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.