What happened — grocery delivery startup Instacart, which is valued at over $39 billion, replaced its CEO, moving founder Apoorva Mehta to “Chairman” role, and bringing in Facebook hotshot, Fidji Simo to drive the bus.
Fact that Apoorva has been a stellar founder-CEO and yet gets replaced was kinda surprising.. but then 👇
Problems brewing? — after an EPIC run up during 2020, there has been some chatter about Instacart’s sales volumes flatlining and declining in 2021. Now 2020 was an odd year for sure, and trumping that is hard, but when companies like Uber, DoorDash and Amazon continue to gain share, it's hard to come up with excuses.
Bigger strategy — also, the Information had recently reported that Instacart was on its way to make almost a BILLION DOLLARS this year from guess what… Ads.
Hiring Fidji, who led Facebook App, and made big bucks for Zuckerberg, is a sure shot way to double down here.
Bottomline — unit economics of delivery are horrible. $5 Apples, cost $10 to deliver to your house. Diversifying the business with ads is a powerful way to bolster margins, and compound leverage.