With the launch of its IPO Wednesday, food delivery service DoorDash is on the verge of being valued at up to $32 billion. For CEO and co-founder Tony Xu, that lucrative public offering would make him a billionaire at just 36 years old.
Xu owns a stake of about 5% of the company he co-founded as a Stanford undergraduate with a handful of classmates in 2013, according to the company's recent public filings. At a valuation of more than $30 billion for DoorDash after the IPO, Xu's stake would be worth roughly $1.6 billion.
Billionaire status would cap a meteoric rise to tech success and stardom for Xu, who is the son of Chinese immigrants who moved to the U.S. from Nanjing in 1989, when Xu was just 5 years old.
Xu's family settled in Champaign, a small city in central Illinois, after moving to a new country with "only a few hundred dollars in our pockets," according to Xu. There, Xu's parents took jobs working in a local restaurant despite the fact that Xu's mother had been a doctor in China (the U.S. did not recognize her medical license) and his father was also a graduate student studying aeronautical engineering and applied math at the University of Illinois.
In order to better fit in with his new American classmates, he even changed his name from Xu Xun, instead adopting the first name of the main character of his favorite American television show: Tony of "Who's the Boss," played by the actor Tony Danza. "I walked with my dad to the immigration office and legally changed my name," Xu told NPR in 2018.
Money was so tight while Xu's father worked toward his degree that the family relied on federal assistance programs for support and even "visiting McDonald's was a luxury," Xu wrote in 2017. Xu has said his mother worked three jobs at one point in order to earn enough money to obtain a U.S. medical degree and open her own medical clinic. (It took her 12 years to open the clinic and she's been running it for about two decades, Xu said in 2019.)
Xu even started working at an early age himself, earning money by washing dishes in the restaurant where his mother worked and even starting his own lawn-mowing business at age 9, where he and a friend would make money by mowing different designs into their neighbors' lawns.
"We mowed lawns and charged more for designs, like a checkered lawn," he said in 2015. "I learned you can do more than you think you are capable of doing. I could barely reach the handle of the mower!"
In an interview with CNBC's Jim Cramer on Wednesday, just after DoorDash stock began trading, Xu highlighted his immigrant story by noting that his parents "came to this country to make a better life for me." He specifically pointed to his mother's years of working multiple jobs to earn her U.S. medical degree and open her own business, noting that "we started this company" for entrepreneurs like his mom.
"My mom came to this country, worked three jobs a day for 12 years, one of which was at a local Chinese restaurant. And I got see that a bit, washing dishes on the side with her," Xu told CNBC. "[The IPO] certainly is a big day for all of us at DoorDash, and it's a huge day for all of the businesses we serve as well."
Xu's parents always "made education a priority," he's said, so they also saved enough money for him to attain a degree in industrial engineering from the University of California, Berkeley and an MBA from Stanford University.
It was while Xu was attending graduate school at Stanford that he and three classmates at the business school — co-founders Stanley Tang, Andy Fang and Evan Moore — started the business that would eventually become DoorDash. All four students had spent some time working in Silicon Valley, with Xu having interned at Square and worked in business development at RedLaser (an e-commerce app bought by eBay).
In 2012, the four students, who had met through a class project, decided to work together to develop an app for small businesses. That year, they launched an online service called PaloAltoDelivery.com after talking to local restaurant owners near Stanford who complained that they didn't have enough bandwidth to fulfill all of their delivery orders, which meant they were essentially leaving money on the table from orders they could not fill.
Xu and his classmates wrote the code to build a prototype of their website in just a day and immediately started receiving food delivery orders on their cell phones after posting PDF menus from eight local restaurants in Palo Alto, Xu told NPR. Xu and his three co-founders made the first few hundred deliveries themselves, filling most of the orders at night while still attending classes during the day.
"We told some friends about it. We emailed some groups on campus. We emailed some dorm list servers, and that's kind of how we got the first few orders running through the system," Xu told The Los Angeles Times in 2018. "We were the drivers. We took turns dispatching and took turns delivering."
In 2013, the company joined the Y Combinator start-up accelerator, receiving $120,000 in seed capital. That year, Xu and his co-founders changed the name of the business to DoorDash and they began hiring new team members and delivery drivers, called "Dashers."
By the following year, DoorDash had received nearly $20 million in venture capital funding and was delivering food for over 1,000 restaurants in the Bay Area and Los Angeles before expanding across the country to Boston. Today, the company has raised more than $2.5 billion in funding from investors such as SoftBank, Sequoia Capital and Singapore sovereign wealth fund GIC.
As CEO, Xu is now running the country's most popular food delivery app, as DoorDash has over 1 million delivery workers (the "Dashers") and 18 million customers, the company said recently. DoorDash also reported $1.9 billion in 2020 revenue through the end of September (though the company also had a $149 million net loss during that period, as it has yet to turn a profit), with the company bringing in money from a combination of delivery fees charged to customers and commissions charged to restaurants.
Meanwhile, Xu made a $300,000 base salary in 2019, according to SEC filings, and he's now on the verge of billionaire status, thanks to the company's impending IPO.
And while online delivery services like DoorDash have received criticism for the high commissions and service fees they often charge small businesses (DoorDash was criticized for its tipping policy, which it changed, and it did temporarily reduce or eliminate commission fees for many small restaurant owners amid the Covid-19 pandemic), Xu has said that the reason he wanted to start the company in the first place was to help smaller entrepreneurs, like his mom.
"DoorDash exists today to empower those like my Mom who came here with a dream to make it on their own," Xu wrote in a letter accompanying the company's IPO prospectus filing with the SEC.
This article has been updated with Xu's comments on CNBC after DoorDash stock started trading on Wednesday morning.