6 ms·

From my understanding, the Jet.com deal was more of an acquihire to get Marc Lore to work for walmart.com[1]. The Jet.com numbers didn't look good at all, and t

by wyc 10y ago

From my understanding, the Jet.com deal was more of an acquihire to get Marc Lore to work for walmart.com[1]. The Jet.com numbers didn't look good at all, and they were rapidly burning through capital. Walmart didn't have technology as a core competency (nothing wrong with that), so it saw an opportunity to grow into the digital space through this acquisition. This leads me to think that everyone from the company is likely in golden cuffs. [1] see the subtle language that suggests Lore will be working on walmart.com: http://fortune.com/2016/09/20/walmart-acquisition-jetcom/ http://fortune.com/2016/09/20/walmart-acquisition-jetcom/

deleted 10y ago
[deleted]
qaq 10y ago
So the whole walmart labs thing doesn't count?
- was_boring 10y ago
  Sometimes that knowledge doesn't trickle out due to a variety of political reasons. A fresh face, with the blessing of senior management, can make a solid impact. Not saying this is what happened, and I greatly respect Walmart labs, especially the electrode project.
- verelo 10y ago
  As someone who has tried to work with them, I'd say no it doesn't. They are not responsive, very slow to do anything and frankly are more of a product API than a real innovation team. I'd love to see more from this group, I'd love to see them engage with the people in the labs forum more!
  - qmarchi 10y ago
    I'm curious to know what you were trying to reach out about. That team is massive (they have their own floor).
    - clay_to_n 10y ago
      Plus offices in two other countries. The Bangalore office has at least a floor in a large shared building.
    - verelo 10y ago
      I cannot be specific in the open, but if you look at my profile you might be able to take a guess. Frankly my experiences are limited to the Walmart Open API that came out of labs, so likely I'm just looking at a very small portion of what they're really doing (I'd guess most of which is for in house audiences).
- testaccountsdk 10y ago
  Labs has many good people but also lots of legacy from Sterling world. This affects culture. For example, their execution (especially speed) is not as good as Amazon's. Their use cases are more complex than Amazon's because customers expect store pickup and/or store delivery. They are trying to leverage their stores but it adds is more work. Marc and team has been brought to change how execution happens.
sbov 10y ago
> Walmart didn't have technology as a core competency Is this really true? Isn't the prototypical example of real world big data that Walmart learned to stock pop tarts before hurricanes? They also seem to have a wide range of tech related jobs at their job portal.
- wyc 10y ago
  I meant that historically, Walmart's money-making pursuits were not bastioned mainly on technology, but supply chain and leveraged buying positions. This does not preclude them from having highly-competent specialists (e.g., technologists) to support these operations. For example, Google has a stellar legal team, but is still an advertisement technology company. In fact, I think that Walmart had a lot to do with the standardization of UPC codes, which is a technological innovation for sure. Depending on your definition, everything could be a technology play, which makes for a far less useful term.
  - webmaven 10y ago
    Supply chains are a set of (evolving) technologies, few more so than Walmart's.
- muninn_ 10y ago
  Yes but that is more so relying on off-the-shelf software versus building it yourself. A technology company will be building the tools, not exclusively buying them. Wal-Mary's core competency has been supply chain and apparently operations research.
  - deleted 10y ago
    [deleted]
- dbcurtis 10y ago
  Walmart clearly knows how to leverage technology. Their business is built around using technology to lower costs and manage the flow of inventory. Walmart has always relied very heavily on IT, and has been a driver of retail IT innovation. My take is that even a very seasoned technology team with a deep bench can occasionally miss the beginning of something important, and be forced to catch up. 1) Don't let that be you. 2) Admit it, someday it will be you, so don't be so arrogant that you can't start executing plan B.
ikeboy 10y ago
He runs the online part now. See http://news.walmart.com/2017/01/31/walmart-launches-free-two-day-shipping-on-more-than-two-million-items-no-membership-required http://news.walmart.com/2017/01/31/walmart-launches-free-two...
ikeboy 10y ago
$3 billion is a lot to hire one person. They had to think the tech, relationships, or something there was valuable, it makes no sense as just an aquihire imo.
- creaghpatr 10y ago
  physical inventory, probably
- wyc 10y ago
  I think there's definitely truth in what you're saying, and that $3BB is surely a lot to hire an individual. However, a company is more than just its employees and cash on hand, and I think Walmart saw value in paying for a team that could enable it to execute successfully online. Jet.com had great technical execution and some interesting predictive capabilities: e.g., if a customer felt overserved and didn't want 2-day shipping or return option, then there were additional discounts that could be offered. If this could tool Walmart up to the point where it could be competitive online, then maybe it would be worth just under 1% of their almost $500BB annual revenues to buy this company. The Resource-Process-Value framework could be a decent way to think about this[1]: > Every time one company acquires another, it buys its resources, its > processes and its values. Acquiring managers, therefore, need to begin by > asking, “What is it that really made this company that I just bought so > expensive? Did I justify the price because of its resources–its people, > products, technology or market position? Or is a substantial portion of > its worth created by its processes and values–its unique ways of working > and decision making?” [1] https://www.forbes.com/2008/05/05/microsoft-yahoo-google-lead-clayton_in_cc_0505claytonchristensen_inl.html https://www.forbes.com/2008/05/05/microsoft-yahoo-google-lea...
- ProAm 10y ago
  > They had to think the tech, relationships, or something there was valuable, it makes no sense as just an aquihire imo. 3B is nothing when you are preventing competition.
  - omarchowdhury 10y ago
    Competition that was on a cash burning trajectory that could have been picked for much, much cheaper later (or just died out)?
MegaButts 10y ago
I never really understood the acquisition because of the reasons you said. Jet was burning through cash, and from what I can tell was gaining no mindshare over Amazon. When they didn't have inventory for products on their store, which was regularly in my personal experience, they'd just order them from Amazon and then offer more coupons to the customer. So Walmart spent $3 billion to acquire someone who can spend cash fast? What exactly did he prove with Jet, other than he can spend more money to acquire customers than they will pay? I only know what I read about it from a few articles, so I don't know the specifics. But from a consumer perspective Jet was losing horribly to Amazon - I'd use their coupons when it was cheaper than Amazon and then go back to Amazon. I figured out ways to essentially get steep discounts for every order, and even then I still preferred to use Amazon because it had less friction. Maybe I'll just never understand big business.
- sjg007 10y ago
  Target, Walmart, Best Buy all need to improve their online and mobile experiences. Jet.com was the first real contender to Amazon. Makes sense for someone to scoop them up. I'd bet there is room for more companies like jet. It could also be instacart or some other delivery oriented company if they can get nationwide scale.
- snarf21 10y ago
  That isn't what they bought. You have to understand more of the back story. Marc built an e-commerce business up from nothing and sold it to Amazon for 500M. The thing Amazon bought then wasn't just the customers/revenue but all of his experience using Kiva robots to automate the logistics and keep costs down. They now use that in all of their warehousing. My understanding is that Marc is none too fond of Amazon for whatever reason and jet.com was created specifically to beat Amazon. Jet's group coupon and localized shipping discounts became to hard to figure out profitability and keep growing the business so it was keeping raising and fighting or go help do it with Wal-Mart's checkbook. I actually think it was a win-win.
  - MegaButts 10y ago
    I hope you're right, as I believe competition is good for the consumer. But in this case I'm not sure I see it. I can understand Walmart wanting to buy Marc, but not at that price point for a company that is growing its burn rate. Of course, I don't know the logistics and how Walmart's acquisition could effect their burn rate and their revenue stream. My point was specifically that Jet was spending money to acquire customers, but the customers (in my anecdotal experience) always went back to Amazon.

by wyc 10y ago

deleted 10y ago

[deleted]

qaq 10y ago

So the whole walmart labs thing doesn't count?

was_boring 10y ago
Sometimes that knowledge doesn't trickle out due to a variety of political reasons. A fresh face, with the blessing of senior management, can make a solid impact. Not saying this is what happened, and I greatly respect Walmart labs, especially the electrode project.
verelo 10y ago
As someone who has tried to work with them, I'd say no it doesn't. They are not responsive, very slow to do anything and frankly are more of a product API than a real innovation team. I'd love to see more from this group, I'd love to see them engage with the people in the labs forum more!
- qmarchi 10y ago
  I'm curious to know what you were trying to reach out about. That team is massive (they have their own floor).
  - clay_to_n 10y ago
    Plus offices in two other countries. The Bangalore office has at least a floor in a large shared building.
  - verelo 10y ago
    I cannot be specific in the open, but if you look at my profile you might be able to take a guess. Frankly my experiences are limited to the Walmart Open API that came out of labs, so likely I'm just looking at a very small portion of what they're really doing (I'd guess most of which is for in house audiences).
testaccountsdk 10y ago
Labs has many good people but also lots of legacy from Sterling world. This affects culture. For example, their execution (especially speed) is not as good as Amazon's. Their use cases are more complex than Amazon's because customers expect store pickup and/or store delivery. They are trying to leverage their stores but it adds is more work. Marc and team has been brought to change how execution happens.

sbov 10y ago

> Walmart didn't have technology as a core competency Is this really true? Isn't the prototypical example of real world big data that Walmart learned to stock pop tarts before hurricanes? They also seem to have a wide range of tech related jobs at their job portal.

wyc 10y ago
I meant that historically, Walmart's money-making pursuits were not bastioned mainly on technology, but supply chain and leveraged buying positions. This does not preclude them from having highly-competent specialists (e.g., technologists) to support these operations. For example, Google has a stellar legal team, but is still an advertisement technology company. In fact, I think that Walmart had a lot to do with the standardization of UPC codes, which is a technological innovation for sure. Depending on your definition, everything could be a technology play, which makes for a far less useful term.
- webmaven 10y ago
  Supply chains are a set of (evolving) technologies, few more so than Walmart's.
muninn_ 10y ago
Yes but that is more so relying on off-the-shelf software versus building it yourself. A technology company will be building the tools, not exclusively buying them. Wal-Mary's core competency has been supply chain and apparently operations research.
- deleted 10y ago
  [deleted]
dbcurtis 10y ago
Walmart clearly knows how to leverage technology. Their business is built around using technology to lower costs and manage the flow of inventory. Walmart has always relied very heavily on IT, and has been a driver of retail IT innovation. My take is that even a very seasoned technology team with a deep bench can occasionally miss the beginning of something important, and be forced to catch up. 1) Don't let that be you. 2) Admit it, someday it will be you, so don't be so arrogant that you can't start executing plan B.

ikeboy 10y ago

He runs the online part now. See http://news.walmart.com/2017/01/31/walmart-launches-free-two-day-shipping-on-more-than-two-million-items-no-membership-required http://news.walmart.com/2017/01/31/walmart-launches-free-two...

ikeboy 10y ago

$3 billion is a lot to hire one person. They had to think the tech, relationships, or something there was valuable, it makes no sense as just an aquihire imo.

creaghpatr 10y ago
physical inventory, probably
wyc 10y ago
I think there's definitely truth in what you're saying, and that $3BB is surely a lot to hire an individual. However, a company is more than just its employees and cash on hand, and I think Walmart saw value in paying for a team that could enable it to execute successfully online. Jet.com had great technical execution and some interesting predictive capabilities: e.g., if a customer felt overserved and didn't want 2-day shipping or return option, then there were additional discounts that could be offered. If this could tool Walmart up to the point where it could be competitive online, then maybe it would be worth just under 1% of their almost $500BB annual revenues to buy this company. The Resource-Process-Value framework could be a decent way to think about this[1]: > Every time one company acquires another, it buys its resources, its > processes and its values. Acquiring managers, therefore, need to begin by > asking, “What is it that really made this company that I just bought so > expensive? Did I justify the price because of its resources–its people, > products, technology or market position? Or is a substantial portion of > its worth created by its processes and values–its unique ways of working > and decision making?” [1] https://www.forbes.com/2008/05/05/microsoft-yahoo-google-lead-clayton_in_cc_0505claytonchristensen_inl.html https://www.forbes.com/2008/05/05/microsoft-yahoo-google-lea...
ProAm 10y ago
> They had to think the tech, relationships, or something there was valuable, it makes no sense as just an aquihire imo. 3B is nothing when you are preventing competition.
- omarchowdhury 10y ago
  Competition that was on a cash burning trajectory that could have been picked for much, much cheaper later (or just died out)?

MegaButts 10y ago

I never really understood the acquisition because of the reasons you said. Jet was burning through cash, and from what I can tell was gaining no mindshare over Amazon. When they didn't have inventory for products on their store, which was regularly in my personal experience, they'd just order them from Amazon and then offer more coupons to the customer. So Walmart spent $3 billion to acquire someone who can spend cash fast? What exactly did he prove with Jet, other than he can spend more money to acquire customers than they will pay? I only know what I read about it from a few articles, so I don't know the specifics. But from a consumer perspective Jet was losing horribly to Amazon - I'd use their coupons when it was cheaper than Amazon and then go back to Amazon. I figured out ways to essentially get steep discounts for every order, and even then I still preferred to use Amazon because it had less friction. Maybe I'll just never understand big business.

sjg007 10y ago
Target, Walmart, Best Buy all need to improve their online and mobile experiences. Jet.com was the first real contender to Amazon. Makes sense for someone to scoop them up. I'd bet there is room for more companies like jet. It could also be instacart or some other delivery oriented company if they can get nationwide scale.
snarf21 10y ago
That isn't what they bought. You have to understand more of the back story. Marc built an e-commerce business up from nothing and sold it to Amazon for 500M. The thing Amazon bought then wasn't just the customers/revenue but all of his experience using Kiva robots to automate the logistics and keep costs down. They now use that in all of their warehousing. My understanding is that Marc is none too fond of Amazon for whatever reason and jet.com was created specifically to beat Amazon. Jet's group coupon and localized shipping discounts became to hard to figure out profitability and keep growing the business so it was keeping raising and fighting or go help do it with Wal-Mart's checkbook. I actually think it was a win-win.
- MegaButts 10y ago
  I hope you're right, as I believe competition is good for the consumer. But in this case I'm not sure I see it. I can understand Walmart wanting to buy Marc, but not at that price point for a company that is growing its burn rate. Of course, I don't know the logistics and how Walmart's acquisition could effect their burn rate and their revenue stream. My point was specifically that Jet was spending money to acquire customers, but the customers (in my anecdotal experience) always went back to Amazon.