12 ms·

Webvan

84 points by 29_29 7y ago

wil421 7y ago
Webvan brings up old memories and I really thought of it as the future. My neighbors tried it a few times and I can remember it showing up. When I asked my parents to do it they thought I was crazy. Pretty sure cost had something to do with it. I’d still fill up a shopping cart just because. Webvan failed but if the gig economy was around it could’ve succeeded for a time. These companies need non-employees to make it viable I believe. Will Uber eats and the like become the next Webvan? Grocery store delivery? Paying someone to shop for you then picking it up? IMHO, robots will not be picking people up and delivering our groceries in the near future. Your business can’t depend on the weather. Gig economies are not good for the gig seekers long term.
- sixQuarks 7y ago
  I remember a journalist did a story on webvan and how ridiculous it’s biz model was. They ordered a snickers bar, which was delivered by itself. The cost to deliver that snickers bar was multiple times the cost of the product.
  - deleted 7y ago
    [deleted]
  - pp19dd 7y ago
    Knew a person who worked there at the time and they said the problem no one could solve was optimizing logistics because they couldn't cherry pick their customers. One order could be halfway across town from the next, and they had to fulfill that in a timely manner.
- londev 7y ago
  Almost every one I know in the UK has their groceries delivered. According to the official stats it’s only 7% of grocery spend though.
  - cameronbrown 7y ago
    This is definitely the kind of thing heavily influenced by location. I'm from the north and I don't know anyone who gets them delivered.
    - rjsw 7y ago
      Where do you count as "the north" ? Plenty of delivery vans around in Manchester.
    - pushpop 7y ago
      I think it’s more of an income thing than a location thing. Most supermarkets will have a minimum spend and then there is a delivery charge on top. Both are pretty cheap but if money is tight then that is one easy convenience to go without.
      - twic 7y ago
        I suspect there's also a social proof aspect. If five of your six closest local friends get their shopping delivered, you're very likely to try it yourself. If you don't know anyone who does it, you aren't.
        pushpop 7y ago
        I would be the outlier in that particular example but I think there is a fair amount in truth in what you said nonetheless.
      - kalleboo 7y ago
        I know people with not great income who use delivery due to working parents and can't afford a car, so ordering delivery from a large supermarket is cheaper and has better range than the walkable corner store alternative, and frees up a ton of time.
        pushpop 7y ago
        Ironically I find I spend less when shopping online too because I’m less likely to impulse buy stuff. Though I do often break the “don’t go shopping when you’re hungry” rule, which doesn’t help.
- leetbulb 7y ago
  > Will Uber eats and the like become the next Webvan? Grocery store delivery? Paying someone to shop for you then picking it up? Maybe for prepackaged foods, but I hope not fresh foods like meats, veggies, etc. Most stores have a wide variety of quality in the same bin for any given food and I'd rather be the one to choose.
  - wil421 7y ago
    I love to cook and wouldn’t trust someone else picking out my groceries. Not to mention these things cost more.
    - MarkyC4 7y ago
      I currently use Instacart (as an Express member). I'd say 10% of orders (I order ~2 times a week) contain an item that wasn't of sufficient quality. Their customer support is great when this happens, always refunding the bad item (though sometimes that's besides the point -- I needed that item for my meal!) The $100 yearly membership fee amortizes to ~$1/order, and the markup on products seems to be ~5-10%. So I'm paying a little extra to avoid going to multiple grocery stores on a weekend/weeknight
- napoleond 7y ago
  > These companies need non-employees to make it viable I believe. I'm curious about this. Does this mean that, once gig-economy workers factor in all the costs that are normally born by employers (Insurance premiums? Certain taxes? Mileage costs? What else?), that they are effectively making less than minimum wage? If so, why do they do it? If not, what is the intrinsic reason that this work must be done by contractors rather than employees?
  - ramy_d 7y ago
    that they are effectively making less than minimum wage? That's the whole point of the gig economy: How to pay people to work without paying them minimum wage by "disrupting labor laws".
    - napoleond 7y ago
      Is that actually true, though? I've seen anecdotal reports from certain Uber drivers or whatnot, but I have not seen data. (It seems counterintuitive that such a huge amount of contractors would continue to choose that work over traditional employment in service jobs if it paid less.)
      - sct202 7y ago
        Uber published a study with 2014 data here that says their drivers make ~$20/hr not including expenses which they estimate at like $3/hr https://drive.google.com/file/d/0B1s08BdVqCgrZWZkV0ZfZnhGUGc/ https://drive.google.com/file/d/0B1s08BdVqCgrZWZkV0ZfZnhGUGc... This MIT study says $8-10 after expenses https://www.npr.org/sections/thetwo-way/2018/03/07/591430857/researcher-says-criticism-is-valid-will-revise-study-finding-low-uber-and-lyft-p https://www.npr.org/sections/thetwo-way/2018/03/07/591430857... Plus given that drivers could be trying to drive when there's no demand, its very possible for people to earn below minimum wage.
        Spooky23 7y ago
        That's a long time ago. They've cut the payment substantially since then. https://www.inquirer.com/news/uber-lyft-rideshare-drivers-philadelphia-pay-cut-ipo-public-stock-strike-20190410.html https://www.inquirer.com/news/uber-lyft-rideshare-drivers-ph...
- hetoh 7y ago
  Maybe Webvan was before its time. Instacart is doing just that and has lots of partnership too e.g. Costco/Sprouts etc. They might just become successful.
- pushpop 7y ago
  UK supermarkets have offered both a collection service as well as a delivery service for years. It’s great, you do your grocery shopping online and schedule a delivery or collection time and the supermarket does all the hard work for you. And the whole Thing costs a couple of quid. It’s a great convenience.
  - wil421 7y ago
    My grocery store will do delivery through Instacart. According to Google Instacart adds $5.99 plus 10% of the order. What does your store charge?
    - twic 7y ago
      The market for delivery has evolved comparable complexity to mobile phone contracts, sadly: https://www.lovefood.com/guides/3444/cheapest-supermarket-online-delivery-deals-asda-tesco-iceland-cost https://www.lovefood.com/guides/3444/cheapest-supermarket-on... So, you can use Waitrose, where delivery is free, but there's a £60 minimum order, and their prices are generally higher than the other supermarkets (Waitrose is the UK's high-end supermarket for moderately posh people [1]). Or you can use solidly middle-class Sainsbury's, where there's a £25 minimum order, delivery costs £1 - £7 depending on the time and day, but it's free for orders over £100. Or something else. Or sign up to a subscription plan which will work out cheaper if you get a lot of deliveries, etc. [1] https://www.buzzfeed.com/floperry/of-the-most-middle-class-things-overheard-at-waitrose https://www.buzzfeed.com/floperry/of-the-most-middle-class-t...
    - pushpop 7y ago
      As I said in my post, I normally pay £2. But the price is variable depending on time of day etc. I can’t recall what the minimum spend is but it’s way below our typical weekly spend anyway.
- wpietri 7y ago
  The hilarious part to me is how Webvan as deployed represented a cutting of scope. Originally they were going to sell everything. Groceries were the start-small compromise! One valuable lesson here is that being correct but too early is the same thing as being wrong. Webvan vastly overestimated the speed of change. 20 years later and I still get most of my groceries from the corner store. I have friends who do mostly delivery, but that's still far from a perfect experience. Another is that any startup should ask questions like: what do we think we'll learn, and can we learn that for less money? They spent $800 million finding out the answers to things like, How much do people want to buy groceries on line? and What are sustainable economics for grocery delivery? They could have gotten the answers they did for less than 1% of what they spent. Build a web site, rent a few trucks, buy most of your groceries from the nearest grocery store, launch a limited test in your most favorable zip code. They would quickly have learned how viable it was, and the other $792 million could have gone to startups with more of a chance of delivering sustained customer value.
  - mikepurvis 7y ago
    There was a grocery delivery startup called Grocera that operated in Waterloo region for a little while a couple years ago (https://www.crunchbase.com/organization/grocera https://www.crunchbase.com/organization/grocera). It's defunct now, but my wife ordered from them a few times, and was pretty sure it was one of the founders who showed up at the door, pulling the order out of the back of their own hatchback. So much value in learning first hand about the experience first hand, both for the customer and the staff person.
    - MarkyC4 7y ago
      > So much value in learning first hand about the experience I couldn't agree more! I'm working for a startup doing alcohol/cannabis delivery. Before there was funding, our founders rode their bikes to do these deliveries (and have still done some deliveries in the past 6 months). There was so many lessons learned from doing our deliveries. One such example: we had a bug where our push notifications told the customer we had arrived, but were actually still pretty far away (GPS math sure is fun :P)
  - 7y ago
- rongenre 7y ago
  I used webvan back in 1999, and it felt... ridiculous? Like they had to be spending a ton of money to bring me basic groceries? But 1999 was like that. What I think they really missed is how much they were in the logistics business rather than the grocery business -- immediately. That's a seriously tough nut to crack and you have to be Amazon or Walmart or (now) Uber to really play in that space.
- davidjnelson 7y ago
  > Grocery store delivery? Amazon does this already with Whole Foods.
hbosch 7y ago
Of all the companies to bite in the the dot-com crash, Webvan really did seem like it was truly viable.
- Ididntdothis 7y ago
  I think they were suffering from too much money that needed to be spent too quickly. If they had moved slower they may have become like amazon.
  - tw1010 7y ago
    What does that even mean? How do you kill yourself with a bucket of money?
    - michaelmior 7y ago
      Hire too many employees, build out too much capacity without a market that can provide the necessary demand, operating costs get too high, and you're done. Of course if the terms of investments and the discipline of the founders are combined able to regulate the growth rate, these things become less of a problem.
    - blackflame7000 7y ago
      If you expand too quickly then you might not have the sales to maintain the large growth. Then your profits from good markets go to propping up bad markets and before you know it you aren't making any money in any markets.
    - Ididntdothis 7y ago
      You can overspend on stuff. When the money runs out you have a business that can’t sustain itself. Uber is running that risk too.
    - whatever_dude 7y ago
      In the same way one kills a software development project by having too many developers: you feel like you need to put everyone to action immediately, so you end up with a mass of disjointed, barely functional code.
Theodores 7y ago
http://www.webvan.com/ http://www.webvan.com/ As resurrected by Amazon in 2009. How the mighty have fallen.
DangerousPie 7y ago
There is now a very successful company with exactly the same business model in the UK: https://en.wikipedia.org/wiki/Ocado https://en.wikipedia.org/wiki/Ocado
- orf 7y ago
  I wouldn’t say it’s exactly the same, it definitely targets the higher end of the market.
- debt 7y ago
  timing clearly is everything
jedberg 7y ago
In 1999 and 2000, I worked for a startup in the Bay Area. Twice a week our kitchen was stocked with fresh food delivered by WebVan. We had a ton of their crates sitting around that we used to store computer parts and other facilities needs, since they never seemed to collect them. Right around mid-2000, the deliveries stopped as the market started to tank and we had to "tighten our belt", and the free food disappeared and the vending machines went from free to 10 cents each (and there was a small riot). I suspect we weren't the only startup that did that. It makes me wonder how much of their revenue was from other startups. Kind of reminds me of 2019... They actually brought good food. I considered signing up for myself at my house, but it was just too expensive for a single guy. Might have been good for a family though.
- friendly_chap 7y ago
  Can you please explain the bit about 2019? Do you feel a downturn is happening/coming?
  - danko 7y ago
    The implication here is that a lot of value associated with 2019-era VC-funded startups is derived from the revenue they receive by selling to other VC-funded startups.
    - friendly_chap 7y ago
      I see, thanks for the clarification!
jbverschoor 7y ago
https://www.youtube.com/watch?v=I6IQ_FOCE6I https://www.youtube.com/watch?v=I6IQ_FOCE6I ;-(
themark 7y ago
The cup holders... https://www.sfgate.com/bayarea/matier-ross/article/Webvan-ghost-at-ball-yard-42-000-cup-holders-3314941.php https://www.sfgate.com/bayarea/matier-ross/article/Webvan-gh...
thesausageking 7y ago
They raised a pile of money from Benchmark, Sequoia, and Softbank. Does anyone know what happened with these investments? Did they get out post-IPO while it was still high flying?
- firasd 7y ago
  Bill Gurley answers on behalf of Benchmark here,saying they lost about $3.5 million but he would do it again (this answer is from 2004, seems he's addressed it in later interviews as well): https://www.quora.com/How-much-money-did-Benchmark-capital-lose-on-Webvan https://www.quora.com/How-much-money-did-Benchmark-capital-l...
rmason 7y ago
Webvan's main problem was they expanded before they had their model figured out. They invested tens of millions in warehouses they didn't need with their current volume as well. If they had spent time on their model they'd have figured out that it only made sense to target the upper middle class neighborhoods at the time profitably. With that realization they'd never have built all the warehouses and with a lower burn they'd have survived only to eventually own the market. The founder was a really smart guy who had already created a very successful startup. But he was under an imperative from his investors to ramp up fast. A lot of the hard learned wisdom from that time would create a different outcome possibly today. I know that I'd have done a lot differently with my own startup back then if only I knew what is common wisdom today ;<).
- Gabriel_Martin 7y ago
  such an important insight, that the investors were the ones pressuring him to structure it in this way.
  - mmazing 7y ago
    True, but not blameless - he was the one to attempt to execute the plan that way.
  - rmason 7y ago
    Back in that time everyone placed an over importance on being first and then locking up the market quickly. Sometimes like maybe Uber that's important. Reid Hoffman is still a proponent of this tactic with what he calls blitzscaling. Course nowadays he's a VC ;<). But as Google demonstrated you can enter after the market is mature with both a better product as well as a better business model and dominate.
    - robocat 7y ago
      > But as Google demonstrated you can enter after the market is mature [] and dominate. I don't think Google (founded 20 years ago) is a good example of entering a mature market. I think a better example is Facebook (founded 15 years ago) which won against MySpace. I thought Salesforce (founded 20 years ago) should be a good example, but their market cap is still well below SAP's.
CPLX 7y ago
The part this thread seems to be missing is that like we didn’t have much internet back then. Sure you didn’t have it in your pocket, but also most people didn’t have it in their house either. And if you did you had to dial with a phone line (which is a thing attached to a wall) and make it so you couldn’t get any calls while you were doing it. And it would take like 41 seconds for a grainy picture of a banana to roll in from top to bottom. And you’d get disconnected and lose your cart. And so on. It was different back then.
- bjhkx 7y ago
  Disconnected, okay. Lose your cart... why? Cookies and sessions existed back then.
  - useful 7y ago
    cookies are sent with every request, you were lucky to have >28k modem back then. Json didn't really exist, xml was king. There were plenty of reasons. Apache needed a mod to store a session in a cookie instead of a url and HTTPS was really hard to do. Java had its way, PHP had another, ASP had another... everything was different and there were no patterns.
    - rongenre 7y ago
      56k modems were pretty routine by 1999 and ISDN (It still does nothing) was a thing. But by 2000, DSL rollouts were starting to happen.
- clairity 7y ago
  my area at the time was one of the first to get cable modems. 10mbps (and as much as 40) vs 56k dial-up. it was heavenly. the webvan site would have been no match, had it been offered where i lived.
- davidjnelson 7y ago
  Lol, amazing how fast the internet has gotten. Started on a 14.4 modem, now I’m being told gigabit fiber is available in my neighborhood. Just... wow.
subpixel 7y ago
The CEO of WebVan negotiated a contract to pay him $375,000 per year for life - including his wife's life, if she survives him. I'm not sure what to say except: well-played.
- koolba 7y ago
  Not really. The company went bankrupt and it’s an unsecured debt. It would have been a good play if it was collateralized or the company actually succeeded.
  - abraae 7y ago
    Yes, that seems the opposite of the kind of deal you'd want to make with a hotly burning startup.
  - subpixel 7y ago
    Ah, I assumed the deal was independent of WebVan's fate. I acknowledge that makes little sense. I must have been captivated by the vision of that check in the mail.
- simplicio 7y ago
  Is he still getting paid? I'd assume once the company went under there'd be no one to do the paying. In which case it doesn't seem like such a great play.
- gearhart 7y ago
  Well, sort of - it was a really good start, but given that was his incentive structure he should have been slowly and steadily building a sustainable business and instead he went and blew what could have been the opportunity of a lifetime by not being able to say no to bad strategy pressure from overly-aggressive VCs. Good negotiator. Bad CEO. You could also say that it was really good negotiation by the other side; if you're a board member of a startup during the bubble and all you get to control is CEO pay, then you did everything you could to incentivise him to behave sensibly, and the rest unfortunately was on him.
femto113 7y ago
In Seattle we had HomeGrocer and it was awesome. Absolutely seemed like the future of groceries, they had great selection and especially great produce. The delivery people drove company vans (with a distinctive peach logo on the side) and wore a uniform (like UPS) and AFAIK were all full-time employees. Sadly they were acquired by Webvan and it all fell apart.
- clairity 7y ago
  i felt that way about the massachusetts-based lighthouse bank[0] founded in 2000 and unaffiliated with the current santa cruz-based lighthouse bank. high-interest checking, no-fee, internet-only bank. it was amazing until it got merged into brookline bank and essentially dissolved. [0] https://www.bloomberg.com/research/stocks/private/snapshot.asp?privcapId=821638 https://www.bloomberg.com/research/stocks/private/snapshot.a...
  - astura 7y ago
    >high-interest checking, no-fee, internet-only bank. SoFi just launched this product, and they are even giving $50 referral bonuses on both ends to sign up (referer and referee). I'm really wondering if it's a sustainable business model.
    - clairity 7y ago
      it's quite sustainable i'd bet. banks traditionally make money by lending most of its deposits to other people and earning interest on that lending. as long as the deposits are large enough, that interest should cover the fixed costs (employees, infrastructure) and the variable costs (paying out interest, referral bonuses) of providing the accounts. internet-only banks also lower their fixed costs by foregoing expensive retail square footage.
cVwEq 7y ago
Boy, this brings back memories. I was working at Andersen Consulting (AC, then Accenture) at the time our CEO, George Shaheen, left to join Webvan. The general sentiment at AC (at least amongst the grunts in my circle) was that we were glad to see George Shaheen leave, but were all left wondering if we should be jumping ship too, to join the dot-com boom. The partners at AC were trying to hang on to talent for dear life because of the dot-com boom. When Webvan went bust many of the the partners/associate partners were quick to point that out, maybe as some kind of misguided retention pep-talk or something. As a funny aside, there were some who used to call George Shaheen "George Unseen:" http://www.bigtimeconsulting.org/remember-george-4 http://www.bigtimeconsulting.org/remember-george-4 http://www.bigtimeconsulting.org/ceo-of-the-future-4 http://www.bigtimeconsulting.org/ceo-of-the-future-4 http://www.bigtimeconsulting.org/george-unseens-reward-4 http://www.bigtimeconsulting.org/george-unseens-reward-4 http://www.bigtimeconsulting.org/webminivan-a-look-back-4 http://www.bigtimeconsulting.org/webminivan-a-look-back-4
crawdog 7y ago
Reminds me of another business in the delivery space: https://en.wikipedia.org/wiki/Kozmo.com https://en.wikipedia.org/wiki/Kozmo.com Interesting how some of the business models that were not profitable in the early 2000's are resurrected with the on-demand workforce - cutting out the most expensive part.
- thomasjudge 7y ago
  Cloud computing makes scaling the IT side of things much easier & cheaper than it used to be too. The old model was buy a giant Sun box, buy a bunch of Oracle software, ... take a look at ORCL in the 2000ish time frame
davidu 7y ago
There are no bad ideas, just early ones. (I believe this was first said by my partner Marc)
dacracot 7y ago
I worked for Redknife, later renamed OpenLatitude, that was WebVan's primary B2B exchange hub. We translated their orders/invoices/catelogs back and forth to their vendors. They were our second best customer behind MicroWarehouse. When they went down, they took us with them. MicroWarehouse exercised a contract clause to purchase our software and hired me on a three month contract to teach them how to use it. I took it because my option was to be laid off. Brings back memories, and not all good ones. What a wild ride.
davidjnelson 7y ago
I remember how excited people were about webvan. And look, 20 years later we have it! You can order from Whole Foods and get it in 2 hours thanks to Amazon.
vmarshall23 7y ago
Textbook example of: GOOD_IDEA < GOOD_EXECUTION
cuban-frisbee 7y ago
Webvan is an interesting case because it could have succeeded if it was not for some strategic blunders (i.e. the idea was good and to some extend the execution in the beginning). The main thing they did wrong was buying and the fumbling the Home Grocer acquisition [1]. Web van was investing heavily in their own warehousing system so they scrapped Home Grocers which at that time was actually better. The acquisition was a large financial cost (1,2 billion) but also a large opportunity cost. [1]https://www.academia.edu/11307477/HomeGrocer.com_Anatomy_of_a_failure https://www.academia.edu/11307477/HomeGrocer.com_Anatomy_of_...

84 points by 29_29 7y ago

Webvan brings up old memories and I really thought of it as the future. My neighbors tried it a few times and I can remember it showing up. When I asked my parents to do it they thought I was crazy. Pretty sure cost had something to do with it. I’d still fill up a shopping cart just because. Webvan failed but if the gig economy was around it could’ve succeeded for a time. These companies need non-employees to make it viable I believe. Will Uber eats and the like become the next Webvan? Grocery store delivery? Paying someone to shop for you then picking it up? IMHO, robots will not be picking people up and delivering our groceries in the near future. Your business can’t depend on the weather. Gig economies are not good for the gig seekers long term.

sixQuarks 7y ago
I remember a journalist did a story on webvan and how ridiculous it’s biz model was. They ordered a snickers bar, which was delivered by itself. The cost to deliver that snickers bar was multiple times the cost of the product.
- deleted 7y ago
  [deleted]
- pp19dd 7y ago
  Knew a person who worked there at the time and they said the problem no one could solve was optimizing logistics because they couldn't cherry pick their customers. One order could be halfway across town from the next, and they had to fulfill that in a timely manner.
londev 7y ago
Almost every one I know in the UK has their groceries delivered. According to the official stats it’s only 7% of grocery spend though.
- cameronbrown 7y ago
  This is definitely the kind of thing heavily influenced by location. I'm from the north and I don't know anyone who gets them delivered.
  - rjsw 7y ago
    Where do you count as "the north" ? Plenty of delivery vans around in Manchester.
  - pushpop 7y ago
    I think it’s more of an income thing than a location thing. Most supermarkets will have a minimum spend and then there is a delivery charge on top. Both are pretty cheap but if money is tight then that is one easy convenience to go without.
    - twic 7y ago
      I suspect there's also a social proof aspect. If five of your six closest local friends get their shopping delivered, you're very likely to try it yourself. If you don't know anyone who does it, you aren't.
      - pushpop 7y ago
        I would be the outlier in that particular example but I think there is a fair amount in truth in what you said nonetheless.
    - kalleboo 7y ago
      I know people with not great income who use delivery due to working parents and can't afford a car, so ordering delivery from a large supermarket is cheaper and has better range than the walkable corner store alternative, and frees up a ton of time.
      - pushpop 7y ago
        Ironically I find I spend less when shopping online too because I’m less likely to impulse buy stuff. Though I do often break the “don’t go shopping when you’re hungry” rule, which doesn’t help.
leetbulb 7y ago
> Will Uber eats and the like become the next Webvan? Grocery store delivery? Paying someone to shop for you then picking it up? Maybe for prepackaged foods, but I hope not fresh foods like meats, veggies, etc. Most stores have a wide variety of quality in the same bin for any given food and I'd rather be the one to choose.
- wil421 7y ago
  I love to cook and wouldn’t trust someone else picking out my groceries. Not to mention these things cost more.
  - MarkyC4 7y ago
    I currently use Instacart (as an Express member). I'd say 10% of orders (I order ~2 times a week) contain an item that wasn't of sufficient quality. Their customer support is great when this happens, always refunding the bad item (though sometimes that's besides the point -- I needed that item for my meal!) The $100 yearly membership fee amortizes to ~$1/order, and the markup on products seems to be ~5-10%. So I'm paying a little extra to avoid going to multiple grocery stores on a weekend/weeknight
napoleond 7y ago
> These companies need non-employees to make it viable I believe. I'm curious about this. Does this mean that, once gig-economy workers factor in all the costs that are normally born by employers (Insurance premiums? Certain taxes? Mileage costs? What else?), that they are effectively making less than minimum wage? If so, why do they do it? If not, what is the intrinsic reason that this work must be done by contractors rather than employees?
- ramy_d 7y ago
  that they are effectively making less than minimum wage? That's the whole point of the gig economy: How to pay people to work without paying them minimum wage by "disrupting labor laws".
  - napoleond 7y ago
    Is that actually true, though? I've seen anecdotal reports from certain Uber drivers or whatnot, but I have not seen data. (It seems counterintuitive that such a huge amount of contractors would continue to choose that work over traditional employment in service jobs if it paid less.)
    - sct202 7y ago
      Uber published a study with 2014 data here that says their drivers make ~$20/hr not including expenses which they estimate at like $3/hr https://drive.google.com/file/d/0B1s08BdVqCgrZWZkV0ZfZnhGUGc/ https://drive.google.com/file/d/0B1s08BdVqCgrZWZkV0ZfZnhGUGc... This MIT study says $8-10 after expenses https://www.npr.org/sections/thetwo-way/2018/03/07/591430857/researcher-says-criticism-is-valid-will-revise-study-finding-low-uber-and-lyft-p https://www.npr.org/sections/thetwo-way/2018/03/07/591430857... Plus given that drivers could be trying to drive when there's no demand, its very possible for people to earn below minimum wage.
      - Spooky23 7y ago
        That's a long time ago. They've cut the payment substantially since then. https://www.inquirer.com/news/uber-lyft-rideshare-drivers-philadelphia-pay-cut-ipo-public-stock-strike-20190410.html https://www.inquirer.com/news/uber-lyft-rideshare-drivers-ph...
hetoh 7y ago
Maybe Webvan was before its time. Instacart is doing just that and has lots of partnership too e.g. Costco/Sprouts etc. They might just become successful.
pushpop 7y ago
UK supermarkets have offered both a collection service as well as a delivery service for years. It’s great, you do your grocery shopping online and schedule a delivery or collection time and the supermarket does all the hard work for you. And the whole Thing costs a couple of quid. It’s a great convenience.
- wil421 7y ago
  My grocery store will do delivery through Instacart. According to Google Instacart adds $5.99 plus 10% of the order. What does your store charge?
  - twic 7y ago
    The market for delivery has evolved comparable complexity to mobile phone contracts, sadly: https://www.lovefood.com/guides/3444/cheapest-supermarket-online-delivery-deals-asda-tesco-iceland-cost https://www.lovefood.com/guides/3444/cheapest-supermarket-on... So, you can use Waitrose, where delivery is free, but there's a £60 minimum order, and their prices are generally higher than the other supermarkets (Waitrose is the UK's high-end supermarket for moderately posh people [1]). Or you can use solidly middle-class Sainsbury's, where there's a £25 minimum order, delivery costs £1 - £7 depending on the time and day, but it's free for orders over £100. Or something else. Or sign up to a subscription plan which will work out cheaper if you get a lot of deliveries, etc. [1] https://www.buzzfeed.com/floperry/of-the-most-middle-class-things-overheard-at-waitrose https://www.buzzfeed.com/floperry/of-the-most-middle-class-t...
  - pushpop 7y ago
    As I said in my post, I normally pay £2. But the price is variable depending on time of day etc. I can’t recall what the minimum spend is but it’s way below our typical weekly spend anyway.
wpietri 7y ago
The hilarious part to me is how Webvan as deployed represented a cutting of scope. Originally they were going to sell everything. Groceries were the start-small compromise! One valuable lesson here is that being correct but too early is the same thing as being wrong. Webvan vastly overestimated the speed of change. 20 years later and I still get most of my groceries from the corner store. I have friends who do mostly delivery, but that's still far from a perfect experience. Another is that any startup should ask questions like: what do we think we'll learn, and can we learn that for less money? They spent $800 million finding out the answers to things like, How much do people want to buy groceries on line? and What are sustainable economics for grocery delivery? They could have gotten the answers they did for less than 1% of what they spent. Build a web site, rent a few trucks, buy most of your groceries from the nearest grocery store, launch a limited test in your most favorable zip code. They would quickly have learned how viable it was, and the other $792 million could have gone to startups with more of a chance of delivering sustained customer value.
- mikepurvis 7y ago
  There was a grocery delivery startup called Grocera that operated in Waterloo region for a little while a couple years ago (https://www.crunchbase.com/organization/grocera https://www.crunchbase.com/organization/grocera). It's defunct now, but my wife ordered from them a few times, and was pretty sure it was one of the founders who showed up at the door, pulling the order out of the back of their own hatchback. So much value in learning first hand about the experience first hand, both for the customer and the staff person.
  - MarkyC4 7y ago
    > So much value in learning first hand about the experience I couldn't agree more! I'm working for a startup doing alcohol/cannabis delivery. Before there was funding, our founders rode their bikes to do these deliveries (and have still done some deliveries in the past 6 months). There was so many lessons learned from doing our deliveries. One such example: we had a bug where our push notifications told the customer we had arrived, but were actually still pretty far away (GPS math sure is fun :P)
- 7y ago
rongenre 7y ago
I used webvan back in 1999, and it felt... ridiculous? Like they had to be spending a ton of money to bring me basic groceries? But 1999 was like that. What I think they really missed is how much they were in the logistics business rather than the grocery business -- immediately. That's a seriously tough nut to crack and you have to be Amazon or Walmart or (now) Uber to really play in that space.
davidjnelson 7y ago
> Grocery store delivery? Amazon does this already with Whole Foods.

hbosch 7y ago

Of all the companies to bite in the the dot-com crash, Webvan really did seem like it was truly viable.

Ididntdothis 7y ago
I think they were suffering from too much money that needed to be spent too quickly. If they had moved slower they may have become like amazon.
- tw1010 7y ago
  What does that even mean? How do you kill yourself with a bucket of money?
  - michaelmior 7y ago
    Hire too many employees, build out too much capacity without a market that can provide the necessary demand, operating costs get too high, and you're done. Of course if the terms of investments and the discipline of the founders are combined able to regulate the growth rate, these things become less of a problem.
  - blackflame7000 7y ago
    If you expand too quickly then you might not have the sales to maintain the large growth. Then your profits from good markets go to propping up bad markets and before you know it you aren't making any money in any markets.
  - Ididntdothis 7y ago
    You can overspend on stuff. When the money runs out you have a business that can’t sustain itself. Uber is running that risk too.
  - whatever_dude 7y ago
    In the same way one kills a software development project by having too many developers: you feel like you need to put everyone to action immediately, so you end up with a mass of disjointed, barely functional code.

Theodores 7y ago

http://www.webvan.com/ http://www.webvan.com/ As resurrected by Amazon in 2009. How the mighty have fallen.

DangerousPie 7y ago

There is now a very successful company with exactly the same business model in the UK: https://en.wikipedia.org/wiki/Ocado https://en.wikipedia.org/wiki/Ocado

orf 7y ago
I wouldn’t say it’s exactly the same, it definitely targets the higher end of the market.
debt 7y ago
timing clearly is everything

jedberg 7y ago

In 1999 and 2000, I worked for a startup in the Bay Area. Twice a week our kitchen was stocked with fresh food delivered by WebVan. We had a ton of their crates sitting around that we used to store computer parts and other facilities needs, since they never seemed to collect them. Right around mid-2000, the deliveries stopped as the market started to tank and we had to "tighten our belt", and the free food disappeared and the vending machines went from free to 10 cents each (and there was a small riot). I suspect we weren't the only startup that did that. It makes me wonder how much of their revenue was from other startups. Kind of reminds me of 2019... They actually brought good food. I considered signing up for myself at my house, but it was just too expensive for a single guy. Might have been good for a family though.

friendly_chap 7y ago
Can you please explain the bit about 2019? Do you feel a downturn is happening/coming?
- danko 7y ago
  The implication here is that a lot of value associated with 2019-era VC-funded startups is derived from the revenue they receive by selling to other VC-funded startups.
  - friendly_chap 7y ago
    I see, thanks for the clarification!

jbverschoor 7y ago

https://www.youtube.com/watch?v=I6IQ_FOCE6I https://www.youtube.com/watch?v=I6IQ_FOCE6I ;-(

themark 7y ago

The cup holders... https://www.sfgate.com/bayarea/matier-ross/article/Webvan-ghost-at-ball-yard-42-000-cup-holders-3314941.php https://www.sfgate.com/bayarea/matier-ross/article/Webvan-gh...

thesausageking 7y ago

They raised a pile of money from Benchmark, Sequoia, and Softbank. Does anyone know what happened with these investments? Did they get out post-IPO while it was still high flying?

firasd 7y ago
Bill Gurley answers on behalf of Benchmark here,saying they lost about $3.5 million but he would do it again (this answer is from 2004, seems he's addressed it in later interviews as well): https://www.quora.com/How-much-money-did-Benchmark-capital-lose-on-Webvan https://www.quora.com/How-much-money-did-Benchmark-capital-l...

rmason 7y ago

Webvan's main problem was they expanded before they had their model figured out. They invested tens of millions in warehouses they didn't need with their current volume as well. If they had spent time on their model they'd have figured out that it only made sense to target the upper middle class neighborhoods at the time profitably. With that realization they'd never have built all the warehouses and with a lower burn they'd have survived only to eventually own the market. The founder was a really smart guy who had already created a very successful startup. But he was under an imperative from his investors to ramp up fast. A lot of the hard learned wisdom from that time would create a different outcome possibly today. I know that I'd have done a lot differently with my own startup back then if only I knew what is common wisdom today ;<).

Gabriel_Martin 7y ago
such an important insight, that the investors were the ones pressuring him to structure it in this way.
- mmazing 7y ago
  True, but not blameless - he was the one to attempt to execute the plan that way.
- rmason 7y ago
  Back in that time everyone placed an over importance on being first and then locking up the market quickly. Sometimes like maybe Uber that's important. Reid Hoffman is still a proponent of this tactic with what he calls blitzscaling. Course nowadays he's a VC ;<). But as Google demonstrated you can enter after the market is mature with both a better product as well as a better business model and dominate.
  - robocat 7y ago
    > But as Google demonstrated you can enter after the market is mature [] and dominate. I don't think Google (founded 20 years ago) is a good example of entering a mature market. I think a better example is Facebook (founded 15 years ago) which won against MySpace. I thought Salesforce (founded 20 years ago) should be a good example, but their market cap is still well below SAP's.

CPLX 7y ago

The part this thread seems to be missing is that like we didn’t have much internet back then. Sure you didn’t have it in your pocket, but also most people didn’t have it in their house either. And if you did you had to dial with a phone line (which is a thing attached to a wall) and make it so you couldn’t get any calls while you were doing it. And it would take like 41 seconds for a grainy picture of a banana to roll in from top to bottom. And you’d get disconnected and lose your cart. And so on. It was different back then.

bjhkx 7y ago
Disconnected, okay. Lose your cart... why? Cookies and sessions existed back then.
- useful 7y ago
  cookies are sent with every request, you were lucky to have >28k modem back then. Json didn't really exist, xml was king. There were plenty of reasons. Apache needed a mod to store a session in a cookie instead of a url and HTTPS was really hard to do. Java had its way, PHP had another, ASP had another... everything was different and there were no patterns.
  - rongenre 7y ago
    56k modems were pretty routine by 1999 and ISDN (It still does nothing) was a thing. But by 2000, DSL rollouts were starting to happen.
clairity 7y ago
my area at the time was one of the first to get cable modems. 10mbps (and as much as 40) vs 56k dial-up. it was heavenly. the webvan site would have been no match, had it been offered where i lived.
davidjnelson 7y ago
Lol, amazing how fast the internet has gotten. Started on a 14.4 modem, now I’m being told gigabit fiber is available in my neighborhood. Just... wow.

subpixel 7y ago

The CEO of WebVan negotiated a contract to pay him $375,000 per year for life - including his wife's life, if she survives him. I'm not sure what to say except: well-played.

koolba 7y ago
Not really. The company went bankrupt and it’s an unsecured debt. It would have been a good play if it was collateralized or the company actually succeeded.
- abraae 7y ago
  Yes, that seems the opposite of the kind of deal you'd want to make with a hotly burning startup.
- subpixel 7y ago
  Ah, I assumed the deal was independent of WebVan's fate. I acknowledge that makes little sense. I must have been captivated by the vision of that check in the mail.
simplicio 7y ago
Is he still getting paid? I'd assume once the company went under there'd be no one to do the paying. In which case it doesn't seem like such a great play.
gearhart 7y ago
Well, sort of - it was a really good start, but given that was his incentive structure he should have been slowly and steadily building a sustainable business and instead he went and blew what could have been the opportunity of a lifetime by not being able to say no to bad strategy pressure from overly-aggressive VCs. Good negotiator. Bad CEO. You could also say that it was really good negotiation by the other side; if you're a board member of a startup during the bubble and all you get to control is CEO pay, then you did everything you could to incentivise him to behave sensibly, and the rest unfortunately was on him.

femto113 7y ago

In Seattle we had HomeGrocer and it was awesome. Absolutely seemed like the future of groceries, they had great selection and especially great produce. The delivery people drove company vans (with a distinctive peach logo on the side) and wore a uniform (like UPS) and AFAIK were all full-time employees. Sadly they were acquired by Webvan and it all fell apart.

clairity 7y ago
i felt that way about the massachusetts-based lighthouse bank[0] founded in 2000 and unaffiliated with the current santa cruz-based lighthouse bank. high-interest checking, no-fee, internet-only bank. it was amazing until it got merged into brookline bank and essentially dissolved. [0] https://www.bloomberg.com/research/stocks/private/snapshot.asp?privcapId=821638 https://www.bloomberg.com/research/stocks/private/snapshot.a...
- astura 7y ago
  >high-interest checking, no-fee, internet-only bank. SoFi just launched this product, and they are even giving $50 referral bonuses on both ends to sign up (referer and referee). I'm really wondering if it's a sustainable business model.
  - clairity 7y ago
    it's quite sustainable i'd bet. banks traditionally make money by lending most of its deposits to other people and earning interest on that lending. as long as the deposits are large enough, that interest should cover the fixed costs (employees, infrastructure) and the variable costs (paying out interest, referral bonuses) of providing the accounts. internet-only banks also lower their fixed costs by foregoing expensive retail square footage.

cVwEq 7y ago

Boy, this brings back memories. I was working at Andersen Consulting (AC, then Accenture) at the time our CEO, George Shaheen, left to join Webvan. The general sentiment at AC (at least amongst the grunts in my circle) was that we were glad to see George Shaheen leave, but were all left wondering if we should be jumping ship too, to join the dot-com boom. The partners at AC were trying to hang on to talent for dear life because of the dot-com boom. When Webvan went bust many of the the partners/associate partners were quick to point that out, maybe as some kind of misguided retention pep-talk or something. As a funny aside, there were some who used to call George Shaheen "George Unseen:" http://www.bigtimeconsulting.org/remember-george-4 http://www.bigtimeconsulting.org/remember-george-4 http://www.bigtimeconsulting.org/ceo-of-the-future-4 http://www.bigtimeconsulting.org/ceo-of-the-future-4 http://www.bigtimeconsulting.org/george-unseens-reward-4 http://www.bigtimeconsulting.org/george-unseens-reward-4 http://www.bigtimeconsulting.org/webminivan-a-look-back-4 http://www.bigtimeconsulting.org/webminivan-a-look-back-4

crawdog 7y ago

Reminds me of another business in the delivery space: https://en.wikipedia.org/wiki/Kozmo.com https://en.wikipedia.org/wiki/Kozmo.com Interesting how some of the business models that were not profitable in the early 2000's are resurrected with the on-demand workforce - cutting out the most expensive part.

thomasjudge 7y ago
Cloud computing makes scaling the IT side of things much easier & cheaper than it used to be too. The old model was buy a giant Sun box, buy a bunch of Oracle software, ... take a look at ORCL in the 2000ish time frame

davidu 7y ago

There are no bad ideas, just early ones. (I believe this was first said by my partner Marc)

dacracot 7y ago

I worked for Redknife, later renamed OpenLatitude, that was WebVan's primary B2B exchange hub. We translated their orders/invoices/catelogs back and forth to their vendors. They were our second best customer behind MicroWarehouse. When they went down, they took us with them. MicroWarehouse exercised a contract clause to purchase our software and hired me on a three month contract to teach them how to use it. I took it because my option was to be laid off. Brings back memories, and not all good ones. What a wild ride.

davidjnelson 7y ago

I remember how excited people were about webvan. And look, 20 years later we have it! You can order from Whole Foods and get it in 2 hours thanks to Amazon.

vmarshall23 7y ago

Textbook example of: GOOD_IDEA < GOOD_EXECUTION

cuban-frisbee 7y ago

Webvan is an interesting case because it could have succeeded if it was not for some strategic blunders (i.e. the idea was good and to some extend the execution in the beginning). The main thing they did wrong was buying and the fumbling the Home Grocer acquisition [1]. Web van was investing heavily in their own warehousing system so they scrapped Home Grocers which at that time was actually better. The acquisition was a large financial cost (1,2 billion) but also a large opportunity cost. [1]https://www.academia.edu/11307477/HomeGrocer.com_Anatomy_of_a_failure https://www.academia.edu/11307477/HomeGrocer.com_Anatomy_of_...