Apoorva Mehta at Startup School NY 2014

Key Takeaways

Instacart CEO Apurva Meta started out with a company that offered something pretty amazing, right? Shopping from stores across your city all in one bag delivered to your home within a few hours. So you can have that case of Yingling from Costco shipped right alongside the organic kale from Whole Foods. It'll just show up. And very recently, they announced a significant $44 million round of funding and are bringing Instacart to New York City. It's here right now. You can all order that said kale and yingling right here to the theater if you so desire. But in the meantime, while you're planning out your recipes, please give it up for Aorva. Come on out, Aorva. [Applause] Hey guys, thank you so much for having me here. I'm psyched to be here today with you. So, as Alexa says, my name is Apora and I'm the founder and CEO of Instacart. So, what is Instacart? Instacart is a product where you can order your groceries and get them delivered to your door within 1 hour. What's interesting about this is how we actually make this happen. Instacart is entirely a software company, which means that we don't actually have any warehouses, no trucks, and we don't hold any inventory. So, when you order your groceries, we have one of the thousands of personal shoppers in our network. Pick up your groceries from stores such as Whole Foods, Costco, Safeway, and many others and bring them to your door within one hour. We've been around for two years now, and we've raised over $55 million in financing, and today we're doing over hundreds of thousands of dollars in revenue every single day. Today, I'd like to share with you the story of Instacart. Hopefully, there's some lessons here that could be useful to you in your journey. The story of Instacart begins two years before I started the company. I used to live in Seattle and I worked at Amazon at the time and I had always wanted to start a company, but it wasn't until January of 2010 when this became serious. I realized that my learning at Amazon was plateauing and I was getting tired of the slow and bureaucratic environment there. So I knew I had to make a change to get started. I started going to these these founder meetups in Seattle and every week they would have these entrepreneurs who would come in and do a talk and this was great. But I realized that every time they would be talking, they would talk about things like convertible notes versus series A or angels versus VCs and and consumer versus enterprise. And I'll be honest, I had no clue what they were talking about. To me, if you were talking about enterprise, I thought we were talking about a car rental company. So given this is what I was starting with, I knew I had a lot of catch up to do. I immersed myself into this. I I started talking to as many founders as I could find. I started talking to as many investors as I could find. And I started reading as many books about startups I could find. I also started to come up with and develop ideas in my spare time. And this was a lot of fun. Even though I enjoyed my work at Amazon, I would look forward to come home and work on my ideas. It got to the point where I was working on my ideas even during the day at work. Very soon, my co-workers started to notice that something was wrong. I was a back-end logistics engineer at Amazon, so my co-workers would always be curious why I had Xcode open on my computer all the time. So, I knew that I was being unfair to my co-workers and so I decided that I wanted to quit and focus on my ideas full-time. In fact, today is the fourth year anniversary of me quitting my job at Amazon. [Applause] At the time, I was scared and uncertain, but now I know that was the best decision I've ever made in my entire life. After quitting Amazon, I had a decision to make whether to stay in Seattle or move to San Francisco. Let's just say it wasn't a very difficult decision. I packed my bags, told my friends goodbye, and moved to San Francisco, a city where all I knew were two people. Lucky for me, those two people also had a couch. After I moved to San Francisco, I found a co-founder and we got to work. We weren't picky about a particular vertical or market. So we were very flexible about the ideas that we wanted to try. One week we would work on something like an analytics platform for advertisers. Another week we would do uh group on for food. And for each one of these products we would try to get traction with the customers. And around this time we must have built around 20 products or so. But the results were always the same. Failed product after failed product after failed product. about 12 months after leaving Amazon and and working on so many different products and continuously failing, this started to get to me. Um, at this point in time, I began to question whether quitting Amazon was the right decision for me, whether entrepreneurship was really even for me. Around that time, we had been brainstorming about this idea and we thought it was worth a shot. The idea itself was a social network for lawyers. Um, and our our our product will allow lawyers to connect with each other, share articles and interesting opinions. At the time, I remember thinking that this idea was brilliant, that after all those failures that this was going to be the one. I guess there was one thing that we may have overlooked and that was that we didn't really know anything about lawyers. We I had never even worked with a lawyer before and so we were working we were building a product for people that we didn't really know much about solving a problem that we didn't know they had. After after building the product, building a team, and and raising money, and talking to as many lawyers as possible, I finally realized how terrible of an idea this was. Lawyers don't like technology. Lawyers don't like sharing. And most of all, lawyers especially don't like someone trying to get them to sign up for a service they they never needed in the first place. After one year of iterating and pivoting on this product, I realized that that this was just another failure to add to the list. I told my co-founder that we needed to part ways and I quit my own startup. I learned a very important lesson here and that was the reason to start a company should never be to start a company. The reason to start a company should be to solve a problem that you truly truly care about. And connecting lawyers was definitely not a problem that I cared about. One thing that has that has been with me for as long as I could remember is is the pain of grocery shopping. That was a problem that I truly cared about. And I have dreaded going to the grocery store. Once you get there, you have to circle in in through the aisles to find the items that you're looking for. Then you have to wait in line to check out and then lug your groceries back to your apartment only to realize that you've forgotten something at the store. This was 2012 and we were buying everything online from bags to to books to big screen TVs. But one thing that all of us had to do every single week we were still doing in the most inefficient means possible. I had felt this pain for as long as I could remember. So, I knew exactly what I needed to build. In the spring of 2012, I started to write the code for the first version of Instacart. And I promised myself that I would not go to the grocery store until the product was ready. And on June 2nd, 2012, I placed my first order on Instacart. And then of course I went to the grocery store, picked up my groceries and delivered them to myself. Instacart was already a profitable business. This is the first version of Instacart. I realized something very interesting here which was that my friends were using Instacart as well. I didn't have to force them to use it. And this was something that I've never experienced with all the products that I had built before this. So I decided that I wanted to go to Y Combinator. But there was one slight problem. The application deadline had passed two months ago. But somehow I knew that if the if the YC partners experienced Instacart, they would have to let me in. So I contacted all the the YC alumni that I had in my network for introductions to the partners and in the next 24 hours I started to get those introductions. Now all I had to do was wait. One by one all the responses started to come in and the and the answers were always the same. No way. It's too late. And then finally I got I got Gary Tan's response and this gave me some hope. He said you could fill out a late application but it's nearly impossible now. So that meant it was possible. I I realized that at this point none of the YC partners had actually experienced the product. Did they even know what it was? Did they even know how it was different? So, I I knew I had to make one last attempt. I opened my app, placed an order for a six-pack of beer, and addressed it to Gary Tan at the YC headquarters. One of my drivers, John, made the delivery and texted me to let me know it was done. And uh half an hour later, I got a call from Gary Tan. I'm not sure if it was the beer talking, but he asked me to come to the to the YC headquarters the next day to meet the partners. So, I arrive at the the the meeting location the next day. I meet four partners and I get a barrage of questions about everything and anything about the the product. We must have talked for about an hour, but it felt like just a few minutes. And when when it was done, they told me to leave and they they said that if they decided to fund me, they'd give me a call. This is standard YC practice. But at the time, it felt really really cold. It felt like the string of failures, the string of rejections would just continue. 10 minutes later, I got a call from Harge from YC. He said, "I cannot believe we're doing this. We have never let anyone in so late, but if you're interested, we'd love to have you. That's how I got into Y Combinator. I learned two important lessons here. First and foremost, Gary Tan loves his beers. And and second lesson was that as a founder, you have to be extremely resilient. You have to go from failure to failure without losing any steam. Because the next step, the next product, the next iteration that you build could make the difference. It could be the the the step towards success. After getting into Y Combinator, things got really chaotic. YC has these dinners where all the founders get together every Tuesday to share their progress in from the last week. And as I was going to one of these YC dinners, I got a call from one of my shoppers and she sounded extremely flustered and she said that she was going to quit, I I asked her what had happened and she said, "Look, I I know this is a startup and and and we're supposed to do everything, but I just can't do this." Turns out what had happened was she had just received an order for 200 2 L bottles of soda from the Y Combinator dinner. and there was just no way that she was going to be able to carry it or fit her in the car. So, I I talked to her for a few minutes and I was able to calm her down and I told her I was going to meet up with her and uh and then we're going to do this order together. So, that's what we did. We had to clear out three Safeways or you guys have Fairways here. Um uh to to find those drinks. This is actually us packing the the cards. The trunk is already full at this point. And so this is the the backseat of the car. Um, and then finally we get to Y Combinator and uh we unload all these all these bottles and then we go to Renee who was who had coordinated the dinner uh and ordered these drinks to let her know that hey we made the delivery. Um and so we do that and she turns around and says oh this was so convenient. I'm going to do this every week. In the in the early days of Instacart, most of the customers that we had were were YC founders. And and this was great because getting getting feedback was very easy. Every time they would just place an order, I would give them a call and ask them what they thought. And this allowed me to iterate on the product very very quickly. One of the first orders that we had was from Dan, another YC founder. Um and um and and uh as he as he placed the order um and our shopper delivered them, our my shopper gave me a call right after the delivery and said this customer was very odd because he had ordered these bananas, but he would not accept the bananas at delivery. And so my shopper had all these bananas in her car she didn't know what to do with. Um I was confused, too. So, I decided to email Dan and asked him if everything was okay with his order and uh especially with the bananas. Um he uh he replied 30 seconds later and he was extremely agitated. He said, "I ordered 10 bananas on Instacart and your shopper brought me 10 bushels of bananas. What do you think this is? A zoo?" Turns out that the the picture on Instacart for that for that item was a bushel of bananas. And uh so there was some confusion between what the customer had ordered and what the shopper thought that the customer had ordered. So we ended up sending Dan um a banana bread recipe and he was fine. YC encourages startups to to do things unscalably at the beginning and and this is extremely important. I find that this is one of the biggest competitive advantages that a that a startup has over a larger company because there's no way that the larger company would be doing those things unscalably. And the idea is that once your product has demand, you can figure out how to scale your product. We took this advice to heart when in the early days of Instacart, you could place orders on on on our service without there being any shoppers to fulfill those orders. Of course, this meant that I would drop everything that I was doing and and fulfill the order myself. Now, I don't have a car and uh and getting a a cab in San Francisco is next to impossible. So in the early days of Instacart, there was a high likelihood that when you would place an order, the order would arrive in the luxury of a Uber black car. After going through Y Combinator, my my focus changed to to raising a seed round. And raising a seed round is one of the hardest things that a founder does. You have the least amount of data about your company. and you have the least amount of traction in your company. So convincing investors that this is a good idea is actually very very difficult and it was exceptionally difficult for us because of the space that we were operating in. There have been some spectacular failures in grocery delivery before like web van, cosmo and and many others. So so investors were pretty reluctant to invest in Instacart early on. In fact, I had one meeting with a with a venture capitalist when when suddenly he decided to to get up and leave the room and he came back with a floppy disc and he said, "You should go home and and open this because this has the web van business plan." I didn't really know how to find a floppy drive, so I didn't really open it. But um but um we were able to um close a seed round uh with some investors who believed in us. And this was our revenue graph at the time. So definitely by no means was it a rocket ship. Um even after even after raising the seed round the our our our approach towards unscalable unscalably doing things did not change and all only thing that mattered to us was how fast we were growing and how fast we were executing. One example was this was when we decided to add Trader Joe's to Instacart's offering. When we add a store on Instacart, the first thing we have to do is find the items that are available in that store and get that catalog and put that onto Instacart.com or in the apps. Um, now there was no API or website which had the item catalog for for Trader Joe's. So, the only way we could actually get all the item information was to buy one of every single item at Trader Joe's, take it to a studio, take pictures of all those things, and then put them into our catalog. And so, that's exactly what we did. Um, here's here's actually all the the photos, all the items being lined up before the before us taking the picture. Um, and you know, many many of you may think this was a fool's errand, but our our team ate like kings for the next two weeks. Using the same unscalable techniques, we we added Whole Foods, Costco, and many other stores. And we realized that we had the best product in the market. We were growing so fast, and our customers loved Instacart. After figuring this out in San Francisco, we decided that it was time to take this outside of the Bay Area to to a city that represented United States uh you know accurately. And so we decided to launch in Chicago. What we found there to our surprise was that in 3 weeks we were doing more deliveries than we had done in 33 weeks in the Bay Area. Then we launched Boston and Boston was growing even faster than Chicago did. Then we launched DC. DC was growing even faster than Boston, Chicago or the Bay Area. Then we continue to launch more and more cities and today we're in 10 cities in the United States and our revenue is growing by 10% week over week and has been growing like that for 20 weeks so far. As we have grown a as a company and as a team, we have to now make everything scalable and this is exceptionally hard. We have customers who are placing orders for for two items or for 60 items. We have customers who are placing instant orders or scheduled orders. They could be from any part of the city any time of the day. And then we have crowdsourced shoppers who could be working from any part of the city at any time of the day. And some of them are slower, some of them are faster. And then we have stores that are located on all parts of the city with different selection, different inventory levels. So, how do you create this Amazon.com like experience when you don't have any warehouses, when you don't have any trucks, and when you don't hold any inventory? This is a very very difficult computer science and operations research problem. But we believe this is a very important problem to solve because for the first time in history, we have retailers all across the United States who are coming online for the first time. For the first time in history, we have retailers who are able to provide a 1 hour, two hour, and same day delivery experience to their customers. And for the first time in history, they're able to do that without having any infrastructure. Now, I know this is something where they want to be and we're 1% of the way there. But if there's something that I've learned so far in my journey, it's that there going to be hundreds of failures and hopefully some successes. So, if there's one thing that I'd like you to take away from this chat, it's the journey as a founder is an extremely exciting one. One that's filled with hundreds of failures, but if you persist for long enough, you may just get lucky. Best of luck.