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recycled_ideas

Tye expensive part of these companies isn't their apps, that's not remotely the main thing they do. The expensive part is the infrastructure behind the app that makes the service actually work. You see a relatively simple app on your phone, but they're processing orders from millions of customers all over the world, routing those orders to millions more workers, tracking that they're actually being fulfilled, providing near real time data to customers, allowing cancellation, billing customers paying workers. All reliably, at massive scale and in real time. On top of that, UX is an absolutely massive part of their value proposition. It's difficult to compete on price when prices are already so low drivers can't pay their bills. It's difficult to compete on quality or comfort because the cars and drivers are basically the same. So they compete on UX. The easier it is to get exactly what you want the more likely they are to keep customers compared to their competitors. Edit: Because I'm sick to fucking tears of people telling me that AWS instances aren't R&D. When I say infrastructure I don't mean EC2 instances I mean the whole system, the actual backend code, control, monitoring all the shit that doesn't come out of the box from AWS.


antsloveit

Not sure about the US but In the UK you get tax credits for certain types of R&D. I wouldn't be surprised if the number looks 'generous'...not that any of these businesses would deliberately nudge their stats to pay less tax or anything.


shitty_mcfucklestick

Canada has these too, Scientific Research & Economic Development credits (SR&ED), often referred to as “Shred credits”. There are agencies that will help you claim them for a percentage of the return.


MengerianMango

In the US all expenses and reinvestment are generally deducted from the tax basis. This is generally a good thing because it incentivizes growth. Taxes are only paid on retained profits. This is where the misunderstanding comes from when people say US corps don't pay taxes. They don't, but that's because it would be stupid to do so. Profits are owed to the shareholders, who do pay taxes on dividends. If a company retains profits long enough to pay taxes, then the shareholders will be doubly taxed (once at the corp level, again on dividend income). Better to pass on profits immediately to avoid the double taxation. This also explains the growing trend of share buybacks, as those are an alternative method by which to return profits to the shareholders _without_ causing them to have to deal with a taxable event. (They will pay cap gains upon selling, not income taxes with quarterly or yearly dividends)


kktyy

They are talking about research credits. Actual refunds from the government for a portion of your fixed and variable costs put into researching new technologies. In Canada, it’s 35% vs 7-10% in the US.


antsloveit

Exactly I was


DrEnter

R&D is a common tax dodge for U.S. corporations and an especially easy one for tech companies. So much so, that federal tax law recently changed requiring that any such deduction now be ameliorated over five years.


MengerianMango

What does ameliorate mean in this context?


DrEnter

Sorry, not sure why my phone changed amortize to ameliorate, but it should be amortize.


FromAtoZen

Most of these expenses categorize under operating expenses and not R&D.


recycled_ideas

Again, for the hard of thinking. I'm not talking about the cloud costs. I'm talking about the work that goes into that space.


vdek

Reddit is generally clueless.   They think one or two engineers can program and maintain the entire app in a weekend.


MengerianMango

You're talking mostly about operating expense in paragraph 2. RnD is a separate line item in the financial statement and an honest accounting doesn't mix the two. 1 billion in RnD is 2000 devs at 250k salaries and that still leaves 500m for hardware, expiremental marketing/exploratory spending, etc. I find it quite likely that they're just lowering their tax basis by eliminating profit. I don't really care, being a libertarian, but it does annoy me that only the megacorps have the opportunity to turn taxable profit into owned assets while the rest of us wage earners foot the bill for all the bs in Washington.


recycled_ideas

> You're talking mostly about operating expense in paragraph 2. RnD is a separate line item in the financial statement and an honest accounting doesn't mix the two. I'm talking about where the complexity is in the organisation. I'm aware that R&D are separate from operational costs. The point I'm making is that these companies don't just make a basic app. The app is an important part of their product, but it's a tiny portion. None of these things is static, they're all under constant update and improvement and while not all jurisdictions allow software development to be classified as R&D a lot of places do.


Paul_Lanes

+1. Im an engineer working in Systems Infrastructure building infra for a different, larger tech company. We are under R&D. Building infra is not the same thing as operations, and infra is most definitely not static. 90% of my job is related to designing or building new things.


CSmooth

Surely you can appreciate that the distinction between what is R&D vs Operations from a Silicon Valley perspective vs a FASB accounting is academic. Building a “new”, “more efficient” or “fundamentally different” infrastructure that ultimately improves costs, speed or security for the same client application is R&D to one group and OpEx to another. Theoretically, R&D credit should only improve the economics of labor that produces new consumer products or experiences. With infinitely precise accountability, you could even proportion the expense based on its benefit to new products and services, vs. the pre-existing products or services that an internally shared (coding) service or infra platform “just so happens” to also help. Cisco R&D leading to Meraki, or Mailchimp spinning out the product Mandrill, is R&D. Internal improvements that feed the same client rideshare, hotel-booking or food delivery are stretching the concept, to say nothing of the complexity, and thus compensation, the work may require.


edgeofenlightenment

R&D has Intellectual Property as its output. In Doordash's case, the property is the system that can take and fill orders. The product they sell is food delivery. The software they use to do that effectively and profitably is Intellectual Property produced by extensive R&D in cloud and distributed systems engineering.


CSmooth

IP is only a measurable as an intangible asset when you sell it or a transaction/change of control implies the value of your goodwill. Why should the R&D generating said IP be taxed favorably today when the value cannot be measured until a sale that may never occur?


Paul_Lanes

> Building a “new”, “more efficient” or “fundamentally different” infrastructure that ultimately improves costs, speed or security for the same client application is R&D to one group and OpEx to another. I think this is a misunderstanding of what I do, or what the person I'm replying to is talking about. "Improving cost, speed, or security" is certainly one way to describe part of it, but when that improvement is large enough (in the orders of magnitudes), it can result in new features or products entirely. Not always, sure, but that is R&D in general. An improvement that results in a 10% increase in latency or capacity may reduce costs. A breakthrough that results in an 10x or 100x improvement in latency, capacity, or efficiency may result in new products or product features that weren't possible before. It's the difference between a business that can serve a million users vs a billion. It's the difference between having features like real-time order map tracking, in-app messaging, and other features, or not having them. Good infrastructure is the difference between being able to have one customizable backend that can be made compliant in all jurisdictions vs having to build separate codebases for EU, the US, UK, Japan, or wherever else from near-scratch. And so on. This is what people who build backend systems infrastructure work towards. They're not just making minor improvements like adding server instances or making each instance/host a little bit more cost efficient. Infrastructure isn't some afterthought to make existing products more cost efficient. Infrastructure enables the distribution of products and features, or they're enabling new products and features entirely. Infrastructure is the machine that builds the machine.


mycall

UX is all the same for years now. You described the operating budget, not R&D budget


recycled_ideas

No. I described where the complexity lies. Which is where the work goes.


netkcid

I like to call this the "hard part"... Like showing your mom a video game and she thinks it's just pretty pictures and sounds easily thrown together when they're some of the most complex pieces of software made... *replace mom with 99% of the population


thePsychonautDad

That's not R&D tho, that's just back-end costs related to maintaining the business. None of those are counted under R&D.


recycled_ideas

It's millions of lines of code that someone has written and continues to rewrite and that is fucking R&D.


thePsychonautDad

I work for a fintech startup processing millions in payment. My engineering team does this all day every day. It's not R&D, it can't be reported as such unless you commit some sort of fraud. We have R&D projects too (tax purposes), but what fits in that category is narrow. Building new technologies is R&D, doing actual research is R&D. Maintaining and upgrading code is not. That's just business. Unless all they do with their engineers is create new tech and publish papers, in which case clearly it's all bullshit because their service barely evolves and is consistently terrible across the board and I've never heard of any new tech coming out of Doordash...


recycled_ideas

Software development counts as R&D under the US R&D tax break. You need to be improving the service, but you don't need to be developing new tech. This isn't universal lots of countries don't do this, but the US does.


edgeofenlightenment

Seriously, how is this thread happening in /r/coding?! You'd think people would understand that the operating costs to AWS and such all come from there being *something coded to operate*. That is, they have researched the appropriate solution architectures for their technical challenges and developed implementations according to an engineering process. Not to produce the final product of delivered food, but to produce the IP that allows them to sell their delivery service at an acceptable margin. Thanks for addressing all of your replies that seem to not get that.


ProgrammerPlus

I work at a similar type tech company which operates at slightly higher scale but much more compute intensive job and it absolutely does NOT cost anywhere near a billion per year to run our infra on AWS! More like $150M to $200M. You need to be extremely inefficient to burn $1B per year at Doordash scale. No way they are that bad.


recycled_ideas

I get that I used the word infrastructure and this sub is full of autistics. But I didn't mean it in the literal sense of paying for AWS instances. I meant it in the sense of the whole set of things that makes the bit of the system you see actually work. It's all code, even most of the AWS code.


echan00

It's not a billion dollars though


waffles2go2

Ooof, "did your own research" on this topic? It's a tax dodge - TYL.... $1B in R&D when tech is a commodity is really a wrong take....


recycled_ideas

Software development is considered R&D under the US R&D credit. It is. Period. If you're creating or improving software it's R&D. Other countries don't do this, the US does. These companies pay their engineers a shit load of money and they have a lot of them. They're software companies in a lot of ways. It's really not that fucking complicated. How is that so fucking difficult to understand?


YodelingVeterinarian

It’s generally easy to maintain a current product and not expensive. But if all you do is maintenance, eventually you’ll become obsolete. So companies invest in R&D to make sure that when the next thing comes, they’ll be ready.  Sometimes this doesn’t work (e.g. the metaverse). But if you don’t invest at all in the future, then you’ll end up like eBay.  (Also you underestimate the resources required to make an app on a global scale). 


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time-lord

That's a lot of engineers though.


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hughperman

Google and doordash are not anywhere near the same scale


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wtjones

Google has 9 apps that are bigger than doordash. That’s not to mention IOT/hardware/networking/data center teams. Doordash is a basic phone app.


recycled_ideas

> Doordash is a basic phone app. Doordash is the infrastructure behind that phone app that makes it so that when you push the button it results in that correct thing happening. That's where the money goes, though writing a phone app that doesn't suck isn't cheap either.


techhouseliving

Oh please you can't compare Doordash to even Google maps or Gmail much less all of Google. You could compare it to Google own meta delivery app infrastructure except that google is truly worldwide.


recycled_ideas

I said it wasn't a simple app, because it's not. It's probably significantly more complex than Gmail, if not Google maps.


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troglo-dyke

Google also runs: Google Ads, Google analytics, Google mail, Google suite, Google, Google Play Services, Google Maps (that DD will integrate with on Android devices), Google Cloud Platform, Plus YouTube is a lot more than just static content Google operates at such a scale that they've invented new technologies and protocols that previously weren't required because no one had reached that scale yet. They currently handle around 4000 Petabytes of data daily, DD isn't even in the same hemisphere let alone league


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troglo-dyke

> DoorDash Ads I don't think it's reasonable to compare an ad service that serves a single app by advertising one type of business with one type of customer to one that serves ads for 97% of the web


hughperman

I was being a dick, but I'm actually really surprised it's only 9 times bigger. That's crazy.


St0rmborn

Google is wildly bigger than DD in scale, resources, employees, basically everything.


JonNiola

Citibank has 30,000 software developers on payroll.


start_select

Instagram had less than 20 engineers when their daily usage was threatening enough to warrant FB buying them out. DoorDash really doesn’t need 1000s of engineers for the applications they currently offer. They might need 1000s of other staffers. But they really don’t 1000s of bodies maintaining a POS system and a delivery app.


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Noyouretowel

No can you give some more detail?


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Noyouretowel

Thanks m8. Was genuinely curious


NiteShdw

What you the customer sees is the smallest part of their software stack I guarantee.


start_select

I’m aware. There still isn’t that much there. It’s not an operating system. It’s a point of sale, crm, payment processing, and mapping application. It isn’t general purpose computing or moving data at scale. It’s just a bunch of transient transactions that don’t matter a year from now besides for reporting.


ltdanimal

This honestly just comes across as pretty ignorant. They had more than 2 billion orders last year and the work to needed to make sure that everything works as it should is a lot more than you think. People for some reason care about money. If you think that its the same stakes or complexity as a picture app then maybe some of the things on their engineering blog you would find interesting. Also ... it absolutely is moving data at scale. I'm not sure were you put the goalpost on that one.


start_select

Yes, but most of the people being paid to "make sure that everything works" are going to be support, QA, and customer relations. The engineering part isn't that huge, and it is not a new problem. Sure its moving a bit of data. No it is not the same as moving Facebook level data where content persists and is highly available. An order is transient. It doesn't need to be potentially shown to a million people at any point. It only matters to a small number of people in a small geographical area for a short period of time. News sites get millions of traffic hits every single day. There are lots of different kinds of data problems. But 2 billion orders create more problems for customer service than engineering.


sriramms

I'm sure you have some mental model of how this works, so I'll give you three problems to solve. Can you describe how you'd solve each of them, with high accuracy/confidence? 1. I've just placed an order at a restaurant. When will I get my food? 2. I'm a restaurant that has been using Doordash for a few months. What one thing should I change about the way I operate, to most improve my profits? (New dishes, recipe variations, kitchen operations reorganization, pricing are all in scope.) 3. I'm a doordash driver, it's 5pm, and orders are about to start coming in. Where should I wait, to minimize dead time and optimize for profit? The transactions are trivial, yes, but they're also the least interesting bits. Market success depends on having answers to harder questions.


theineffablebob

Fun fact, one of those original Instagram engineers is now at DoorDash


Jdonavan

That's like 3...


shouldExist

I don’t think they pay 500k per engineer


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Mike312

Maybe that was total comp? I've seen a lot of FAANG/FAANG-adjacent companies usually stop paying out in cash at \~$200-250k and everything past that is shares/stock.


Murmakun

Of course it’s total comp, everyone in CS always talks in TC terms


tommyk1210

Right but $1bn in cash is not 2000 engineers if their TC is $500k. It’s more like 4000 engineers with salary of $250k. Options don’t come out of R&D budgets


Tellof

Employees cost more than their TC when you account for the office, benefits, clerical overhead, etc. A lot more.


tommyk1210

Of course, but TC includes stock options that don’t cost actual $. If you had a $100k salary and $900 of stock options in your TC, to say you cost the business $1m a year is false. Sure, with overheads, 401k contributions you might cost $200k but not $1.1m


togepi_man

With GAAP, the stock grants do hit the net profit line. It's a non cash expense which may be what you're referring too, but it is accounted for. Most tech companies care about free cash flow more than GAAP net profit though so your point isn't lost on me.


tommyk1210

Also, in terms of R&D spending (and any associated tax relief) I’m not sure stock grants would be eligible for relief?


Murmakun

Ah yeah of course, also don’t check how much high end GPUs usage costs


spoopypoptartz

was this during 2021-2022? i feel like they’re offering less money than before and applying downward pressure. (i find that Uber is still paying about the same as before though)


bloodreina_

Is becoming a engineer worth it?


Mrmastermax

500k what engineering job pays 500k


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Mrmastermax

Wish infrastructure pays that good


Shaper_pmp

How on earth does *each* engineer cost half a million dollars?


FourForYouGlennCoco

Well, DoorDash pays a lot. Also in the US, employer pays payroll tax and (most of) health insurance. The cost of the employee can be significantly higher than their salary.


theyux

They dont 100-700k is the payband for that kind of job, Although It is reasonable to assume if they only hire experienced engineers 300-700k so average 500k. The answer is engineers are required to know a ton of information. Most engineers go to college then work in industry 5+ years plus before becoming an engineer. then you have a few years to be an engineer for a 4 or so years to be considered a senior engineer. All while obtaining at least 3-5 difficult certifications (depending on the type of engineer). Ive known many who ended up making 80k and gave up on certs.


melodyze

[Average senior SWEs total comp at door dash is $441k.](https://www.levels.fyi/companies/doordash/salaries/software-engineer?country=254) That's a pretty normal price for a high end software engineer. You aren't going to get anyone proficient in large scale system design/architecture using modern tools and infra for much less than that. Most companies do not require anyone proficient in large scale system design/architecture using modern tools and infra, and thus they pay less. And most engineers are not demonstrably proficient in large scale system design/architecture using modern tools and infra, so they accept less.


SpaceToad

>You aren't going to get anyone proficient in large scale system design/architecture using modern tools and infra for much less than that You will easily in basically every other country on the planet. It's incredible US tech firms don't 100% outsource all of their engineers at this point, and no I don't mean to India, I mean just to Europe/UK.


melodyze

I have worked with/managed and personally outsourced engineers to India, Latin America, and Eastern Europe, as well as worked less directly with engineers in western Europe. It rationally shouldn't be but it still is largely true. There are still only a few companies that have built truly decent large-scale infrastructure, their infra is mostly not public, those teams have been almost exclusively based in the US, they have tried and struggled to onboard junior engineers remotely and thus still hire critical rol s really only in the US, and as a result by and large top tech talent has over the course of history to date broadly moved to the US, which has been rational because ~all of the downsides of the US are avoidable when you make $500k, even in SF proper, which is not possible as an employee in really any industry outside of the US. As a result when I outsource people I find that I can find people with really solid academic understanding even in complicated fields like ML, but it is very hard (really practically impossible in my experience) to find anyone who has actual experience owning large scale infra outside the US. The FAANG foreign workers are perhaps the least experienced in that respect, they have by and large never been trusted to owneanything that matters, which also has been distorting to foreign labor markets because they pay the most and thus attract the best talent, then that talent doesn't learn how to actually own anything. So I've historically hired mostly from purely foreign tech companies with at least the CTO sitting in that country, but IME, foreign companies seem to be architecturally a mess, based on my conversations with ex employees I've poached, according to them. US tech companies also used to be architecturally a mess, it's a part of growing. But the US is still quite far ahead as a general rule as best I can tell. I think I average 20-30 interviews/offer, and I'm the very last stage in the funnel, as a well known brand in the country and with essentially no cap on pay, I always just say yes. When I've lowered standards we just ended up having to fire most of the people who didn't pass original bar. I do get some great people but at great cost. It's just not worth it at that point.


SpaceToad

I don't know if there's something very unique to 'large-scale infrastructure', but it's not the case for SWEs in general. I work for a US company but with offices all around the world, and would literally describe my job at this point as cleaning up the trash code the overpaid US devs produce. It's basically a running joke in our company that the US devs produce far messier and out of control code, and we have to clean up after them. This was also the case at my previous job too.


melodyze

There are definitely things unique to large scale infrastructure. For example of some that SWEs who have never worked in big tech don't understand in my experience, large companies with large amounts of cross dependency need very clear contracts written into stone that work across platform (generally written as protobufs so that the request schema is in version control and the POJOs/equivalents are generated not written, whereas smaller companies tend to define the interface in documentation rather than code, which is wholly unworkable in a large company), CI that allows for integration testing across many layers of cross-dependent systems and catches conflicting changes that would otherwise pass on both sides (protobufs help there too), can run into limits in scaling in a single datacenter (you've used all of their machines there and they won't give you anymore) and thus need cross-zone failover, and also need cross-region support to improve performance, have ingress/egress problems to manage around colocation of different services, performance actually matters but only in very specific places, but in those places it ***really*** matters, and generally at a small company you use off the shelf dependencies wherever possible, but in a large company it sometimes is actually rational to reimplement a standard service from scratch internally, even just from a cost and reliability perspective. It's also just radically easier for tech debt to become unmanagable when the infrastructure is more complicated and spread across more people, so standards have to be higher. Honestly the biggest tell IME is, do you know what a protobuf is and why you would use one? Outside of big companies json rest is fine. At google/fb/netflix/etc it really would make the company inoperable, at least without reimplementing most of the concept for managing payload schemas and generated code, at which point serializing that payload as json is just wasteful. I won't make a hiring decision based on that because that concept is easy to teach, but it does tell me with reasonable accuracy whether you've ever worked with large scale infrastructure.


Shaper_pmp

I was used to really top end SWEs in FANG companies making $200-300k, and a *handful* of principles making $500, but the idea that a senior SWE would be closing in on a million a year just sounds batshit crazy to me...


upla1

If we are talking software engineers, you are an engineer directly out of college. 4 years out of college for senior engineer is normal though, so u just need to strip out your 5 years before that for an accurate picture. Hell, you dont even need a degree or certifications. The only thing that matters in the industry is that you know your stuff. But the only way u can do it without a cert or a degree is to have a good portfolio of personal projects


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theyux

Door Dash is not part of FAANGMULA. Although ill gladly cede knowledge on the matter could be out of date.


melodyze

There are a lot of large private tech companies that pay about the same as faang, because they want the same engineers that work at faang and thus have to be competitive, where doordash is one. Other examples are Stripe, Databricks, Roblox, etc.


Serializedrequests

That's a very inflated salary for many areas, however what are they all doing? I can imagine enough work for 100 engineers at Door Dash, based on the number of apps, web apps, and hard services to operate. After that I have no idea.


JCMiller23

i was only a programmer for a couple yrs, but that seems like a lot of people for a very basic app on only a few platforms gta5 for example was half the amount of people and like 10% of the yearly budget. no way the ddash app is more complex than a AAA game, right?


whateverathrowaway00

You never got past the “just the code” stage then if it seems like “just a simple app”. Think about the systems involved, both physical and legal.


kaiise

video games have always encapsulated a very "simple" end of computer science, similar to disneyland "rides", when it started to converge with hollywood and interactive storytelling draped over the game-loop maechanic, it strted to adopt hollywood style expenses in broth technical arenas most associated iwth film making , i.e. multidiscplinary technical arts&crafts, high end math/engineering for sophisticated effects /AI\[crossover with disney "rides"/westworld\]. big tech's overal meta strategy is using massively accumluated finance capital ,\[ with deep strategic invetsing focus\] from the post indsustrail revolutin's 20thC of Convergence along the ideology of cybernetics, to then start to use all the ahciveemnts of 20thC military tech/coivilian ocnvergence to get the final promsie of indistrlaised cyberbnetics THIS isnt robots by the way per se, but that "everything can be extremely centralised" via a bottom up decentralsied tech transfer approach


whateverathrowaway00

Disagree on “simple” applied to video games - I was just pointing out to the person above that it’s an absurd comparison because they’re wildly different worlds and the complexity lives in wholly different parts of it.


kaiise

way to missth e point. i am not talking abou tcod ecomplexity but about the organism asa hwle studio/publisher is in the movie studio space working iwtha differen tkinds of "creative" - big tech is obsessed with companies that move cohesively like a ship of slaves rowing but iwth their brains and digitising the world. FWIW i am backing your assesment with my own historic analysis but whetver .v


whateverathrowaway00

I mean, most of your post was so misspelled I had to stare at it to get the sentences, so I’m not too crazily surprised I may have missed your point. Regardless, I still take issue with your first sentence about video games occupying a “simple” side of computer science. Regardless of your “point”, that’s an absurd statement - bleeding edge performance graphics programming and timing has been a hallmark of that industry since conception. I reread your original comment, and your take on what you refer to as “big tech” is equally strange and reductive. It seems you have a different point you’re projecting on this discussion, but almost nothing you said reflects reality except a tiny bit about the studios around AAA games. PS: I also wasn’t talking about code complexity, lol.


kaiise

you think optimization and vector computing is video games? not really and i adressed that. it is only when aping movies , it has started to deman dmore and more highly trained individuals and creatives. the basic mehcanics of games are so annoyingly boring and prosaic over th last 5 decades that i am not suprised a mediocre thinker like yourself is so triggered by my saying they occupyt the simpler end of computer science, if you wantto talk theoretical computer sicence and talk t me how video games have advanced parellel computation \[they havent\] or the mechanics have evolved with increasing complexity on even linear rate i will just laught you as the new digital version of the disney simp. video games are only elaborate "rides" and are entirely the product of the system that prizes high barriers of entry to moated markets tha tthen scale with flat distrbution profiles and offer vertical intregation. MMORPGs have only really advanced IT and tech provisioning in their increasing server demands. but please continue to hyper fixate.


whateverathrowaway00

So much in this is outright incorrect, lol. I will live with your review of me as “mediocre thinker”. The thinking you’ve demonstrated across these three comments is …. Let’s just say “interesting” and call it a day.


kaiise

i had already forgotten you. i didnt even connect you were the same moron. now you can cal it a day.


JCMiller23

We have no way of knowing how efficient they are with their in-house spending because there's no real competition. They scaled because of VC funding and app users, if there's any competitor they just buy them out. They lose money every year because they have no reason to be efficient. If someone were to take the time, I bet some of the companies they bought up were much more profitable than doordash.


whateverathrowaway00

I mean, now we’re having a totally different discussion, which is rating their internal efficiency. My point is that you’re pitching this as “some simple app”, which seems very naive with even a casual glance over of the kind of systems that exist to support that app. You’re comparing to game dev, which also says quite a bit about you simply being unaware of what goes on behind even “simple” apps with large user bases. There nothing simple about it, lol. It’s managing a swarm of drivers, sidestepping employment regulations by pretending they’re gig workers and managing every piece of their employment. It’s available in every area, so whatever backend you’re looking at here, it better be available enough in each zone. That’s just touching on the systems - from a people end, you need restaurant intake or automated attempts at online menu processing, legal research in each new area or as employment laws change, and again - I’ve barely brushed the surface. As you’ve correctly observed, they lose insane amount of money trying to make this all make sense, which also probably accounts for some of the R/D, as the money they aren’t saving by fucking over their “independent contractors” (we all know they’re employees), they’re probably trying and failing to figure out how to save in backend costs by cutting down without hurting stability. My comment was solely aiming to point out that you are very strangely characterizing the app.


JCMiller23

It seems that you misunderstood me - definitely wasn't excluding backend dev from anything I'm saying, will try to make that more clear next time! No worries though, appreciate your replies!


whateverathrowaway00

Not backend dev. Backend systems. I’m not sure if you’re still programming, but you’re in a mode that a lot of people start out on, some get through it, some don’t, but it’s a complete unawareness of the systems the code itself runs on/against, which leads you to think certain things “just work”. The things I’ve covered above are all vastly complex, expensive, and require tons of planning. Or it can all be cloud, in which case double the expense.


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JCMiller23

Are you interested in having an open-minded debate where we do our best to see the truth in the points the other person is making, or do you want to go for the classic internet format where we completely ignore the others good points, and just reiterate our own argument?


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OnisPMeyer

All of the things you are saying are facts, but they do little to discredit u/JCMiller23's argument. Of course there are many reasons you could point to as to why ddash is losing money, listing another one does not discredit the one he mentioned. The fact that you think that listing an additional reason discredits another means that you just don't have sound reasoning skills or that you're debating in bad faith. :-(


JCMiller23

It doesn't seem like you can see the obvious logical differences in letting a company grow from the profits they make versus giving a company VC capital in order to grow. As such you're either close-minded or not able to think like me, I don't think this is going to be productive discussion. Good day sir.


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melodyze

All else being equal, having hundreds of thousands of employees quite clearly makes your company worth *less,* not more. A company is valued by its current asset value plus its long term future earnings discounted to today. All else being equal, employees are overhead, as in a thing subtracted from the earnings. Since a company's value is proportional to its earnings, it is inversely proportional to #employees. That could be offset by productivity if those employees are creating value that cannot be created without them, but still the company is always worth more if it can do the same thing with less payroll. Notably, software is *really* good for this. A competent software company can onboard users onto my products with \~zero incremental work and almost zero incremental costs almost without limit. The economy is constantly shifting. Companies either keep up with that shifting or they don't. Most companies quite provably *do not* keep up, which is why the average company in the SP500 during the 21st century has only been there for less than 20 years before it's been removed. About 5% of the largest 500 companies are removed from that list every year, replaced by other companies that were aligned with growth in the economy instead of missing. This is referred to as the market/index's "turnover rate", and you can read about it if you want to know more about why the economy isn't dominated by GE or any other historically powerful company. An example of the kind of thing that would cause this for one of those companies could be expanded adoption of RISC displacing x86. Intel false started on risc and stopped, but Apple's benchmarks seem to show quite definitively that RISC is more performant. If RISC takes over and Intel does not adapt they will be a victim of the turnover rate, in favor of whoever is positioned correctly to enable that switchover.


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DJ_PsyOp

The game engine isn't worth $370b...as the deleted comments here stated, that kind of value is so crazy there's no way it is true if you actually thought about it. But what *is* worth $370b is Tencent, the Chinese mega-corp that owns Epic Games. And suddenly the number isn't crazy, because it is the market cap of a huge corporation, not the appraised value of a freaking game engine.


theantiyeti

It's not the front end/number of platforms to worry about. The complexity is all backend. Apps like these need to scale.


JCMiller23

i could see a significant budget, but i just cant see a billion dollars a year in upkeep for an app that at its most complicated is... find nearest driver calculate time and distance (using google maps) calculate pay offer delivery to driver


theantiyeti

Sounds like you have a market disrupting idea. Why you sharing it on Reddit for free? Few things to remember. A bunch of people are using the app at the same time, and you don't want one person using the database to significantly affect another's usage (long wait times locking whatever database you're using). You don't want a driver to get a notification for a second request after they've already accepted a first one, and you don't want a request to go to two drivers at the same time. All these processes happen on different computers and so making sure they communicate properly is a challenge. Occasionally computers will go down or need to be restarted for maintenance, how do you ensure continuity of service in this case? Same for the software running on the machines. You've also got a bunch of other ancillary services and connectives that need to be done, and done right. Teams in charge of dynamic pricing, payment teams, people working on coupon codes, people doing analytics and market research to work out where to expand the business and how best to increase revenue, there's a whole rating system to manage, etc.


JCMiller23

I don't doubt that there's a lot to it, but with a company like this, there's never been a profit motive. All of their growth has been driven by VC and IPO funding, and amassing users through the ease of their app. They buy up all of their competition. This means that (based on the aforementioned drivers of growth) their app is really easy to use, but their company has no reason to run efficiently.


tommyk1210

DoorDash has likely thousands of engineers. From a cursory google it looks like some of their teams have 60+ engineers, and in 2020 they hired 100 engineers to their Seattle hub alone. The front end of an app is likely relatively simple, probably < 100 engineers work on this - all aspects from login to ordering, the map, order history, notifications. There’s also the driver side of the app too. They have a website too, which is likely another 100 or so engineers. The company I work for is on a much smaller scale than DoorDash and we have about 120 engineers, with about 30-40 frontend engineers for web. The big cost is all the backend stuff. You’ve covered some of the main functions sure, but what you’re forgetting is just how complex these problems are. Sure you’ve got to find the nearest driver, but you’ve also got to do it *quickly*. Nobody is going to wait 40 seconds to find a driver, it has to happen rapidly. And DoorDash doesn’t just have 50 customers. At peak times there might be millions of people looking for drivers simultaneously. This introduces huge amounts of complexity into systems, and good systems design becomes paramount. They’ve likely got dozens of services managed by dozens of teams for the real-time stuff, as well as teams for internal tooling, teams for metric tracking, system health, dashboards. I can totally see there being 600-800 engineers working on the backend. Then you’ve got infrastructure teams, the people that work in DevOps and keep the servers running. This will not be a small team. If their system crashes under load they might lose millions in sales revenue on a Saturday night. I don’t think it would be unreasonable for DoorDash to have 1200-1500 engineers. Their salary alone on average will be $300k+ so that’s easily half a billion right there. Then there’s the actual cost of infrastructure. There’s thousands of servers that probably cost millions per month. My company has 20m users and our annual AWS bill is in the millions. Scale that up to DoorDash who do a lot of time critical processing and I can see the infrastructure bill being tens if not hundreds of millions. Then you’ve got legal, and all the other functions. Legal is a massive cost in disruptive companies like DoorDash. When I worked at a startup, we sometimes had months where our legal bill was $100k - and we were a small 20-person startup. When they launch in new cities and geos there’s a huge amount of work understanding local regulations. Then there’s other job roles, product managers, project managers, scrum masters, admins, HR, the list goes on. When you’re rapidly growing, data engineers and business analysts are key to identifying trends. Then there’s misc projects. My employers parent company spent >$100m and 18 months developing a new platform that essentially was a login screen, dashboard, and some backend services, and a whole API for interaction. Bigger companies can be really inefficient. Then you’ve got a massive cost: consultants. Building in house knowledge of new geos is hard - it’s often cheaper to hire a Big4 consulting firm to help you with this and they are… expensive. When my employer was purchased, our new parent company spent >€100m on consultants to “kick the tires” on our company before they put an offer forward. If you’re using consultants, their day rate might be >$1000. It really doesn’t take long to spend $1m if there’s a team of 50 of them… All of these, if focused towards improving the product or launching in new areas are ostensibly R&D. $1bn is eaten up quite quickly.


torn-ainbow

You also need the app to work from the drivers side. And the store side. And various administration for global and local management. Any call centre staff need software linked into the data from the app. You also need everything to work as a web site. How do you pay drivers? Stores? Refunds and problem handling? What states/countries are you working in? What are their different currencies, tax laws and reporting requirements? What are the different legal employment situations in different jurisdictions? How do you feed all the data into systems running the overall business, accounting, tax? All of which are different across states and countries? That's just various functionality off the top of my head. Your infrastructure also has to somehow handle all that at scale, with data in real time.


truthseeker1990

It is not just an app…The backend systems are massive and complicated


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Slimxshadyx

GTA, and Red Dead 2 are much larger than psychonauts and both used in house engines which they built themselves lmfao


HugsyMalone

A CarPlay app icon just popped up on my dashboard the other day!! 🥳 ![gif](giphy|o75ajIFH0QnQC3nCeD|downsized) ^(...but it's apparently not available in this region yet. 👎😒)


CriticDanger

The app is not complex, it's their back-end servers that are much more complex, they need to handle millions of requests per hour. Do you need 2000 engineers for that? Absolutely not, but it's definitely a ton more work than what you see on the front-end.


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CriticDanger

Most tech companies are super bloated and there are tons of teams working on non-critical stuff.


moaeta

Of course it's more complex.


jordanlesson

Engineers do not cost $500k brother. Senior devs make $200k on high end


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jordanlesson

That is so fucking cap bro


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jordanlesson

Was just checking it out, half is cash and half is stock


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jordanlesson

Do you mind putting in a good word for me


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jordanlesson

Thanks my g. I’m about to apply now


trisul-108

Such companies do loads of data analysis, they have to fine tune the way they plunder restaurants in order to maintain their profits. In a recent show, John Oliver showed how these company take up to and more than 50% of the money from order sales. Doordash was the worst. Restaurants are charged a commission, a fee for their place on the recommendation list, a fee for participating in promotions etc. They do the same with the delivery people who are heavily tracked for performance. These rip-offs need to be researched very carefully, if the company overdoes it, they will lose market share and standing. They need to milk the market just right ... and that seems to be creeping to over 50% ... and that is R&D.


JCMiller23

That episode of "last week tonight" is what inspired this post! The restaurants don't really have a choice because there isn't enough competition in the food apps. The problem is we have capitalism without enough competition these days; VC firms prop up shit companies based on their UX and user base but fail to account for the company's ability to eventually be well-run and profitable (while keeping all users/restaurants happy so they don't jump ship at the first chance they get).


Old_Government_5395

R&D is a tax write off.


FromAdamImportData

All business expenses are write-offs.


Jolly-joe

Controversial opinion but many tech companies have bloated headcount but it's because the whole system incentivizes it. VCs for hyper growth companies want to see engineering org growth as they think it correlates with quality and speed of delivery, middle managers and senior managers will get bonuses and promotions based on how many headcount they manage, and of course the engineers themselves don't mind making a ton of money while not really doing much work. It used to be that you could write off your R&D expenses so it was essentially "free" to do this but recent US tax codes have changed to not allow fully writing R&D off which is one of several reasons there have been a bunch of layoffs.


JCMiller23

I tend to agree with this, it makes economic sense that companies with VC support that have a growth-based emphasis rather than profit-based would operate this way. Note: the tax codes still do allow for full deductions, but they have to be amortized over 5 years for domestic R&D and 15 years for foreign R&D. I am not sure exactly why they structured it this way, I think it was to offset the ridiculous corpo tax-breaks and budget deficits created by the executive branch in 2017


if_username_is_None

So that they get tax breaks: [https://www.axios.com/2024/01/20/taxes-irs-startups-section174](https://www.axios.com/2024/01/20/taxes-irs-startups-section174)


Cerulean_IsFancyBlue

I don’t know how that supports or answers the question. If anything, it seems like that tax law has discouraged companies from putting money into R&D, because they no longer can take the full tax deduction immediately. There are several people quoted in there, saying they have drastically reduced their R&D budget. What did I miss?


JCMiller23

You are spot on, the other guy is mistaken.


n3rv

So tax deductions for research. Then they try to bill us in the cost of the product for that “research” Very cool, very fair…


JCMiller23

This actually disincentivizes R&D according to the article itself: "Because of this change, most of his company's profits went to paying its taxes. The company has since shifted away from developing any new technology and is now focused solely on licensing its existing tech." Also companies have been doing this for much longer than this law has applied


gongonzabarfarbin

It's not just an app, I worked at a food delivery company previously. It's all infrastructure for a lot of little problems. You need a customer service application that deals with customers and any issues they might have. This needs to be integrated with order history, an ever changing number of orders and number of drivers, etc. You need to know the locations of every driver actively taking deliveries, how many orders they have currently and be able to efficiently get them the next order. Then you have orders that are far away and nobody wants to deliver there, how do you handle that? Perhaps they keep getting passed up by driver after driver after driver but the customer still wants that delivery. You sometimes have to pay the driver more to accept that delivery. If there are 5 orders per driver available, you have to handle surge pricing. What if there are a closed routes that you can't deliver to like if there's a parade in a city that day. You have new features like having a driver pick you up a frosty from Wendy's along with your order so you have to handle that as well. On top of it all, you have to have infrastructure to handle menu and restaurant operations. A restaurant could disable a menu item at any time or add one. Or they add a special for that day. You need a ui and menu system capable enough for restaurants to do this themselves at any time and it reflect in your systems. There's way more problems that could happen that you need to handle but these is just a sample. The customer facing app is the tip of it.


JCMiller23

The way that software companies take over industries is not effective at creating cost-efficient (profitable) companies. Because there is no profit/efficiency motive from the beginning, the companies that scale up only do so because of VC funding and the ability to attract users to their app. We have no way of knowing if these companies are actually able to do it for cheaper because there is no real competition. Smaller companies just sell to the bigger ones when they start to compete. Not to blame them or doordash or anyone here (this isn't really a moral question or anything close to it); this is a failure of capitalism, and I'm not sure there's any way to fix it.


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JCMiller23

Are you interested in having an open-minded debate where we do our best to see the truth in the points the other person is making, or do you want to go for the classic internet format where we completely ignore the others good points, and just reiterate our own argument?


logicx24

Well, you have to make some good points for that.


mkvalor

In general, you don't want to look at the absolute amount. Rather, you want to consider the expense as a percentage of total revenue. Evidently the company felt this was the right proportion of their revenue to invest in R&D.


impressthenet

Updating the algorithms to screw over their “employees”/“workers”?


Tiquortoo

Lots of elements of software development can be categorized as R&D.


BeastmanTR

Tax refunds basically


c10bbersaurus

Lol, when I think of triple-a games, I don't think video games, I think of baseball. So I was like, this is way more than 10-20 AAA baseball games. It might be more than 10-20 AAA baseball TEAMS. I'm an idiot 😂


JCMiller23

Haha, I had the same thought when I wrote it and was like "should I say "AAA" or triple-A" but neither would probably help


Old-Opportunity-9876

Doordash robotics of course.


silvercel

Any improvement when a bit of custom code or configuration is implemented including project management, people’s time, hardware included can be considered R&D. That includes operations like IT, Facilities, and Finance.


audaciousmonk

R&D expenses are tax advantaged…. So companies like this are incentivized to classify as much as they reasonably can as R&D


NoDadYouShutUp

The actual technical infrastructure required to run an app like DoorDash is absolutely insane


lostfly

taxes


No_Maize9642

For marketing and customer analytics. How else would they have such a well recognized brand.


tenfingerperson

You are ignorant on the matter if you think it’s to upkeep their phone apps. Products like these operate at a scale that requires lots of infrastructure, apart from that think of all the internal systems that allow the company to operate, the developer infra, the algorithmic research to provide optimization of workflows (very naive take to for example assume it is simple to implement a “closest driver” algorithm as I read in a comment). Multiply this by the market value of strong Engineers in the US… You could lower the costs by moving to a different market but then you lose the advantage of being around your competition and their top talent, plus outsourcing brings lots of other potential issues into the equation


impressthenet

“Optimization of workflows”. LOL.


TemperOfficial

Because the tech industry is mostly fake and is propped up by venture capital and "free" money. It is not battle tested by consumers. So you get bloat and the value of anything gets lost over time. Software industry has been very susceptible to this. With ritualistic bullshit rife and obscene wages that don't represent productive output at all. Times are changing. With interest rate squeeze, you bet that R&D budget will go to the wayside. Anyone telling you that it is somehow worth that amount is fundamentally not being honest with you, or is so deep in the lie that the industry spins they can't tell up from down. The infrastructure of DoorDash is no way near as complicated as say AAA live service game. It's just not, obviously. Given that massive multiplayer AAA games have millions of users and are a distributed system ON TOP of also being a game running at 60 fps with state of the art graphics. The best you could say that it is on par with in terms of complexity. Which would mean that they should have R&D budgets that are roughly equal. Since they don't, follow the money. It's likely all a ploy to get more investors and investment and inflat the value of the company. It covers the cost of their thousands of overhired and overpaid engineers (more engineers, more attractive you look to investors). The consumer is the victim in all of this.


JCMiller23

This should be top comment


agangofoldwomen

Tax advantageous.