's market debuts, said a source familiar with the company's thinking.
Months later, choppy markets followed by WeWork's tumultuous IPO attempt made the company delay again. Postmates then raised $225 million in September. After the winter holidays, Postmates quietly resumed working on its IPO, but after the coronavirus caused widespread market instability, the company again decided to bide its time, the source said.
DoorDash's IPO would be a big test for investor SoftBank, which led a $535 million Series D round of funding in early 2018. The Japanese investor has had several high-profile issues in recent months with companies in its first Vision Fund portfolio, including WeWork, Wag, Zume, and Fair.
'When and if we do go public'
Xu and DoorDash are facing the same conditions. DoorDash doesn't have an immediate need to raise capital, he said. The company closed a $700 million Series G funding round in November after raising $400 million in a Series F round in February 2019, per PitchBook.
Instead of worry about what's happening in the markets, Xu and DoorDash are "focusing on what we can control," he said.
"What we can control is how we manage our business and ... we can also control when and if we do go public," he said. "Because we feel so strongly about our current business, the public markets to us is just really a way of thinking about how to make potential further investments in the future."
While many investors and executives have extolled the virtues of private companies, Xu touted the potential benefits of DoorDash as a public company. Having shares that can trade publicly would allow it to make investments it couldn't otherwise make and allow its shareholders as a whole to realize the value of their stakes in the company.
The CEO also said that he's not concerned about his competition, even in the face of potential industry consolidation. GrubHub is exploring its strategic options, including a possible merger or sale, The Wall Street Journal reported in January. DoorDash itself held merger talks with Uber late last year, according to the Financial Times.
"I don't really spend a lot of time thinking about how many players exist. I worry mostly about the customers at DoorDash, the merchants at DoorDash, and the dashers at DoorDash. And if we're doing a good job serving them, the rest kind of takes care of itself," Xu said.
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