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Instacart in Talks to Raise $400M at $3B Valuation
- karmicthreat 10y agoI kind of wonder why this was even leaked. Is anyone going to give Instacart a better deal than that? Or acquire it?
- throewai 10y agoFunny, I talked to an associate at a VC once and asked him what the riskiest play in SV was after Theranos and he said Instacart.
- deleted 10y ago[deleted]
- JBReefer 10y agoThat is insane and unreasonable. The bubble has lost it.
- MegaButts 10y agoPeople have been saying that for years. The question is how crazy can things get before the bubble bursts?
- gkoberger 10y agoWhy? Grocery shopping is extremely inefficient and has to be done weekly by almost everyone in the world. It's not a small problem that they're solving, so large amounts of cash (and a high valuation) makes sense.
- oculusthrift 10y agoOne doesn't deserve a high valuation just because the problem they are solving is hard. The company he came from, Amazon, has more cash than anyone could raise. They have logistical expertise and are perfecting same day shipping at a national scale. They also offer Amazon "Fresh" which is essentially the same service except they don't skirt labor laws by classifying their employees as contractors. And non-tech people actually trust Amazon and order quite a bit from them. For them to succeed outside of a few big cities would require gross negligence and incompetence by Amazon, which isn't impossible. But seems unlikely.
- envy2 10y ago> They also offer Amazon "Fresh" which is essentially the same service except they don't skirt labor laws by classifying their employees as contractors. At least in DC, the Amazon Fresh (and Prime Now) drivers are definitely just random people in their own car, the same as Instacart.
- matthewowen 10y agoBecause it's a terrible way to solve it and this company doesn't seem to be executing particularly well on it. I actually agree that online grocery shopping should be great. It's mystifying to me that it isn't: if you go to the UK, the experience is fantastic: order direct from the grocery store, easy to order, cheap and efficient delivery. I don't really understand why US chains can't do the same thing.
- JBReefer 10y agoWe do, it's a very successful service called Peapod that you haven't heard of because it's not used by people in SV. It's exactly what you're describing, but doesn't have a hugely PR engine because it's a profitable arm of an existing store that doesn't require a 10x exit.
- ghaff 10y agoAnd Peapod is actually the only delivery service I can get where I live. I've used it when I was on crutches for a few months because of a broken foot. I didn't love it but it was better than trying to do a full grocery shopping when I couldn't walk. In general, in the US, people mostly use delivery services if they can't easily go to the store and shop. Or if it's just a hassle because of kids, etc. I'm not sure if there are cultural differences from other places or it's just because, for most people in the US, hopping in a car and parking in the large supermarket parking lot just isn't a big deal. In any case, it doesn't seem like a market that's ripe for disruption except in the minds of Silicon Valley types. Adequate services exist. It's just that very few people have an interest in using them.
- dang 10y agoUnsubstantiveness and name-calling make for a bad kind of HN comment. If you have a substantive point, you're welcome it to make it thoughtfully. If you don't, please don't post here.
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- toephu2 10y agoLow barrier to entry, crowded space, and low margins...can't imagine this company (or any of the small guys) still being around 5 years from now.
- oculusthrift 10y agoI guess jumping on the "Uber for X" bandwagon nets you 3Bn.
- omarchowdhury 10y agoThere hasn't been any net yet.
- oculusthrift 10y agoTrue. But I'd assume at the very least it nets you a fat salary befitting a founder of a 3bn company.
- greglindahl 10y agoThat's not how salaries work at the startups I've been a part of.
- alaskamiller 10y agoSome context, aside from the viability of Instacart itself. Apoorva Mehta used to work down the hall from us at SomaCentral, a shared office space retrofitted out of an old law firm on Townsend. He and his buddy would be heads down in their laptops every time we walk past their bullpen corner. They were busy building out a legal tool slash social network slash law something slash annotation something slash whatever. The plan didn't so much change but rather morph every time I said hi. They were smart though, so I figured they would hit it whenever they get to it. Though they've been at this for awhile now. While most others tried to keep a social factor going on at the space, they tend to be so busy they would avoid it. Though and now then I do remember getting to grab a drink with them. A few years later, settling in my new job in Berkeley/Oakland I called up Instacart to deliver me some groceries. But it was only last year I finally looked up the company profile and soon realized it's the same Apoorva Mehta. From being that dude to 3 billion dollars in a matter of five years is--to quote another commenter--insane. But he's keeping the silicon valley dream alive. That's pretty nifty in itself. The rest of us are just hanging out here writing comments.
- a13n 10y agoI was going to post a comment about Instacart here, but instead decided to write a little thing on Medium. Why Instacart is gonna get crushed by Amazon https://medium.com/@a13n/why-instacart-is-gonna-get-crushed-by-amazon-48f08bad6e35#.a1jcnmu4g https://medium.com/@a13n/why-instacart-is-gonna-get-crushed-...
- a13n 10y agotl;dr is that Amazon can deliver a better experience because they actually know exactly what they have in their own warehouses. Often times on Instacart you order something and it gets replaced with something else because it was out of stock, because they work with other stores like Safeway, Whole Foods. Also everyone already has a relationship with Amazon so it's just easier to go that route.
- chejazi 10y agoIntegrating inventory across various grocery stores would be ideal, but it seems like a big undertaking not to mention it clashes with the shopping experience (e.g. customers keep items in their shopping carts for long times) I like the idea of warehouses, though the requirement to stock items seems restrictive, kinda like when Google Shopping Express launched - it had such a small selection of products. One potential middle ground... why not use a warehouse/centralized location to aggregate the requested groceries, then have a separate system to dispatch the groceries to the customer? By aggregating from multiple grocery stores, you minimize the risk an item is not available.
- lkhatter 10y agoI'm pretty sure they're doing this, It was in an interview the ceo had with techcrunch.
- lstyls 10y agoI think you nailed it. I live in NYC and work too much, meaning I live and die by trading money for time. And every time I use instacart I regret it for the exact same reasons you describe. The idea of hooking into some kind of warehouse management network makes a lot of sense. Does an API exist? Probably not. But there's an opportunity right there. Partner with a major warehouse management system, preferably one that works with Safeway or Stop n' Shop, and figure out a way to cut out the store visits altogether. Of course this would mean automating away the shoppers :/.
- biggc 10y agoI feel like I'm taking crazy pills. Every supermarket in Montrela offers phone orders and home delivery for a fee of less than $5 if your order is big enough ($50+). If you want to, you can even do your shopping in the store, and pay about two bucks to have them deliver to your house if it was in a few km. I just checked, and one of the smaller chains (4 stores) has their own online ordering platform.
- laser 10y agoTheir revenue numbers must look absolutely insane, even if they're not actually profitable. I spend more money through instacart right now than any other software, and maybe all other software I use, combined.
- arikr 10y agoNot appropriate to count entire cart/shopping spend as Instacart's revenue. Think of that as "GMV". Instacart's revenue is their delivery charges, service charges, and any money the stores pay them / % fees. See #6 here http://a16z.com/2015/08/21/16-metrics/ http://a16z.com/2015/08/21/16-metrics/
- paulcole 10y agoAre they counting pass-through as revenue?
- pj_mukh 10y agoAll my nearby stores offer this, I still use Instacart. It lets me shop from any store, their QC is amazing, and living in a small apartment I need to make 2 or 3 $35 trips (instead of one big $150 trip) and that becomes free on Instacart (saving me close to 5hrs per week of drudgery).
- greglindahl 10y agoAs a comparison, the Whole Foods supermarket chain has a market cap of $9.6G. Yow.
- Vadoff 10y agoYep, and Safeway with over 1500 stores across the US/Mexico has a market cap $8.1B.
- omarchowdhury 10y agoInstacart is building datasets right now on what people purchase. They can simply bypass their physical market place partners of today and become a retailer without the cost of running physical stores. They would only need to take care of fulfillment, and hey, maybe with machine vision there will be a little Instacart robot that delivers your groceries to you direct from the Instacart warehouse: cutting yet another cost and justifying their high valuation. Who know's if that's what they're up to.
- CPLX 10y ago> Instacart is building datasets right now on what people purchase. Why do people say things like this as if Silicon Valley is the only place that's heard of collecting data on customers. You are aware that's what those supermarket savings cards with the barcodes do right? I guarantee you that Instacart has like the 178th best database of what supermarket customers purchase at best.
- omarchowdhury 10y agoOf course, I'm only painting a scenario that I think likely is being posed by Instacart to justify their valuation and future prospect, not the superiority or effieciency thereof. And there is a big difference between having access to a database of customer sales, and actually having those customers...
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- siliconc0w 10y agoMy theory is that the inability of US chains to figure out online ordering is really some anti-competitive agreement to force customers to go into the store because the chains live and die by high-margin impulse buys. Wholefoods just opened a brand new chain called '365' that has all sorts of sophisticated nonsense like a programmatic tea-bot and yet there is no online ordering. Even the made to order stuff is driven by an interface which could just be made publicly accessible and they'd be done but no, into the store you go.
- Eridrus 10y agoI don't think so. Supermarkets and e-commerce are entirely different competencies and I have no trouble believing that being good at one doesn't give you a tonne of advantage at the other. Putting some startup's tea-bot into a store is far easier than integrating that tea-bot into an online ordering system.
- RyanZAG 10y agoMost supermarkets in other countries seem to manage deliveries and online ordering pretty well. For example, all supermarkets in South Africa provide online ordering and delivery. Sometimes without even a delivery charge.
- cududa 10y agoI think you're severely overestimating the ability of supermarket chains.
- caminante 10y ago365's a downmarket brand (lower margin) focused on millenials and a "hip" shopping experience. WFM never wants to be a virtual distribution center for Instacart.
- e1g 10y agoFWIW WholeFoods recently invested significant sums (~$30M) into instacart and made them the official online distribution channel. So WFM sees some value in being a distribution center, if that means moving more of their goods.
- gtirloni 10y agoI see Uber, Lyft, Amazon Fresh, Instacart, etc and I can't understand why they take the market by storm like that. They are not the first to ever think about that, their service isn't super great (except for Amazon, I'd say) and still, in the US, it seems like the market just sits and waits for them. Then a majority of people jumps in and the thing skyrockets. Meanwhile, in other countries, small to medium-sized companies have had online groceries ordering for many years, local taxi unions have had websites and recently apps, and still... it's like OMG so much innovation from US companies let's give them crazy valuations. What gives? Is it market size?
- jdminhbg 10y agoI'm not on the Amazon Fresh/Instacart trend yet (and may not be -- I really enjoy grocery shopping and frequent different farmers' markets, so it's not a problem I need to have solved for me). But as for Uber/Lyft, the reason they're vastly more valuable than whatever local taxi website/app is convenience and lack of friction. When you get an Uber, you don't have to worry about payment or directions; it's all handled for you. When you get to a different city, you don't have to google the local taxi companies and pick one; you just open Lyft and get a ride.
- tonydiv 10y agoJust ended by Instacart subscription for Amazon Fresh. I hated how Instacart would mess with prices. So far, much happier with Amazon Fresh. Costco access gives Instacart a huge advantage, but they abuse it.
- sjg007 10y agoSupermarkets can compete by becoming more like Hyvee with restaurants and other amenities. But I agree delivery is amazing.
- yesimahuman 10y agoOne interesting counter to Instacart are services like grocerkey (http://www.grocerkey.com/ http://www.grocerkey.com/) that exist as whitelabel instacart's for stores. That local chain that everyone knows probably doesn't want to send all their customers to instacart if they don't have to. I'm not sold on Instacart being something people use outside of a few major cities, but maybe that's enough for them.