Instacart’s public debut could also come at a turbulent time in the stock market. Only two IPOs of more than $500 million have priced this year in the U.S. and the performance of newly public companies generally has been disappointing. Seeing the company through a successful IPO would be the next step in an ambitious plan Simo has laid for Instacart since the former top Facebook executive was named CEO last July.
Michael Moritz, a partner at venture capital firm Sequoia Capital Ltd. and longtime Instacart investor and board member, likened Simo’s challenge to that of Satya Nadella’s, who took over Microsoft Corp. after former CEO Steve Ballmer left in 2014. “I see a lot of parallels,” Moritz said. “Satya took Microsoft back to its roots as a deep technology company that’s focused on the enterprise customer.”
Simo’s plan for Instacart focuses more on grocery technology than grocery delivery. She has reconfigured the company’s business model to prioritize enterprise offerings and, in turn, has multiplied Instacart’s portfolio of products that it can sell to grocers: analytics software, fulfillment services, 15-minute delivery, and advertising platforms.
She’s betting that outfitting brick-and-mortar supermarkets like Kroger Co. and Wegmans with e-commerce tech, coupled with Instacart’s existing footprint online, will position the company to grow, whether people are perusing the app at home or hand-picking avocados in the store.
"When we first started, we didn’t realize how important local stores were to people," said Max Mullen, who co-founded the company in 2012 along with Apoorva Mehta and Brandon Leonardo. "Going to the grocery store is an emotionally connected experience and we're tapping into that now."
The inspiration for Simo’s vision for Instacart’s future can be traced to her French and Sicilian roots and was on full display at the dessert table one recent afternoon at her home in Carmel, California. On it sat a stack of homemade crepes and Madeleines that were gluten free, a tragedy, she says, for a French person, but an example of the change she believes is necessary to transform the industry built to serve the masses. “Imagine if you had absolute personalization—based on dietary restrictions, your taste, your household—available online but also in-store,” she said.
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“Think about adding an item to a physical cart and getting a suggestion for a recipe tailored to you, or never having to wait in a checkout line, or stores better predicting inventory and cutting down on food waste,” she said. “It’s the grocery store of the future and our technology is going to power that.”
Born from an idea that struck Mehta when he had “nothing to eat but siracha” in his apartment,” San Francisco-based Instacart was one of the pioneers of smartphone grocery delivery. It has come a long way from Mehta’s original concept, and now must coordinate orders from millions of households through more than 750 retailers across the U.S. and an army of delivery contractors for its model to work. Unlike Amazon.com Inc. or Gopuff, Instacart relies on retailers for inventory and charges fees to both customers and grocers.
Grocers first flocked to Instacart en-masse when Amazon bought Whole Foods in 2017, a deal many thought spelled the beginning of the end for brick-and-mortar grocery stores. After the pandemic forced supermarkets’ customers online, it tilted the scales further in Instacart’s favor, making its marketplace appear less like a partnership of equals and more of a marriage of convenience, at best.
When the company clinched a $39 billion valuation in March 2021, Instacart appeared to have the online grocery market cornered and its leadership cemented.