The fact that they opened the article with the example that they did is absolutely ridiculous, considering there are significantly better examples that didn't e

The fact that they opened the article with the example that they did is absolutely ridiculous, considering there are significantly better examples that didn't even receive their own complete sentence. Contribution Margin is a metric that all VCs should keep an eye on. It is a scalability metric: before CM positivity, you are lose money with every unit sold. After you are CM positive, growing sales will only ever help you. The only mistake the SpoonRocket management made (at least as far as referenced in the article) was trying to expand to new cities before they were CM positive. The absolutely moronic-bordering-on-Bernie-Madoff example was Instacart. Instacart told Bloomberg in February that it was profitable in its biggest markets and that 40 percent of its volume was profitable. The company later clarified that it meant gross margin profitable, which is usually limited to direct costs such as supplies and delivery labor. Instacart's calculation leaves out other costs, such as customer service, central office salaries, rent, and the cost of acquiring its workers. Instacart also said it is gross margin profitable, on average, across all its markets. I certainly hope the Bloomberg writers actually clarified (and just made it sound like they were assuming) how Instacart is calculating Gross Margin, because delivery costs are typically only included on the inbound side, which is a cost that Instacart doesn't manage. Outbound delivery costs are very rarely included, and that is Instacart's whole fucking business. It would be like a grocery store claiming profitability as long as you exclude COGS. In other words, if Instacart is including their delivery costs in their GM calculation, they might have a sustainable business (they'll never be as profitable as their valuation assumes, but at least they could stick around after the VC dries up). If they aren't including delivery costs in their GM calculation, then Instacart is so laughably unprofitable that they don't have a snowball's chance in hell.