Nov 24, 2015 ยท 6 minutes

Grubhub founder Matt Maloney posted an amazing throw-down of a piece about Postmates and Door Dash on Medium a few days ago. 

It was a very well argued piece, and I find myself agreeing with much of it.

For instance: I totally buy that it creates problems for restaurants when these sites don’t partner with them. And I totally agree that the fees are way too high for the mass market and aren’t as clear as they could be. And, like many others in the Valley, I worry that companies like these aren’t sustainable. As I’ve written before, almost all of the on-demand companies out there aren’t really that innovative either.

And yet, I almost never use Grubhub. I use Postmates several times a week. I use it more regularly than any other on-demand service except Lyft. Even when Grubhub and Postmates lists the same restaurant, most times, I’ll go with Postmates. I’ll go with Postmates in some cases even if the restaurant has its own free delivery.

Why? A lot of reasons that Maloney either misses or just chose not to articulate.

To his first point about restaurants –and as so many point out in the comments to his story – the reason Postmates wedged a foothold into this market is precisely because it didn’t ask each restaurant’s permission to be listed. Because it didn’t go the route of partnerships. That is the entire distinction. The differentiation. It promises it will deliver your food from anywhere you want. Period. They’ll figure the rest out.

Might this be annoying for restaurants? Yep. But if we waited on established players' permission to unroll the next generation of their services, it would always favor the established players and not consumers. Think of the music industry. Think of Uber. I am no fan of Uber’s tactics, but there is no denying the taxi industry would have ever created a more usable product.

Maloney acts shocked by the fact that a venture funded company would go against the way things are done in order to solve a currently unsolved problem for consumers. It’s not only what Postmates has done, it’s what so many valuable consumer Internet companies have done. His stronger point is that it’s arguably unethical – but he loses the plot when he suggests the tactic should turn investors off. My guess is the approach is precisely what turns them on about these businesses. It’s their entire reason to exist. It’s what makes these services something that didn’t exist previously.

Investors seem to agree. Just yesterday, Bloomberg reported that Doordash is in talks to raise another round, lead by Sequoia, at a billion dollar valuation:

DoorDash is making another run. The San Francisco food delivery startup is in talks to raise financing at a valuation of at least $1 billion, said people with knowledge of the matter.

Sequoia Capital, which is already an investor in DoorDash, is expected to lead the upcoming round.

Consumers seem to agree too. Cry foul about hidden prices all you want. These services have been around long enough now, a good portion of customers are just OK paying them. And there’s a reason people like me pay comparatively exorbitant prices for these services. No other food delivery service promises you instant, trackable delivery from any place you want. Whether Maloney wants to admit it or not: Finding a way to do something that couldn’t be done before is inherently innovative.

Most of the restaurants I order from via Postmates aren’t on GrubHub. But some are, and I usually still use Postmates for those. I freely admit Maloney’s point here – this is not mass market behavior, nor is it rational. I have no reason to doubt his data on how consumers fall off as delivery price inches up over just $2. I am not happy about how much I pay in Postmates fees. But I am a single mom running a company, and by the time I get around to my own dinner, Postmates is really the only good option that doesn’t mean I have to cook for half an hour when I can barely stand, leave a house with two sleeping children in it, or put my eyes out from a horrific user experience.

Perhaps you all use a different version of Grubhub. Whenever I try to browse, I get a list of 45 pizza joints. Discovery is difficult and – on Postmates – it’s not only easier, it’s borderline inspiring food porn. It’s expensive, yes, but it also solves a very real problem and the service and experience is so much better than Grubhub it feels indulgent, the way an Uber Black used to before I quit Uber.

One restaurant I frequent in particular is delicious but a total pain in the ass to order from. They promise delivery. It doesn’t show. I call back. They promise it’s 10 minutes out. It never appears. This can go on for hours. This restaurant isn’t on GrubHub, because it’s built its own online ordering system. It doesn’t want anything to distract from that. I’ve decided the $10 is totally worth it to use Postmates, even though this restaurant has  free delivery. Let them deal with the hassle. I just want the delicious food.

Are there other restaurants on Grubhub that offer similar cuisine to this one? Sure. But everyone knows food is all about the details. Just because it’s “pizza” or “Chinese” or “sushi” or any given category doesn’t mean it’s the same selection or quality. People want their favorites. Most of mine simply don’t deliver and aren’t on Grubhub.

If Grubhub and Postmates were the same service, I’d agree that riding roughshod over restaurants and charging 30% more to customers are lousy ways to build something sustainable. But they just aren’t.

That said, I don’t know that either Doordash or Postmates will make it. I’ve never used Doordash but it manages to always come off slightly worse in these stories. In Maloney’s, the two negative stories he links to were both about Doordash, and his side-by-side shows Doordash as 50% more costly. In another recent piece, a driver compared being a bike courier for the two: Again Doordash, came off worse. (Although I’ve heard multiple accounts of how brutal being a Postmate is too.)

The two crucial points that Maloney makes which might undercut all of my points above are how widespread the appeal can possibly be and how much these companies are spending to scale. No one knows the answer to the former, and only those inside the company know the answer to the latter.

Per the former, I’m sure I’m a minority, but we don’t know how big or loyal that minority is. And that doesn’t mean there isn’t a sustainable business in that minority.  It also doesn’t mean that Postmates couldn’t expand its service overtime with scale to be more affordable. So as long as the answer to the latter question isn’t unreasonable, I don’t see why the answer to the former puts them out of business.