5 ms·

How Blue Apron Became a Massive $2 Billion Disaster

24 points by smn1234 7y ago

_bxg1 7y ago
> Exactly who it was that was both upwardly mobile to pay for this service while also having a barren kitchen, nobody really knew—but by the divine math of Silicon Valley gamblers, your existence made this an idea worth several billion dollars and potent enough to “disrupt” the grocery business. I mean. My partner and I are both software engineers, she loves to cook, and these meals make up a hearty portion (for two people) of healthy, really diverse and flavorful dishes that come to around the same price per person as going to Chipotle. We eat them three nights a week and are really very happy with it. I'm not surprised to hear that they overestimated their market (who doesn't these days?), but there definitely is one.
- metalforever 7y ago
  The market value to me, to be honest, was learning to be a better cook.
  - elorant 7y ago
    And that's when the service becomes less usable because by then you'll start buying the ingredients by yourself.
  - flukus 7y ago
    Cookbooks and cooking shows already fill that need in a much better way.
- SpicyLemonZest 7y ago
  A subscription service doesn't seem like the right way to deliver that, though. It seems like their competitor Plated had the right idea; grocery stores have highly optimized the process of distributing cooking ingredients to people, so the right way to sell meal kits is to become part of a grocery store.
  - _bxg1 7y ago
    Sure, I've no doubt grocery stores have a better economy-of-scale around this sort of thing, but the article seemed to be invalidating the entire product, so I was speaking against that. I will also say that the recipes are a huge factor, and the delivery is a non-zero factor. We haven't gotten the same recipe twice and they consistently impress with bold and unexpected flavors, and fewer trips to the store (and fewer ingredients going to waste from expiration) is really nice as a pair of working adults.
  - flukus 7y ago
    We had a similar one in stores around me but they've since disappeared. The biggest problem with being in store is that it only saves you about 5 minutes of walking around the store to gather the ingredients and it costs a lot more. The mostly got replaced by reasonably fresh microwavable meals that save the shopping time and the cooking time.
  - erikpukinskis 7y ago
    Yea, I think delivery was a fine strategy to start with.... as a well funded startup in a complex ecosystem where you will need partners and those partners will generally start out with a hostile position (like Blue Apron to grocery stores, like Tesla to car dealers) I think it’s right to at least attempt to “leap to the future” in as many areas of the business as possible. Where those bets work, the strategic benefits going forward are huge. But once you have some traction in customers, you need to start sweet talking those hostile partners and get some of them on your side, and make difficult calls to give up on “the future” in those aspects of the business model that aren’t working, and embrace the status quo more.
ganeshkrishnan 7y ago
The losers in this bang bust of pretending to be billion dollar industries are always the stock market investors which includes mutual funds and hence the common people. Keep pumping money until we can list it on the stock market. Find the sucker investors and wash our hands off the investment. The greater fool is ultimately the retail investors on the stock market. Big vcs have already made their mark-up. It's up to the mom and pop investors to pickup the baton and run
- SpicyLemonZest 7y ago
  I don't really buy that there's a bang bust here. Even in the narrow reference class of 2017 VC-backed unicorn IPOs, many other companies did perfectly well. There's no investing strategy that won't see some failures.
  - jjeaff 7y ago
    Do you have some examples? So far, I'm seeing Snap, Cloudera, MongoDB, and SendGrid. Snap-down, Cloudera-down, Mongodb-up, SendGrid-acquired but was up. I would expect in a bull market for most to be up, not half.
    - SpicyLemonZest 7y ago
      Okta and Mulesoft are also very far up (Mulesoft until acquired), and Stitchfix is up a little bit.
jefflombardjr 7y ago
> prepackaged amounts of just enough salmon, green beans, butter and lemon for one meal, no leftovers—was for you. Maybe I’m not their target customer, but I feel like meal prep services are the opposite of convenient. 1. Instead of prepping food, with Blue Apron, I now have to unwrap and prep food. 2. I now have to cook more often because of no more leftovers. 3. Instead of food waste I know have plastic and packaging waste. Food waste I could at least throw in city compost and not feel too bad about.
jjeaff 7y ago
Is there a lockout period for these large VC investors when they do an IPO? Or do they get to dump as much of the stock as possible in these IPOs? And if so, I think there needs to be a big compilation of large shareholders of these IPOs and how much money they are making off the IPO. We might see some interesting patterns. For example, if certain VCs sell their shares at the very beginning, is that a sure signal that everything is going to fall apart soon?
- erikpukinskis 7y ago
  There are no sure signals on the stock market. To the extent such a signal briefly exists, it will quickly be priced into the market. You just have to look at the details on each specific offering and try to find an “unsure” signal that you have confidence in because of some special expertise you developed that not everyone in the market has.
  - jjeaff 7y ago
    Yes, but it would be nice to use those signals to know which VCs are crooks so they can be publicly shamed.

24 points by smn1234 7y ago

> Exactly who it was that was both upwardly mobile to pay for this service while also having a barren kitchen, nobody really knew—but by the divine math of Silicon Valley gamblers, your existence made this an idea worth several billion dollars and potent enough to “disrupt” the grocery business. I mean. My partner and I are both software engineers, she loves to cook, and these meals make up a hearty portion (for two people) of healthy, really diverse and flavorful dishes that come to around the same price per person as going to Chipotle. We eat them three nights a week and are really very happy with it. I'm not surprised to hear that they overestimated their market (who doesn't these days?), but there definitely is one.

metalforever 7y ago
The market value to me, to be honest, was learning to be a better cook.
- elorant 7y ago
  And that's when the service becomes less usable because by then you'll start buying the ingredients by yourself.
- flukus 7y ago
  Cookbooks and cooking shows already fill that need in a much better way.
SpicyLemonZest 7y ago
A subscription service doesn't seem like the right way to deliver that, though. It seems like their competitor Plated had the right idea; grocery stores have highly optimized the process of distributing cooking ingredients to people, so the right way to sell meal kits is to become part of a grocery store.
- _bxg1 7y ago
  Sure, I've no doubt grocery stores have a better economy-of-scale around this sort of thing, but the article seemed to be invalidating the entire product, so I was speaking against that. I will also say that the recipes are a huge factor, and the delivery is a non-zero factor. We haven't gotten the same recipe twice and they consistently impress with bold and unexpected flavors, and fewer trips to the store (and fewer ingredients going to waste from expiration) is really nice as a pair of working adults.
- flukus 7y ago
  We had a similar one in stores around me but they've since disappeared. The biggest problem with being in store is that it only saves you about 5 minutes of walking around the store to gather the ingredients and it costs a lot more. The mostly got replaced by reasonably fresh microwavable meals that save the shopping time and the cooking time.
- erikpukinskis 7y ago
  Yea, I think delivery was a fine strategy to start with.... as a well funded startup in a complex ecosystem where you will need partners and those partners will generally start out with a hostile position (like Blue Apron to grocery stores, like Tesla to car dealers) I think it’s right to at least attempt to “leap to the future” in as many areas of the business as possible. Where those bets work, the strategic benefits going forward are huge. But once you have some traction in customers, you need to start sweet talking those hostile partners and get some of them on your side, and make difficult calls to give up on “the future” in those aspects of the business model that aren’t working, and embrace the status quo more.

ganeshkrishnan 7y ago

The losers in this bang bust of pretending to be billion dollar industries are always the stock market investors which includes mutual funds and hence the common people. Keep pumping money until we can list it on the stock market. Find the sucker investors and wash our hands off the investment. The greater fool is ultimately the retail investors on the stock market. Big vcs have already made their mark-up. It's up to the mom and pop investors to pickup the baton and run

SpicyLemonZest 7y ago
I don't really buy that there's a bang bust here. Even in the narrow reference class of 2017 VC-backed unicorn IPOs, many other companies did perfectly well. There's no investing strategy that won't see some failures.
- jjeaff 7y ago
  Do you have some examples? So far, I'm seeing Snap, Cloudera, MongoDB, and SendGrid. Snap-down, Cloudera-down, Mongodb-up, SendGrid-acquired but was up. I would expect in a bull market for most to be up, not half.
  - SpicyLemonZest 7y ago
    Okta and Mulesoft are also very far up (Mulesoft until acquired), and Stitchfix is up a little bit.

jefflombardjr 7y ago

> prepackaged amounts of just enough salmon, green beans, butter and lemon for one meal, no leftovers—was for you. Maybe I’m not their target customer, but I feel like meal prep services are the opposite of convenient. 1. Instead of prepping food, with Blue Apron, I now have to unwrap and prep food. 2. I now have to cook more often because of no more leftovers. 3. Instead of food waste I know have plastic and packaging waste. Food waste I could at least throw in city compost and not feel too bad about.

jjeaff 7y ago

Is there a lockout period for these large VC investors when they do an IPO? Or do they get to dump as much of the stock as possible in these IPOs? And if so, I think there needs to be a big compilation of large shareholders of these IPOs and how much money they are making off the IPO. We might see some interesting patterns. For example, if certain VCs sell their shares at the very beginning, is that a sure signal that everything is going to fall apart soon?

erikpukinskis 7y ago
There are no sure signals on the stock market. To the extent such a signal briefly exists, it will quickly be priced into the market. You just have to look at the details on each specific offering and try to find an “unsure” signal that you have confidence in because of some special expertise you developed that not everyone in the market has.
- jjeaff 7y ago
  Yes, but it would be nice to use those signals to know which VCs are crooks so they can be publicly shamed.