Video & transcript: Apoorva Metha, founder & former CEO, Instacart
Full video & transcript from Fireside chat with Apoorva Metha
I did a fireside chat with Apoorva Metha, founder & original CEO of Instacart. We discuss a wide range of topics including:
How to parse startup ideas
Founding moment for Instacart
Early things Instacart did that could not scale, but got them in business
Hypergrowth at a startup & people
Why start another company / act 2 in life?
Video:
Full transcript:
Elad Gil
Thanks so much for coming. I guess from a background perspective, I'm doing this all from memory, so undoubtedly I'll get all this wrong. But I believe you studied engineering at Waterloo.
Apoorva Mehta
That's right.
Elad Gil
And then you started a variety of different businesses. You ended up starting Instacart. And I was hoping to just hear a little bit more about the origins of the company. I know you were iterating through a variety of ideas, a variety of businesses.
How did you converge on what Instacart was and how'd you get going on that?
And I should mention one other thing. From a background perspective, you're now working on your second company.
Apoorva Mehta
That's right.
Elad Gil
And I don't know how much you can or cannot share. It'd be great to talk about that as well if that makes sense.
Apoorva Mehta
Yeah, and let me know if there are specific details that'd be more interesting. So I was a supply chain engineer at Amazon and was not fulfilled. I was like, there's got to be more to life than this. I decided that I wanted to become an entrepreneur. I moved from Seattle to San Francisco and realized that the only real way of becoming an entrepreneur is to sort of really get your hands dirty.
So I started over the course of a couple of years, I started about 20 companies, did all kinds of things. Like at this time, Zynga was growing very fast. And so I built an ad network for social games. I built a Groupon specifically for food. This time Groupon was really big as well. And all these companies failed, unfortunately.
And I was in San Francisco in my apartment. I realized that all I had in my fridge was a bottle of hot sauce. And this was a common problem for me and it didn't make sense to me. This was 2012 and we were ordering everything online except for groceries. And here it is. There's a trillion-dollar category that's still stuck offline. And so I decided that I was going to bring this category online.
I started coding the first version of Instacart and three weeks later Instacart was born. And at the time, because I was the only one in the company, I placed my order and then went to the store, picked up my groceries, and delivered them to myself. And of course, I gave myself a nice tip.
Elad Gil
The rest is history.
Apoorva Mehta
Yeah, exactly.
Elad Gil
So when Instacart got up and running, about a decade before that, there was Webvan, which was one of the most famous craters in all of Silicon Valley history. It was backed by Sequoia. It raised a billion dollars or something. It hired the CEO of Accenture and started running it and then it was like a total wipe. And it was a very asset-heavy business.
What was the reception when you told people that this is what you were going to do were people like, that's a great idea? Were they like, how could you do this? Don't you know the history? What was the reaction?
Apoorva Mehta
Yeah, I remember there was an investor meeting that I had in the early days and I walk into this meeting and I start presenting. And this is like 24-year-old Apoorva. I wanted to really stand out. The title under my logo was Webvan done right. And I started, got to the second slide, third slide, and this investor literally got up and left the room and I was like, Is the meeting over? It's very clear I didn't get the term sheet. But then he came back and he slapped this floppy disk on the desk on the table. And he was like, this has the Webvan business plan, you should go home and study it and you will never do this company. And so the reception was not great.
And this is sort of what you see with a lot of startup advice. It is very generic and you actually have to step back and reason from first principles. A lot has changed since when Webvan got started. And one of the main changes was the fact that now everyone was carrying a supercomputer that was connected to the Internet with GPS in their pockets. And so if you wanted to order your groceries, we could connect you with someone who was close to the grocery store, who could pick up and deliver the groceries to you. And we wouldn't need any trucks, we wouldn't need to hold inventory.
And so the world had actually changed pretty significantly, and yet this conventional wisdom had not changed. The reception wasn't great, but then you start to talk to people who are actually open to reasoning for its principles, and that got us our funding.
Elad Gil
It's kind of interesting because during that era there were a lot of things that had blown up ten years before that everybody thought would never work again. And then there were online versions of that. I think there was Chewy on the pet food side, but also things like payments. And so as PayPal sold to eBay, the conventional wisdom in Silicon Valley started to become that payments are too hard. And so all sorts of people avoided payments for ten years.
Apoorva Mehta
That's right.
Elad Gil
And I think it's notable that both you and Stripe got funded by Mike Moritz, who was in the middle of all this stuff back then. I think he was actually the board member on Webvan that blew up.
Apoorva Mehta
That's right.
Elad Gil
But then there was sort of this rethinking now, actually, maybe it now works in the context. So can you talk a little bit more about how you started working with Sequoia and how you met them and how that turned into a relationship, given that they were so burnt on the prior sort of version of this?
Apoorva Mehta
Yeah, at the end of the day, you want to start a category-defining company. And payments: enormous TAM. Grocery enormous TAM. And if there are companies that can be built that have a shot of transforming a category, that's a shot that you want to take.
There's this famous saying in investing, which is that most investing mistakes are failures of a mission rather than failures of commission. All right? And so early stages for a lot of companies, it really is like you're buying an option for this company to be successful.
Now, of course, as you get into a lot more details about Instacart and I'm sure with Stripe you start to understand, yes, it is challenging, but with the approaches that we've taken, it actually is tractable. And if you solve some of these problems, you can actually make it a much more successful company.
Elad Gil
What was the worst advice that you got in the early days besides just don't do this?
Or what was the best advice in either direction?
I'm just sort of curious, like, where was that outlying insight or was it just, hey, I'm just going to keep grinding and it eventually works out?
Apoorva Mehta
Yeah. I felt like a lot of startups are actually created and remembered by the rules that they actually break. If you look at a company like TikTok, for example, they did paid user acquisition to grow their user base. That was considered to not be a practical thing to grow. And so you always had to take advice and really assess that for your own company.
I think the most important advice that we got multiple times, and it took me some time to internalize, was the team that you built is the company that you build. And initially, as a founder, I was just so focused on getting things done that I wouldn't jump into any single problem myself until it was absolutely, you know, in a place where I felt comfortable with. But then you realize that you've solved that problem for that moment.
The next quarter that will break again and the next quarter will break again. And so the most scalable way to actually solve a problem is to step back and hire the team that can actually solve the problem. And that was advice that I got multiple times I ignored. But over time, that became the way as a CEO, I started to solve problems.
Elad Gil
Well, I guess, related to team, what sort of characteristics do you think are most important for very early teams or people that you hire into those teams?
And then how does that differ for later-stage companies?
Apoorva Mehta
Yeah, I mean, of course you have your core values that you hold dearly yourself that show up in the work that you do every day. And for me, for example, they are number one, intellectual honesty. Early stages. You can make a lot of wrong decisions by focusing on hype, for example, or vanity metrics. But really, if you're intellectually honest, you get to the right answer.
Number two for me is executing relentlessly, which is a combination of urgency and excellence.
And number three, are you going to be able to scale as a leader? Because in an early stage, specifically, it's a very different company quarter after quarter. And so those are the few things that I look for in early-stage companies as we're scaling.
Elad Gil
And then do you think anything that changes late? Because I think the nature of people who show up to a later-stage company is different. Part of that is risk aversion.
Part of that is now you have a brand, so people feel like it's a safe thing to go to or it's a status thing. And so how do you think about those different pools of people who both may be excellent but just very different?
Apoorva Mehta
Yeah, I think that there are a lot of people who have a strong aversion to people like that. But the reality is, I think you actually need a combination of those people because a lot of people who are in the early stage may not have the deep domain experience that is required at the later stage. And that's okay. In the early days, you kind of want the Swiss Army knives, but at later stages, those people are not able to scale as fast.
And so you do need a combination at later stages. Of course, there are a lot of companies that get stuck in a place where they're still doing the same thing, the same playbook, which obviously doesn't scale. So you do need the entrepreneurial DNA. Hopefully, you can retain that from the early stages, but it really is a combination.
Elad Gil
Instacart today is very different from where it was initially, which is usually a very positive sign for a company. And it started off as a marketplace. It's still obviously an important marketplace. And then on top of that, now you have advertising and services for grocers and other things. The marketplace side tends to be really hard to get going, and many companies struggle with a two-sided marketplace.
And in your case, you also had people who were actually doing three things in some sense, right? You had the buyers, the grocers, and then the people who are actually helping with the delivery of goods and services.
How did you go about bootstrapping something? Because it's already hard enough to do two. How did you do three, and how do you think about that?
Apoorva Mehta
Yeah, so the way we look at the business is Instacart's a four-sided marketplace today where we have customers on one side and we have retailers on the other side. We have people who are picking up and delivering the groceries on the third side. And then fourth, we have advertisers. These are the people who are buying ads. When you search for, for example, a beverage. Now, of course, once you have a marketplace, it's a virtual cycle demand begets supply, supply begets demand. It's really wonderful.
But to actually get that started, you have to solve this chicken and egg problem, which is not trivial. We were this small company based in my apartment and so getting a large Fortune 500 retailer like a Kroger or Costco to sign a partnership with us was just going to be impossible. And so what we did was we invented this thing called ninja shopping, which was effectively that we would just go to a store, buy the stuff off the shelf, go to the checkout, and deliver the groceries to the customers. And the only problem was we didn't know what any of the stores actually carried. All right, and you couldn't find it anywhere online. I was totally okay scraping stuff, but you just couldn't find it. And some of these SKUs didn't even have any online information about them at all.
So what we decided to do was we went to many different stores and picked up one of every single thing from the store, took it to a studio, photographed everything, and then uploaded all that onto Instacart. And it cost us like $50,000 to do that, to buy the entire grocery store. But that allowed us to bootstrap our supply. And so now it immediately became something that customers wanted. And I remember we did this for one of the stores and overnight our demand doubled.
And so we're like, okay, well this is clearly something that customers wanted. And so we did this for another store. Another store, another store. And we didn't know it at the time, but what we were doing by building this sort of data pipeline and collecting high-quality images and this metadata for the items was actually, this was going to become a key barrier to entry that we were building onto the Instacart platform. And it still continues to be a barrier today, and we're continuing to strengthen that today as well. So for us, that's how we got started.
Elad Gil
When you first started the company, because I feel that often when people think about companies early, they really index heavily on moats. But often it takes a while to figure out what your moat will actually be or to build it.
What did you think your moat was going to be when you started the company?
Apoorva Mehta
Yeah, I think a lot of times early-stage companies just really focus on growth. It makes sense trying to prove product market fit, you're looking at your customer retention. But I actually think that you actually have to be very deliberate about what your barriers to entry are going to be and you have to work on them just like you're working on your growth, your profitability.
For us, there were several moats that we thought about at the beginning and then over time we actually worked on those. First, doing this is actually very hard. We deliver millions and millions of unique items in any given city, just having that information is actually not something that anyone else has. Right? And to do that efficiently, while you have to navigate the people within the store efficiently. So we were like, well, this is actually technically quite complex, right? And as we continue to grow, this is going to only become more of a barrier for us, which is obviously wonderful. But then as we continued to grow, we noticed that we were becoming very quickly a decent portion of any retailer's store volume. Like in many cases, we were over 5% of their store volume. And that they started to pay attention to that.
And as I discussed, one of the things that we noticed was that as soon as we added a store, our demand doubled. So it was very clear that grocery selection really mattered. People cared about the grocery stores that we had on our platform. And so we developed very close and deep relationships with these retailers that gave us exclusivity to that supply. And so we had this technical moat, but we also built this relationship moat as well.
Then we started to build more enterprise features for these retailers. Today, many of the retailer.coms are powered by Instacart, and that meant that we were more and more deeply integrated with these retailers. All of this was something that we tracked on a quarterly basis and engulfed our teams on. So it wasn't something that we sort of just said, well, it's just going to happen. It was something that was pretty deliberate.
Elad Gil
I think you all were very thoughtful from the early days in terms of how you would develop the business. And I feel like a lot of the things that you talked about earlier are now substantiating themselves. So it's been interesting to watch that arc over time. I think many companies are less forward-thinking and you see things happen organically and sometimes that's amazing, and things organically form defensibility or other things, and then sometimes it just leaves things wide open.
I guess related to that, many companies end up with one or more moments where it feels like there's a big existential threat to the company or everything's going to fail. Did you have any moments like that?
Apoorva Mehta
Several. Yeah, I could have used fewer of those. I'll talk about one of them. I had just come back from one week off and it was so wonderful that I was able to take the time off. The day I came back, I got a call from the Whole Foods CEO at 6:00 AM in the morning. All right, at this time, Whole Foods was the largest partner of ours. They had about, I think 30% to 40% of our overall sales were coming from Whole Foods. And so of course, I was going to take the call. It didn't matter if it was 06:00 AM. And I get on a call with him. He tells me that Amazon had just paid like $18 billion to buy Whole Foods.
Now, I'm a very paranoid person, and you tend to be that when you're a founder, you have to understand where risks are in your business. But this was not in my risk bingo card and was a very short call because I didn't know what to say to him. And I was just refreshing my social feed. And as soon as that announcement happened, the next set of announcements were, oh, Instacart's dead. And we started getting text messages from investors and parents asking us if we're okay. And it kind of felt like this was going to be it. Like this was going to be my 21st failure of a company because now our largest competitor owned our largest partner.
And so at the time I called in all hands, told the team that we were in war mode and the only thing that mattered at this point was to fight this battle. In the next couple of weeks, we came together with a plan, and this was a high beta plan, very high-risk plan, which was that we were going to sign every major grocery retailer onto our platform and we were going to rapidly increase the Instacart membership so that we would be able to retain most of these customers. And me and the team, we were on the phone with effectively every retail CEO in America talking about what we could do.
We had this concept of the alliance of the willing. We were calling it internally, but really it was how do we figure out how do we work with retailers? And we looked at every single thing that we could do to get them over the line, which was how do we rapidly expand nationwide? So that we were everywhere. We were in Rockford, Illinois. We were in Lubbock, Texas. In the smallest cities, Instacart worked. And we figured out how to make the economics work in the smallest cities because that's what it would take for some of these larger retailers to sign with us. We scaled Instacart enterprise with all kinds of functionality that would make it so that these retailers felt comfortable putting their brand onto Instacart. And there was no meeting that we would not do in person. Regardless of how many red eyes we had to take, we made it happen.
And by the time Whole Foods finally left the Instacart platform, they were less than 5% of our sales. We had continued to drive a lot of growth and we had virtually every major grocery retailer on our platform. And so at the time, of course, this felt like we're not going to make it, but actually ended up being one of the best things that could have happened to the company.
Elad Gil
Thanks for sharing that story. As you built the company and as people build companies in general, they go through different types of investors. Can you talk a little bit about how that investor mix shifted over time and what you were looking for at each stage of the company?
Apoorva Mehta
Yeah, I think generally speaking, in the seed round, a, B, maybe even, sometimes C, at least for us, what we were pitching was mostly, look at the opportunity, we're going to take that over. It was mostly selling the growth, selling the opportunity, selling the dream. And it makes sense because you're talking about, relatively speaking, smaller dollar amounts.
And when you're talking about later stage, it's all about what is your next two, three-year, five-year plan and how you're performing on that. How is this company going to be valued as a public company? What are the real things that are going to change in the next couple of quarters that are actually going to allow you to hit the plan? Obviously, you're coming in with large dollar amounts. You're talking about investors who are at that point, you're sort of not looking to lose money. You're looking to have maybe a smaller on a percentage basis return, but you're looking to make sure that you're going to return.
So the types of investors that you have are different. And it actually is very helpful to have those different investors. And I think that a lot of times, as that shift happens, you really want that input from the later stage investors to see, okay, well, how is this company going to trade? What are the multiples going to be? What are the public investors going to think about the risks in the business? And how do you really address those head-on earlier in the company's journey? And I would say, in fact, it's actually very good to have that perspective in the early stages as well. And looking back, I would have definitely done that.
Elad Gil
Yeah, that makes sense. Was there any specific insight or anything else that a later-stage investor really brought to the table for you in terms of some aspect of public markets or some aspect of running the business or some aspect of dispensability that really landed?
Apoorva Mehta
Every investor, a lot of great investors have a different point of view that they bring. So what we would do is before every Instacart meeting, board meeting, we would have sort of a smaller meeting, and the board meeting is sort of perfunctory and you got to get through stuff. And sometimes there's insight, but a lot of times the best meetings are the ones right before then where you have one or two investors who come in and who are really providing you strategic guidance in terms of what if you slow down growth, what if you increase profitability? What if you think about expanding into a different category, different market and so on. And that conversation is actually the most helpful.
And for example, Kris brought in a lot of really interesting data from what they were seeing across many different similar companies domestically and internationally. And so we would have a lot of data in terms of retention, in terms of market share, in terms of conversion, cross-shopping. And we could use that to make very important decisions. And so I'd say those are the value adds that I was most grateful for.
Elad Gil
Yeah. Makes sense. Are you able to talk about your new company at all?
Apoorva Mehta
I can talk about it at a high level.
Elad Gil
Okay, sure. So, first off, I feel that starting a company is so painful. I've started two. I feel like it's putting yourself through so much in terms of range of emotion and work and like, why do it again?
Apoorva Mehta
Honestly, I just didn't want my legacy to be defined by just one company.
Elad Gil
It's a pretty great company, though. It is wonderful, it's a great legacy.
Apoorva Mehta
I'm very happy, of course, but if I'm able to do it again in a different category, I think that'd be really wonderful. And for me, that was always the motivation.
Elad Gil
How did your thinking about the early team change between the first company and the second company?
Apoorva Mehta
Pretty dramatically. Yeah, actually very dramatically. My thought was, in the early days of a company, you always want people who are actually not that senior because you want people who are in the weeds. They're actually doing the work as individual contributors. And so we hired some wonderful people at Instacart in the early days who were really some of the best people I've ever worked with. Right. But they were ICs.
And this time around, what I've done is I've brought in people who are actually much more senior, but they can scale down to be ICs. And what that has allowed me to do is actually not only benefit from being able to go into the details but their judgment as well. As well as in the event that we need to scale, I don't have to look for another manager. We already have the people who can recruit. And I feel like that is a much better way of approaching this.
Elad Gil
I think that's also a real benefit of a second-time successful founder because you can access those people. And I feel like first-time founders run into two issues. One is they can't access them, but more importantly, they don't even think about it.
Apoorva Mehta
Right.
Elad Gil
Often, if it's your first time really building something, you often see the opposite. You're like, why do I need all these experienced people?
Apoorva Mehta
That's right.
Elad Gil
They just want to talk about stuff. And in reality, they can be very valuable.
Apoorva Mehta
Yeah. I mean, you certainly want to watch out for the people who talk about stuff, and you want to watch out for those people regardless of what stage you're in the company. But that was a big shift for me. And we're certainly just able to move much faster.
Elad Gil
I guess there's the team side of it. Were there other aspects of starting this company that you thought of very differently or that were nuances or shifts relative to what you did with Instacart?
Apoorva Mehta
Well, I mean, I think as a second-time founder, you have a completely new set of challenges that you don't expect. Second-time founder, you're thinking about like, well, what if it doesn't turn out to be that big? All right, the first time you're like, it's a billion-dollar company, great.
Second time, you really want to make sure that it can meet your hurdle, whatever that might be. And another thing is that at least for me at Instacart, I didn't really care what the problem was. I would jump in now, of course, because of a lot of experience. I think a lot more about this problem is not going to go away. How do I figure out how to scale myself? And that's a pretty meaningful difference as well.
Elad Gil
Yeah, it makes sense. Well, maybe what we can do is open things up for about five or ten minutes of questions from the audience.
Audience Speaker
Something Elad mentions is the danger of spending too much time on an idea or market that's just not working. And the myth that if you spend enough time on something, it'll magically work when given enough time. And so you said you started 20 companies in two years. So obviously very fast-paced.
What convinced you each time to abandon that idea? And then what changes? What gave you the conviction with Instacart that this is the thing I now want to pursue and keep working on?
Apoorva Mehta
Yeah. That is one of the hardest things as an investor, as an entrepreneur, to figure out when your idea is not going to be the one. Because you sort of have to be emotionally invested in it to actually put in the work when everyone's sort of like, no, already is not going to work. But you believe in it. So the 20 ideas and building these 20 companies was actually very emotionally draining.
But then I came up with a process which really helped me, which was anytime you come up with an idea, the first thing you want to do is write down the top ten reasons why it's not going to work. All right? Just write it down and try to prove those things to prove that it's not going to work as fast as possible in two days, in a week, and before that, don't get emotionally invested in it. If that passes, I find the next ten reasons why it's not going to work. Now, this requires a little bit of work to actually go into the details, to figure out what are the nuanced reasons. These things take time. So you're going to invest, like, maybe a month or two.
At that point, if you have some resources, maybe it can be shorter, but it takes some time. If at that point you've gone through the 20 reasons why it's not going to work and you've proven that actually no, there's going to be something there, you then are like, well, at that point, if you're still emotionally bought in, you should really consider it. And for me, with Instacart, I unfortunately did not have this deliberate of a process at the time. But for every reason that I would come up with, I was like, well, I had the supply chain background from Amazon, so I was like, that's the hardest part in this company. All right, if I can solve that, which I knew I could. This company should exist. For me, I think Instacart was a little different.
Elad Gil
Do you think most founders err too much on the side of going on when they shouldn't or stopping too soon on ideas?
Apoorva Mehta
I think most founders spend way too much time on ideas that are really not great companies. There are most likely going to be zombie companies. And it's just sad to see that after I stepped down from Instacart, I spent about like six to nine months looking at climate to see if there's a really interesting opportunity there and looked at space and a bunch of other areas.
And these are wonderful categories of really challenging problems to be solved there. And then I would run into founders that had been working on these ideas for like, you know, in some cases more than a decade. And truly wonderful people, truly mission-driven, obviously. But if the time for the idea is not now, and so it's just not going to happen. All right. And sometimes it's hard.
Elad Gil
Yeah, I think that goes against the conventional wisdom. And I agree with you. The conventional wisdom is keep grinding no matter what, and years in you'll suddenly make it work. And usually it's the exact opposite. You just waste the best years of your sort of prime life.
Apoorva Mehta
Exactly right. It's so sad to see that at any given point in time, any moment in time, there's only a handful of really good ideas that can't actually be possible because of the way things in the world have changed. Maybe there's some sort of a disruption that's it and the best resources, the resource allocation should be focused on those ideas.
I'd say most founders should also not feel bad about working on an idea that maybe other people are working on too. All right, that's okay. Because maybe the time for the idea is right now, and maybe the way to win is better execution. I'm a big proponent of focusing on where you can make the most impact and that's sort of a handful of ideas.
Audience Speaker
Thanks for sharing all this. As you look back on all the decisions that you made, is there one or two decisions that you wish you could have gone back and changed and that would have changed the inflection of this space?
Apoorva Mehta
You know, to be honest, there's like, probably many, but I look at it as like a learning opportunity. All right? If you could have hired someone versus hired someone else would have been a very different game. Could have gone into a different category versus another one.
For me, you know, there's a lot of things we did right at Instacart, right. Sticking to focus on one category: on grocery, working with retailers as partners rather than competitors. And these decisions could have gone the other way. Right. I remember 2015 or so, Jeff Bezos came on stage and said that this sort of way of doing grocery shopping doesn't seem like it's the right solution. And the whole team was like, shit, Jeff Bezos saying this. But actually, in our model, the marketplace model was superior to our first-party fully integrated model for various reasons. And our first principles thinking was right.
Elad Gil
And I should say this was in a period of time where everybody was talking about vertically integrated companies again.
Apoorva Mehta
That's right.
Elad Gil
So you were actually being very contrarian relative to the big trend of the day, which was, oh, we'll just vertically integrate everything.
Apoorva Mehta
That's right.
Elad Gil
That was really interesting.
Apoorva Mehta
Yeah.
Audience Speaker
I'm curious how your role changed as the company evolved and what made you decide that you wanted to start something new instead of being a public company CEO.
Apoorva Mehta
Yeah, the role changed quite significantly, and it needs to be. Initially, you're obviously focused on every single problem in the company. And as you continue to grow, you need to pick your battles. You need to pick the fires that you're going to fight. Because there's just so many things going on to the point where you get to where you're primarily focused on resource allocation, making sure that you have the right people around you who are doing that, and to the point where you continue to become more sort of a figurehead.
And, I mean that not in a negative way, but you sort of need to be, as a company continues to grow, and you're obviously in the details in some areas, but you also have to be the chief cheerleader for the company. And I loved so many aspects of this. There are aspects of it that, frankly, were just not part of what I found fun. To me, coming up with a new business model that could solve a meaningful problem in the world, that's fun. And in putting all the pieces together to actually make it a reality, that's fun. That's sort of what I wanted to do.
Elad Gil
I think there's been a really interesting trend over the last couple of years, too, where I feel like there's many more founders of this founding generation who want to do the next act. And I think that's a really interesting change from history. And there's other people who've done things like that over, you know, like, Brian Armstrong is working on a biotech as well as running Coinbase. Like, I feel like there's lots of examples now of people saying, I really want to do extra stuff in my life. And that level of ambition, I think, is really impressive.
Because I think it's something that before you'd kind of run a company and if you'd leave, you'd kind of go and retire. There were a lot of almost like, retirement people from the 90s. So I think it's a very exciting trend in terms of people who really know how to do things now, trying to go and do something again.
Apoorva Mehta
I actually think that if you think about it, right, you have to ask yourself, is it inertia that's, like, making you stick around, or is it the first principle way of thinking about it? Is this like, what your values are, what you want to be doing with your life?
And I actually talked to dozens of founders and how they're thinking about their second act, and it was clear that this was on everyone's mind. And for me, I love doing just one thing at a time. I think that when you obsess about a problem, you can really figure out, like, you find solutions in a way that maybe giving it a part-time focus would just not be able to do.
Audience Speaker
I remember reading a tweet. I think that you tweeted on IPO day about the story of how you focused on profitability and achieved that. And the story today around what you did after news of the Whole Foods acquisition, sort of like, mirrored, how you communicated to the team and the framing of the being like, this is the key focus.
I guess I'm curious is prioritization what you would distill as the most important thing in key challenges like this?
Where once you have the right priority and communicate to the team, and then you have the team that has the right strength, that's sort of what allows you to prevail in these moments.
Or how would you describe what allows you to fight these challenges successfully?
Apoorva Mehta
Yeah, I actually think a small focused team versus a large team focused on many different things. I would bet on the small focus team every day. And that's why that's like, one of the biggest advantages of early-stage companies. You have this team that is so focused on this one problem, while a larger company may have like, 15 different product lines.
And so there is this incredible quote which is, never waste a good crisis. And I've always been inspired by that. And so anytime there is a crisis, you have to ask yourself, well, two years later, where would I like to really be and how can I leverage this crisis for the team's advantage? When you have competition, that could be a very good forcing function for your company, because everyone knows who is the enemy. And that clarity is just so incredible that you're getting it for free. So we loved having that focus that brought to bear the whole company's creativity to solve some very complex problems.
Audience Speaker
Looking back at Instacart's journey, what do you view as the major inflection points? Were they expected or not?
And then the second question, what do you regret most?
Apoorva Mehta
We had quite a few inflection points. First was when we signed the deal with Whole Foods that sort of validated that our model was actually something that could work. All right. And most people don't know this, but we had a terrible deal with Whole Foods and there was no math you could ever do that would ever make sense. I talked to the board about it and they were like, are you sure you want to sign this deal? And I was like, yes, we're going to sign this deal and it's a one-year deal, but we're going to sign it. We're going to prove to them that this actually makes sense. And our next deal was three times better.
And that legitimized what Instacart was to other grocers, and that allowed us to get the next deal. And the next deal, that was a massive inflection point for us. It'd be hard to say that COVID was not an inflection point. Of course, overnight we became a lifeline from being a convenience. And that was just incredible. The way that the company handled it. In terms of regrets, I'm sure there's many if I step back and really reflect on it. I think that I'm just really proud of the way the team handled some of these inflection points, and stepped up at the right moments.
Elad Gil
I think Apoorva’s biggest regret is not spending more time with me during that period. Next time, next company.
Apoorva Mehta
There you go.
Audience Speaker
I understand, having explained your framework for accepting bad ideas or proving something that's right to pursue. But before that, going back to you pursuing 20 different things in a couple of years versus more recently, taking a step back more than six months to assess markets as well as landscape, how would you say your ideation process has evolved? And do you have a framework for that as well?
Apoorva Mehta
Yeah, so the first thing I'm looking at is the catalyst. What has changed in the industry that is very meaningful and this is actually very hard to get to? Of course, when mobile came around, you're like, okay, great. You would have to be pretty silly to not see mobile right, like, when it was around as a disruption. But actually to understand the catalysts in a different industry, you have to go deep in the industry to really know what are the regulatory changes, maybe there are some other structural changes that people are not talking about.
For example, one thing that people forget between Webvan and Instacart was credit card penetration had increased very dramatically. So now e-commerce was a thing. Commerce couldn't have been something that was successful in the Webvan era. Right? And so there are all these catalysts that are not something that you see in a headline. So that's number one. First thing you're looking at in any industry is catalysts. What are the catalysts that are changing? And then after that, when you're evaluating a business as a founder, maybe this is different for an entrepreneur or as an investor.
The things that I'm looking at are sort of threefold. Number one, is it a good business? Obvious to say as an investor, but you'd be surprised. Number two, is it going to be something I'm going to enjoy doing? I'm going to have fun? And number three, is it a mission that I can get behind?
The advice that you normally get is the opposite of that. Oh, is it a good mission? Is it going to be something fun? And is it a good business? Right. But the reality is that if it's not a good business, you're not going to have fun doing it and you're not going to achieve the mission.So you sort of need to sort of reverse it as a founder. Now, for each one of these categories, I looked at climate, space, robotics, a couple of other areas, and I was just trying to look at that. Are there really good businesses that I could have fun doing, that have a mission that I could rally behind?
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