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Of course I can't find the source for it now, but during Instacart's last fundraising round they did some really weird stuff. For starters, the investors were

Of course I can't find the source for it now, but during Instacart's last fundraising round they did some really weird stuff. For starters, the investors were only allowed to view their financials in a printed book in a room, and were not allowed to take pictures or write anything down to mull it over and make a decision. Apart from that, you have to understand that there are a lot of investors, and if you can convince just a few of them that the upside is huge then you've got funding. It's not hard to get traction in a space like delivery where everybody knows it's something people want. But the problem is they get traction by operating at a loss, so when they try to run profitably they inevitably fail as people bawk at the prices.

grandalf 10y ago
> But the problem is they get traction by operating at a loss, so when they try to run profitably they inevitably fail as people bawk at the prices. Well, in a competitive environment like Uber vs Lyft, both companies subsidize the service to the benefit of the customers (and employees) in an attempt to maximize market share. There is a lot to gain by becoming the market leader in a service like ride sharing or grocery shopping. The market is very big and it's a basic need that most people have. If anything, I think there is too much expectation by investors that a success in a non-ridesharing market will generate earlier-stage financials that look like Uber's. With Instacart, the value add is such a no brainer. Imagine if everyone had to go to a shop, park, and walk around picking out mail that had been addressed to them. It would be hugely inefficient. This is why the postal service delivers mail to everyone's home. The service is considered so essential to the functioning of society that it's viewed as a legitimate state-run monopoly and aggressively subsidized. Most people spend significantly more time grocery shopping than they do picking up letters and parcels. This is a significant amount of leisure time wasted. Instacart can also easily swoop in and source certain high-margin goods on its own, or offer price comparison or even auction-style services where merchants bid on the virtual cart and it is fulfilled by the merchant offering the lowest price. All these are obvious next steps for Instacart, which wisely sees Grocery stores as a relic of the past ready to be replaced by something better. Grocers are market makers who specialize in understanding demand patterns. This is what makes a grocer successful, but grocers must spend lots of money simply to help alleviate the drudgery of being at the store shopping for one's self. One place near where I live features an elaborate player piano, hot bar, oyster bar, and wine bar! Most customers don't buy the oysters or a glass of wine, but having those side-acts makes being at the store pushing a cart through aisles feel less like demeaning, robotic drudgery. Instacart has found a better way. You take out the app, easily search for products, see recently/frequently purchased products, set up a delivery time, and you're done. It all arrives as if by magic. Maybe someday the shopping will be done by actual robots and the delivery by drone. But even in that world, the market-maker wisdom of local grocers will be just as relevant as it is today, and the high quality shopping experience of the Instacart app will be at least as useful.
- MegaButts 10y ago
  You clearly like Instacart, and that's fine, but I strongly disagree with you that they've built something better than the grocery store. For starters, right now they depend on grocery stores existing for their business, otherwise they are exactly like WebVan. Also, grocery shopping is nothing like postal delivery. You don't choose what mail you want, you just take everything that's addressed to you. Obviously this varies from person to person, but some people actually like choosing their ingredients and meals and deciding what they want to eat - the opposite extreme for this is to buy Soylent. Every time I've used Instacart they've made annoying substitutions that cost me money and weren't what I wanted, and the hassle of explaining item for item substitutions with back and forth texts is just frustrating. I've only used it a few times, but I've never had a pleasant experience with Instacart where I got everything I wanted - and this is ignoring the added cost and "convenience" of using their service. > There is a lot to gain by becoming the market leader in a service like ride sharing or grocery shopping. There is no evidence of this. In fact, there is a lot of evidence that these companies are losing money. > All these are obvious next steps for Instacart, which wisely sees Grocery stores as a relic of the past ready to be replaced by something better. Just because you don't like grocery stores doesn't mean they're going to disappear. Honestly, you sound like a shill paid by Instacart, but I'm giving you the benefit of the doubt that you just really like their product.
  - grandalf 10y ago
    Hah. I wish I were getting paid to do this. Maybe I do particularly dislike grocery shopping. Everywhere I've lived it's been a real drag: Midwest: In the store with lowest prices you spend half your time shopping and half waiting to get through checkout. Whole Foods is pleasant but overpriced. Mariano's is somewhere in the middle. NYC: Great small boutique grocery stores, much more expensive than Whole Foods, unbearably crowded at peak times, packed full of customers who are tripping over each other. Employees look ready to burst from the stress at any moment. Lower-end stores stock a very small number of items and are also overpriced. Not all neighborhoods have walking access to a larger, higher quality store like Whole Foods. SF: Whole Foods is a zoo and is undersized and frequently sold out. Safeway lacks many of the higher quality items but only offers paper bags which are a nightmare to carry if you walked. Safeway delivers but the quality of service is poor, and you are guaranteed to get the produce they had to get rid of that day. Parking to shop at any of these is a unique nightmare. I don't think I'm alone in not enjoying most of these experiences, or at least preferring to avoid them most of the time. Instacart may be losing money (who knows) but likely has ample room to increase prices. Uber and Lyft are both burning money and nobody cares.

grandalf 10y ago

> But the problem is they get traction by operating at a loss, so when they try to run profitably they inevitably fail as people bawk at the prices. Well, in a competitive environment like Uber vs Lyft, both companies subsidize the service to the benefit of the customers (and employees) in an attempt to maximize market share. There is a lot to gain by becoming the market leader in a service like ride sharing or grocery shopping. The market is very big and it's a basic need that most people have. If anything, I think there is too much expectation by investors that a success in a non-ridesharing market will generate earlier-stage financials that look like Uber's. With Instacart, the value add is such a no brainer. Imagine if everyone had to go to a shop, park, and walk around picking out mail that had been addressed to them. It would be hugely inefficient. This is why the postal service delivers mail to everyone's home. The service is considered so essential to the functioning of society that it's viewed as a legitimate state-run monopoly and aggressively subsidized. Most people spend significantly more time grocery shopping than they do picking up letters and parcels. This is a significant amount of leisure time wasted. Instacart can also easily swoop in and source certain high-margin goods on its own, or offer price comparison or even auction-style services where merchants bid on the virtual cart and it is fulfilled by the merchant offering the lowest price. All these are obvious next steps for Instacart, which wisely sees Grocery stores as a relic of the past ready to be replaced by something better. Grocers are market makers who specialize in understanding demand patterns. This is what makes a grocer successful, but grocers must spend lots of money simply to help alleviate the drudgery of being at the store shopping for one's self. One place near where I live features an elaborate player piano, hot bar, oyster bar, and wine bar! Most customers don't buy the oysters or a glass of wine, but having those side-acts makes being at the store pushing a cart through aisles feel less like demeaning, robotic drudgery. Instacart has found a better way. You take out the app, easily search for products, see recently/frequently purchased products, set up a delivery time, and you're done. It all arrives as if by magic. Maybe someday the shopping will be done by actual robots and the delivery by drone. But even in that world, the market-maker wisdom of local grocers will be just as relevant as it is today, and the high quality shopping experience of the Instacart app will be at least as useful.

MegaButts 10y ago
You clearly like Instacart, and that's fine, but I strongly disagree with you that they've built something better than the grocery store. For starters, right now they depend on grocery stores existing for their business, otherwise they are exactly like WebVan. Also, grocery shopping is nothing like postal delivery. You don't choose what mail you want, you just take everything that's addressed to you. Obviously this varies from person to person, but some people actually like choosing their ingredients and meals and deciding what they want to eat - the opposite extreme for this is to buy Soylent. Every time I've used Instacart they've made annoying substitutions that cost me money and weren't what I wanted, and the hassle of explaining item for item substitutions with back and forth texts is just frustrating. I've only used it a few times, but I've never had a pleasant experience with Instacart where I got everything I wanted - and this is ignoring the added cost and "convenience" of using their service. > There is a lot to gain by becoming the market leader in a service like ride sharing or grocery shopping. There is no evidence of this. In fact, there is a lot of evidence that these companies are losing money. > All these are obvious next steps for Instacart, which wisely sees Grocery stores as a relic of the past ready to be replaced by something better. Just because you don't like grocery stores doesn't mean they're going to disappear. Honestly, you sound like a shill paid by Instacart, but I'm giving you the benefit of the doubt that you just really like their product.
- grandalf 10y ago
  Hah. I wish I were getting paid to do this. Maybe I do particularly dislike grocery shopping. Everywhere I've lived it's been a real drag: Midwest: In the store with lowest prices you spend half your time shopping and half waiting to get through checkout. Whole Foods is pleasant but overpriced. Mariano's is somewhere in the middle. NYC: Great small boutique grocery stores, much more expensive than Whole Foods, unbearably crowded at peak times, packed full of customers who are tripping over each other. Employees look ready to burst from the stress at any moment. Lower-end stores stock a very small number of items and are also overpriced. Not all neighborhoods have walking access to a larger, higher quality store like Whole Foods. SF: Whole Foods is a zoo and is undersized and frequently sold out. Safeway lacks many of the higher quality items but only offers paper bags which are a nightmare to carry if you walked. Safeway delivers but the quality of service is poor, and you are guaranteed to get the produce they had to get rid of that day. Parking to shop at any of these is a unique nightmare. I don't think I'm alone in not enjoying most of these experiences, or at least preferring to avoid them most of the time. Instacart may be losing money (who knows) but likely has ample room to increase prices. Uber and Lyft are both burning money and nobody cares.