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I disagree that this is awesome news for the team at Shipt. The best exit is not always a buy-out; they seem to have been doing great as an independent company

I disagree that this is awesome news for the team at Shipt. The best exit is not always a buy-out; they seem to have been doing great as an independent company. Now they're tied to Target. I'm mostly worried about what will happen to their existing stores: > Our shoppers fulfill orders from your favorite local stores in the cities we serve! It varies by market, but we currently shop at your favorite local stores: ● ABC Fine Wine and Spirits ● Central Market ● Fry’s ● Harris Teeter ● H-E-B ● Kroger ● Meijer ● Publix ● Western > More stores will be offered as we grow! [1] Given that, I don't see a good reason for Target to have bought Shipt. Why not just sign up with them like these other retailers? Unless they plan to cut these partnerships. I certainly hope that they follow through on their claim from the article that "It will continue to operate independently and plans to expand its business with other retailers" and not have Target attempt to cut these partnerships. [1]: http://help.shipt.com/how-shipt-works/what-stores-are-supported-through-shipt http://help.shipt.com/how-shipt-works/what-stores-are-suppor...

khc 9y ago
They have 20000 customers so that's $2M of membership revenue. There maybe other delivery revenues but surely that can't be more than a small multiple of that. How does 500M price tag make sense?
- jdc0589 9y ago
  their pricing model is a subscription + an upcharge on purchased goods (10%?). The upcharge may not do much more than pay shoppers and cover some of those associated costs, I don't know, but there's more than just the base subscription revenue.
- ovrdrv3 9y ago
  My guess is infrastructure
  - ktta 9y ago
    Half a billion worth of infrastructure?
    - Hasz 9y ago
      Might be more like "we'd lose more than 500M while we build our own" so a 500M price tag makes sense to have it now.
      - ktta 9y ago
        Would they really? They already have a good amount of developers working on their apps and websites. Now this app will be consolidated as an extra feature on the Target app. I really seem to be missing something here. Jet acquisition made (atleast some) sense because it had much bigger employee count and showed it can run okay. What I know for sure is that the investors are super happy with their returns.
daveFNbuck 9y ago
Maybe Target wants to expand shipit and profit off of sales from all of these other companies, the same way Amazon makes money off of its cloud infrastructure via AWS.
jasode 9y ago
>The best exit is not always a buy-out; they seem to have been doing great as an independent company. It was not a hostile takeover so maybe Bill Smith thought they had a brighter future with with Target's investment. From the article, it says that Target and Shipt have been in discussions since the summer so Bill and his team had several months to work out the terms of a friendly deal. Crunchbase says they had 3 rounds of funding.[1] If it's reasonable to guess that Bill still has at least ~30% equity left, it would translate to $160+ million payout. Maybe staying independent had more risks in his mind. [1] https://www.crunchbase.com/organization/shipt-2 https://www.crunchbase.com/organization/shipt-2
hinkley 9y ago
I’ll reserve my judgement until I see the org chart. Every so often the smaller company gets its executives placed high in the organization making it more like a merger than a buyout. Some of those turn out pretty well. The ones where they talk about a strategic purchase and learning this and blah blah that but they end up strangling the company end up sounding really good at the beginning but then turn sour quick. Also the rank and file employees usually get screwed in this scenario.

khc 9y ago

They have 20000 customers so that's $2M of membership revenue. There maybe other delivery revenues but surely that can't be more than a small multiple of that. How does 500M price tag make sense?

jdc0589 9y ago
their pricing model is a subscription + an upcharge on purchased goods (10%?). The upcharge may not do much more than pay shoppers and cover some of those associated costs, I don't know, but there's more than just the base subscription revenue.
ovrdrv3 9y ago
My guess is infrastructure
- ktta 9y ago
  Half a billion worth of infrastructure?
  - Hasz 9y ago
    Might be more like "we'd lose more than 500M while we build our own" so a 500M price tag makes sense to have it now.
    - ktta 9y ago
      Would they really? They already have a good amount of developers working on their apps and websites. Now this app will be consolidated as an extra feature on the Target app. I really seem to be missing something here. Jet acquisition made (atleast some) sense because it had much bigger employee count and showed it can run okay. What I know for sure is that the investors are super happy with their returns.

daveFNbuck 9y ago

Maybe Target wants to expand shipit and profit off of sales from all of these other companies, the same way Amazon makes money off of its cloud infrastructure via AWS.

jasode 9y ago

>The best exit is not always a buy-out; they seem to have been doing great as an independent company. It was not a hostile takeover so maybe Bill Smith thought they had a brighter future with with Target's investment. From the article, it says that Target and Shipt have been in discussions since the summer so Bill and his team had several months to work out the terms of a friendly deal. Crunchbase says they had 3 rounds of funding.[1] If it's reasonable to guess that Bill still has at least ~30% equity left, it would translate to $160+ million payout. Maybe staying independent had more risks in his mind. [1] https://www.crunchbase.com/organization/shipt-2 https://www.crunchbase.com/organization/shipt-2

hinkley 9y ago

I’ll reserve my judgement until I see the org chart. Every so often the smaller company gets its executives placed high in the organization making it more like a merger than a buyout. Some of those turn out pretty well. The ones where they talk about a strategic purchase and learning this and blah blah that but they end up strangling the company end up sounding really good at the beginning but then turn sour quick. Also the rank and file employees usually get screwed in this scenario.