Webvan

Webvan&#x27;s main problem was they expanded before they had their model figured out. They invested tens of millions in warehouses they didn&#x27;t need with their current volume as well.<p>If they had spent time on their model they&#x27;d have figured out that it only made sense to target the upper middle class neighborhoods at the time profitably. With that realization they&#x27;d never have built all the warehouses and with a lower burn they&#x27;d have survived only to eventually own the market.<p>The founder was a really smart guy who had already created a very successful startup. But he was under an imperative from his investors to ramp up fast.<p>A lot of the hard learned wisdom from that time would create a different outcome possibly today. I know that I&#x27;d have done a lot differently with my own startup back then if only I knew what is common wisdom today ;&lt;).

Webvan brings up old memories and I really thought of it as the future. My neighbors tried it a few times and I can remember it showing up. When I asked my parents to do it they thought I was crazy. Pretty sure cost had something to do with it. I’d still fill up a shopping cart just because.<p>Webvan failed but if the gig economy was around it could’ve succeeded for a time. These companies need non-employees to make it viable I believe.<p>Will Uber eats and the like become the next Webvan? Grocery store delivery? Paying someone to shop for you then picking it up?<p>IMHO, robots will not be picking people up and delivering our groceries in the near future. Your business can’t depend on the weather. Gig economies are not good for the gig seekers long term.

In 1999 and 2000, I worked for a startup in the Bay Area. Twice a week our kitchen was stocked with fresh food delivered by WebVan. We had a ton of their crates sitting around that we used to store computer parts and other facilities needs, since they never seemed to collect them.<p>Right around mid-2000, the deliveries stopped as the market started to tank and we had to &quot;tighten our belt&quot;, and the free food disappeared and the vending machines went from free to 10 cents each (and there was a small riot). I suspect we weren&#x27;t the only startup that did that. It makes me wonder how much of their revenue was from other startups. Kind of reminds me of 2019...<p>They actually brought good food. I considered signing up for myself at my house, but it was just too expensive for a single guy. Might have been good for a family though.

Boy, this brings back memories. I was working at Andersen Consulting (AC, then Accenture) at the time our CEO, George Shaheen, left to join Webvan. The general sentiment at AC (at least amongst the grunts in my circle) was that we were glad to see George Shaheen leave, but were all left wondering if we should be jumping ship too, to join the dot-com boom.<p>The partners at AC were trying to hang on to talent for dear life because of the dot-com boom. When Webvan went bust many of the the partners&#x2F;associate partners were quick to point that out, maybe as some kind of misguided retention pep-talk or something.<p>As a funny aside, there were some who used to call George Shaheen &quot;George Unseen:&quot;<p><a href="http:&#x2F;&#x2F;www.bigtimeconsulting.org&#x2F;remember-george-4" rel="nofollow">http:&#x2F;&#x2F;www.bigtimeconsulting.org&#x2F;remember-george-4</a><p><a href="http:&#x2F;&#x2F;www.bigtimeconsulting.org&#x2F;ceo-of-the-future-4" rel="nofollow">http:&#x2F;&#x2F;www.bigtimeconsulting.org&#x2F;ceo-of-the-future-4</a><p><a href="http:&#x2F;&#x2F;www.bigtimeconsulting.org&#x2F;george-unseens-reward-4" rel="nofollow">http:&#x2F;&#x2F;www.bigtimeconsulting.org&#x2F;george-unseens-reward-4</a><p><a href="http:&#x2F;&#x2F;www.bigtimeconsulting.org&#x2F;webminivan-a-look-back-4" rel="nofollow">http:&#x2F;&#x2F;www.bigtimeconsulting.org&#x2F;webminivan-a-look-back-4</a>

There is now a very successful company with exactly the same business model in the UK: <a href="https:&#x2F;&#x2F;en.wikipedia.org&#x2F;wiki&#x2F;Ocado" rel="nofollow">https:&#x2F;&#x2F;en.wikipedia.org&#x2F;wiki&#x2F;Ocado</a>

I worked for Redknife, later renamed OpenLatitude, that was WebVan&#x27;s primary B2B exchange hub. We translated their orders&#x2F;invoices&#x2F;catelogs back and forth to their vendors. They were our second best customer behind MicroWarehouse.<p>When they went down, they took us with them. MicroWarehouse exercised a contract clause to purchase our software and hired me on a three month contract to teach them how to use it. I took it because my option was to be laid off.<p>Brings back memories, and not all good ones. What a wild ride.

The part this thread seems to be missing is that like we didn’t have much internet back then.<p>Sure you didn’t have it in your pocket, but also most people didn’t have it in their house either. And if you did you had to dial with a phone line (which is a thing attached to a wall) and make it so you couldn’t get any calls while you were doing it.<p>And it would take like 41 seconds for a grainy picture of a banana to roll in from top to bottom. And you’d get disconnected and lose your cart. And so on.<p>It was different back then.

In Seattle we had HomeGrocer and it was <i>awesome</i>. Absolutely seemed like the future of groceries, they had great selection and especially great produce. The delivery people drove company vans (with a distinctive peach logo on the side) and wore a uniform (like UPS) and AFAIK were all full-time employees. Sadly they were acquired by Webvan and it all fell apart.

Reminds me of another business in the delivery space: <a href="https:&#x2F;&#x2F;en.wikipedia.org&#x2F;wiki&#x2F;Kozmo.com" rel="nofollow">https:&#x2F;&#x2F;en.wikipedia.org&#x2F;wiki&#x2F;Kozmo.com</a><p>Interesting how some of the business models that were not profitable in the early 2000&#x27;s are resurrected with the on-demand workforce - cutting out the most expensive part.

Of all the companies to bite in the the dot-com crash, Webvan really did seem like it was truly viable.

Webvan is an interesting case because it could have succeeded if it was not for some strategic blunders (i.e. the idea was good and to some extend the execution in the beginning).<p>The main thing they did wrong was buying and the fumbling the Home Grocer acquisition [1]. Web van was investing heavily in their own warehousing system so they scrapped Home Grocers which at that time was actually better. The acquisition was a large financial cost (1,2 billion) but also a large opportunity cost.<p>[1]<a href="https:&#x2F;&#x2F;www.academia.edu&#x2F;11307477&#x2F;HomeGrocer.com_Anatomy_of_a_failure" rel="nofollow">https:&#x2F;&#x2F;www.academia.edu&#x2F;11307477&#x2F;HomeGrocer.com_Anatomy_of_...</a>

The CEO of WebVan negotiated a contract to pay him $375,000 per year for life - including his wife&#x27;s life, if she survives him.<p>I&#x27;m not sure what to say except: well-played.

<a href="http:&#x2F;&#x2F;www.webvan.com&#x2F;" rel="nofollow">http:&#x2F;&#x2F;www.webvan.com&#x2F;</a><p>As resurrected by Amazon in 2009. How the mighty have fallen.

The cup holders...<p><a href="https:&#x2F;&#x2F;www.sfgate.com&#x2F;bayarea&#x2F;matier-ross&#x2F;article&#x2F;Webvan-ghost-at-ball-yard-42-000-cup-holders-3314941.php" rel="nofollow">https:&#x2F;&#x2F;www.sfgate.com&#x2F;bayarea&#x2F;matier-ross&#x2F;article&#x2F;Webvan-gh...</a>

There are no bad ideas, just early ones.<p>(I believe this was first said by my partner Marc)

They raised a pile of money from Benchmark, Sequoia, and Softbank. Does anyone know what happened with these investments? Did they get out post-IPO while it was still high flying?

I remember how excited people were about webvan. And look, 20 years later we have it! You can order from Whole Foods and get it in 2 hours thanks to Amazon.

Textbook example of: GOOD_IDEA &lt; GOOD_EXECUTION

<a href="https:&#x2F;&#x2F;www.youtube.com&#x2F;watch?v=I6IQ_FOCE6I" rel="nofollow">https:&#x2F;&#x2F;www.youtube.com&#x2F;watch?v=I6IQ_FOCE6I</a> ;-(