Shark Tank’s newest guest shark, DoorDash CEO Tony Xu, went from working in his mother’s restaurant as a kid to co-founding a company that today is valued at more than $20 billion.
Xu and his wife have signed The Giving Pledge, which “commit to give the majority of their wealth to charitable causes, either during their lifetimes or in their wills.”
That seems like a perfect fit for Shark Tank, on which self-made millionaires and billionaires hear pitches from founders and entrepreneurs, many of them small businesses.
DoorDash’s newsroom is full of headlines about how the company is “helping local communities” and “supporting local communities,” and doing admirable things like “broadening food access in local communities.”
It also published an Economic Impact Report saying that it “supported an estimated $68.9 billion in U.S. GDP with over 500,000 merchants active on the DoorDash platform.”
Xu’s Doordash bio says “Tony came to America with his parents and grew up working in his mom’s restaurant. He started DoorDash to help small business owners succeed.”
His ABC bio expands on that, saying “He and his co-founders started DoorDash to help local businesses like that restaurant succeed.”
Yet DoorDash has also done the opposite of helping local restaurants and the people who deliver food for the company, accused of “predatory” tactics that “hurt” businesses and consumers.
DoorDash has actually hurt some of the small, local businesses it purports to help, even in the worst part of the pandemic.
Part of that is just its business model: DoorDash takes fees and commissions from restaurants. Last year DoorDash created new plans in response to what Eater called “industry backlash against creeping fees and diners’ overreliance on the apps.”
But those new fees range from 15 percent to 30 percent—a considerable chunk of revenue.
There’s been more egregious behavior, though. For example, DoorDash has included restaurants on its app that had refused to partner with it, still “charging both a delivery fee and higher menu prices,” Eater reported. DoorDash was sued by In-N-Out for doing that very thing.
DoorDash admitted to this practice, saying in a 2019 letter to shareholders that “listing restaurants on platforms without any partnership allowed other players to expand restaurant inventory rapidly,” and that “resulted in significant growth in both orders and new diners.”
The City of Chicago sued DoorDash in 2021, saying it used “unfair and deceptive tactics to take advantage of restaurants and consumers who were struggling to stay afloat” and the lawsuit would seek “restitution for restaurants and consumers hurt by these predatory tactics, and civil penalties for violations of the law.” DoorDash called those allegations “baseless.”
In a press release, The City of Chicago said that DoorDash and GrubHub would both:
- Advertise order and delivery services from unaffiliated restaurants without their consent, leaving restaurants to repair reputational damage and resolve consumer complaints caused by Defendants.
- Lure consumers into a bait-and-switch with deceptively small delivery fees upfront, only to charge misleading fees at the end of the transaction. This increases the total cost of delivery by as much as six times the amount initially advertised.
- Hide that menu prices on their platforms are often significantly higher than the prices available if ordering directly from the restaurant.
If you don’t have warm and fuzzy feelings for DoorDash yet, there’s more: DoorDash also took drivers’ tip money for itself.
In 2019, Tony Xu defended this model on Twitter, but also announced a change, saying “Dashers’ earnings will increase by the exact amount a customer tips on every order.”
So yes, DoorDash changed their policy so that tips would actually go to the people getting tipped, and it’s unbelievable the company would ever think that drivers or customers would think tips would go anywhere other than to the person delivering. Yet DoorDash kept doing that even after promising to change.
In San Francisco, DoorDash agreed to “pay $5.3 million to settle allegations with San Francisco that it stiffed almost 4,500 delivery workers of the city’s mandated health care coverage and paid sick leave,” although the company “did not admit wrongdoing,” the San Francisco Chronicle reported.
DoorDash recently fired 1,250 people, even though, as Xu wrote in a blog post, “our business remains strong and continues to grow,” but they’re worried “our operating expenses—if left unabated—would continue to outgrow our revenue.”
It’s worth noting that DoorDash is certainly not alone in these—and even more appalling—practices. The City of Chicago said that GrubHub was “Publishing deceptive ‘routing’ telephone numbers that Grubhub represented as the restaurant’s direct number, and regularly charging commissions even when calls to these numbers did not result in an order,” and “Creating and maintaining “impostor websites’ for restaurants, which look like the restaurant’s actual website but route unsuspecting consumers to Grubhub.”
Deepti Sharma, who created the competing delivery service FoodtoEat, wrote in Eater about “the destructive power of delivery services like Grubhub, DoorDash, and Uber Eats,” and “how they harm the restaurant industry,” and that “subsidized the ‘true’ cost of delivery, making it cheap for consumers while squeezing restaurants with high fees and pocketing courier tips.”
Maybe this is Silicon Valley culture—or just American business: screwing people over in order to profit, earning more money at all costs.
As much as I love Shark Tank, highlighting a company with a sketchy track record isn’t its only blemish.
Another guest shark this season, Gwyneth Paltrow, has sold pseudoscience nonsense under the guise of “wellness”; even Gwyneth’s own former COO and co-star of The Goop Lab, Elise Loehnen, spoke out about how “toxic” it is. A product pitched but rejected on Shark Tank been horrible for our society.
Meanwhile, one of Shark Tank’s permanent sharks has a toxic presence on the show. And its very likely that some of the businesses the sharks have invested in also have problematic histories, or that they do as investors or business owners themselves.
But it’s worth asking why Shark Tank wants to center and promote a company with behavior like DoorDash’s. I asked ABC about that very thing, and have not yet heard back.