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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. Th

by 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.
- KingMob 10y ago
  Focus on value, not cost. Sure, 3 bil is too much if all you want is Jet.com as is. But 3 bil might be just fine if what you want is a team to help you catch up online and compete with Amazon.
  - MegaButts 10y ago
    $3 billion to acquire a team that has not proven an ability to generate a profit? That's what boggles my mind. It's still a risk, but it's valued like a sure thing.
    - webmaven 10y ago
      > a team that has not proven an ability to generate a profit There is more than one flavor of unprofitability. On one end, you have Pets.com-style "selling stuff for less than it costs to stock and ship", and on the other end you have Amazon-style "every penny of profit and funding goes into expanding infrastructure ahead of projected demand and leveraging current infrastructure to enter new markets."
- xherberta 10y ago
  One thing you're seeing in the burn rate crescendo is that just before the acquisition, jet bought small rivals such as hayneedle.com so as to bargain based on a higher market share.
jdeibele 10y ago
"none too fond" is almost certainly a vast understatement. http://allthingsd.com/20131010/how-jeff-bezos-crushed-diapers-com-so-amazon-could-buy-diapers-com/ http://allthingsd.com/20131010/how-jeff-bezos-crushed-diaper...

by snarf21 10y ago

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.

KingMob 10y ago
Focus on value, not cost. Sure, 3 bil is too much if all you want is Jet.com as is. But 3 bil might be just fine if what you want is a team to help you catch up online and compete with Amazon.
- MegaButts 10y ago
  $3 billion to acquire a team that has not proven an ability to generate a profit? That's what boggles my mind. It's still a risk, but it's valued like a sure thing.
  - webmaven 10y ago
    > a team that has not proven an ability to generate a profit There is more than one flavor of unprofitability. On one end, you have Pets.com-style "selling stuff for less than it costs to stock and ship", and on the other end you have Amazon-style "every penny of profit and funding goes into expanding infrastructure ahead of projected demand and leveraging current infrastructure to enter new markets."
xherberta 10y ago
One thing you're seeing in the burn rate crescendo is that just before the acquisition, jet bought small rivals such as hayneedle.com so as to bargain based on a higher market share.

jdeibele 10y ago

"none too fond" is almost certainly a vast understatement. http://allthingsd.com/20131010/how-jeff-bezos-crushed-diapers-com-so-amazon-could-buy-diapers-com/ http://allthingsd.com/20131010/how-jeff-bezos-crushed-diaper...