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Instacart: Crowdsourcing Your Grocery Shopping

Startup Instacart fills orders with products from a mix of stores
Instacart: Crowdsourcing Your Grocery Shopping
Illustration by 731

Sequoia Capital partner Michael Moritz has a favorite disaster. Its name was Webvan, and it operated for less than two years during the dot-com bust and burned through $375 million from its initial public offering before going out of business in 2001. So Sequoia’s July 10 announcement that it’s investing $8 million in a San Francisco-based online grocery upstart, Instacart, rekindled some dormant traumas. “We had still been receiving outpatient therapy for our Webvan fiasco,” says Moritz, who’s joining the year-old company’s board. Still, with Instacart, he says, “There’s little danger of a relapse.”

In contrast to the high overhead of Webvan, which had its own refrigerated warehouses and a fleet of trucks, Instacart is built on a crowdsourcing model. Its 10 full-time employees, mostly engineers, work from a small office in San Francisco’s South Park neighborhood. Its app sends customer orders to about 200 independent Bay Area personal shoppers, who receive commissions based on the number of items and orders they deliver in their own vehicles. The app features detailed maps of local supermarkets and can direct the personal shoppers to specific aisles. Founder Apoorva Mehta says Instacart’s “secret sauce” is its fulfillment software, which allows the online retailer to combine orders placed at different times and fill them from different stores—supplementing frozen food from Trader Joe’s with fresh fruit from Whole Foods and cereal from Costco. Customers assemble their orders with lengthy drop-down menus on Instacart’s website or app.