[Applause]
hello everyone and welcome back to case
studies with the biz doc this week it’s
another request that you had instacart
yet another y combinator graduate i’m
gonna talk about three things this week
point number one the timeline of their
corporate development and the money
they’ve raised point two pitfalls and
important lessons they learned along the
way and finally point number three how
on earth are they or anybody going to
compete against Amazon because as we all
know by now Amazon bought Whole Foods in
is already testing Amazon Prime grocery
delivery they’ve been working on that
for a while well how is instacart going
to weather the storm
when amazon wants to do something it
usually crushes the competition so let’s
dive in it all starts when an
entrepreneur named Apoorva Mehta
actually leaves Amazon of all places
where he was an engineer and claimed he
was bored he starts working on a variety
of startups and there’s a lot of
folklore and stories out there who knows
which is accurate but what is accurate
is that he spent a good amount of time
away from Amazon and claimed to have
been working on up to 20 different ideas
for companies and he said he didn’t have
any passion for one of them and finally
grocery delivery struck his heart as
well I like to cook I like to do things
why can’t I as a single person and I’m
barely have enough time to do what I
need to do it would be convenient to get
groceries delivered and there’s so many
other delivery things and in the gig
economy and what’s going on I want to do
that so he incubated the idea and then
got together with max Mullen and Brandon
Leonardo and the three of them are the
cofounders of what becomes instacart
well they go to Y Combinator and they
try to get into the incubator and
there’s a couple different times a year
you can get into Y Combinator there’s a
approval process an application process
but they had missed the deadline and so
they they were rejected well being an
entrepreneur he said I gotta get in I
want to get into Y Combinator and I want
to get in now he sent a six-pack of IPA
this is how the story goes to
one of the founders one of the board
members I guess of Y Combinator they
call him the next day and said hang on
why don’t you come in we want to talk to
you a little bit further because it
occurred to them well we just got this
grocery this beer delivered so first of
all thank you for the beer second of all
maybe there’s something here and they
get placed into Y Combinator so a gutsy
strong move and they’re in to one of the
greatest accelerator incubators of our
age so they graduate out of that you can
get about 2.3 million dollars of seed
money now that’s pretty healthy seed and
some Kritzer khals that would be called
a Series A nonetheless they classified
it as seed and Sam Altman apparently
being one of the investors of course Sam
is founder the guy that runs Y
Combinator so away they go they
initially start in the Bay Area it’s an
easy place to start you have San Jose
San Francisco Oakland Alameda all these
areas there where there’s a lot of busy
people with busy lives congested traffic
and who in those markets wouldn’t
appreciate being able to get groceries
delivered and so they go out and they
get a few deals together with some
stores and they’re off and running in
2013 they catch the eye of the great
Vinod Khosla Khosla Ventures and they
raise eight point five million dollars
in a true Series a pretty good money and
they had gotten some deals together with
Safeway Trader Joe’s Whole Foods Costco
you know the simple pitch hey we’ll
deliver for your people they’ll order it
on an app indicate what they want and
we’ll be off and running so they got
some early good partners well they also
started getting some other investors
that were very interested in what they
were doing a year later in June of 2014
they do a series be with andreessen
horowitz and what was really interesting
about that is now in two years since
graduating the incubator they’ve raised
fifty five million dollars and they’re
making a lot of traction and moving
through and people around Silicon Valley
suddenly know that this particular
business is going to be a
and it’s a lot different than web been
let me give you a little history lesson
wet van goes way back to the dawn of the
dot-com era and there is a company named
benchmark and some others that had made
very significant investment in web ban
and what web ban was their concept was
we’ll get the trucks we will build the
warehouse we will put conveyor systems
in the warehouse will have refrigerated
areas of the warehouse so what we’ll do
is we’ll effectively make the grocery
store distribution center and we’ll have
trucks now that meant big giant stacks
of money required from the venture
community to build all that
infrastructure over here shoppers are
going in using seam there with their
instacart t-shirts they come in they
have their lists on the phone they’re
getting everything for you putting it in
the basket going through the checkout
it’s charge to you and they’re gone
so now what we’re talking about is the
infrastructure is really now digital
infrastructure and the second
infrastructure delivery systems are the
cars that are operated by the
independent shoppers we’ve now entered
the gig economy where you can get a gig
delivering for instacart so you see way
back when tons and tons of money and
we’re gonna buy trucks and build
infrastructure now its will build the
digital infrastructure and the marketing
to reach out to the consumer but all
that other infrastructure it’ll be the
grocery stores because we’re gonna
they’re the warehouse and the shopper is
going to go up and down the aisles and
buy the stuff and then they’ll be
delivered to you and it’s going to use
the shoppers car and we’ll worry about
paying them out of the margin we can
make of the fee that you’re gonna pay on
top of the grocery costs so there you
have it a big big difference in the
history of web ban very interesting
there’s some book called I think it’s
called boys the story of benchmark
capital and what they invested in it’s
an older book but you go back and read
that and you’ll see the kind of the
thinking that things that happen way
back when so away they go and a year
later they attract kleiner perkins
caufield buyers the great kleiner
perkins 220 million dollars the series
series in January of 15 and now we’re
suddenly
hearing words about hey it’s not just a
billion-dollar company entering the
unicorn
Club which is one billion in valuation
it’s a two billion dollar valuation so
now we’re saying wow things are really
happening there’s some other things that
start happening here at the workforce
and I’m going to come back to in a
second cuz it was a serious pitfall and
it is a deep question for instacart
going into the future even today
following that in March of seventeen it
is Sequoia and four hundred million
dollars now there’s a lot more than just
Sequoia in there and some of these
previous investors came along for the
ride and followed their previous
investment and put more in but it was
Sequoia driving the series d4 hundred
million dollars and a 3.4 billion dollar
valuation let’s take a look at that this
is five years barely five years and you
are suddenly a three point four billion
dollar valuation this is remarkable but
it’s also a testimony of the new gig
economy and the value you can make by
building a great big consumer base of
customers and what the consumer is
willing to pay at the same time there
were rumors out there that it was about
a two billion dollar run rate and it had
500,000 of those consumer customers we
go one more step to the beginning of
this year 2018 in February they
announced a two hundred million dollar
investment in a series II from co2 and
Glade booked and there is one other
thing that’s kind of a tongue twister
it was Nomo to the IPO said the CFO so
that’s the end of our fundraising and we
anticipate our next step is an IPO now
when you take a look at all this and you
realize there’s a competition with
Amazon you could see why maybe some of
the investors are going to drive toward
an IPO there’s a couple reasons for that
the IPO market hasn’t been particularly
good and if they could show that they
are a good company making great margin
with good relationship with those
shoppers which I’m going to talk about
in a second wow we could get this out to
the market and it means this 800
and fifty million dollars approximately
that’s been raised from seed through
series II the investors will get their
money back that’s the natural order of
things during the IPO a lot of the
venture capitalists they may hold on to
a little bit but by and large you’re
gonna sell into the IPO it’s called
and that’s when they get the return on
the risk and investment that they took
to bring it to this level so now you’re
sitting there in right now the beginning
of 2018 at a four point two billion
dollar valuation that is four point two
billion dollars in a little less than
six years there is only one word for
that and that is damn that is a big
stack of money to be generating in its
short amount of time now I call it a
stack of money because right now it’s
just virtual money it’s evaluation it
needs to get converted to an actual
valuation after an IPO but nonetheless
that’s the number right now that you
would need at a bare minimum if you
knocked on the door and you wanted to
buy instacart so let’s dive into what
was going on with the workforce and some
policies that were changed by instacart
just three years four years in their
discovering we have to make changes to
our business model and some of the
elements on that including this critical
element regarding workforce and how
they’re compensated you could earn a tip
as an insta cart delivery person and
there was about 80% of the deliveries
included tips now there was 20% of
deliveries that people got no tip
whatsoever but there was also a an army
of the the workforce the instacart
shoppers that prided themselves on going
the extra mile for the customer and
maybe they had regular customers in
there and what happened is they were
getting very good tips from people like
you and me that said you were fast you
did a nice job you’re really nice thank
you so much here’s a little something
for you on top of the fee and what the
price we paid for the groceries well
instacart replaced the tip with a
service fee and it gave a long
explanation of hey we’re trying to make
it more certain for the level of income
you’re going
make at each individual delivery we’re
trying to stabilize that and let us
remind you about 20 percent of you don’t
get tips you’re not receiving tips from
customers now the service fees gone
therefore all customers well there was a
big backlash there because you know the
better part of the workforce that is was
delivering with some style or whatever
they were doing that allowed them to be
tipped by you and me they got really
annoyed and quickly instacart reacted
there was a article in recode very big
an influential journalism source here in
the United States that covers the
startup and technology world among other
things and instacart backed off they
said okay wait a minute we’ll put the
tip back in but then there is even more
criticism because they said well the
tips now kind of buried and hidden here
then they also that about that same time
as I if I’m getting the story straight
you could also as a customer you could
go in and you could remove the service
fee that was there so now you had
instacart shoppers that were gaming the
whole system because they would give a
piece of paper to the consumer that said
hey this is how you go in and you can
set the service fee to zero and then you
can also give me a tip so they were
trying to game the system so as we look
at instacart you know the workforce is a
key part of it but what do they need to
be successful well you need partner
contracts but you’re not going to get a
contract for a new grocery store unless
you can say hey I’ve got a workforce
that’s ready to go and be delivering
your customers right now are going to be
loving this and they’re gonna be
ordering grocery products from you and
we’re gonna deliver them right now
and there has to be speed and value
otherwise those people in the new city
are gonna say yeah I’ve heard about
instacart but it’s not so good so the
consumers have to be hey great instacart
came to my town and I shop at Trader
Joe’s
fantastic I’m going to use it it all has
to come together but the big one in the
middle
if you don’t ever work for us and you
can’t get it delivered you’re in trouble
now let me share something in a past
case study you saw me talk about Amazon
and how I ordered a laptop battery it
was actually delivered to me on a Sunday
and the people that delivered it was
these two individuals that are in a car
and they delivered it to me and I said
why you’re delivering on Sunday but I
was expecting some professional delivery
service instead they said YX I worked
for lyft but I also deliver for Amazon
on weekends and I was kind of shocked
well guess what so to get things done
apparently Amazon’s working with lyft
drivers or something or they were also
lyft drivers but it had to expand like
that to find workforce to deliver things
on a Sunday when I got a same-day
battery delivery for my laptop here in
Dallas
so the workforce is not to be trifled
with it’s critically important that you
are able to attract enough of them that
you can deliver all the orders that are
there and as they’ve grown and as the
workforce has grown there’s also been
some scuttlebutt from workers saying hey
I used to get three or four orders a day
now my incomes gone down I don’t like
this tip and service fee thing and I’m
not able to get as many orders because
there’s more and more people doing this
so there’s a lot of tensions that are
here that doesn’t change the fact of
what instacart has become or the success
it’s had now let’s go a little deeper
and talk about Amazon Amazon and
everybody else believes that there’s
gold in those hills to deliver groceries
there’s a study that said only about 7%
of Americans had even tried to have a
grocery product of any type delivered
which is pretty amazing when you
consider two billion dollars in revenue
if that’s correct for it instacart and
others it also means there’s a large
untapped market for you and me who had
maybe haven’t tried it yet and we want
to get groceries delivered though the
speed of this market is really picking
up steam industries are no longer
waiting for Amazon to steamroll them and
then to cry and be all upset we can
already see this week that as we are in
in early 2018 Walmart stock just took a
hit because they admitted to some of
their online delivery and the things
they were doing wasn’t doing as well as
Amazon and they took a hit
you know effectively saying hey we’re
being beaten a little bit by Amazon in
this area here also Albertsons at this
time had recently bought
of rite aid because they didn’t want to
be out in the cold as Amazon dives into
being pharmacy and pharmacy delivery
they don’t want to wait and the
Albertson’s not gonna sit around and
wait so two things happen they buy Rite
Aid as their competing and then relevant
here they signed a five-year deal with
instacart meaning hey Whole Foods is
working with Amazon and we can already
see Amazon Prime delivering for Whole
Foods and we’re not gonna wait we’re
making a deal with instacart and we need
to stay ahead of Amazon we’re also
buying Rite Aid so be interesting to see
if Albertsons able to successfully
compete against Amazon in all of this
with a key partner being instacart now
then I just mentioned Amazon and Whole
Foods there’s a deal that was struck
between instacart and Whole Foods well
go back and look at my Toys R Us case
study and you’ll see what happened to
Toys R Us when they cut an extended deal
with Amazon and a very short time into
it Amazon decided that they’d figured
out toys and they didn’t want to work
with Toys R Us anymore and they
effectively reneged on the contract they
said we’re not going to do this Toys R
Us got upset took him to court and it
was years later that Toys R Us did win
and got a settlement but the settlement
was nothing compared to what they had
lost in business speed first market lost
profits as Amazon built the toy business
and absolutely kicked their butt so if
anyone thinks that once Amazon has a
chance to see exactly how well and
what’s happening with instacart and
Whole Foods soon as they digest that
information I am willing to bet that
amazon is just gonna draw a line and say
we’re done no more you know there were
the instacart deal we’re not using
anymore you’re not gonna be here and
there might be a lawsuit but it takes
years to figure out lawsuits and so
that’s one of the dangers that’s there
but I’m one of the people I don’t
believe that Amazon is gonna stay with
this instacart contract at Whole Foods
they’re already working on prime
delivery however the rest of the people
that are being
hold into instacart is significant it’s
significant because their arms are
getting longer in the northeast they’ve
got Stew Leonard’s if you know anything
about Connecticut and part of New York
Stu Leonard’s is a wonderful store up
there known for its impeccable service
and now instacart is going to deliver
force to Leonard’s
there’s also a variety up there there’s
the Food Lion that’s in Washington and
Virginia let’s see what it lows lows
foods
yes Lowe’s hardware store has food
stores in North Carolina where the
Lowe’s brand is royalty and there’s a
variety of other niches that instacart
is been coming to so if instacart can
settle its workforce and settle the way
that they pay them so that people feel
properly compensated in the gig economy
if they can keep delivering speed and
value so that they have the gross margin
and they can get these partner contracts
not only the big stores like Albertson
but continue to reach into these little
ones they can do all that and stay ahead
of Amazon I believe they have a shot and
they’re about to go public and when they
go public all the numbers will be out
there for everyone including Amazon to
see that’s the story of instacart a
little company that in six years went
from zero to four point two billion
dollars in valuation and is one of the
few companies that appears like it has
some footing to actually compete against
the giant steamroller that is Amazon
thank you for watching and remember
we’re on a mission to get to a million
subscribers and when we do the first
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conference led by Patrick BETT David
will be held we can’t wait to do that to
deliver so much value to you that you
will walk in and say damn that was
fantastic for my business for me and all
the customers that I’m serving and we
can’t wait for that day until next time
I’m Thomas Werth the biz doc and I hope I left you better than I found you
hello everyone and welcome back to case
studies with the biz doc this week it’s
another request that you had instacart
yet another y combinator graduate i’m
gonna talk about three things this week
point number one the timeline of their
corporate development and the money
they’ve raised point two pitfalls and
important lessons they learned along the
way and finally point number three how
on earth are they or anybody going to
compete against Amazon because as we all
know by now Amazon bought Whole Foods in
is already testing Amazon Prime grocery
delivery they’ve been working on that
for a while well how is instacart going
to weather the storm
when amazon wants to do something it
usually crushes the competition so let’s
dive in it all starts when an
entrepreneur named Apoorva Mehta
actually leaves Amazon of all places
where he was an engineer and claimed he
was bored he starts working on a variety
of startups and there’s a lot of
folklore and stories out there who knows
which is accurate but what is accurate
is that he spent a good amount of time
away from Amazon and claimed to have
been working on up to 20 different ideas
for companies and he said he didn’t have
any passion for one of them and finally
grocery delivery struck his heart as
well I like to cook I like to do things
why can’t I as a single person and I’m
barely have enough time to do what I
need to do it would be convenient to get
groceries delivered and there’s so many
other delivery things and in the gig
economy and what’s going on I want to do
that so he incubated the idea and then
got together with max Mullen and Brandon
Leonardo and the three of them are the
cofounders of what becomes instacart
well they go to Y Combinator and they
try to get into the incubator and
there’s a couple different times a year
you can get into Y Combinator there’s a
approval process an application process
but they had missed the deadline and so
they they were rejected well being an
entrepreneur he said I gotta get in I
want to get into Y Combinator and I want
to get in now he sent a six-pack of IPA
this is how the story goes to
one of the founders one of the board
members I guess of Y Combinator they
call him the next day and said hang on
why don’t you come in we want to talk to
you a little bit further because it
occurred to them well we just got this
grocery this beer delivered so first of
all thank you for the beer second of all
maybe there’s something here and they
get placed into Y Combinator so a gutsy
strong move and they’re in to one of the
greatest accelerator incubators of our
age so they graduate out of that you can
get about 2.3 million dollars of seed
money now that’s pretty healthy seed and
some Kritzer khals that would be called
a Series A nonetheless they classified
it as seed and Sam Altman apparently
being one of the investors of course Sam
is founder the guy that runs Y
Combinator so away they go they
initially start in the Bay Area it’s an
easy place to start you have San Jose
San Francisco Oakland Alameda all these
areas there where there’s a lot of busy
people with busy lives congested traffic
and who in those markets wouldn’t
appreciate being able to get groceries
delivered and so they go out and they
get a few deals together with some
stores and they’re off and running in
2013 they catch the eye of the great
Vinod Khosla Khosla Ventures and they
raise eight point five million dollars
in a true Series a pretty good money and
they had gotten some deals together with
Safeway Trader Joe’s Whole Foods Costco
you know the simple pitch hey we’ll
deliver for your people they’ll order it
on an app indicate what they want and
we’ll be off and running so they got
some early good partners well they also
started getting some other investors
that were very interested in what they
were doing a year later in June of 2014
they do a series be with andreessen
horowitz and what was really interesting
about that is now in two years since
graduating the incubator they’ve raised
fifty five million dollars and they’re
making a lot of traction and moving
through and people around Silicon Valley
suddenly know that this particular
business is going to be a
and it’s a lot different than web been
let me give you a little history lesson
wet van goes way back to the dawn of the
dot-com era and there is a company named
benchmark and some others that had made
very significant investment in web ban
and what web ban was their concept was
we’ll get the trucks we will build the
warehouse we will put conveyor systems
in the warehouse will have refrigerated
areas of the warehouse so what we’ll do
is we’ll effectively make the grocery
store distribution center and we’ll have
trucks now that meant big giant stacks
of money required from the venture
community to build all that
infrastructure over here shoppers are
going in using seam there with their
instacart t-shirts they come in they
have their lists on the phone they’re
getting everything for you putting it in
the basket going through the checkout
it’s charge to you and they’re gone
so now what we’re talking about is the
infrastructure is really now digital
infrastructure and the second
infrastructure delivery systems are the
cars that are operated by the
independent shoppers we’ve now entered
the gig economy where you can get a gig
delivering for instacart so you see way
back when tons and tons of money and
we’re gonna buy trucks and build
infrastructure now its will build the
digital infrastructure and the marketing
to reach out to the consumer but all
that other infrastructure it’ll be the
grocery stores because we’re gonna
they’re the warehouse and the shopper is
going to go up and down the aisles and
buy the stuff and then they’ll be
delivered to you and it’s going to use
the shoppers car and we’ll worry about
paying them out of the margin we can
make of the fee that you’re gonna pay on
top of the grocery costs so there you
have it a big big difference in the
history of web ban very interesting
there’s some book called I think it’s
called boys the story of benchmark
capital and what they invested in it’s
an older book but you go back and read
that and you’ll see the kind of the
thinking that things that happen way
back when so away they go and a year
later they attract kleiner perkins
caufield buyers the great kleiner
perkins 220 million dollars the series
series in January of 15 and now we’re
suddenly
hearing words about hey it’s not just a
billion-dollar company entering the
unicorn
Club which is one billion in valuation
it’s a two billion dollar valuation so
now we’re saying wow things are really
happening there’s some other things that
start happening here at the workforce
and I’m going to come back to in a
second cuz it was a serious pitfall and
it is a deep question for instacart
going into the future even today
following that in March of seventeen it
is Sequoia and four hundred million
dollars now there’s a lot more than just
Sequoia in there and some of these
previous investors came along for the
ride and followed their previous
investment and put more in but it was
Sequoia driving the series d4 hundred
million dollars and a 3.4 billion dollar
valuation let’s take a look at that this
is five years barely five years and you
are suddenly a three point four billion
dollar valuation this is remarkable but
it’s also a testimony of the new gig
economy and the value you can make by
building a great big consumer base of
customers and what the consumer is
willing to pay at the same time there
were rumors out there that it was about
a two billion dollar run rate and it had
500,000 of those consumer customers we
go one more step to the beginning of
this year 2018 in February they
announced a two hundred million dollar
investment in a series II from co2 and
Glade booked and there is one other
thing that’s kind of a tongue twister
it was Nomo to the IPO said the CFO so
that’s the end of our fundraising and we
anticipate our next step is an IPO now
when you take a look at all this and you
realize there’s a competition with
Amazon you could see why maybe some of
the investors are going to drive toward
an IPO there’s a couple reasons for that
the IPO market hasn’t been particularly
good and if they could show that they
are a good company making great margin
with good relationship with those
shoppers which I’m going to talk about
in a second wow we could get this out to
the market and it means this 800
and fifty million dollars approximately
that’s been raised from seed through
series II the investors will get their
money back that’s the natural order of
things during the IPO a lot of the
venture capitalists they may hold on to
a little bit but by and large you’re
gonna sell into the IPO it’s called
and that’s when they get the return on
the risk and investment that they took
to bring it to this level so now you’re
sitting there in right now the beginning
of 2018 at a four point two billion
dollar valuation that is four point two
billion dollars in a little less than
six years there is only one word for
that and that is damn that is a big
stack of money to be generating in its
short amount of time now I call it a
stack of money because right now it’s
just virtual money it’s evaluation it
needs to get converted to an actual
valuation after an IPO but nonetheless
that’s the number right now that you
would need at a bare minimum if you
knocked on the door and you wanted to
buy instacart so let’s dive into what
was going on with the workforce and some
policies that were changed by instacart
just three years four years in their
discovering we have to make changes to
our business model and some of the
elements on that including this critical
element regarding workforce and how
they’re compensated you could earn a tip
as an insta cart delivery person and
there was about 80% of the deliveries
included tips now there was 20% of
deliveries that people got no tip
whatsoever but there was also a an army
of the the workforce the instacart
shoppers that prided themselves on going
the extra mile for the customer and
maybe they had regular customers in
there and what happened is they were
getting very good tips from people like
you and me that said you were fast you
did a nice job you’re really nice thank
you so much here’s a little something
for you on top of the fee and what the
price we paid for the groceries well
instacart replaced the tip with a
service fee and it gave a long
explanation of hey we’re trying to make
it more certain for the level of income
you’re going
make at each individual delivery we’re
trying to stabilize that and let us
remind you about 20 percent of you don’t
get tips you’re not receiving tips from
customers now the service fees gone
therefore all customers well there was a
big backlash there because you know the
better part of the workforce that is was
delivering with some style or whatever
they were doing that allowed them to be
tipped by you and me they got really
annoyed and quickly instacart reacted
there was a article in recode very big
an influential journalism source here in
the United States that covers the
startup and technology world among other
things and instacart backed off they
said okay wait a minute we’ll put the
tip back in but then there is even more
criticism because they said well the
tips now kind of buried and hidden here
then they also that about that same time
as I if I’m getting the story straight
you could also as a customer you could
go in and you could remove the service
fee that was there so now you had
instacart shoppers that were gaming the
whole system because they would give a
piece of paper to the consumer that said
hey this is how you go in and you can
set the service fee to zero and then you
can also give me a tip so they were
trying to game the system so as we look
at instacart you know the workforce is a
key part of it but what do they need to
be successful well you need partner
contracts but you’re not going to get a
contract for a new grocery store unless
you can say hey I’ve got a workforce
that’s ready to go and be delivering
your customers right now are going to be
loving this and they’re gonna be
ordering grocery products from you and
we’re gonna deliver them right now
and there has to be speed and value
otherwise those people in the new city
are gonna say yeah I’ve heard about
instacart but it’s not so good so the
consumers have to be hey great instacart
came to my town and I shop at Trader
Joe’s
fantastic I’m going to use it it all has
to come together but the big one in the
middle
if you don’t ever work for us and you
can’t get it delivered you’re in trouble
now let me share something in a past
case study you saw me talk about Amazon
and how I ordered a laptop battery it
was actually delivered to me on a Sunday
and the people that delivered it was
these two individuals that are in a car
and they delivered it to me and I said
why you’re delivering on Sunday but I
was expecting some professional delivery
service instead they said YX I worked
for lyft but I also deliver for Amazon
on weekends and I was kind of shocked
well guess what so to get things done
apparently Amazon’s working with lyft
drivers or something or they were also
lyft drivers but it had to expand like
that to find workforce to deliver things
on a Sunday when I got a same-day
battery delivery for my laptop here in
Dallas
so the workforce is not to be trifled
with it’s critically important that you
are able to attract enough of them that
you can deliver all the orders that are
there and as they’ve grown and as the
workforce has grown there’s also been
some scuttlebutt from workers saying hey
I used to get three or four orders a day
now my incomes gone down I don’t like
this tip and service fee thing and I’m
not able to get as many orders because
there’s more and more people doing this
so there’s a lot of tensions that are
here that doesn’t change the fact of
what instacart has become or the success
it’s had now let’s go a little deeper
and talk about Amazon Amazon and
everybody else believes that there’s
gold in those hills to deliver groceries
there’s a study that said only about 7%
of Americans had even tried to have a
grocery product of any type delivered
which is pretty amazing when you
consider two billion dollars in revenue
if that’s correct for it instacart and
others it also means there’s a large
untapped market for you and me who had
maybe haven’t tried it yet and we want
to get groceries delivered though the
speed of this market is really picking
up steam industries are no longer
waiting for Amazon to steamroll them and
then to cry and be all upset we can
already see this week that as we are in
in early 2018 Walmart stock just took a
hit because they admitted to some of
their online delivery and the things
they were doing wasn’t doing as well as
Amazon and they took a hit
you know effectively saying hey we’re
being beaten a little bit by Amazon in
this area here also Albertsons at this
time had recently bought
of rite aid because they didn’t want to
be out in the cold as Amazon dives into
being pharmacy and pharmacy delivery
they don’t want to wait and the
Albertson’s not gonna sit around and
wait so two things happen they buy Rite
Aid as their competing and then relevant
here they signed a five-year deal with
instacart meaning hey Whole Foods is
working with Amazon and we can already
see Amazon Prime delivering for Whole
Foods and we’re not gonna wait we’re
making a deal with instacart and we need
to stay ahead of Amazon we’re also
buying Rite Aid so be interesting to see
if Albertsons able to successfully
compete against Amazon in all of this
with a key partner being instacart now
then I just mentioned Amazon and Whole
Foods there’s a deal that was struck
between instacart and Whole Foods well
go back and look at my Toys R Us case
study and you’ll see what happened to
Toys R Us when they cut an extended deal
with Amazon and a very short time into
it Amazon decided that they’d figured
out toys and they didn’t want to work
with Toys R Us anymore and they
effectively reneged on the contract they
said we’re not going to do this Toys R
Us got upset took him to court and it
was years later that Toys R Us did win
and got a settlement but the settlement
was nothing compared to what they had
lost in business speed first market lost
profits as Amazon built the toy business
and absolutely kicked their butt so if
anyone thinks that once Amazon has a
chance to see exactly how well and
what’s happening with instacart and
Whole Foods soon as they digest that
information I am willing to bet that
amazon is just gonna draw a line and say
we’re done no more you know there were
the instacart deal we’re not using
anymore you’re not gonna be here and
there might be a lawsuit but it takes
years to figure out lawsuits and so
that’s one of the dangers that’s there
but I’m one of the people I don’t
believe that Amazon is gonna stay with
this instacart contract at Whole Foods
they’re already working on prime
delivery however the rest of the people
that are being
hold into instacart is significant it’s
significant because their arms are
getting longer in the northeast they’ve
got Stew Leonard’s if you know anything
about Connecticut and part of New York
Stu Leonard’s is a wonderful store up
there known for its impeccable service
and now instacart is going to deliver
force to Leonard’s
there’s also a variety up there there’s
the Food Lion that’s in Washington and
Virginia let’s see what it lows lows
foods
yes Lowe’s hardware store has food
stores in North Carolina where the
Lowe’s brand is royalty and there’s a
variety of other niches that instacart
is been coming to so if instacart can
settle its workforce and settle the way
that they pay them so that people feel
properly compensated in the gig economy
if they can keep delivering speed and
value so that they have the gross margin
and they can get these partner contracts
not only the big stores like Albertson
but continue to reach into these little
ones they can do all that and stay ahead
of Amazon I believe they have a shot and
they’re about to go public and when they
go public all the numbers will be out
there for everyone including Amazon to
see that’s the story of instacart a
little company that in six years went
from zero to four point two billion
dollars in valuation and is one of the
few companies that appears like it has
some footing to actually compete against
the giant steamroller that is Amazon
thank you for watching and remember
we’re on a mission to get to a million
subscribers and when we do the first
annual value taemin entrepreneur
conference led by Patrick BETT David
will be held we can’t wait to do that to
deliver so much value to you that you
will walk in and say damn that was
fantastic for my business for me and all
the customers that I’m serving and we
can’t wait for that day until next time
I’m Thomas Werth the biz doc and I hope I left you better than I found you
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