Same-day delivery service Postmates could be profitable next year if the company wants to be, said CEO Bastian Lehmann today at TechCrunch Disrupt NY.
The company has made 2 million deliveries, which is up 500,000 in around seven weeks. It took 10 weeks to go from 1 million deliveries to 1.5 million. Postmates is rapidly expanding to new cities and adding big partnerships, such as Chipotle and, today, McDonald’s. It’s easy to see that the company is growing like crazy.
So it’s not a huge surprise that it could hit profitability given that the company doesn’t have warehouses. Postmates went from delivering things from merchants to finding a sweet spot delivering things like food — something users were asking for early on but that the company didn’t have the ability to do initially. That’s driven the business to new places like Los Angeles, New York and even places like Houston and San Antonio.
But just because the company can be profitable does not mean it will be profitable. For startups that are rapidly growing, it’s often better to invest that directly into growing the company. We also hear it’s raising a bunch of money — another way of rapidly accelerating growth.
The company employs couriers who, during peak hours, make a median of $19, Lehmann said, giving them a way to make a good amount of money on the side — though Lehmann says it’s still mostly best as a part-time job.
“I’d like it to be a full-time job in the future, but the reality is it’s probably a really good part-time job,” he said. “It pays a lot more than other part-time jobs. If we look at median compensation during peak times, that’s 40 percent to 50 percent more than a barista makes.”
The concept of same-day delivery is not entirely dissimilar to Kozmo, a delivery company that went under during the dot-com boom. But the business model for Postmates is quite different — and instead of having operators directing couriers, Postmates can do it digitally with algorithms and mobile phones, significantly reducing the lag and overhead required to route deliveries. Still, Lehmann said Kozmo was also ahead of its time.
Eventually, he said, there will probably be some kind of consolidation in the same-day delivery market, which is becoming increasingly crowded and where startups are raising a ton of capital (Shyp raised $50 million, for example, and Sprig raised $45 million).
“What is crucial in my opinion — this is a space where the first-mover advantage is there,” he said. “It might not be a winner-take-all but it’s a winner takes most.”