
Instacart in Talks to Raise $400M at $3B Valuation - rayuela
https://www.bloomberg.com/news/articles/2017-03-01/instacart-in-talks-to-raise-about-400-million
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biggc
I feel like I'm taking crazy pills. Every supermarket in Montrela offers phone
orders and home delivery for a fee of less than $5 if your order is big enough
($50+). If you want to, you can even do your shopping in the store, and pay
about two bucks to have them deliver to your house if it was in a few km.

I just checked, and one of the smaller chains (4 stores) has their own online
ordering platform.

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laser
Their revenue numbers must look absolutely insane, even if they're not
actually profitable. I spend more money through instacart right now than any
other software, and maybe all other software I use, combined.

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arikr
Not appropriate to count entire cart/shopping spend as Instacart's revenue.
Think of that as "GMV". Instacart's revenue is their delivery charges, service
charges, and any money the stores pay them / % fees.

See #6 here
[http://a16z.com/2015/08/21/16-metrics/](http://a16z.com/2015/08/21/16-metrics/)

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laser
Great article, thanks.

~~~
arikr
:)

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alaskamiller
Some context, aside from the viability of Instacart itself.

Apoorva Mehta used to work down the hall from us at SomaCentral, a shared
office space retrofitted out of an old law firm on Townsend. He and his buddy
would be heads down in their laptops every time we walk past their bullpen
corner.

They were busy building out a legal tool slash social network slash law
something slash annotation something slash whatever. The plan didn't so much
change but rather morph every time I said hi.

They were smart though, so I figured they would hit it whenever they get to
it. Though they've been at this for awhile now.

While most others tried to keep a social factor going on at the space, they
tend to be so busy they would avoid it. Though and now then I do remember
getting to grab a drink with them.

A few years later, settling in my new job in Berkeley/Oakland I called up
Instacart to deliver me some groceries. But it was only last year I finally
looked up the company profile and soon realized it's the same Apoorva Mehta.

From being that dude to 3 billion dollars in a matter of five years is--to
quote another commenter-- __insane __.

But he's keeping the silicon valley dream alive.

That's pretty nifty in itself.

The rest of us are just hanging out here writing comments.

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a13n
I was going to post a comment about Instacart here, but instead decided to
write a little thing on Medium.

Why Instacart is gonna get crushed by Amazon

[https://medium.com/@a13n/why-instacart-is-gonna-get-
crushed-...](https://medium.com/@a13n/why-instacart-is-gonna-get-crushed-by-
amazon-48f08bad6e35#.a1jcnmu4g)

~~~
lstyls
I think you nailed it. I live in NYC and work too much, meaning I live and die
by trading money for time. And every time I use instacart I regret it for the
exact same reasons you describe.

The idea of hooking into some kind of warehouse management network makes a lot
of sense. Does an API exist? Probably not. But there's an opportunity right
there. Partner with a major warehouse management system, preferably one that
works with Safeway or Stop n' Shop, and figure out a way to cut out the store
visits altogether.

Of course this would mean automating away the shoppers :/.

~~~
jon-wood
Ocado in the UK did more or less this. They started out partnering with a
large supermarket chain and then started building out their own automated
warehouses. The big chains all offer online ordering and delivery, at times
with scale that makes it worthwhile for them to run dark stores which are
closed to the public and only fulfil online orders. At the other end of the
spectrum there are companies like the one I work for offering online ordering
and delivery services to smaller independent shops, we provide the website and
logistics and they use existing shop staff to pack orders when the shop is
quiet.

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siliconc0w
My theory is that the inability of US chains to figure out online ordering is
really some anti-competitive agreement to force customers to go into the store
because the chains live and die by high-margin impulse buys.

Wholefoods just opened a brand new chain called '365' that has all sorts of
sophisticated nonsense like a programmatic tea-bot and yet there is no online
ordering. Even the made to order stuff is driven by an interface which could
just be made publicly accessible and they'd be done but no, into the store you
go.

~~~
Eridrus
I don't think so.

Supermarkets and e-commerce are entirely different competencies and I have no
trouble believing that being good at one doesn't give you a tonne of advantage
at the other.

Putting some startup's tea-bot into a store is far easier than integrating
that tea-bot into an online ordering system.

~~~
RyanZAG
Most supermarkets in other countries seem to manage deliveries and online
ordering pretty well.

For example, all supermarkets in South Africa provide online ordering and
delivery. Sometimes without even a delivery charge.

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toephu2
Low barrier to entry, crowded space, and low margins...can't imagine this
company (or any of the small guys) still being around 5 years from now.

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gtirloni
I see Uber, Lyft, Amazon Fresh, Instacart, etc and I can't understand why they
take the market by storm like that. They are not the first to ever think about
that, their service isn't super great (except for Amazon, I'd say) and still,
in the US, it seems like the market just sits and waits for them. Then a
majority of people jumps in and the thing skyrockets.

Meanwhile, in other countries, small to medium-sized companies have had online
groceries ordering for many years, local taxi unions have had websites and
recently apps, and still... it's like OMG so much innovation from US companies
let's give them crazy valuations.

What gives? Is it market size?

~~~
jdminhbg
I'm not on the Amazon Fresh/Instacart trend yet (and may not be -- I really
enjoy grocery shopping and frequent different farmers' markets, so it's not a
problem I need to have solved for me).

But as for Uber/Lyft, the reason they're vastly more valuable than whatever
local taxi website/app is convenience and lack of friction. When you get an
Uber, you don't have to worry about payment or directions; it's all handled
for you. When you get to a different city, you don't have to google the local
taxi companies and pick one; you just open Lyft and get a ride.

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tonydiv
Just ended by Instacart subscription for Amazon Fresh. I hated how Instacart
would mess with prices. So far, much happier with Amazon Fresh. Costco access
gives Instacart a huge advantage, but they abuse it.

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oculusthrift
I guess jumping on the "Uber for X" bandwagon nets you 3Bn.

~~~
omarchowdhury
There hasn't been any net yet.

~~~
oculusthrift
True. But I'd assume at the very least it nets you a fat salary befitting a
founder of a 3bn company.

~~~
greglindahl
That's not how salaries work at the startups I've been a part of.

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greglindahl
As a comparison, the Whole Foods supermarket chain has a market cap of $9.6G.
Yow.

~~~
Vadoff
Yep, and Safeway with over 1500 stores across the US/Mexico has a market cap
$8.1B.

~~~
omarchowdhury
Instacart is building datasets right now on what people purchase. They can
simply bypass their physical market place partners of today and become a
retailer without the cost of running physical stores. They would only need to
take care of fulfillment, and hey, maybe with machine vision there will be a
little Instacart robot that delivers your groceries to you direct from the
Instacart warehouse: cutting yet another cost and justifying their high
valuation. Who know's if that's what they're up to.

~~~
CPLX
> Instacart is building datasets right now on what people purchase.

Why do people say things like this as if Silicon Valley is the only place
that's heard of collecting data on customers. You are aware that's what those
supermarket savings cards with the barcodes do right?

I guarantee you that Instacart has like the 178th best database of what
supermarket customers purchase at best.

~~~
omarchowdhury
Of course, I'm only painting a scenario that I think likely is being posed by
Instacart to justify their valuation and future prospect, not the superiority
or effieciency thereof.

And there is a big difference between having access to a database of customer
sales, and actually having those customers...

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yesimahuman
One interesting counter to Instacart are services like grocerkey
([http://www.grocerkey.com/](http://www.grocerkey.com/)) that exist as
whitelabel instacart's for stores. That local chain that everyone knows
probably doesn't want to send all their customers to instacart if they don't
have to. I'm not sold on Instacart being something people use outside of a few
major cities, but maybe that's enough for them.

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sjg007
Supermarkets can compete by becoming more like Hyvee with restaurants and
other amenities. But I agree delivery is amazing.

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karmicthreat
I kind of wonder why this was even leaked. Is anyone going to give Instacart a
better deal than that? Or acquire it?

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JBReefer
That is insane and unreasonable. The bubble has lost it.

~~~
gkoberger
Why? Grocery shopping is extremely inefficient and has to be done weekly by
almost everyone in the world. It's not a small problem that they're solving,
so large amounts of cash (and a high valuation) makes sense.

~~~
oculusthrift
One doesn't deserve a high valuation just because the problem they are solving
is hard.

The company he came from, Amazon, has more cash than anyone could raise. They
have logistical expertise and are perfecting same day shipping at a national
scale.

They also offer Amazon "Fresh" which is essentially the same service except
they don't skirt labor laws by classifying their employees as contractors.

And non-tech people actually trust Amazon and order quite a bit from them.

For them to succeed outside of a few big cities would require gross negligence
and incompetence by Amazon, which isn't impossible. But seems unlikely.

~~~
envy2
> They also offer Amazon "Fresh" which is essentially the same service except
> they don't skirt labor laws by classifying their employees as contractors.

At least in DC, the Amazon Fresh (and Prime Now) drivers are definitely just
random people in their own car, the same as Instacart.

