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Illustration: Sarah Grillo/Axios

Restaurant delivery company DoorDash is expected to be part of the post-Labor Day IPO rush, having filed confidential registration documents back in February. But it's also facing an existential threat to its business model and needs to quickly come up with some better rhetorical defenses.

Driving the news: My interview with DoorDash co-founder and CEO Tony Xu was shown Monday night on "Axios on HBO," with a heavy focus on the employee vs. independent contractor debate. At best, he held his cards close to his chest. At worst, he whistled past the graveyard.

Xu argued that flexibility — in terms of when "Dashers" work, which jobs they accept, etc. — is incompatible with being an employee. But he never quite settled on why that is, except that it's the dichotomy that companies like DoorDash have created. When pressed, he falls back on "what Dashers want," without lending much gravity to dissent from politicians, courts or certain Dashers.

  • Watch this video clip of Xu explaining why his independent contractors can't negotiate their rates and his thoughts on unionization.
  • See Xu talking about Joe Biden and Kamala Harris' opposition to gig economy company efforts to roll back a California law that would categorize their workers as employees.
  • He also said the average Dasher now makes $22 per hour, which includes when the app is on but a delivery is not in progress, but he didn't know the cost of typical Dasher overhead (fuel, vehicle depreciation, etc.).

DoorDash was not party to the lawsuit that nearly led Lyft and Uber to suspend ride-hail operations in California, but it's facing a similar complaint brought by the San Francisco district attorney. In an unaired portion of the interview, Xu declined to say what DoorDash would do if a preliminary injunction was granted in that case, except to say the company is "working on all plans."

  • Xu also said he hasn't read a proposed "third way" to categorize gig economy workers that Uber CEO Dara Khosrowshahi recently laid out in a NY Times op-ed, but he said DoorDash favors the idea of giving Dashers benefits like portable health plans.

The bottom line: DoorDash in the pandemic evolved from a casual luxury to an essential service. For IPO investors to buy in, though, Xu will need to give more compelling answers on how his company will manage its most glaring risk factor.

Go deeper

Nov 10, 2020 - Podcasts

Lyft co-founder John Zimmer on what comes next for the gig economy

Gig economy companies like Lyft and Uber got a huge win in California last week, when voters approved a measure that will let them continue to classify many of their workers as independent contractors instead of employees.

Axios Re:Cap digs into the ballot measure and what comes next, both in California and nationally, with Lyft co-founder and President John Zimmer.

Updated 2 hours ago - Politics & Policy

Congressional leaders clinch support for crucial defense bill, debt limit votes

Senate Majority Leader Chuck Schumer passes waiting reporters on Tuesday. Photo: Eric Lee/Bloomberg via Getty Images

Congress has found a shortcut to pass its annual defense funding bill and raise the debt limit.

Driving the news: The House voted Tuesday night on two major bills — one creating a one-time, fast-track process for the Senate to raise the debt ceiling with just 51 votes, and another passing its annual defense bill.

House passes annual defense bill

Speaker of the House Nancy Pelosi. Photo: Chip Somodevilla/Getty Images

The House voted to pass the annual defense bill 363-70 on Tuesday night, authorizing nearly $770 billion in funding for defenses and national security programs.

Why it matters: The National Defense Authorization Act (NDAA) still has to clear the Senate, but the House passage greatly increases the chances that the must-pass defense bill will move through both chambers of Congress before the end of the year.