Great product, Bad timing - Story of Webvan

In 1999, the online grocery delivery startup, Webvan, went to IPO at a valuation of $ 4.8 Billion. The value proposition was that users didn’t need to walk to brick-and-mortar grocery stores. They could place an order via website and got it delivered to their homes. 2 years later, the company shut down in June 2001, filing bankruptcy and laying off 2,000 employees.

In 2012, a former Amazon employee Apoorva Mehta started a similar grocery delivery and pick-up service called Instacart. By 2018, the company was doing $3B in orders and is set to IPO in 2022.

The key difference between the two isn’t the core product or the team, but the market at the time of launch. Thanks to the rise of smartphones and online payments, online ordering, tracking and delivery of grocery became 100x more convenient to the end users. The masses have now come to internet thanks to the smartphones, making the unit economics of many such business models viable.

Another compounding reason was Webvan decided to build out its own infrastructure (including warehouses across the country and a nation-wide fleet of vans). Instacart leverages the “sharing economy” that companies like Uber and Task Rabbit have popularized rather than building its own infrastructure.

As you can see, a strong team with a good product in two different markets mean two entirely different outcomes.