17 ms·

Semi related but Blue Apron will forever be my favorite IPO. 5 stock splits and 3 CEOs later, day one investors will receive roughly 2 pennies back for every d

Semi related but Blue Apron will forever be my favorite IPO. 5 stock splits and 3 CEOs later, day one investors will receive roughly 2 pennies back for every dollar invested just 2 years ago. Only people who won were those who dumped free shares on the market (insiders), and maybe consumers for getting subsidized food of questionable quality. Once valued at 2 billion USD, a paltry 150 million will get the job done now.

vuln 7y ago
What a true unicorn.
JMTQp8lwXL 7y ago
I got a phone call from them recently. Not automated. Asking "how the experience has been". I wonder if they're increasingly panicking. I ordered less than a handful of boxes in the past few years with them.
- mikehollinger 7y ago
  Ahem. https://www.mcsweeneys.net/articles/please-forgive-us-at-blue-apron-for-this-weeks-meals-weve-been-having-a-tough-time-lately https://www.mcsweeneys.net/articles/please-forgive-us-at-blu... That’s a parody from 2017. It’s probably more true now than ever. We actually cancelled our BlueApron last year in favor of another meal kit service - and might end up canceling them overall for grocery pickup from our local grocery chain.
  - JMTQp8lwXL 7y ago
    Wonderful link. To be objective, one of my most recent handful of boxes arrived recently because I forgot to cancel it. Every few weeks, I login to turn off the next months' worth of auto-scheduled deliveries. The ingredient quality is still there. A third of the box is broccoli and it's still $60, so those features haven't changed. I go to the grocery store and re-make a good number of the recipes. I'm appreciative of the expanded palate BA has given me as well.
Deimorz 7y ago
This was a pretty good article about Blue Apron from last week: https://pitchbook.com/news/articles/recipe-for-disaster-the-meteoric-rise-and-ongoing-demise-of-blue-apron https://pitchbook.com/news/articles/recipe-for-disaster-the-...
- ackbar03 7y ago
  This gets me thinking. They validated or at least thought they validated their idea because they gained traction at the start correct? But clearly they didn't validate the business because the price point wasn't at a profitable level? Was this the mistake? Or is it that the price point allowed for marginal profits and they thought that by scaling up it would cover the fixed operational costs and thus lead to profits. Where do you think it went wrong?
  - jsloss 7y ago
    The cost of acquiring new customers once they reached scale was the issue. The cost went up significantly making their unity economics unfavourable.
    - hef19898 7y ago
      Back the day I had a short stint at Flixbus in Germany. Being an ops / logistics guy I wasn't that impressed by their operations at the team I was at (their line business seemed different but grew out of one of Flixbus earlier acquisitions, mein fernbus). Also the tech didn't look revolutionary. What was top notch, and backed by serious money, was advertising and marketing. They had all the metrics, the strategy, the budget, knew the processes, everything. It was that what gave them the market penetration in new countries, out spending and out performing competition until competition faulted or was bought out. So, the lesson I took, was that a lot of the latest b2c e-commerce start-ups are to a very large extent marketing driven.
  - greglindahl 7y ago
    It's easy to measure an LTV that doesn't turn out to be accurate many months later.
hn_throwaway_99 7y ago
Honest question if anyone knows more details. VCs these days are very focused on the "SaaS Quick Ratio": https://www.cobloom.com/blog/saas-quick-ratio-how-to-measure-your-startups-revenue-health https://www.cobloom.com/blog/saas-quick-ratio-how-to-measure... (Blue Apron isn't quite a SaaS business but close enough for this metric). The idea is that it not only measures growth, but measures new customers in relation to churn, with the idea that it's a lot easier to have a long term successful business if you have, say, 1000 new customers and 50 that leave in a month (net 950 new customers) vs. 5000 new customers and 4050 that leave in a month (though also 950 net new customers). Blue Apron was legendary for its huge churn rate and commensurate high customer acquisition costs. Curious what its quick ratio was, and whether it was just basically ignored.
- femto113 7y ago
  The metrics, "rules of thumb", and "conventional wisdom" that apply to SaaS businesses do not extrapolate well to non-software subscription businesses. The main reason for this is SaaS has enormous gross margins, often upwards of 90%. This makes revenue a reasonable proxy for (gross) profit. The margins on physical goods are tiny by comparison, for food often in the low single digits, and subletting real estate is not much higher (if at alL). When profit is such a small percentage of revenue you have to be a lot more detailed in the math for lifetime value, acquisition cost, and so on, and you can no longer rely on simple formulas based on revenue and run rate.
  - hn_throwaway_99 7y ago
    While I agree with many of your points, I'd add that adding in the additional metrics you mention (lifetime value, acquisition cost, etc.) would make Blue Apron look even worse. My main point is that basically the only thing Blue Apron had going for it was topline growth, but by pretty much every other metric it looked horrible and unsustainable. SaaS quick ratio alone should have clearly highlighted how unsustainable that topline growth was given their through-the-roof churn rates.
- MrEldritch 7y ago
  I gotta say, I do hope Blue Apron survives. After all, if it goes under, who will sponsor the entire podcast ecosystem?
Forge36 7y ago
They had an excellent service, which upon having recipes we promptly dropped. It simply wasn't worth it and even cooking 3 means a night was too much.
dangxiaopin 7y ago
Pinterest is next https://trends.google.com/trends/explore?date=today%205-y&geo=US&q=%2Fm%2F0h3tm0f https://trends.google.com/trends/explore?date=today%205-y&ge...
- quaquaqua1 7y ago
  Wow, interesting, that map is really correlated with my (biased) perception of where "percentage of people under 40 who are married" is highest
  - jchallis 7y ago
    Idaho’s killer app
  - sk5t 7y ago
    Also, cold winters; scrapbooking; applique vests
- mmaunder 7y ago
  That actually looks catastrophic. Stock price doesn't reflect it yet. Shadenfreude isnt my thing but this looks bad and insiders must already be aware.
  - quaquaqua1 7y ago
    Can't believe the market is currently valuing Pinterest at 16B
    - mmaunder 7y ago
      Guess these guys didnt get the memo. https://www.google.com/amp/s/seekingalpha.com/amp/article/4291436-pinterest-next-100-billion-platform https://www.google.com/amp/s/seekingalpha.com/amp/article/42... To be clear, I dont trade stocks and couldn't care less which way this moves. Just seems like the Google trends data is a bit of information asymmetry that the market hasn't caught on to, yet.
platz 7y ago
But the stock is going up now !
abvdasker 7y ago
I actually still use Blue Apron. It's not that much more expensive than grocery shopping (I live in New York so groceries are expensive) and you never end up with wasted food. The recipes are generally very quick to make and far better than anything I could make on my own in a comparable amount of time. While the business may not have worked out so well their service is still pretty good.
- quaquaqua1 7y ago
  Glad you like it and hope the price continues to be reasonable as they continue to cut expenses while trying to maintain food quality :) For me I eat a very peculiar diet so I usually just pick up yogurt and fresh bread from the grocery store on my way home from work, and when I'm feeling particularly lazy I will order steamed chicken and steamed broccoli from the local Chinese shop who really have this amazing technique of steaming that I seem unable to grasp!!
  - TylerE 7y ago
    Sometimes I feel for a company like that that at least 60% of their spend is on podcast advertising.
- rosybox 7y ago
  Blue Apron just seems so unnecessary. You still have to do all the work! Just go to the grocery store and buy stuff there? You can get recipes online for free. I do all my shopping on Saturday at Trader Joe's and spend very little for lots of food which I then cook. There's so much wasted materials and trash with Blue Apron. I don't get it, but then I don't have any trouble cooking for myself and my family. I didn't grow up learning how to cook. I spent a little bit of time figuring it out and then it became easy and didn't require a subscription to some sketchy company. There's also no way that you're coming close to the prices at a supermarket when you're buying individual meal's worth ingredients instead of bulk, a bag of potatoes, or a bottle of seasoning instead of one potato and one pinch of whatever inside some single serving plastic wrapping.
  - 7y ago
mrweasel 7y ago
Blue Apron and WeWork share a common problem, they’re viewed as tech companies, even when they’re clearly not. Being tech companies means that they’re viewed as part of a group of companies who have pulled of billion dollars IPO, so they’re wrongly focus on “no less than the one billion”. Mentally the jump from 1 billion to 2 billion is also a lot less that the jump from 150 million to 1 billion, so why not go for 2 billion.
- htfu 7y ago
  By any standard whatsoever a 100% jump is a lot less than one that's 500%+. What does that even mean?
m0zg 7y ago
BA was pretty decent. My wife subscribed us to it and we used it for a couple of months. Restaurant quality meals for real. But the whole business model is idiotic at the small scale. Amazon with its gigantic distribution network (as well as Whole Foods) could pull it off I suppose, but I just felt bad that this stuff had to be shipped to me from hell knows where, with lots of packaging, and an ice pack to boot. Not "environmentally friendly" in the least. Besides both my wife and I can cook perfectly fine without any help. So after 2 months we got rid of it.

vuln 7y ago

What a true unicorn.

JMTQp8lwXL 7y ago

I got a phone call from them recently. Not automated. Asking "how the experience has been". I wonder if they're increasingly panicking. I ordered less than a handful of boxes in the past few years with them.

mikehollinger 7y ago
Ahem. https://www.mcsweeneys.net/articles/please-forgive-us-at-blue-apron-for-this-weeks-meals-weve-been-having-a-tough-time-lately https://www.mcsweeneys.net/articles/please-forgive-us-at-blu... That’s a parody from 2017. It’s probably more true now than ever. We actually cancelled our BlueApron last year in favor of another meal kit service - and might end up canceling them overall for grocery pickup from our local grocery chain.
- JMTQp8lwXL 7y ago
  Wonderful link. To be objective, one of my most recent handful of boxes arrived recently because I forgot to cancel it. Every few weeks, I login to turn off the next months' worth of auto-scheduled deliveries. The ingredient quality is still there. A third of the box is broccoli and it's still $60, so those features haven't changed. I go to the grocery store and re-make a good number of the recipes. I'm appreciative of the expanded palate BA has given me as well.

Deimorz 7y ago

This was a pretty good article about Blue Apron from last week: https://pitchbook.com/news/articles/recipe-for-disaster-the-meteoric-rise-and-ongoing-demise-of-blue-apron https://pitchbook.com/news/articles/recipe-for-disaster-the-...

ackbar03 7y ago
This gets me thinking. They validated or at least thought they validated their idea because they gained traction at the start correct? But clearly they didn't validate the business because the price point wasn't at a profitable level? Was this the mistake? Or is it that the price point allowed for marginal profits and they thought that by scaling up it would cover the fixed operational costs and thus lead to profits. Where do you think it went wrong?
- jsloss 7y ago
  The cost of acquiring new customers once they reached scale was the issue. The cost went up significantly making their unity economics unfavourable.
  - hef19898 7y ago
    Back the day I had a short stint at Flixbus in Germany. Being an ops / logistics guy I wasn't that impressed by their operations at the team I was at (their line business seemed different but grew out of one of Flixbus earlier acquisitions, mein fernbus). Also the tech didn't look revolutionary. What was top notch, and backed by serious money, was advertising and marketing. They had all the metrics, the strategy, the budget, knew the processes, everything. It was that what gave them the market penetration in new countries, out spending and out performing competition until competition faulted or was bought out. So, the lesson I took, was that a lot of the latest b2c e-commerce start-ups are to a very large extent marketing driven.
- greglindahl 7y ago
  It's easy to measure an LTV that doesn't turn out to be accurate many months later.

hn_throwaway_99 7y ago

Honest question if anyone knows more details. VCs these days are very focused on the "SaaS Quick Ratio": https://www.cobloom.com/blog/saas-quick-ratio-how-to-measure-your-startups-revenue-health https://www.cobloom.com/blog/saas-quick-ratio-how-to-measure... (Blue Apron isn't quite a SaaS business but close enough for this metric). The idea is that it not only measures growth, but measures new customers in relation to churn, with the idea that it's a lot easier to have a long term successful business if you have, say, 1000 new customers and 50 that leave in a month (net 950 new customers) vs. 5000 new customers and 4050 that leave in a month (though also 950 net new customers). Blue Apron was legendary for its huge churn rate and commensurate high customer acquisition costs. Curious what its quick ratio was, and whether it was just basically ignored.

femto113 7y ago
The metrics, "rules of thumb", and "conventional wisdom" that apply to SaaS businesses do not extrapolate well to non-software subscription businesses. The main reason for this is SaaS has enormous gross margins, often upwards of 90%. This makes revenue a reasonable proxy for (gross) profit. The margins on physical goods are tiny by comparison, for food often in the low single digits, and subletting real estate is not much higher (if at alL). When profit is such a small percentage of revenue you have to be a lot more detailed in the math for lifetime value, acquisition cost, and so on, and you can no longer rely on simple formulas based on revenue and run rate.
- hn_throwaway_99 7y ago
  While I agree with many of your points, I'd add that adding in the additional metrics you mention (lifetime value, acquisition cost, etc.) would make Blue Apron look even worse. My main point is that basically the only thing Blue Apron had going for it was topline growth, but by pretty much every other metric it looked horrible and unsustainable. SaaS quick ratio alone should have clearly highlighted how unsustainable that topline growth was given their through-the-roof churn rates.
MrEldritch 7y ago
I gotta say, I do hope Blue Apron survives. After all, if it goes under, who will sponsor the entire podcast ecosystem?

Forge36 7y ago

They had an excellent service, which upon having recipes we promptly dropped. It simply wasn't worth it and even cooking 3 means a night was too much.

dangxiaopin 7y ago

Pinterest is next https://trends.google.com/trends/explore?date=today%205-y&geo=US&q=%2Fm%2F0h3tm0f https://trends.google.com/trends/explore?date=today%205-y&ge...

quaquaqua1 7y ago
Wow, interesting, that map is really correlated with my (biased) perception of where "percentage of people under 40 who are married" is highest
- jchallis 7y ago
  Idaho’s killer app
- sk5t 7y ago
  Also, cold winters; scrapbooking; applique vests
mmaunder 7y ago
That actually looks catastrophic. Stock price doesn't reflect it yet. Shadenfreude isnt my thing but this looks bad and insiders must already be aware.
- quaquaqua1 7y ago
  Can't believe the market is currently valuing Pinterest at 16B
  - mmaunder 7y ago
    Guess these guys didnt get the memo. https://www.google.com/amp/s/seekingalpha.com/amp/article/4291436-pinterest-next-100-billion-platform https://www.google.com/amp/s/seekingalpha.com/amp/article/42... To be clear, I dont trade stocks and couldn't care less which way this moves. Just seems like the Google trends data is a bit of information asymmetry that the market hasn't caught on to, yet.

platz 7y ago

But the stock is going up now !

abvdasker 7y ago

I actually still use Blue Apron. It's not that much more expensive than grocery shopping (I live in New York so groceries are expensive) and you never end up with wasted food. The recipes are generally very quick to make and far better than anything I could make on my own in a comparable amount of time. While the business may not have worked out so well their service is still pretty good.

quaquaqua1 7y ago
Glad you like it and hope the price continues to be reasonable as they continue to cut expenses while trying to maintain food quality :) For me I eat a very peculiar diet so I usually just pick up yogurt and fresh bread from the grocery store on my way home from work, and when I'm feeling particularly lazy I will order steamed chicken and steamed broccoli from the local Chinese shop who really have this amazing technique of steaming that I seem unable to grasp!!
- TylerE 7y ago
  Sometimes I feel for a company like that that at least 60% of their spend is on podcast advertising.
rosybox 7y ago
Blue Apron just seems so unnecessary. You still have to do all the work! Just go to the grocery store and buy stuff there? You can get recipes online for free. I do all my shopping on Saturday at Trader Joe's and spend very little for lots of food which I then cook. There's so much wasted materials and trash with Blue Apron. I don't get it, but then I don't have any trouble cooking for myself and my family. I didn't grow up learning how to cook. I spent a little bit of time figuring it out and then it became easy and didn't require a subscription to some sketchy company. There's also no way that you're coming close to the prices at a supermarket when you're buying individual meal's worth ingredients instead of bulk, a bag of potatoes, or a bottle of seasoning instead of one potato and one pinch of whatever inside some single serving plastic wrapping.
- 7y ago

mrweasel 7y ago

Blue Apron and WeWork share a common problem, they’re viewed as tech companies, even when they’re clearly not. Being tech companies means that they’re viewed as part of a group of companies who have pulled of billion dollars IPO, so they’re wrongly focus on “no less than the one billion”. Mentally the jump from 1 billion to 2 billion is also a lot less that the jump from 150 million to 1 billion, so why not go for 2 billion.

htfu 7y ago
By any standard whatsoever a 100% jump is a lot less than one that's 500%+. What does that even mean?

m0zg 7y ago

BA was pretty decent. My wife subscribed us to it and we used it for a couple of months. Restaurant quality meals for real. But the whole business model is idiotic at the small scale. Amazon with its gigantic distribution network (as well as Whole Foods) could pull it off I suppose, but I just felt bad that this stuff had to be shipped to me from hell knows where, with lots of packaging, and an ice pack to boot. Not "environmentally friendly" in the least. Besides both my wife and I can cook perfectly fine without any help. So after 2 months we got rid of it.