The Story Behind My Third Investment, Instacart
Last year at Thanksgiving, that Wednesday night, as my wife was preparing her portion of the Thanksgiving potluck, I headed out to the Dutch Goose for beers with two of my oldest friends in the Bay Area, from back when I moved here the first time in 2001. We all lived in the city then. Earlier that afternoon, I had finished my cooking assignments and, unwittingly, used one of my wife’s key ingredients. So I’m at the bar, thinking my work is done, and just hanging out when she texts to inform me that I screwed up, used her ingredient, and now she’s stuck as I have the car. I figured I’d have to leave for the night and correct my mistake, but then I remembered my friend David Leib from Bump kept raving about using this service to deliver groceries, and he loved it. I didn’t get it at first. So, I opened up the App Store, downloaded the app, created an Instacart account, and selected the items she needed — they were delivered in one hour.
From that point, I began to use Instacart a bit more frequently, and I also started to monitor social media chatter about the product and service. Week in and week out, people either “loved” the service or were waiting to get it in their location. Yet, I remained skeptical because I figured it would be a low-margin business that’s also hard to scale. I started to dig in more and realized Instacart was not just about grocery delivery — it is about machine learning (to predict supply and demand), vertical search, intelligent pricing (based on the algorithms), customer segmentation, and logistics. It just happened to deliver groceries.
I had met Apoorva, the founder, in December at a party and remember still being skeptical about how they could scale. He wasn’t too pleased with my assessment. Then in March 2013, as I had started this fund, I got back in touch with him and asked to meet. We had a beer at an Irish bar on a weekday afternoon. Apoorva is super-busy so I made it quick — I told him I started this fund as a platform to work with companies and that I wanted to invest. He said he’d consider it, we finished our beers, and that was that. I wasn’t sure what to make of it, and eventually, he agreed to bring me on. As the time passed from the beer to term sheet, I remember going back and forth in my head about whether this was a good idea, given my earlier skepticism. Then, he told me about the plan for Costco, and I was sold. Where do I sign?
Since then, Apoorva and Instacart have been on a tear.
Instacart eventually raised their Series A from Sequoia Capital. Mike Moritz joined the board. They’ve expanded their customer offerings (Instacart Express), the site experience (recipes), and geography (heading into Chicago). The company has maintained 35% month-over-month growth and is already a substantial revenue driver for the grocery stores it serves. Along the way, what’s been most impressive to me is the level of execution at the company. That’s what got me over the hump in my decision. I’d have skepticism about something in theory, but then I’d see the culture at the company — a culture where if a new idea is hatched, the owner of the idea takes responsibility from beginning to end to implement it — and grew more confident. Now, looking back, I was a fool to be so skeptical. I don’t know what will happen with Instacart as it expands, but I do believe in the larger trends and the ability of this team to execute on any dimension — product, pricing, delivery, and expansion. It’s fun to be along for the ride in what is a huge, huge market.