9 ms·

Why $53M Wasn't Enough to Scale Good Eggs

69 points by dhgisme 11y ago

danso 11y ago
Just two months ago, they announced expansion of delivery to Manhattan's downtown area: http://blog.goodeggs.com/post/120709577938/good-eggs-is-coming-to-manhattan http://blog.goodeggs.com/post/120709577938/good-eggs-is-comi... I'm guessing the logistical and financial troubles described in the OP were pretty clear 2 months ago...was expanding service to Manhattan a Hail Mary to attract additional investment?
- jforman 11y ago
  When it's clear at the top that core strategy needs to change (as in this case), this usually doesn't impact the company in bits and pieces — it all comes at once. That's because making a major change at a large company requires coherent planning, and you don't get coherent planning by only saying "we need to reduce opex across the board, we're running out of money". You get it by making a new top-down plan with entirely new goals and a new P&L. As a result, 140 people got laid off all at once, rather than in waves. Had it been done in waves there would have been mass confusion, low morale, and an inability to buy into the new plan because there wouldn't have been a new plan yet. And for the same exact reason plans to roll out to Manhattan, which were surely started many months ago and enshrined in yearly and quarterly goals, were axed abruptly. It's possible it was a cynical ploy for fundraising, but I really doubt that. It's very hard to pull off momentum games at GoodEgg's size — investment scrutiny is much higher, and decisions are based more on spreadsheets. Not that hype doesn't factor into it, but it's not going to float you if your core economics are busted.
sliverstorm 11y ago
It takes a lot more than good code, talented engineers and passionate customers to scale food tech startups that deal with getting perishable food from local farms to people’s doorsteps. It feels like some kind of tech-myopia that anyone should think code was the key to a successful food company. The old "when you're holding a hammer..."
- woah 11y ago
  If they had used Haskell I think things would have gone differently.
  - jeremiep 11y ago
    Yeah, they could've hit Monad Transformer Hell, or they could've wasted all their time learning how to write practical applications in Haskell and end up bankrupt in a very lovely ivory tower. I've heard this argument over and over again and it never is good advice. It ignores the context completely as well as whether the developers know Haskell or not. You can screw things up in any language, especially if a large part of your business model involves stuff not related to code, like shipping perishable food.
    - sliverstorm 11y ago
      (I think your parent was being satirical)
Animats 11y ago
"The single biggest mistake we made was growing too quickly, to multiple cities, before fully figuring out the challenges of building an entirely new food supply chain." This is a repeat of Webvan. Webvan had a good idea, but tried to "scale" fast. They had about 3% market share in 30 cities, and needed 30% market share in 3 cities.
- WDCDev 11y ago
  Heh ... I immediately thought Kozmo.com myself. History is repeating itself.
- nikanj 11y ago
  The downside of venture capital, entrepreneurs need to remember that investors prefer trying for billions and failing, and consider trying for millions and succeeding a failure. I've read a few bitter stories about people with ramen-profitable businesses who got a late-stage investment into their bootstrapped company. Basically you spend years slowly kindling a small fire, and the VC comes over a dumps a truckload of lumber on it. Might get the bonfire they're looking for, but they don't really care if they just smother your campfire instead.
- michaelt 11y ago
  There's a reason webvan was tempted into scaling too fast. For mass market groceries, there are two virtuous cycles a retailer needs to trigger. The first is: 1. Get higher customer density 2. more deliveries per driver shift 3. reduced delivery costs 4. attract more customers with lower delivery prices 5. go to 1 The second is: 1. Get more customers 2. better economies of scale and more negotiating leverage with suppliers 3. reduced grocery costs 4. attract more customers with lower item prices 5. go to 1 Now, the first virtuous cycle only works at the city level - operating in two cities doesn't improve your customer density. But for the second virtuous cycle you need overall market share, not just local market share. To get Wal-Mart market share (~30%) and prices you need Wal-Mart buying power. Of course, that's no excuse for building loads of warehouses full of tech that can't achieve the performance you need and to 'iterate' costs a few hundred million per warehouse! But it's understandable why the business plan would call for national expansion at some time - and I can also understand why people immersed in the SV community would find it hard to slow down and not break things :)
kra34 11y ago
The first time around it was called "The New Economy" https://en.wikipedia.org/wiki/New_economy https://en.wikipedia.org/wiki/New_economy
exelius 11y ago
Sometimes "do things that don't scale" is bad advice. It's great advice when starting out (because you should be focused on building an appealing product before you worry about scaling it), but you need to be using your scale-up to test ways of breaking out of doing the "things that don't scale". The idea is to turn it into a forcing function for the company: if you can't find a better way to scale, you're done. Disruptive innovation is about ripping out the assumptions that incumbents made and operating under a new set of assumptions that may not have been possible when the incumbents started. But sometimes, the incumbents' assumptions/constraints are still valid, and new entrants don't have as much of an advantage (or the new entrants' advantage is easily copied).
- CPLX 11y ago
  I think it's basically a contraction for "do things that don't scale until you get $50MM or whatever and then stop doing that."
zenbowman 11y ago
It's a little ironic that goodeggs is considered a food technology firm, when it has nothing to do with technology, and in fact has a rejectionist approach to technology in the first place. Monsanto and Cargill are food technology firms. Advances in food technology are what allow us to feed 9 billion people with a fixed resource (arable land). There are serious innovations in food production and distribution that have saved millions of lives in the last half century (Norman Borlaug and the Green Revolution). An online seller of local produce is not "food tech". It is simply using the web to sell food. Add to that their dislike of synthetic pesticide/fertilizer and other real advances in food technology (advances that in the developing world mean a real reduction in deadly diseases that spread through the use of animal manure [natural fertilizer]), and it makes them just another anti-tech firm that happens to peddle goods on the Internet.
- akamaka 11y ago
  I'm not sure if you just have a problem with organic food, or if this is just another reiteration of the tired old "if you're not trying to solve world hunger..." argument that gets used to criticize business ideas, but none of your points are really relevant to a company whose goal is to conveniently supply food to some of the richest cities in the world.
  - zenbowman 11y ago
    Organic food is fine. But it is, fundamentally, an anti-technology approach to growing food. You should be free to eat it if you want. The point is simply that firms that reject technology should not be described as "tech" companies simply because they use the Internet in some way. I'm not suggesting in any way that companies should not exist if they don't solve planet-scale problems.
    - akamaka 11y ago
      I think folks underestimate how much agricultural science and technology there is that doesn't fall under the very narrow categories of genetic engineering and chemical pesticides. Modern society is built on top of the massive productivity improvements in agriculture that occurred before those were introduced, and there is plenty of room to innovate without using those methods. GMO crops are limited[1] in Europe, yet they continue to be a leader in agricultural innovation. [1] edited, see dragonwriter's correction
searine 11y ago
Wait, you're telling me a perishable luxury product is a tough market?
wahsd 11y ago
When I first heard of this company I thought it was some kind of joke. Turns out I should really learn how to bamboozle investors into handing me $53M for shitty ideas that don't make even basic logic sense.
Axsuul 11y ago
Good luck to them. Hope they figure it out. Churn can really hurt your business and affect growth tremendously if you don't address it. I'm guessing that's the case here. It's like taking three steps forward and two step back. I'd rather take one step forward at a time.
pfooti 11y ago
I live in Good Eggs central - san francisco, and I foresee problems that are still ahead for this startup. Don't get me wrong: I really want Good Eggs to succeed, but they have quality control issues that need to be addressed and scale very poorly. Specifically, I've been a customer of theirs for years, and in the past two years in particular, I've seen prices go up pretty dramatically and quality in some cases go down. It used to be the case that Good Eggs produce and meats were farmers-market quality at really good prices, delivered. Now it's the case that the produce feels like farmers-market seconds (the produce I get from them regularly has only a few more days of freshness left and are decidedly not the fruits or veggies I would pick if I went to the store on my own), and the meat and fish prices have gone well beyond the cost of the same meat from other sources (say a trip to a regular market). Top this all off with persistent packaging and logistics errors - my last order contained someone else's frozen lunch pies, didn't contain any of the cheese I ordered, and was delivered an hour before the actual delivery window I requested (and contained fish, so if I hadn't already been home, this would have been a problem). Good Eggs is really good at fixing these problems - I email their customer service and they credit me for stuff I don't have and throw in a $5 off coupon for next time or whatever. If inconsistent quality or mispacks were rare, this'd be perfect. The problem is, it is not rare at all. I have definitely fallen off in my use of their service - if I'm paying the same price, I might as well just go to Andronico's, Whole Foods, or the Ferry Building (or Gus's or Rainbow, or Berkeley Bowl ... there's a lot of great grocery stores in the SF region) so I can pick out what I want, and sometimes (especially at Berkeley Bowl) get a way better price. They need a better process for vetting the product they get from distributors (and possibly a better contract when it comes to rejecting low-quality stuff) and a better process for getting people's stuff into their bags. That's not scaling, that's core competency. It may be the case that this doesn't scale, can they deliver food that's sufficiently high quality that I could say, 'If I went to the store, I'd have chosen that tomato' at a price that's competitive with the store? That's a difficult problem to solve and requires well-established relationships with vendors.
saosebastiao 11y ago
Facepalms all around. Supply chains are hard, and the idea that you can just write software to "solve" them is a level of hubris that defies description. Supply chains aren't a problem you can solve with big data. They aren't a problem that be solved with machine learning. In fact, you could combine the worlds top researchers in Computer Science, Economics, Operations Research, Mathematics, and Statistics, put them in a room together for a decade, and still not "solve" even 1% of the problems that Supply Chains face. I know the ITA presentation on Air Travel Planning Complexity[1] has been circulated here many times, but it always blows peoples minds how complex that problem space is, and that type of problem is miniscule in comparison to end to end supply chain optimization. I work in a problem space that is the combination of 9 different NP-Complete/Hard problem spaces (I've counted) on a regular basis...we are barely scraping by with millions of lines of code and entire data centers of our servers running at peak utilization 24/7, and that is with state of the art heuristics solvers and hundreds of PhD-level researchers, and that is only a subset of the Supply Chain problems that my company faces. To say that Good Eggs bit off more than they can chew is a MASSIVE understatement. Supply Chain Management is a field that is heuristic-driven because there isn't a solution. The heuristics that drive modern food distribution are the result of a real world genetic algorithm that is already thousands of generations deep...and miniscule incremental improvements have been the subject of PhD Theses for over a hundred years now. You don't optimize on top of that by writing a web service. Supply Chain Management may not be technologically advanced in its usage of enterprise software, but that doesn't mean that their ideas and processes are stupid. At best, it means there are some annoying frictions in the industry in the way that they interact with other industries (and there are actually plenty of viable startup opportunities to fix this). The presumption of stupidity[2] regarding the existing state of logistics and supply chain management killed this company, just like how it killed Webvan, and is going to kill a whole host of startups in the distribution and delivery space within the next few years. [3] [1] https://static.googleusercontent.com/media/www.itasoftware.com/en//pdf/ComplexityofArlineTravelPlanning_Carl_Sep-03.pdf https://static.googleusercontent.com/media/www.itasoftware.c... [2] http://www.aaronkharris.com/presumption-of-stupitidy http://www.aaronkharris.com/presumption-of-stupitidy [3] PS: If you are in VC and have a stake in any startup that is doing last mile delivery, liquidate now. There isn't a single startup in the space, whether they are currently valued at $1 or $1B, that can sustainably provide their existing value proposition that they are promising to their customers. It is possible to force scale some of them into something sustainable, but your valuations make me believe your cash flow neutrality projections are off by more than an order of magnitude.
griffinmb 11y ago
I really liked Good Eggs, and their customer support always seemed great. Unfortunately, my last order came an item short so they gave me a $5 credit on my next order. A day or two later, they close down in NY and now I won't be able to redeem the credit. Not a big deal, but it was a bit annoying coming from a company I'd always used specifically for their great customer service.
ucaetano 11y ago
"Scaling Food Distribution Is Really, Really Hard" No, it isn't. It is fairly straightforward and thousands of companies have scaled across the world. Scaling a two-sided network focusing on providing a niche seasonal product to a niche audience is really, really hard. It wasn't the food distribution that wasn't scalable, it was the business model. "We were motivated by enthusiasm for our mission and eagerness to bring Good Eggs to more people. But the best of intentions were not enough to overcome the complexity." No, you were motivated by aggressive expansion targets to provide returns for the dozens of millions of dollars you took as investment and to make a lot of money.
- davidu 11y ago
  As blunt as this is, it's right. C&S Grocer does $22 Billion per year in revenue, and is profitable, doing just food distribution. http://www.cswg.com/ http://www.cswg.com/ and https://en.wikipedia.org/wiki/C%26S_Wholesale_Grocers https://en.wikipedia.org/wiki/C%26S_Wholesale_Grocers Every one of us in the USA probably ate C&S distributed food today.
jordank 11y ago
A couple more points here: 1. A lot of people who care about organic and farm-to-table ethos already live in areas with significant market coverage. Those people will tend to have existing behaviors — GoodEggs sought to displace these. This can be hard if existing players do good-enough job. 2. The paradox of some delivery services is that the people who need them most are sometimes the most economically unviable customers (because they are geographically spread out, because they are lacking in funds or both).
Paul_Dessert 11y ago
$200M Wouldn't be enough. They are trying to solve a problem that doesn't exist for 95% of the country. Sure, there is a market for this, it's just not the size they are thinking. As the article says, "Figure Out Your Model Before Scaling".
subpixel 11y ago
Part of their operation was driving a truck up to Fishkill, NY and filling it with goods from Hudson Valley producers, many of who are too small to be commercially distributed already. I bet someone could keep doing that and make good money. But probably not enough money to make VC's happy.
pbreit 11y ago
What is the deal with those ridiculous social share bars that cover up so much of the page's content??
pbreit 11y ago
I wonder if the problem has to do with providing a desirable product? It's already pretty easy to get good food, good organic food and good organic locally grown food from a variety of vendors. With GoodEggs it seems you're getting a clunky ordering experience, inability to select produce, an extra shipping charge, moderate/high prices, etc.
pbreit 11y ago
I think the sweet spot is going to be a Trader Joe's-like online brand. Good quality, organic options, low prices, curated selection. Instacart, GoodEggs and others are missing the mark.
asah 11y ago
Bummer - I was rooting for Good Eggs! re: software and food. The truth is nuanced: - obviously, code won't overcome the challenges of immature, lower-scale logistics and business operations. Roll up your sleeves like everyone else! - no, it's not about "big data" as much as business process software. - but yes, code can help in some ways: - analytics/BI/decision-support: smarter decisions, fewer meetings. - running ops: fewer managers, automated monitoring and project followup. - use code to help manage your supply chain. - but yes, "tech thinking" does help: - faster, safer process change - remote monitoring - application of classic compsci algorithms vs reinventing wheels. cheers! adam Buyer's Best Friend leading provider of office snacks to silicon valley http://bbf.io/snacks http://bbf.io/snacks

69 points by dhgisme 11y ago

danso 11y ago

Just two months ago, they announced expansion of delivery to Manhattan's downtown area: http://blog.goodeggs.com/post/120709577938/good-eggs-is-coming-to-manhattan http://blog.goodeggs.com/post/120709577938/good-eggs-is-comi... I'm guessing the logistical and financial troubles described in the OP were pretty clear 2 months ago...was expanding service to Manhattan a Hail Mary to attract additional investment?

jforman 11y ago
When it's clear at the top that core strategy needs to change (as in this case), this usually doesn't impact the company in bits and pieces — it all comes at once. That's because making a major change at a large company requires coherent planning, and you don't get coherent planning by only saying "we need to reduce opex across the board, we're running out of money". You get it by making a new top-down plan with entirely new goals and a new P&L. As a result, 140 people got laid off all at once, rather than in waves. Had it been done in waves there would have been mass confusion, low morale, and an inability to buy into the new plan because there wouldn't have been a new plan yet. And for the same exact reason plans to roll out to Manhattan, which were surely started many months ago and enshrined in yearly and quarterly goals, were axed abruptly. It's possible it was a cynical ploy for fundraising, but I really doubt that. It's very hard to pull off momentum games at GoodEgg's size — investment scrutiny is much higher, and decisions are based more on spreadsheets. Not that hype doesn't factor into it, but it's not going to float you if your core economics are busted.

sliverstorm 11y ago

It takes a lot more than good code, talented engineers and passionate customers to scale food tech startups that deal with getting perishable food from local farms to people’s doorsteps. It feels like some kind of tech-myopia that anyone should think code was the key to a successful food company. The old "when you're holding a hammer..."

woah 11y ago
If they had used Haskell I think things would have gone differently.
- jeremiep 11y ago
  Yeah, they could've hit Monad Transformer Hell, or they could've wasted all their time learning how to write practical applications in Haskell and end up bankrupt in a very lovely ivory tower. I've heard this argument over and over again and it never is good advice. It ignores the context completely as well as whether the developers know Haskell or not. You can screw things up in any language, especially if a large part of your business model involves stuff not related to code, like shipping perishable food.
  - sliverstorm 11y ago
    (I think your parent was being satirical)

Animats 11y ago

"The single biggest mistake we made was growing too quickly, to multiple cities, before fully figuring out the challenges of building an entirely new food supply chain." This is a repeat of Webvan. Webvan had a good idea, but tried to "scale" fast. They had about 3% market share in 30 cities, and needed 30% market share in 3 cities.

WDCDev 11y ago
Heh ... I immediately thought Kozmo.com myself. History is repeating itself.
nikanj 11y ago
The downside of venture capital, entrepreneurs need to remember that investors prefer trying for billions and failing, and consider trying for millions and succeeding a failure. I've read a few bitter stories about people with ramen-profitable businesses who got a late-stage investment into their bootstrapped company. Basically you spend years slowly kindling a small fire, and the VC comes over a dumps a truckload of lumber on it. Might get the bonfire they're looking for, but they don't really care if they just smother your campfire instead.
michaelt 11y ago
There's a reason webvan was tempted into scaling too fast. For mass market groceries, there are two virtuous cycles a retailer needs to trigger. The first is: 1. Get higher customer density 2. more deliveries per driver shift 3. reduced delivery costs 4. attract more customers with lower delivery prices 5. go to 1 The second is: 1. Get more customers 2. better economies of scale and more negotiating leverage with suppliers 3. reduced grocery costs 4. attract more customers with lower item prices 5. go to 1 Now, the first virtuous cycle only works at the city level - operating in two cities doesn't improve your customer density. But for the second virtuous cycle you need overall market share, not just local market share. To get Wal-Mart market share (~30%) and prices you need Wal-Mart buying power. Of course, that's no excuse for building loads of warehouses full of tech that can't achieve the performance you need and to 'iterate' costs a few hundred million per warehouse! But it's understandable why the business plan would call for national expansion at some time - and I can also understand why people immersed in the SV community would find it hard to slow down and not break things :)

kra34 11y ago

The first time around it was called "The New Economy" https://en.wikipedia.org/wiki/New_economy https://en.wikipedia.org/wiki/New_economy

exelius 11y ago

Sometimes "do things that don't scale" is bad advice. It's great advice when starting out (because you should be focused on building an appealing product before you worry about scaling it), but you need to be using your scale-up to test ways of breaking out of doing the "things that don't scale". The idea is to turn it into a forcing function for the company: if you can't find a better way to scale, you're done. Disruptive innovation is about ripping out the assumptions that incumbents made and operating under a new set of assumptions that may not have been possible when the incumbents started. But sometimes, the incumbents' assumptions/constraints are still valid, and new entrants don't have as much of an advantage (or the new entrants' advantage is easily copied).

CPLX 11y ago
I think it's basically a contraction for "do things that don't scale until you get $50MM or whatever and then stop doing that."

zenbowman 11y ago

It's a little ironic that goodeggs is considered a food technology firm, when it has nothing to do with technology, and in fact has a rejectionist approach to technology in the first place. Monsanto and Cargill are food technology firms. Advances in food technology are what allow us to feed 9 billion people with a fixed resource (arable land). There are serious innovations in food production and distribution that have saved millions of lives in the last half century (Norman Borlaug and the Green Revolution). An online seller of local produce is not "food tech". It is simply using the web to sell food. Add to that their dislike of synthetic pesticide/fertilizer and other real advances in food technology (advances that in the developing world mean a real reduction in deadly diseases that spread through the use of animal manure [natural fertilizer]), and it makes them just another anti-tech firm that happens to peddle goods on the Internet.

akamaka 11y ago
I'm not sure if you just have a problem with organic food, or if this is just another reiteration of the tired old "if you're not trying to solve world hunger..." argument that gets used to criticize business ideas, but none of your points are really relevant to a company whose goal is to conveniently supply food to some of the richest cities in the world.
- zenbowman 11y ago
  Organic food is fine. But it is, fundamentally, an anti-technology approach to growing food. You should be free to eat it if you want. The point is simply that firms that reject technology should not be described as "tech" companies simply because they use the Internet in some way. I'm not suggesting in any way that companies should not exist if they don't solve planet-scale problems.
  - akamaka 11y ago
    I think folks underestimate how much agricultural science and technology there is that doesn't fall under the very narrow categories of genetic engineering and chemical pesticides. Modern society is built on top of the massive productivity improvements in agriculture that occurred before those were introduced, and there is plenty of room to innovate without using those methods. GMO crops are limited[1] in Europe, yet they continue to be a leader in agricultural innovation. [1] edited, see dragonwriter's correction

searine 11y ago

Wait, you're telling me a perishable luxury product is a tough market?

wahsd 11y ago

When I first heard of this company I thought it was some kind of joke. Turns out I should really learn how to bamboozle investors into handing me $53M for shitty ideas that don't make even basic logic sense.

Axsuul 11y ago

Good luck to them. Hope they figure it out. Churn can really hurt your business and affect growth tremendously if you don't address it. I'm guessing that's the case here. It's like taking three steps forward and two step back. I'd rather take one step forward at a time.

pfooti 11y ago

I live in Good Eggs central - san francisco, and I foresee problems that are still ahead for this startup. Don't get me wrong: I really want Good Eggs to succeed, but they have quality control issues that need to be addressed and scale very poorly. Specifically, I've been a customer of theirs for years, and in the past two years in particular, I've seen prices go up pretty dramatically and quality in some cases go down. It used to be the case that Good Eggs produce and meats were farmers-market quality at really good prices, delivered. Now it's the case that the produce feels like farmers-market seconds (the produce I get from them regularly has only a few more days of freshness left and are decidedly not the fruits or veggies I would pick if I went to the store on my own), and the meat and fish prices have gone well beyond the cost of the same meat from other sources (say a trip to a regular market). Top this all off with persistent packaging and logistics errors - my last order contained someone else's frozen lunch pies, didn't contain any of the cheese I ordered, and was delivered an hour before the actual delivery window I requested (and contained fish, so if I hadn't already been home, this would have been a problem). Good Eggs is really good at fixing these problems - I email their customer service and they credit me for stuff I don't have and throw in a $5 off coupon for next time or whatever. If inconsistent quality or mispacks were rare, this'd be perfect. The problem is, it is not rare at all. I have definitely fallen off in my use of their service - if I'm paying the same price, I might as well just go to Andronico's, Whole Foods, or the Ferry Building (or Gus's or Rainbow, or Berkeley Bowl ... there's a lot of great grocery stores in the SF region) so I can pick out what I want, and sometimes (especially at Berkeley Bowl) get a way better price. They need a better process for vetting the product they get from distributors (and possibly a better contract when it comes to rejecting low-quality stuff) and a better process for getting people's stuff into their bags. That's not scaling, that's core competency. It may be the case that this doesn't scale, can they deliver food that's sufficiently high quality that I could say, 'If I went to the store, I'd have chosen that tomato' at a price that's competitive with the store? That's a difficult problem to solve and requires well-established relationships with vendors.

saosebastiao 11y ago

Facepalms all around. Supply chains are hard, and the idea that you can just write software to "solve" them is a level of hubris that defies description. Supply chains aren't a problem you can solve with big data. They aren't a problem that be solved with machine learning. In fact, you could combine the worlds top researchers in Computer Science, Economics, Operations Research, Mathematics, and Statistics, put them in a room together for a decade, and still not "solve" even 1% of the problems that Supply Chains face. I know the ITA presentation on Air Travel Planning Complexity[1] has been circulated here many times, but it always blows peoples minds how complex that problem space is, and that type of problem is miniscule in comparison to end to end supply chain optimization. I work in a problem space that is the combination of 9 different NP-Complete/Hard problem spaces (I've counted) on a regular basis...we are barely scraping by with millions of lines of code and entire data centers of our servers running at peak utilization 24/7, and that is with state of the art heuristics solvers and hundreds of PhD-level researchers, and that is only a subset of the Supply Chain problems that my company faces. To say that Good Eggs bit off more than they can chew is a MASSIVE understatement. Supply Chain Management is a field that is heuristic-driven because there isn't a solution. The heuristics that drive modern food distribution are the result of a real world genetic algorithm that is already thousands of generations deep...and miniscule incremental improvements have been the subject of PhD Theses for over a hundred years now. You don't optimize on top of that by writing a web service. Supply Chain Management may not be technologically advanced in its usage of enterprise software, but that doesn't mean that their ideas and processes are stupid. At best, it means there are some annoying frictions in the industry in the way that they interact with other industries (and there are actually plenty of viable startup opportunities to fix this). The presumption of stupidity[2] regarding the existing state of logistics and supply chain management killed this company, just like how it killed Webvan, and is going to kill a whole host of startups in the distribution and delivery space within the next few years. [3] [1] https://static.googleusercontent.com/media/www.itasoftware.com/en//pdf/ComplexityofArlineTravelPlanning_Carl_Sep-03.pdf https://static.googleusercontent.com/media/www.itasoftware.c... [2] http://www.aaronkharris.com/presumption-of-stupitidy http://www.aaronkharris.com/presumption-of-stupitidy [3] PS: If you are in VC and have a stake in any startup that is doing last mile delivery, liquidate now. There isn't a single startup in the space, whether they are currently valued at $1 or $1B, that can sustainably provide their existing value proposition that they are promising to their customers. It is possible to force scale some of them into something sustainable, but your valuations make me believe your cash flow neutrality projections are off by more than an order of magnitude.

griffinmb 11y ago

I really liked Good Eggs, and their customer support always seemed great. Unfortunately, my last order came an item short so they gave me a $5 credit on my next order. A day or two later, they close down in NY and now I won't be able to redeem the credit. Not a big deal, but it was a bit annoying coming from a company I'd always used specifically for their great customer service.

ucaetano 11y ago

"Scaling Food Distribution Is Really, Really Hard" No, it isn't. It is fairly straightforward and thousands of companies have scaled across the world. Scaling a two-sided network focusing on providing a niche seasonal product to a niche audience is really, really hard. It wasn't the food distribution that wasn't scalable, it was the business model. "We were motivated by enthusiasm for our mission and eagerness to bring Good Eggs to more people. But the best of intentions were not enough to overcome the complexity." No, you were motivated by aggressive expansion targets to provide returns for the dozens of millions of dollars you took as investment and to make a lot of money.

davidu 11y ago
As blunt as this is, it's right. C&S Grocer does $22 Billion per year in revenue, and is profitable, doing just food distribution. http://www.cswg.com/ http://www.cswg.com/ and https://en.wikipedia.org/wiki/C%26S_Wholesale_Grocers https://en.wikipedia.org/wiki/C%26S_Wholesale_Grocers Every one of us in the USA probably ate C&S distributed food today.

jordank 11y ago

A couple more points here: 1. A lot of people who care about organic and farm-to-table ethos already live in areas with significant market coverage. Those people will tend to have existing behaviors — GoodEggs sought to displace these. This can be hard if existing players do good-enough job. 2. The paradox of some delivery services is that the people who need them most are sometimes the most economically unviable customers (because they are geographically spread out, because they are lacking in funds or both).

Paul_Dessert 11y ago

$200M Wouldn't be enough. They are trying to solve a problem that doesn't exist for 95% of the country. Sure, there is a market for this, it's just not the size they are thinking. As the article says, "Figure Out Your Model Before Scaling".

subpixel 11y ago

Part of their operation was driving a truck up to Fishkill, NY and filling it with goods from Hudson Valley producers, many of who are too small to be commercially distributed already. I bet someone could keep doing that and make good money. But probably not enough money to make VC's happy.

pbreit 11y ago

What is the deal with those ridiculous social share bars that cover up so much of the page's content??

pbreit 11y ago

I wonder if the problem has to do with providing a desirable product? It's already pretty easy to get good food, good organic food and good organic locally grown food from a variety of vendors. With GoodEggs it seems you're getting a clunky ordering experience, inability to select produce, an extra shipping charge, moderate/high prices, etc.

pbreit 11y ago

I think the sweet spot is going to be a Trader Joe's-like online brand. Good quality, organic options, low prices, curated selection. Instacart, GoodEggs and others are missing the mark.

asah 11y ago

Bummer - I was rooting for Good Eggs! re: software and food. The truth is nuanced: - obviously, code won't overcome the challenges of immature, lower-scale logistics and business operations. Roll up your sleeves like everyone else! - no, it's not about "big data" as much as business process software. - but yes, code can help in some ways: - analytics/BI/decision-support: smarter decisions, fewer meetings. - running ops: fewer managers, automated monitoring and project followup. - use code to help manage your supply chain. - but yes, "tech thinking" does help: - faster, safer process change - remote monitoring - application of classic compsci algorithms vs reinventing wheels. cheers! adam Buyer's Best Friend leading provider of office snacks to silicon valley http://bbf.io/snacks http://bbf.io/snacks