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Wal-Mart in Talks to Buy Web Retailer Jet.com for $3B
- sargun 10y agoThis would make Wal-mart the biggest production Azure user in terms of actual traffic. That'd be a killer position for Microsoft to be in.
- was_boring 10y ago> That'd be a killer position for Microsoft to be in. What do you mean by this? I don't deal with things of that scale, but I would imagine it would put Wal-Mart in a very good position to negotiate down near at-cost. It could be good for Microsoft on the PR front against Amazon, but bad for profit margins (on this one account).
- mason55 10y agoDepends. Netflix doesn't get any kind of sweetheart deal with AWS. As far as I'm aware the prices they pay are exactly the same as what any other high volume customer would pay.
- Fej 10y agoAWS is the big boy in the room. They don't have to prove anything to anyone.
- sargun 10y agoThey would be a hero customer. From my understanding, Jet.com is already a reference customer, which means that they talk about intimate details about their infrastructure with prospective Microsoft customers. A hero customer typically pushes your platform in radical ways to let you know what to improve. They're also someone you can talk about, and it instantly gains you credibility. For Azure, actual workloads are lacking, especially workloads that are volume, B2C businesses a la AWS's Netflix, and GCE's Spotify.
- flinty 10y agovery similar to what spotify is for the google cloud
- Fej 10y agoArticle not behind paywall: http://nasdaq.com/article/wal-mart-in-talks-to-buy-web-retailer-jetcom-20160803-00816 http://nasdaq.com/article/wal-mart-in-talks-to-buy-web-retai...
- pravula 10y agoYou can use google search to bypass paywall.
- Hongwei 10y agoWonder if the "tip" is part of a strategy to shop the deal, like the LinkedIn post-mortem revealed. Last I heard, Jet.com was haemorrhaging cash buying more growth with massive discounts. Looks like it would be a good exit given how much capital they've raised: $565M per crunchbase.com/organization/jet. 6x capital in means everyone should make good money.
- ocdtrekkie 10y agoWhen Jet.com came out, I often checked it against Amazon, and did make some purchases through it. But there's some odd gaps, it has no category through which I can buy Blu-rays, for example. And it has huge inventory gaps on very basic current items. I honestly forgot to keep checking what I could get through it, as the gimmick of adding up a bunch of items for savings rarely amounted to very much.
- dublinben 10y agoI agree. Their browsing is absolutely useless, and their selection is downright bizarre.
- rogerdpack 10y agoTotally agree, jet just...doesn't have some things. But it does have some other things, and sometimes slightly lower than amazon. It's so low I almost made a purchase with them once!
- maxxxxx 10y agoI have tried them a few times but it's a lot of work finding the items where they are actually significantly cheaper than Amazon. They also don't have reviews and the item descriptions are often really short and incomplete. I don't think they are even close to Amazon.
- mikeryan 10y agoInterestingly not a huge exit its "just" 3x. (Edited from 6x I looked at investment not valuation originally) For all the news around Jet taking on Amazon I'm not sure this is signaling a win for them.
- a_small_island 10y ago$500M invested, previous valuation ~$1B, so a "3x" exit.
- mikeryan 10y agoRight just realized that
- deleted 10y ago[deleted]
- cfield 10y agoIt looks like the $1B figure is a pre-money valuation for the $500M raised.[0] If so, that results in a 2x exit for those investors.[1] This assumes those investors don't have rights that would entitle them to more than their pro rata of the acquisition proceeds, such as special liquidation preference rights that would entitle them to more than a 1x liquidation preference. It's these kinds of special liquidation preference rights that have attracted some attention for helping "juice" valuations, particularly with unicorns.[2] ----- [0] https://www.crunchbase.com/funding-round/79d35bb376dcc222a8a441cd1ab6cf0b https://www.crunchbase.com/funding-round/79d35bb376dcc222a8a... [1] Math: $500M invested at $1B results in those investors owning 1/3 of the company. Assuming pro rata distribution of the acquisition proceeds, they would get $1B in a $3B acquisition. [2] http://www.bloomberg.com/news/articles/2015-03-17/the-fuzzy-insane-math-that-s-creating-so-many-billion-dollar-tech-companies http://www.bloomberg.com/news/articles/2015-03-17/the-fuzzy-...
- mbesto 10y agoAccording to pitchbook, Jet raised their latest round of $350M ($565M total) at a $1.05B pre and a $1.4B post.
- viggity 10y agothis is excellent news. I love amazon prime, and have a hard time seeing me switching, but Amazon needs a competitor, even if it isn't huge.
- blahi 10y agoJust Marc Lore things.
- swalsh 10y agoThere are a lot of product categories I've found its impossible to compete in because jet has this combination of impossibly low prices, and stupid high cpc's on Google. I wonder if an acquisition will bring things to more sustainable levels?
- jkestner 10y agoProbably, since Walmart presumably doesn't have to work as hard to acquire customers. Better make your VC-subsized purchases before the deal closes!
- protomyth 10y agoWhen the article says Wal-Mart is closing stores, how does it count when they close a normal store and open a super store? Also, at this point I feel safer buying cables and chargers from Wal-Mart. I now worry about any retailer doing fulfillment for other sellers.
- poopsintub 10y agoWalmart has been offering 3rd party sellers/products for more than a few months now, if I had to guess. I bought a USB cable from Cable Matters, but the names of some of the companies/sellers on Walmart's website also lead me to believe they are selling products which aren't certified and have the correct components to be safe with our devices.
- protomyth 10y agoWell, guess I'm going to have to find someone else to order from next time. This is just so disappointing, its like the retail version of flash ads.
- massysett 10y agoFor cables and chargers, try Monoprice.
- deleted 10y ago[deleted]
- nommm-nommm 10y agoYeah I know what you mean, I just ordered a cable from Walmart.com the other day not realizing it was from a third party seller until after it shipped. Felt like a bait and switch.
- nommm-nommm 10y agoUnfortunately Walmart.com is now selling stuff from third party sellers.
- ikeboy 10y agoI love how a 3X exit is a "disappointing end". I'll take disappointment all day long.
- ProAm 10y agoWhen you are an investor and have tens or possible hundreds of investments, 3x will not cover much. You need one to leave orbit in order to stay in the game.
- _RPM 10y agoJet.com was founded in 2014. How did they get enough traction to be viable when there are so many other online retailers like Amazon, and all the other brick and mortar retailers that also have large online presence.
- ikeboy 10y agoProminent founder who previously sold a company to Amazon for half a billion, and a whole lot of funding.
- deleted 10y ago[deleted]
- morgante 10y agoBasically, a prominent founder who had previously battled Amazon. That led to a ton of funding which allowed for extremely aggressive marketing and customer acquisition, not to mention plenty of media coverage. If anyone can battle Amazon, it's probably Jet. I can see why Walmart would want Jet (and Marc) in their camp.
- rogerdpack 10y agoThey've actually done very well with "hype" as it were. I guess this goes to show that you too can spend tons of VC dollars, make yourself "popular" and never make any money, but the popularity is enough to make you worth money, even though you're losing money. Fascinating. I almost wonder if they should sell now, just in case they run out of VC "at some point in the near future" and stuff hits the fan...or maybe they'll be "worth" far more in the future, hard to tell...
- niftich 10y agoThis has worked with chat apps and other kinds of community-based social networks for ages, where the promise that after you've grown large, you'll figure out a way to monetize later. What's remarkable is Jet was able to pull this off by being in meatspace, by acting as a VC-subsidized arbitrage broker for consumer products, hoping to get enough mindshare to be considered more of a threat than a nuisance so it can get bought out. It worked!
- roflchoppa 10y agoPerhaps its all in good nature, but anything that Walmart touches I don't want to be a part of.
- clarkenheim 10y agoTop Tip; you can get through the WSJ paywall by googling the url after the domain and going to the top link: https://www.google.com/?q=wal-mart-in-talks-to-buy-web-retailer-jet-com-1470237311 https://www.google.com/?q=wal-mart-in-talks-to-buy-web-retai...
- saosebastiao 10y agoI have to hand it to Marc Lore. Two spectacularly unprofitable businesses, with two spectacularly large exits. If this guy had been doing startups in the late 90's, he'd probably be the worlds first trillionaire by now.
- patrickskim 10y agoHe'd be yuge.
- grandalf 10y agoWhile this is a definite failure for Jet's optimistic investors, it's likely a great opportunity for Wal-Mart to challenge Amazon, and a win for consumers. It's also a big win for OCaml. I tried shopping at Jet and while some of the prices were very good, others were worse than Amazon, and little things like product detail information, pictures, etc., were strongly subpar. Product search was also in serious need of tuning. Does anyone know which pieces of infrastructure (or ops) that Jet built have the most value to Wal-Mart?
- ubertaco 10y agoJet's an F# shop though, not an OCaml shop.
- sgrove 10y agoI think Jet.com is actually F# [0] (which is of course very similar to OCaml, but has quite a different ecosystem/tooling/etc.) [0] - https://tech.jet.com/blog/2015/03-22-on-how-jet-chose/ https://tech.jet.com/blog/2015/03-22-on-how-jet-chose/
- TimMeade 10y agoAll i know is i shopped on the site exactly once. i ordered 2 cases of monster drinks at a fantastic price. Looked exactly like the amazon page. When they arrived they were 'monster hide safe cans'. Basically empty cans. When i tried to return they wanted 40% restocking. Total Fraud.
- deleted 10y ago[deleted]
- DougWebb 10y agoI have mixed feelings about this. Jet started up next to the town where I live, and after growing for a while they moved to the town where I used to live. I'd been watching their job postings since early on, and I probably could've gotten hired early. Their recruiter recently reached out to me, so I could probably still get hired there. If they get bought out, I'd have missed out on potentially a very nice options payout. But then I'd have to find a new job, because I definitely wouldn't want to work for Wal-Mart. So I guess I'm happy with the decision to stay where I am, despite some of the drawbacks of working for a really tiny non-startup company. (Not that there aren't good perks too.) For those of you who spend your careers in startups, how do you feel about new owners after a buy out? If you have reservations about them, do you stick around and see how it goes, or head straight for the exit?
- brogrammernot 10y agoI'm confused. You do or don't work there? They raised 820M so I highly doubt it'll be that great of a payout considering that's only 4x what they raised. As for a buyout, it's typically crappy because the company buying you ruins the culture.
- DougWebb 10y agoI do NOT work for Jet. I've considered it because they're very local to me, even closer than the NYC startups. Edit: I've been through the buyout ruining the company culture, so I definitely agree with you there.
- johnward 10y agoBeing acquired is always seen as this awesome thing but it can be terrible for a lot of people. I didn't have enough equity to make enough to buy a used Honda Civic. I don't care for the culture of the new company but I'm still working there. Pretty much everyone on my direct team left, found a new position in the new company, or were let go. The same thing happened in most areas. Our founders did take care of us by ensuring we get 4 weeks of vacation instead of having to wait 15 years for that, so that's something. Another plus is that I managed to double my startup salary.
- anders098 10y agoNote Alibaba is the main investor. Ali wants to use Jet.com to compete with amazon in US market.
- ktamura 10y agoThis buyout is based on FUD, and FUD-based investment is a recipe for disaster. From the OP: >But for both Jet and Wal-Mart, Amazon’s frenzy of warehouse construction and fast delivery—as quickly as one-hour—have proved formidable. The retailer has logged three straight quarters of record profit while locking in an estimated 60 million members to its $99-per-year Prime service, cultivating a loyal customer base and giving consumers fewer reasons to shop at traditional stores. The answer is not buying a unicorn startup with seemingly no fundamental advantage over Amazon. If I were Wal-Mart, I would take the $3B and try to build a great technology organization and/or fund Wal-Mart Labs more. So much of what makes Amazon better is the data accrued over the last 18 years and the insight mined from them by their super-talented team. And Jet.com is definitely not going to give that to Wal-Mart overnight. If I were them, I'd focus on long-term viability, not a short-term hack to placate shareholders.
- carsongross 10y agoUpper management is filled with cargo cult thinking around technology. I see it even in software companies. Someone advocating a rational, realistic way forward (like you) would be pushed out in favor of people who "get it" and want to "move things forwards dramatically"
- hueving 10y agoYeah, I can see the stupid arguments already. We don't want to make 'incremental improvements', we need a game changing leap forward!
- api 10y agoBusiness in general is filled with cargo cult thinking in my experience.
- brianwawok 10y agoIsn't that what the culture of a business is? A bunch of people who think similar things. If you take a bunch of similar people and apply the same rewards, behavior would tend to be similar. partially why consultants can come in and clean up shop. They don't care about following the conventions.
- losteverything 10y agoDoug is a planner's planner. He wants something jet has. Perhaps growth by acquisition but I suspect more. Maybe it's a sign Walmart is doing better than it had promised and the time is right
- ada1981 10y agoThe tech industry seems to be primarily a vehicle to grease the wheels of importing growth from the developing world.
- deleted 10y ago[deleted]
- swingbridge 10y agoGiven the proposed price relative to funding raised it's likely the investors will get their money back plus a small return, employees with options will likely get nothing or perhaps a token amount (after all the preferred terms are cashed in) and the founder gets to sell off another highly unprofitable business. This will be chalked up as a "failed" startup but at least the investors get to take their money and play another round elsewhere. For the employees this is likely not a great thing. I'm guessing when they joined a hyped up startup it was in large part because they didn't want to work for companies like WalMart and stood to strike it rich if Jet went public or hit it big. Now they could be wearing a WalMart badge and the company sold out to save the ass of its investors.
- wangarific 10y agoI wonder how much that guy who bought Facebook ads to be the leading referrer will get...
- zd4akaq85a 10y agoReally, you are claiming that if a company raised $570M and sold for $3B, the common shareholders will get screwed? Do you have some information we don't? The publicly reported valuation at the last funding round was $1.4B. Those would have to be some impossibly harsh terms to not leave well over $1B to the common shareholders.
- swingbridge 10y agoThe price in these "the business model didn't work so let's save the investors and sell" type deals is primarily driven by paying off the early investors. Term sheets typically say these investors make a decent return before anyone else gets paid. Conversation at the deal table is usually something like "we need X valuation to meet our term sheet with investors so the founders and a few others get paid." The rescue buyer generally doesn't care about what the employees get, in fact it's very much in the buyers interest that the employees don't get too much. In other words the size of the valuation being bounced around is likely not driven by the value of assets for shareholders but rather the size of the contractual hole in the ground that founders dug with their investors... to escape that hole $X is needed.
- pasbesoin 10y ago3 billion is a hell of a price for branding. Goes to show just how entrenched some of the negative feeling (not everywhere, but where it exists, including with many in the Amazon demographic) is about Walmart.
- cm3 10y agoDoes the sale mean F# is having its WhatsApp (Erlang) moment, in other words major industry validation?
- systems 10y agowell, I didn't know whatsapp uses erlang until now and I think it didn't really help make erlang more popular for me I believe it was couchdb that brought erlang to light .. but now it seems erlang isn't really getting any more popular but yea, of course being used by whatsapp is very strong validation for erlang
- cm3 10y agoErlang has been and is in use in many less visible places, same as other frameworks, but WhatsApp provided visibility in the contemporary world of short-lived startups.
- shaqbert 10y agoWhat asset does Jet have that it is worth anything close to $3bn? Loyal users? Nope. Their version of "prime" is the proverbial pig in a poke, as you need to buy that one before you can actually figure out if you like to become a longstanding customer (experience, logistics, price/value, positive surprises). Most users are just the coupon cutters who will switch to whatever next crazy person is offering loss leaders. A strong brand? Plastering NYC subways without having launched does not mean a viable brand. Also they nowadays focus pretty much only on performance marketing. So nope. Strong technology? Meeeh... The rationalization at Walmart HQ probably is that with Walmart's purchasing muscle they might improve the unit economics a lot. But why buy a flash in the pan in the first place...
- pdq 10y agoThey've got a three letter domain name. But that's worth a million bucks or so.
- dragthor 10y agoWhat happens to F# now? Jet used it heavily and championed usage.
- edgyswingset 10y agoWell, Jet isn't the only company to use F# (just AFAIK, the only consumer-facing startup). I can't imagine Walmart wholesale replacing their codebase with whatever the folks at Walmart Labs like to use, as that would be incredibly stupid of them.
- kumarski 10y agoSo it was a total growth viral sign up tactic. To secure 250K users, they offered 20K shares or something like that. To sign up, you had to tweet, fb share, etc.... 250K users in queue enabled them to do a lot of things, but in many senses it may have been a false proxy.
- pnathan 10y agoI always have kept an eye on jet.com, I like it, but I have not been able to find the goods I want to buy. Even not even thinking about prices.
- adamgamble 10y agoI bet the guy that won 100k shares of jet.com stock is excited! http://fusion.net/story/54990/guy-got-rich-using-jet/ http://fusion.net/story/54990/guy-got-rich-using-jet/
- ctb_mg 10y agoI propose that Walmart needs to use their bulk purchasing power/clout, in combination with the efficiencies that Amazon has put in place, to provide lower prices. If you're going to unseat Amazon, it has to be on price.
- abc_lisper 10y agoWTF is Jet.com? I have never heard of it, why is it worth 3B if it is not common knowledge!! Sigh!
- gk1 10y agoThis kind of comment comes up often in these threads. It takes a certain degree of conceit to think a company can only be valuable if you heard of it.
- antisthenes 10y ago> It takes a certain degree of conceit to think a company can only be valuable if you heard of it. No, but it's entirely reasonable to suggest that an e-commerce company that's trying to compete with Amazon isn't valuable if you haven't even heard about it in passing from friends or family.
- CodeSheikh 10y agoWal-Mart should focus on getting rid of (transition) its old mentality management and try spending top dollar on hiring top talent from the industry. I happened to work with Wal-Mart tech teams and their hands are tied by stubborn warehouse-manual-gears mindset of upper management. Basically our company had a nightmarish experience when we were integrating our services product with their internal tech products. All of these companies (Walmart, Bestbuy etc) are trying to compete with Amazon by offering things like price match etc. Sure it is nice to have a price match from Bestbuy and pick up your product on the same day from Bestbuy. But Amazon came back with a KO punch and offered Same-Day/One-Day shipping. I can basically order it before midnight of the previous day and have it at my doors by max 7pm the next day. Amazon has successfully created a concept of brand among household consumers. They are the Apple of household consumerism and most people don't want to buy from uncool brands. When I search for a product on Google shopping and if the price is same on Amazon and Walmart, I would pick Amazon because of "PRIME" shipping. Even if it is $1 cheaper on Walamrt I would still go for Amazon. Brand loyalty can't be bought with $3B. Brand loyalty needs to be created at grass root level.
- nlh 10y agoWhoa whoa whoa stop the clock ;) Before everyone gets up in a big frenzy on the price, read the article (closely): "It isn’t clear how much Wal-Mart would pay, but a person familiar with the matter said Jet could be valued at up to $3 billion in private markets." That is nowhere near a statement that $3B is number from Wal-Mart. That means "someone" thinks they COULD be valued at UP TO $3B in "private markets". That "someone" could be Jet's CEO. Or their banker. Wal-Mart isn't dumb. In fact, they're the opposite of dumb when it comes to paying for things. They wouldn't pay $3B for a failed ecommerce startup if they can let it fail and buy the assets or pay much, much less in various other scenarios. I doubt we'll see this deal go for anywhere close to $3B, if it happens at all. This is likely a negotaition tactic to drum up interest (and/or the price) from other potential acquirers.
- paulsutter 10y agoExactly - I call bullshit on the whole thing
- api 10y agoIt could be something being floated to inflate the price in private markets as a prelude to trying to raise more money.
- fowlerpower 10y agoJet is growing at a staggering rate month over month. They are at over 1.1 billion in sales annually in under a year. Yes, while spending money to do it, but you can't magically get paying loyal customers without any advertising or incentives. Amazon didn't do it by making money either. Amazon is at roughly 86 billion (I'm sure it's more) in sales online, Walmart is at 12 billion online. Amazon is growing in the double digits Walmart is in the single digits online. How is Walmart going to catch them? If jet is at 4 million+ loyal customers in a years time being live, how exactly is it dumb to buy a company that is at 1.1 billion in sales in a years time when it took you 10 years to get to that? How long has Walmart been selling online? Jet will pass Walmart in under 2 years, then what will Walmart do to beat Amazon? I think people on hacker news live in la la land. Ecommerce is very different from your googles and facebooks. Marc Lore knows exactly what he's doing, he probably won't sell it to Walmart for that little. Edits: spelling and grammar.
- avivo 10y agoDid WSJ have the $3B clickbait title and then change it? Or did the HN submission just add the extra "for $3B"? All the article says is that "a person familiar with the matter said Jet could be valued at up to $3 billion in private markets." If this is a HN addition, can that be fixed?
- Xyik 10y agoClearly jet.com's primary user base isn't from the tech crowd. Looking at the comments, seems like a lot of people don't understand that Jet's user base is probably value-conscious consumer's that shop for household items on a recurring basis. Without knowing any numbers I'm surprised at all the backlash in the comments.
- coredog64 10y agoIn my experience, jet.com's primary user base is deal fanatics who enjoy having their consumer goods subsidized by know-nothing VCs dreaming about being in on the ground floor of the next Amazon.
- __derek__ 10y agoI tried to shop for Gatorade and Clif Bars on Jet recently, knowing that it's promoted itself with home products and such. What I found were comical prices ($127.10 for 21 oz. of Gatorade mix) for a poor selection, so I gave up on it. I don't really know what value Walmart gets out of this purchase other than a heavily promoted brand and the ability to go back to focusing on Amazon. It feels like Yahoo and Tumblr.
- brianbreslin 10y agoJet is on pace to do $1B in sales this year (not profit, but gross merchandise value). Not bad for a company only selling stuff for 16 months. They aren't a direct competitor to Amazon in model, they are closer to a seamless version of Flipkart in india. My friend who works there says they see Target as their competition more so than Amazon, and that could be what Walmart sees too. I do wish we could have seen where this company could go, but likelihood is it became increasingly difficult to attract VC money in this market that is tightening.
- carterehsmith 10y agoI mean, it is not really hard to make $1B in sales if you have >$500M to burn ;)
- brianbreslin 10y agoTell that to Lyft/WeWork, and a number of others ;-)
- kevindong 10y agoI'm not sure if Jet's business model is valid, or if it's valid at all. Back in Fall 2015, I ordered two cases of water (I think 24 count in each; normal 500 mL water bottles) for $5.70 each with free two day shipping. They ended up sending me two packages via FedEx Ground (one case per box) with Jet.com branding on the boxes. I was legitimately shocked that they actually processed my order since each case was 30 pounds. They lost so much money on my order. When I checked back two weeks later, they were no longer for sale on the website.
- nommm-nommm 10y agoI agree that I can't understand how jet.com will stay in business with their current shipping practices. I have ordered over 100 pounds of cat litter from them at below market prices all with free shipping. Every other order I've had (3) something has been broken during shipping (as well as two of the cat litters) due to piss poor shipping practices. They put a whole bunch of stuff including crushable and fragile stuff along with bulky heavy stuff in one HUGE box. Of course all the bulky stuff crushed the fragile stuff, who thought that was a good idea? So they not only refunded the broken items but gave me $5 credit. On top of that they gave 30% off my first order and 15-20% off the next few orders. That's not a sustainable business. They also had a couple of really good AMEX offers in the last six months but I don't know if they pay for that or AMEX does.
- blackaspen 10y agoWalmart would be better off buying $3B of Amazon stock -- eCommerce is not their strong point.
- runamok 10y agoWal-Mart can't even leverage their ubiquitous brick and mortar presence to be un-terrible to use for ship-to-store during the two times I tried to use it. Don't think this will end up being an Amazon killer.