AMDP Proposal: Postmates

To: Clark Hansen, CEO, ADMP

From: Andrew Lin, Research and Development

Date: October 24, 2015

Subject: Investing in Postmates

You gave me the job to research a company we can invest in and I’ve found it: Postmates. Postmates is an investment opportunity that Anima Mundi Development Partners cannot afford to miss. All of AMDP’s criteria are not just met, but exceeded. Postmates strives to be socially responsible, environmentally friendly, and profitable.

The country is shifting from the traditional method of eating out, to eating in by having favorite foods delivered right to doorsteps. Postmates exactly fulfills this job. But before I convince you to invest, first let me reiterate our company’s standards.

AMDP Standards

Triple Bottom Line

1. People- Beneficial and positive treatment of the company’s suppliers, employees, workers, investors, and community.

2. Profit- Sustainable growth that allows the company to continually generate income

3. Planet- Maximum reduction of the company’s impact on the environment through all types of pollution and waste.

Corporate Social Responsibility:

Since the 1960’s, CSR has become increasingly popular. A company must have a sense of responsibility towards the environment and community in which it operates. This responsibility can be met in several ways­­– reducing pollution on the environment, protecting the interest of investors and customers, and hosting or participating in philanthropic events.

Social Enterprise:

A social enterprise is a company whose main interest is to maximize improvements to humans and the environment, even if it means reducing profits. The two types of a social enterprise are for-profit and non-profit.

Carbon Footprint:

Carbon footprint is the company’s carbon impact on the environment. Carbon dioxide is the major component of greenhouse gasses, but there are many other compounds that are released into the environment that can harm the planet as well. To measure a company's carbon footprint, the green house gas emissions are estimated. The world's temperature has been increasing and green house gasses have been named as the culprit. The government and companies alike are striving to reduce their carbon footprint to minimize the negative impacts on the environment.

What is Postmates?

Founded recently in 2011, Postmates' headquarters is located in San Francisco. Though it didn’t invent food delivery, Postmates revolutionized it to make all kinds of foods accessible to everyone. It provides fast and efficient food delivery where individuals, similar to those who work for Uber and Lyft, provide the transportation (Postmates). The endless amount of food couriers available allows Postmates to deliver foods from anywhere in under an hour. Since its founding, Postmates has not generated large amounts of profit, but has received enormous amounts of funding. This funding has allowed Postmates to launch itself by providing free or discounted deliveries

Are people cared for?

Just like Uber and Lyft, Postmates allows flexibility that restaurants with built-in delivery do not offer. Many couriers choose to work for Postmates as a side job not because of money issues, but because it’s enjoyable. They get to meet individuals of all different backgrounds while exploring the city.

Customers benefit from Postmates as well with speedy deliveries from friendly faces. Postmates ensures its couriers are overqualified by requiring its couriers to pass strict background checks. The courier's mode of transportation is inspected to minimize any transportation issues down the road. Postmates also personally interviews potential couriers before hiring to ensure that they have an easygoing personality. If someone doesn't meet these standards, they are no longer eligible to become a courier.

What about the environment?

Postmates lies in the transportation industry where reducing carbon emissions is extremely difficult, but extremely necessary. To accomplish this task, fossil fuel cuts are implemented almost everywhere.

Many couriers choose riding bicycles over driving cars to not only save gas, but to also exercise (Postmates). They kill not two, but three birds with one stone by exercising while working, while reducing carbon emissions.

Postmates also indirectly contributes to the green movement by offering discounts when ordering from organic and sustainable restaurants. These discounts make green restaurants much more enticing to customers.

Do they even make money?

Postmates has declined to provide its financial data, but it did release its delivery numbers. Since 2012, the amount of deliveries has grown exponentially, which translates to exponential growth in profits as well. To reach 500,000 deliveries, it started off at a grueling 116 weeks, but has now sped up to a mere 10 weeks (Wilhem). Despite the profit cap at just $13 million, Postmates recently raised $80 million to push for $1 deliveries to expand its name and drive out competitors.  Tiger Global Management’s Chief Executive Bastian Lehmann, who helped Postmates raise $80 million, stated that Postmates is not yet profitable, but is geared for insane growth. Postmates plans to expand into markets other than food such as healthcare and beauty products. It has already partnered up with Apple to deliver MacBooks within hours of the purchase. Lehmann said it best when he stated that "Food is for [Postmates] what books were for Amazon (Macmillan)." 

Do other people care?

According to Nancee Halpin and Cooper Smith of BusinessInsider, Postmates is crushing the competition in the on-demand food fight. Unlike Uber, which forces customers to order food and delivery at the same time, Postmates is an intermediary service that strictly delivers food, allowing its customers to order from the full menu of its merchants. (Smith). This strategy has allowed Postmates to secure exclusive partnerships with merchants such as Starbucks. Starbucks' customers have already been utilizing its Mobile Order & Pay service, making fast deliveries a natural extension (Starbucks). 

Similarly, Kia Kokalitcheva from Fortune praised Postmates because of its ability to expand. There are defined peak hours for food delivery, which limits the amount of profit generated by the company and its couriers (Kokalitcheva). To mitigate this, Postmates has begun to expand to other markets. Though it’s still in its developing stages, Postmates has already partnered up with Apple to deliver Macbooks within hours from ordering from the store. If all goes well, Postmates will be able to deliver numerous products from endless vendors, eliminating the peak hours that comes with food delivery, and improve its profits by at least 20% (Macmillan).

My opinions and why you should care

If you’ve read my first sentence, you already know my thoughts. Postmates is a young company that is geared for tremendous success. Although it faces tough competition from other companies such as Uber, it has proven its ability to surpass competitors. Being able to reduce its time to make 500,000 deliveries by 1000% in less than 3 years is just the beginning. Soon Postmates will deliver all sorts of items such as computers, clothes, and beauty products, further increasing its profits. Postmates exceeds all of AMDP’s standards and would be well worth the investment. With AMDP’s help, Postmates can expand into other markets and increase its number of couriers further and faster than before, bringing its friendly service to more customers and couriers.

References

1. Kokalitcheva, Kia. "Why On-demand Delivery Startup Postmates Really Raised $80 Million." Fortune Why Ondemand Delivery Startup Postmates Really Raised 80 Million Comments. Fortune, 25 June 2015. Web. 25 Oct. 2015.

2. Macmillan, Douglas, and Greg Bensinger. "Postmates Raises $80 Million in Push Toward $1 Deliveries." Digits RSS. Dow Jones & Company, Inc., 25 June 2015. Web. 25 Oct. 2015.

3. "Postmates - On-Demand, 24/7." Postmates. Postmates Inc. Web. 25 Oct. 2015.

4. Smith, Nancee. "Why Postmates Is Winning the On-demand Food Fight." Business Insider. Business Insider, Inc, 26 Aug. 2015. Web. 24 Oct. 2015.
5. Starbucks Delivery by Postmates Begins Service in Seattle. (2015, December 2). Retrieved December 3, 2015, from https://news.starbucks.com/news/starbucks-postmates-in-seattle

6. Wilhem, Alex. "Analyzing Postmates’ Growth." TechCrunch. Tech Crunch, 4 Mar. 2015. Web. 25 Oct. 2015. 

The Genius of Money: Money and the Modern Mind

This chapter reveals two stories. The first story is an artist who pays for his meals using currency that he draws. He draws life-like images of money and pays with it, sometimes expecting actual change. The artist's point was to see how much value was put on simple paper money versus the amount of time he put into drawing replicas. He was able to challenge society's emphasis on monetary values set forth by the government.
In the second story, a rich man gives a poor man some food in exchange that the peasant watch over he grave for 3 days and nights. When the man died, the peasant protected his grave. Along came an ex-soldier who joined with him, in hopes to get paid. At the end of the third night, the devil came by to take the rich man's soul. However the peasant and soldier tricked the devil into giving them gold until the sun rose and the devil left. In the end, the rich man's body was safe, the peasant received food, and the soldier donated the gold. The moral of the story that the author tried to convey was that in each and everyone of us, we contain traits of each character. We have the greed of the devil, the kindness of the peasant, and the morality of the soldier. Though we try to escape the temptations of money, we are always drawn back into its paper web.

The Genius of Money: Money and the Dance of Death

In this chapter, Hans Holbein paints a picture of a man sitting at his desk in a jail-like cell. The walls are solid and the windows are closed and protected with metal bars. Hans wanted to illustrate that no man could get in or out, leaving the money alone. However, there is another 'man' sitting on the other side of the desk. Except this 'man' is more of a creature. It is supposed to be death, but Hans wanted to anthropomorphize death. The human man is blind with greed and scolds at death to leave his money alone, not realizing that death could care less about his money. The man is basically about to die, with nothing more than gold coins to keep him company. The dwindling candlelight and empty hourglass signify that he is out of time. To me, Hans's painting represents most of society-- how we are so obsessed with money that it has taken control of our lives. However in the end, we all die and what really counts is the human connections we have formed, not the value of metallic rocks.

The Buzz with Honey Bees

To much surprise (or at least to me), the terrifying stinging honey bee is a critical piece in the global economy. They help pollinate 70% of our crops from fruits, to vegetables, to the food for cows, chickens, and pigs. Without them, our major pollinators would disappear, potentially creating famines. Currently, bees are in decline due to disease and mites that are slowly destroying beehives. Bee farmers are struggling to maintain the health of their hives. We need to slowly bring back our bee populations if we want to maintain our population numbers. Thankfully there are some symbiotic relationships between us and bees that are making bees more approachable.

In China, there's been a recent increase in popularity with a special kind of mochi desert. Unlike traditional mochi that is prepared entirely in the kitchen, this mochi requires the help of bees. After the mochi is prepared, it is left out in the open for honey bees to "eat". As the bees eat at the mochi, they leave behind distinct honey that enhances the flavor of the mochi, making it a popular exotic desert.

Traditional honey hives have been improved as well. Though they were symbiotic before, extracting honey from bee hives was an extremely painstaking task that was uncomfortable for the bees. In order to obtain the honey, the bees had to be removed from the hive to isolate the honey combs. Now, an Australian honey beekeeper has developed a revolutionary hive that is able to extract honey from a beehive like a sink. There is no more need to remove the bees from the hive to obtain honey.

Though honey bees are exactly pet material, there are more ways where honey bees can be more easily included in our society. 

Omnivore's Dilemma No. 3

For this time's blog post, I read the chapter titled The Consumer, A Republic of Fat. What's it about? You guessed it, people and fat.

He starts off by bringing us back to the 1900's when corn first started to become mass produced to a point of surplus. Farmers had managed to produce more corn than people could eat. To try to maximize profits and minimize waste, the excess corn was turned into corn whiskey. This surge of corn whiskey dropped prices, making whiskey extremely cheap and affordable. Everyone started to buy pints of whiskey to drink at every meal. Just as we drink soda, people back then drank whiskey. And rightfully so due to the affordability and abundance. Though the two drinks are entirely different, they're major ingredient is still the same: corn.

Coke was the first company that turned to corn as a substitute for sugar. A surplus of corn made high fructose corn syrup cheaper than real cane sugar. Very soon other soda companies adopted high fructose corn syrup as the sugar substitute. And as we all know, high fructose corn syrup is extremely high in calories, making it much easier to expand our waists.

Michael also addresses something similar to what we've discussed in class: a plant's ability to adapt to human needs. Corn has nailed it when it comes to being desired by humans. Just like how apples have appealed to our sweet tooth, corn too has evolved to become a very useful sugar substitute. Everyone already knows about the famous Johnny Appleseed, but perhaps there should be another figure who spreads the joy of corn across the nation. After all, corn is all around us.