I texted the owner about being miffed they hadn’t told me they were on DoorDash. He replied. They aren’t. We compared pricing, and found the prices advertised are way off from what the restaurant charges.
So I placed a $5,000 order to the neighbourhood homeless shelter. DoorDash paid him over $20,000, and I get free pasta for the rest of the year. (My neighbours have also partaken.)
Glad to know it’s scaling. SoftBank has assembled a unique concentration of stupidity for itself.
We’re in the midst of a pandemic. The restaurant stays afloat, nothing more. The shelter got a donation, and I got promises of comped deliveries and catering.
It cost me $5,000; it cost DoorDash over twenty thousand.
No worries. I don’t feel anyone did anything wrong here.
> a lot of pizza
Orecchiette and Nebbiolo :).
Any judge with a surname ending with a vowel would pardon you, should they get pinged by DD
Great that you're donating to the homeless!
A small basic pizza is $8-$10 here. Domino's always has a deal where you can get 2 medium pizzas for $6/each. (used to be $5).
But if you're buying larger, specialty pizzas without coupons/promotions then you're going to be paying more like $20/pizza.
My pizzas are usually small and plain, so I'm closer to the $10 mark.
Generally, €10 for a pizza is the average one in EU. Only in UK people is prone to pay an average of 18 pounds for it, which is sick.
Why wouldn't you apply the same principals of ethical hacking, where you would notify the party of the exploit?
in germany, reselling something for less than what you paid for (predatory pricing) is illegal (unless it's already devalued because it's old or used)
Paying part of the meal is part of that strategy. They know full well that large orders and large amounts of transactions cost them more money and they're betting on nobody actually doing this. They're selling products below the cost of production at this point, something that I would argue should not be allowed in ethical capitalism. Investors know fully well what they're investing in, and of not, they've either not kept their responsibility on reading about the company they're investing in, or the company itself is pulling massive investment fraud.
Play shit games, win shit prices. If they don't want to lose money like this, maybe they should have a business strategy that isn't oriented about purposely losing money to bankrupt competitors. They easily could've set a reasonable limit of say $200 dollars to their cheaper transactions but they chose not to.
Would I go full ethical when finding exploits for an inherently unethical company? Would I dutifully report flaws to companies selling "adult supervision" apps used by controlling spouses? Would I give "bank phishing on demand" websites a 90 day trial period? I don't think so. Making such software is perfectly legal (in many jurisdictions) but is rarely ever ethical. Ethics would need to come from two sides for me to consider responsible disclosure. I have flooded several phishing databases with fake information, got some of them over their resource limit and shut down as well, and I don't feel the smallest bit of regret.
Predatory pricing hardly works in economic theory and is working disastrously for a lot of the companies trying it (eg. Ubers financials)
They money grab got a lot worse after they pushed out all the alternatives and just like with Google, everybody has to play by their rules or they'll be mostly undiscoverable for a large portion of the general public. Their delivery people are still underpaid, but by increasing their percentage of the bill they take for themselves they're now turning a profit. It's gotten to the point where companies are not even allowed to lower their prices when people use other delivery systems (or the restaurant's own personnel) which are cheaper.
The company only got this large because they could afford making losses for many years. Now other companies such as Doordash are trying to cut into the market as well, using hundreds of millions of foreign cash flows and putting business owners under even more pressure. Had there not been a company doing this since 2014, Doordash or any of its competitors would have taken the market regardless.
Walmart and McDonalds are masters of this approach.
Uber is a long-term play at disrupting cabs/transportation cartels and incorporated self-driving cars into a non-literal roadmap. They're in it for the long play, and even if they hemorrhage money for a while longer it may, in fact, play out in their favor.
Predatory pricing is intentionally setting loss-making prices to drive out competition to then hike prices to profitable levels.
Notice this isn't what "ultra returns to scale" businesses are doing -- they're just profitably pricing low.
There is presumably some regulatory burden preventing someone from doing this. Maybe you can't move planes from one route to another so easily etc. But then that's how the company does it. Without that method of forcing the new competitor to incur unrecoverable costs, they can't do it.
It's theoretically possible to have a natural market barrier like that, but in practice to be a barrier that large it's nearly always a regulatory compliance issue. The law says you can't sign up customers on long-term contracts, preventing new competitors from locking in customers at the current price rather than the below-cost price. The law says an ISP has to serve the whole city and not just one neighborhood, increasing the startup capital required by a factor of a hundred. The law prohibits adversarial interoperability, so you can't distribute your own apps unless you can manufacture your own phones.
Most monopolies don't come from natural causes.
At best you could try to argue that they make their money fleecing dumb "business owners" who pay for franchises.
Their pricing and food is a gimmick, didn't that movie The Founder and the subsequent articles from various outlets pretty much lineout how Mcdonald's actual business model relies on Property Management and franchising? 
The food, competitively priced (questionable food costs and sources are the bigger story not told) or not is only the hook/marketing costs to get you to show up in Corporate's business model, the real money is in leasing the property and the brand name to the Local owner.
Personally speaking, I had the misfortune of eating at Mcdonalds during this COVID shutdown on more than one occasion as grocery stores were closed by the time I got off work.
And other than nostalgia for what was once a haven of my childhood, I cannot bring myself to put that stuff into my body without feeling nausea afterward. Everything is overly sweet, or salty; I remember the pickles and the fries from the happy meal being pretty decent as a kid in the 90s that went down with the Hi-C orange soda, having had one of those value-meals ($15 is hardly a value mind you) as an adult with the same items was atrocious.
On balance of probability, I think that is just a bullet point to keep the juicy AI flavoured investment funds flowing.
But there are no appreciable logistical or operational efficiencies in how these delivery services operate. And there aren’t any barriers to entry. The workforce is completely fungible so they aren’t locked in. And just the fact that delivery services are popping up like mushrooms suggests it doesn’t take much to start one up.
In theory they could eke put some advantages to scale that keep out upstarts by using machine learning to optimize delivery routes or something. But I doubt that gets them the kind of efficiency gains they would need to actually turn a profit. From what I’ve seen, it looks like their main attempt to freeze out competition is just coming from flooding your search engine hits. I don’t know how sustainable that is either.
And then you make a weird point that software can be unethical (e.g. phising software) and this somehow applies to Doordash. Just to get this straight, making peer to peer scheduling software used for deliveries is unethical? And because of that, its okay to steal from their investors (including many US investors and pension funds)?
Your original comment said it was wrong to exploit a bug, to which the parent poster retorted that this was a feature and not a bug.
Here, you've gone further to claim that this behaviour is stealing, and I'd like to explore that for a minute: what possible moral or legal right does Doordash have to an operating profit when it deliberately operates at a loss?
By all accounts, this below-cost pricing is predatory behaviour on Doordash's part, not the customer's: they seem to break into a market by offering delivery at a subsidized rate, then they take data based on those rates and try to strike fee arrangements with restaurants. At first glance, it seems like they sell themselves based on inflated numbers from the discount period, without disclosing that they were in fact offering customers a discount.
I see no ethical fault in beating a (sophisticated!) predator at their own game, but where do you reach the alternative conclusion?
For me I think it would have. Which makes me pause to consider whether I find the whole scheme too close to the ethical boundary.
Doordash is exploiting and harming the restaurant so that Doordash can make money. I think it's totally fine to make changes to your own site to thwart this. Doordash is in full control of this. They're the ones scraping the site, and they're the ones who should pay the price if they do a poor job.
Also, it occurs to me that if the artificially low prices resulted in doordash recieving more orders than would be usual, I doubt they would have disclosed that in their dealings with the restaurant. Though that is hypothetical and still suffers from the two wrongs don't make a right issue.
> My first thought: I wondered if Doordash is artificially lowering prices for customer acquisition purposes.
> My second thought: I knew Doordash scraped restaurant websites. After we discussed it more, it was clear that the way his menu was set up on his website, Doordash had mistakenly taken the price for a plain cheese pizza and applied it to a 'specialty' pizza with a bunch of toppings.
So I don't think its a feature.
> what possible moral or legal right does Doordash have to an operating profit when it deliberately operates at a loss?
It doesn't have an operating profit whether you exploit the bug or not. Doesn't mean its okay to steal from them. Even if they do deliberately lose money (e.g. first Uber ride free up to $10), exploiting it is unethical (e.g. tricking Uber into thinking you're on a new phone).
The rest of your argument is again, why you don't like Doordash or why Doordash is unethical. I won't address this point because I think its unethical to steal from an unethical company so their ethics is irrelevant.
If I think Walmart is unethical, is it okay shoplift from their stores?
My answer is no. They offered the service at a certain price, you accepted it. Whether either party profits or not is not part of the contract.
So no theft has taken place. If you want to claim that's it's unethical to take the free money that they're offering, you need to provide a justification for why that is. The onus is on you.
The only way I can see you attempting to justify it is by saying that it involves taking advantage of unforeseen consequences of the contract. But as has been pointed out, they fully intended to lose money, so that doesn't work.
In this case a homeless shelter ended up with a lot of pizza (which I'm presuming they consented to receiving), a local business got a cash injection and the OP got some perks. Under your ethical framework a bunch of silicon valley types had to find some other way of pissing $20k up the wall.
I know which outcome I prefer, though I personally wouldn't have done it.
On Wall Street this is called arbitrage.
If you don't want to lose money on sales, don't sell for less than your cost. People buying your product is not "stealing".
Investors know that the company they're investing in will lose a lot of money and the know about the business practices that basically give away money in order to gain popularity. It's not their money anymore after they gave it to the company. It's true that if the company goes bankrupt they lose out, but they can prevent losing that money by not investing on companies handing out free cash.
The software itself is not unethical, the business practices Doordash/Uber/Yelp/etc. follow to make their software popular are. The problem is that these companies seemingly can't make a profit without using huge investments to crush the local competition. If they were to act ethically, I would have no problems with these companies.
Also, taking away future profit is not stealing, it's part of the risk of doing business. Don't stuff your money into risky business ventures if you don't want risk.
It's quite sad that pension funds are investing in these predatory businesses but protecting their investments because they're too big to fail undermine the entire concept of competition in capitalism.
That's fucking awesome. Way to go, man.
This also does probably provide some legal cover as well.
If you order a shitload of real food and the pricing works out well for the restaurant, it's weird but it is still following the rules that DoorDash set out.
That doesn't mean they won't fall afoul of some state or federal laws in doing that.
A delivery service that supported the restaurant would be way way more expensive.
ignoring the fact that this post itself is top of HN and going viral?
He then tweaked his story to say that this cost him $5k. Why did he say he was cutting a deal then?
And when you know your local business owners by name, opportunities like this emerge.
Saudi money (via SoftBank) is paying for poor people's food (and also subsidizing their transportation, via Uber).
And they're also desperate. The future where the world doesn't need their oil (or they've run out) isn't a distant future anymore. It's coming, and coming faster and faster. They need to diversify anyway they can if they want to avoid going back to just being a desert. And so they're jumping at pretty much any deal they see
But yeah, I agree with your main point: they're jumping at deals and chasing big wins, a la Dubai. Cuz they don't really have any other choice.
We'll need oil for plastics even if we stop using it for transportation, and Saudi oil is just about the easiest/cheapest to extract, so we'll be using their oil for a long time, but it won't be as grotesquely profitable for them as in the past.
Oil is just convenient, because you need less energy to make the plastic than if you start with eg water and CO2.
Until WeWork really blew up, it wasn't too hard as an investor to keep up the impression that the track record of Softbank was good enough.
(That's not to say that you couldn't re-interpret the track record in a negative way, even before WeWork. But nothing really forced you to.)
Does that make casinos dumb? No, just imperfect.
Even if the exploited party itself it shady as hell. Say they were a credit card scammer, someone found a way of conning them for money, does that for a while to make some $$$, and then proudly writes a blog article exposing them.
Maybe I'm missing something though. That's looking at it rationally (?), but part of me also feels like, screw Doordash.
Even taking a negligent security posture is not the same as intentionally including a flaw.
If your order to doordash cost $5000, why did they pay the restaurant $20,000? That would suggest their prices are 4 times cheaper to the customer. But I thought everyone complained they were more expensive.
Surely DD are still keeping their commission from your order?
What have I misunderstood?
1) Doordash has some deal with the restaurant, gets a commission on sales, fees, whatever.
2) Doordash has no deal with the restaurant, charges customer $x+y, buys food from restaurant at $x.
In the second case, Doordash may be charging much more than the menu price, if it things it can find customers who will pay it.
So in this story, 'JumpCrisscross paid $x-$y = 5k for an order to a homeless shelter, but the real, restaurant price for that order $x=20k, which means DoorDash has just subsidized the transaction for $y=15k. The restaurant got an extra $20k of business that day, and 'JumpCrisscross bought $20k worth of food for a shelter at 1/4 the price.
And the best part, they could probably do it again :).
EDIT: Reading the article again, it seems to me Doordash is supposed to be charging the customer $x in the lead generation phase; so perhaps the -$y part is a scrapper error.
DD says to Pasta House, see? Look, with DD we facilitated an additional $20k of revenue for you on this day. You should enter into an agreement with us so that we can make this a more seamless process.
In most cases, Pasta House isn’t aware that those orders were drastically under cost and don’t represent actual demand.
5,000$ of pasta would last me and my family until the end of my days.
At ~1-1.2 euros for half a kilo it's around 90 years worth of pasta (based on an average of 28 kilos per person per year in Italy)
What restaurants let you order dry pasta beside the ones in food halls?
I predict we'll see a lot more of that kind of thing with reduced occupancy at restaurants. Come in for a meal, leave with a week's groceries.
And even eating shrimps 3 times a week, with 5,000$ of shrimps a family of 4 could eat shrimps for a year.
Why would someone do this?
"Had no idea you did delivery! Boss just put in an order for a work event! See you Friday?"