Webvan Comes Back from the Dead

A decade after the epic IPO fails of Webvan, eToys, and Pets.com, the HomeGrocer is back for more!

Here’s a brief refresher for those who have forgotten, as investors clearly have. From the New York Times, November 6 1999:

Webvan Group, an online grocer that has overcome several financial and regulatory obstacles, rolled ahead in its first day of public trading today to achieve a market value of $7.9 billion.

The company was expected to post a loss of $65 million this year — high even by the standards of Internet start-ups — and has forecast operating losses for the “foreseeable future.”

But neither problems with the S.E.C. nor loss projections have sunk Webvan, which has been the darling of an investment community intrigued by the promise of moving the grocery market to the Internet.

The stock price plummeted to 6 cents a few months later, and Webvan filed for bankruptcy in 2001.

Webvan’s founder Louis Borders is now running his own startup incubator in Palo Alto, and his flagship startup is called Home Delivery Service:

HDS claims to be environmentally sustainable. Perhaps by reusing the old Webvan trucks and bins from 2001?
HDS claims to be environmentally sustainable. Perhaps by reusing the old Webvan trucks and bins from 2001?

The HDS website offers consumers a single online store to shop for fresh foods and general merchandise from the world’s leading retail brands.

If I were a VC, I would totally fund that pitch. A website, you say? Sign me up and let’s party like it’s 1999!

On a more serious note, we’ve learned that ideas are worthless. Execution is everything. Postmates, Instacart, RelayFoods, AmazonFresh, Google Shopping Express, Walmart To Go, all agree that on-demand grocery delivery is a good idea. But none of these services are independently profitable. Yet.

instacart app

Nobody knows for sure what killed off Webvan. Was it the Dotcom crash? Was it the billions of debt incurred during infrastructure rollout? Was it the fact that it cost Webvan $27 to fulfill an order when there were no delivery charges or minimum order requirements?

Maybe they can get it right this time around. The “patented, automated distribution technology” they cite sure sounds promising.

See Also:
Home Delivery Service: An Introduction

The Rationale Behind On-Demand Mobile Uber for Everything

on-demand mobile

It started with information. In a time when humans had to schlep to the library and look up references in a card catalog, search engines delivered the world’s knowledge with the click of a button.

Then came entertainment. Remember when we had to drive to Blockbuster, or at least to the RedBox kiosk outside of Safeway? Netflix condensed the process to three taps.

blockbuster closing

Last summer, I had a conversation with an investor who urged Barnacle to move into the local food delivery market. We need an Uber for food, he said.

There were (and still are) tons of startups scrapping to do just that. Doordash, Seamless, Postmates

None of them are very good, he said. Deliveries can take upwards of 30 minutes in the city. I ordered a sandwich and by the time it arrived the fries were all soggy.

Oh, the humanity.

Around the same time, all sorts of instant-gratification startups were closing rounds of fundraising. Uber for flower delivery, Uber for dog walking, Uber for dirty laundry. Things were looking a little ridiculous. Are startup founders soiling themselves at such inopportune times that they need on-demand dry-cleaning?

"Thanks for coming on such short notice, I just regurgitated all over my wedding dress and need this--wait a minute--Are you... flexing??"
“Thanks for coming on such short notice, I just regurgitated all over my wedding dress and need this–wait a minute–Are you… flexing??

The interesting thing is that these startups aren’t just catering to the criminally lazy. They’re collapsing entire value chains into a mobile app. On-demand mobile services deliver full-stack experiences that combine everything from discovery to confirmation to payment to fulfillment.


Consumers have grown inured to many sources of friction: Searching for price comparisons, checking for business hours, aligning our own availability, putting on pants, and scheduling for a completion time. It isn’t until we experience something truly delightful, mobile, and on-demand, that we realize just how unpleasant the old practice really was. Full-stack services distill a series of thoughts and decisions into just one.

Our ancestors had to get off the couch and stab a mastodon to death before they could eat dinner. I’m sure even they would agree that there’s something magical about having a chicken tikka masala delivered with three taps.

See Also:
Uberification of the US Service Economy –Schlaf Notes

Crowdsourcing the Race to the Bottom

postmates flowers

I just received this email from Postmates advertising flower delivery in San Francisco. Within the hour. For $19.95. Delivery and tip included. That’s pretty darn cheap.

Yesterday, Warren told me about another startup, BloomThat, that also delivers flowers. Ridiculously fast.

You should really be wearing a helmet, sir.
You should really be wearing a helmet, sir.

Why are they doing this? What problem are they trying to solve? Did your wife come home from work in the middle of the day and catch you in bed with the housekeeper, and now you need to send flowers, Ridiculously Fast, before she storms back to the office?

Exactly how big is this market, anyway?

As for the $19.95 flower delivery, they can’t possibly be turning a profit, or even breaking even. Operating at a loss to build hype is the same strategy employed by every failed business that ever patronized Groupon.

As of Monday, startups can publicly solicit funds from investors. You can gauge the quality of these crowdsourced startups for yourself on sites like AngelList. Yes, investors are actually putting money into these things.

You see, this is what half a decade of Zero Interest-Rate Policy does to the country. Thanks to Bernanke, we now have USB-powered sex-toy startups closing multimillion-dollar rounds.


These are all real listings on AngelList. BillMeLater for subprime credit? That’s a winner!