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Postmates CEO on Bill Gurley Criticism and Whether He'd Partner With Lyft (Q&A)

Despite Postmates' expansion, some still doubt it's making enough money to survive.


Postmates launched in ten new markets today, moving into Hoboken, N.J.; Raleigh, N.C.; Pittsburgh, Pa.; and other places across the country.

With the new additions, Postmates has officially hit 40 markets spanning more than 100 cities, with the last 22 markets all started in 2015. In other words, the company is on a roll. It also announced a formal partnership this week with Walgreens and before that 7-Eleven, Chipotle, Apple and Starbucks, scooping up the last two from under Uber’s nose.

But despite its traction, there are still questions about whether it can survive in the long term. On Tuesday, Benchmark venture investor Bill Gurley said he was skeptical that Postmates could live up to its valuation, along with other on-demand companies like Shyp and Instacart.

We sat down with Bastian Lehmann, Postmates CEO, to talk about competition with Uber, whether he’d partner with Lyft and what he thinks of Gurley’s remarks.

Re/code: A year ago, a lot of people were saying they thought Postmates would be the first on-demand company to fail. Lately, that hasn’t been the narrative. What changed?

Bastian Lehmann: The market evolved. We started delivering on great partnerships, we have numbers that make sense, we have a good gross profit margin, since then we raised a lot of money. We did the things that matter instead of just talking about it.

There’s still a big question about whether on-demand companies have big enough profit margins to sustain themselves. Uber investor Bill Gurley said that earlier this week and named Postmates. What was your response to that?

I don’t know Bill very well and I don’t know what he said exactly. But our unit economics look a lot like Uber with added Gross Merchandise Value (the cost of the item itself). We make money on the delivery fee but we’re also monetizing the GMV (Postmates takes a cut of the sale of the product). I forgive Bill Gurley for not knowing that.

If you can’t make money on partnerships, they’re not that interesting to us. We make money off the GMV with almost everybody we go into an official partnership with.

Speaking of Uber, I’ve heard this story of Uber CEO Travis Kalanick snubbing you when he first met you, saying he’d “see you in the trenches.”

To this day, I don’t know how Travis meant that. Sometimes I think, “Did he mean to say, ‘See you in the trenches, it’s going to be difficult for all of us’?” I don’t know. I also really don’t care about Uber. I don’t wake up thinking about them. I’m not afraid of them.

I find it hard to believe you don’t think about them, given they want to do on-demand delivery — exactly what you’re doing.

Why wouldn’t they? It’s pretty cool what Postmates is doing. But what looks easy on paper may not be the easiest thing to pull off. It’s silly to think there’s one company that will dominate the entire world in delivery and ride-sharing. I refuse to believe that.

You’ve tied up partnerships with so many big name brands. Do you think you’ve beaten Uber’s delivery program before it’s even started?

I wouldn’t be surprised if they have something different in mind. If I was them I would do it with high-end retailers who lend themselves to my brand. I don’t know if I would do delivery with Walgreens or 7-Eleven.

Lyft has publicly stated it’s not doing delivery. Could you see Postmates and Lyft partnering? Sharing resources so that Lyft drivers ferry people during rush hour but Postmates packages during other times?

I probably wouldn’t tell you first. I’d talk to [Lyft founders] Logan and John first. We’re always evaluating a lot of partnerships and where they make sense well do them. I like Lyft as a company.

Have you talked about it to them?

We’re friends. There is no story at this point. The companies like each other.

Have you talked to other on-demand companies about doing their delivery?

We do have conversations, yes. Nothing official at this point. At some point you decide if you want to be the platform for that or not. We have an API. But I don’t know if we’re 100 percent ready for that.

What role do partnerships play in Postmates’ business?

It can validate the space and the product offering. If Starbucks chooses Postmates as a partner, that’s great.

On a more pragmatic level, part of the reason we launched partnerships is to even out the demand curve.

(Lehmann stands up and starts drawing squiggly lines on a white board)

Food has this distinct demand curve, this is lunch and this is dinner. Not a lot of people eat in the afternoons. But with Starbucks you drink coffee in the morning and afternoon. The Apple demand curve is in the evening and later in the night. A lot of these demand curves on top of each other helps us be the platform where our fleet can have the most income at any point in the day. That means they have less reason to work on other platforms — they’re more fulfilled and happier.

How do you fight the recruitment battle for couriers, especially when other companies have raised war chests of venture capital and are chucking bonus money and incentives at drivers?

We raised a little money ourselves. And with Postmates you can have a two-door car. It’s also a great opportunity if you have an old car. If your Delfina pizza arrives in a beat-up Mini Cooper it doesn’t matter. Then we have scooters, which are also not suitable for ride-sharing.

So far we have not had problems recruiting the fleet.

What does Postmates look like in a year?

The greatest thing would be, you open Postmates and there’s two to three things you love. An architecture book, the food you ordered throughout the year, a tailored feed of things in your city.

What about international?

We have no plans right now. I’m going through phases on that one. When I came here from Europe I thought it would be great to take the product you built here to Europe fast. But now my most recent thinking is that we should concentrate on North America.

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