Postmates Sets Up Shop in New York—Right in Seamless’s Backyard
Today Postmates revealed it has expanded its app-driven, shopping and delivery service to New York with a team operating in the Flatiron neighborhood. This puts the San Francisco startup in three cities, including Seattle, and on New York-based Seamless’s home turf.
Postmates lets consumers order prepared food, groceries, and even office supplies that will be delivered within its service areas by couriers in less than one hour. CEO and co-founder Bastian Lehmann spoke to me in New York recently about getting operations set up here.
He says Postmates adopted an expansion strategy similar to political campaigns that spread from town to town. Rather than hire someone remotely, the company sends in a designated crew that spends about one month in each new city then goes on to the next location. “They drop in like a Navy SEAL team and start our launching process,” Lehmann says.
That includes finding office space, recruiting, and marketing in each city. In New York, Postmates initially will focus on a 10-block service area in the Flatiron district, Lehmann says. “After six weeks, the launch team fades back leaving one or two operations managers,” he says. The number of messengers in each city will vary though may grow quickly. The company began providing service in San Francisco last year with about 10 couriers, Lehamnn says, and now has more than 200 operating in that city.
The Postmates platform lets consumers browse nearby stores and place orders, and matches them with available bike messengers and couriers in the area who can pick up orders. Lehmann says his company’s deliveries are often for prepared food ordered for lunch and other meals for workplaces. Users are charged delivery fees that start at $6.99. The app offers updates on the order status with location tracking and also presents information about the delivery person. These mini profiles show their experience level and number of completed jobs through Postmates. “The experience is very similar to using [car hailing app] Uber,” Lehmann says.
Expanding into New York where takeout ordering company Seamless, which this month announced it would merge with GrubHub, and errand-running platform TaskRabbit already operate may sound like a steep hill to climb. Lehmann says his company offers a different type of service. “Seamless is not a logistics company,” he says. “They’re a Web-ordering form. They solely rely on the delivery men that work for restaurants.” That limits those deliveries to within a couple of blocks of participating restaurants, Lehmann says.
The selection of restaurants that can be used through Seamless is also narrow by his reckoning. “Sixty-five percent of restaurants in Manhattan don’t offer deliveries,” Lehmann says. “If you don’t have the volume, it’s very difficult to have people on staff just for deliveries.” Since Postmates provides access to its own couriers, he says his company is not restricted to restaurants’ delivery options.
Lehman believes that fellow San Francisco-based startup TaskRabbit, with whom Postmates shares a mutual investor in Founders Fund, is more at home in the errands space. “Those are not things we’re interested in because we are really a logistics company,” he says. “We want to be an infrastructure in a city. Imagine there are Zipcars everywhere; we want there to be a fleet of Postmates around that you or a merchant can use.”
Getting started in a new territory is not without its surprises, he says. Some of the challenges of sending out couriers in New York include dealing with doormen at many residences and workplaces. Making deliveries to high-rises is also a somewhat new wrinkle for Postmates, he says. “Even with express elevators, you can spend 10 to 15 minutes in a building,” Lehmann says.
Postmates was founded in 2011 in San Francisco though the idea for the company dates back to 2005. Back then, Lehmann wanted his snowboard, accidentally left behind during a move, brought to London. Getting it shipped from Germany though was a complex and expensive process, he says. The varying price ranges and terms for couriers did not make things easier. Ultimately a friend took the snowboard but the situation gave Lehmann an idea. “What if you had a Match.com for stuff?” he asked. “People could say they were driving to a destination and other people could piggyback their items on that.”
Mobile devices at that time, however, were not as widespread or as sophisticated as today’s gadgets. “The best thing you had was a BREW device or a Nokia phone,” he says. Mobile phones in those days also did not commonly include digital maps or GPS navigation. “There were so many challenges that I put the idea on ice,” Lehmann says.
Eventually he came to San Francisco to pursue a different startup idea based on tweet curation. “You don’t want to know anything about it,” Lehmann joked. “It will destroy your brain.” That startup got some funding but he says it soon ran out of steam. Eager to remain in San Francisco, he looked again to idea that became Postmates.
With New York now an active territory, the company is weighing expansion into a fourth city. It is too early to reveal where that might be, Lehmann says.