Apoorva Mehta at Startup School NY 2014

• [Alexis] Instacart CEO, Apoorva Mehta, started out with a company that offered something pretty amazing, right? Shopping from stores across your city all in one bag delivered to your home within a few hours. So, you can have that case of Yingling from Costco, shipped right alongside the organic kale from Whole Foods. And, it'll just show up. And, very recently they announced a significant 44 million dollar round of funding and are bringing Instacart to New York City. It's here right now. You can all order that said kale and Yingling right here at the theater if you so desire. But, in the meantime while you're planning out your recipes, please give it up for Apoorva. Come on out, Apoorva. [applause]

• [Apoorva] Hey guys. Thank you so much for having me here. I am psyched to be here today with you. So, as Alexis says, my name's Apoorva and I am the founder and CEO of Instacart. So, what is Instacart? Instacart is a product where you can order your groceries and get them delivered to your door within one hour. What's interesting about this is how we actually make this happen. Instacart is entirely a software company, which means that we don't actually have any warehouses, no trucks, and we don't hold any inventory.

So, when you order your groceries, we have one of the thousands of personal shoppers in our network pick up your groceries from stores such as Whole Foods, Costco, Safeway, and many others and bring them to your door within one hour. We've been around for two years now and we've raised over 55 million dollars in financing and today we're doing over hundreds of thousands of dollars in revenue every single day. Today, I'd like to share with you the story of Instacart. Hopefully, there are some lessons here that could be useful to you in your journey.

The story of Instacart begins two years before I started the company. I used to live in Seattle and I worked at Amazon at the time and I'd always wanted to start a company. But it wasn't until January of 2010 when this became serious. I realized that my learning at Amazon was plateauing and I was getting tired of the slow and bureaucratic environment there. So, I knew I had to make a change.

To get started, I started going to these founder meet-ups in Seattle and every week they would have these entrepreneurs who would come in and do a talk and this was great. But, I realized that every time they would be talking, they would talk about things like convertible notes versus Series A or angels versus VCs, and consumer versus enterprise, and I'll be honest, I had no clue what they were talking about. To me, if you're talking about enterprise, I thought we were talking about a car rental company.

So, given this what I was starting with, I knew I had a lot of catch up to do. I immersed myself into this. I started talking to as many founders as I could find. I started talking to as many investors I could find and I started reading as many books about start-ups I could find. I also started to come up with and develop ideas in my spare time. And, this was a lot of fun. Even though I enjoyed my work at Amazon, I'd look forward to coming home and working on my ideas.

It got to the point where I was working on my ideas even during the day at work. Very soon, my coworker started to notice that something was wrong. I was a back-end Logistics Engineer at Amazon so my coworkers would always be curious why I had Xcode open on my computer all the time. So, I knew that I was being unfair to my coworkers and so I decided that I wanted to quit and focus on my ideas full-time. In fact, today is the fourth year anniversary of me quitting my job at Amazon. [applause]

At the time, I was scared and uncertain, but now I know that was the best decision I've ever made in my entire life. After quitting Amazon, I had a decision to make whether to stay in Seattle or move to San Francisco. Let's just say it wasn't a very difficult decision. I packed my bags, told my friends goodbye, and moved to San Francisco, a city where all I knew were two people. Lucky for me, those two people also had a couch.

After I moved to San Francisco, I found a co-founder and we got to work. We weren't picky about a particular vertical or market, so we were very flexible about the ideas that we wanted to try. One week we would work on something like an analytics platform for advertisers, another week we would do a Groupon for food and for each one of these products we would try to get traction with the customers and around this time we must have built around 20 products or so, but the results were always the same. Failed product after failed product after failed product.

About 12 months after leaving Amazon and working on so many different products and continuously failing, this started to get to me. At this point, I would begin to question whether quitting Amazon was the right decision for me, whether entrepreneurship was really even for me. Around that time, we had been brainstorming about this idea and we thought it was worth a shot. The idea itself was a social network for lawyers. [laughter] And, our product would allow lawyers to connect with each other, share articles, and interesting opinions.

At the time, I remember thinking that this idea was brilliant. That after all those failures that this was going to be the one. I guess there was one thing that we may have overlooked and that was that we didn't really know anything about lawyers. We... I had never even worked with a lawyer before. And so we were working, we were building a product for people that we really didn't know much about, solving a problem that we didn't know they had.

After building the product, building a team, and raising money in talking to as many lawyers as possible, I finally realized how terrible of an idea this was. Lawyers don't like technology. Lawyers don't like sharing. And, most of all, lawyers especially don't like someone trying to get them to sign up for a service they never needed in the first place.

After one year of iterating and pivoting on this product, I realized that this was just another failure to add to the list. I told my co-founder that we needed to part ways and I quit my own start-up. I learned a very important lesson here and that was the reason to start a company should never be to start a company. The reason to start a company should be to solve a problem that you truly, truly care about, and connecting lawyers was definitely not a problem that I cared about.

One thing that has been with me for as long as I can remember is the pain of grocery shopping. That was a problem that I truly cared about and I have dreaded going to the grocery store. Once you get there, you have to circle in and through the aisles to find the item that you're looking for, then you have to wait in line to check out and then load your groceries back to your apartment only to realize that you've forgotten something at the store.

This was 2012 and we're buying everything online from bags, to books, to big screen TVs. But, one thing that all of us had to do every single week, we were still doing in the most inefficient means possible. I had felt this pain for as long as I can remember so I knew exactly what I needed to build. In the spring of 2012, I started to write the code for the first version of Instacart... and I promised myself that I would not go to the grocery store until the product was ready. [laughter]

And, on June 2nd, 2012, I placed my first order on Instacart and then, of course, I went to the grocery store, picked up my groceries, and delivered them to myself. [laughter] Instacart was already a profitable business. This is the first version of Instacart. I realized something very interesting here, which was that my friends were using Instacart as well. I didn't have to force them to use it and this was something that I've never experienced with all the products that I had built before this.

So, I decided that I wanted to go to Y Combinator. But, there was one slight problem. The application deadline had passed two months ago. But, somehow, I knew that if the YC partners experienced Instacart, they would have to let me in. So, I contacted all the YC alumni that I had in my network for introductions to the partners. And, in the next 24 hours, I started to get those introductions. Now, all I had to do was wait.

One by one, all the responses started to come in and the answers were always the same,... "No way, it's too late." And then, finally, I got Garry Tan's response and this gave me some hope. He said, "You could fill out a late application, but it's nearly impossible now." So, that meant it was possible. [laughter] I realized that, at this point, none of the YC partners actually experienced the product. Did they even know what it was? Did they even know how it was different?

So, I knew I had to make one last attempt. I opened my app, placed an order for a six-pack of beer and addressed it to Gary Tan at the YC headquarters. One of my drivers, John, made the delivery and texted me to let me know it was done. And, half an hour later, I got a call from Garry Tan. I'm not sure if it was the beer talking but he asked me to come to the YC headquarters the next day to meet the partners.

So, I arrive at the meeting location the next day. I meet four partners and I get a barrage of questions about everything and anything about the product. We must have talked for about an hour but it felt like just in a few minutes and when it was done they told me to leave and they said that if they decided to fund me, they'd give me a call. This is standard YC practice, but at the time it felt really, really cold. It felt like the string of failures, the string of rejections would just continue.

Ten minutes later, I got a call from Harj from YC. He said, "I cannot believe we're doing this. We've never let anyone in so late but if you're interested, we would love to have you." That's how I got into Y Combinator. I learned two important lessons here. First and foremost, Garry Tan loves his beers. [laughter] And second lesson was that as a founder, you have to be extremely resilient. You have to go from failure to failure without losing any steam, because the next step, the next product, the next iteration that you build could make the difference. It could be the step towards success.

After getting into Y Combinator, things got really chaotic. YC has these dinners, where all the founders get together every Tuesday to share their progress from the last week. And, as I was going to one of these YC dinners, I got a call from one of my shoppers and she sounded extremely flustered and she said that she was going to quit. I asked her what had happened and she said, "Look, I know this is a start-up and we're supposed to do everything but I just can't do this."

Turns out, what had happened was she had just received an order for 202 liter bottles of soda from the Y Combinator dinner... and there was just no way that she was going to be able to carry it or fit it in the car. So, I talked to her for a few minutes and I was able to calm her down and I told her I was gonna meet up with her and then we're gonna do this order together. So, that's what we did. We had to clear out three Safeways, or you guys have Fairways here, to find those drinks.

This is actually us packing the cart. The trunk is already full at this point and so this is the back seat of the car. And, then, finally we get to Y Combinator and we unload all these bottles and then we go to Rene who has coordinated the dinner and ordered these drinks to let her know that, "Hey. We made the delivery." And, so we do that and she turns around and says, "Oh. This was so convenient. I'm gonna do this every week." [laughter]

In the early days of Instacart, most of the customers that we had were YC founders and this was great because getting feedback was very easy. Every time they would just place an order, I would give them a call and ask them what they thought. And, this allowed me to iterate on the product very, very quickly. One of the first orders that we had was from Dan, another YC founder. And, as he placed the order and our shopper delivered them, my shopper gave me a call right after the delivery and said, "This customer was very odd because he had ordered these bananas but he would not accept the bananas at delivery."

And, so my shopper had all these bananas in her car, she didn't know what to do with. I was confused too. So, I decided to email Dan and ask if everything was okay with his order and especially with the bananas. He replied 30 seconds later and he was extremely agitated. He said, "I ordered 10 bananas on Instacart and your shopper brought me 10 bushels of bananas. What do you think this is? A zoo?" [laughter]

Turns out that the picture on Instacart for the item was a bushel of bananas and so, there was some confusion between what the customer had ordered and what the shopper thought that the customer had ordered. So, we ended up sending Dan a banana bread recipe and he was fine. [laughter]

YC encourages start-ups to do things unscalably... at the beginning. And, this is extremely important. I find that this is one of the biggest competitive advantages that a start-up has over a larger company because there's no way that the larger company would be doing those things unscalably.

And, the idea is that once your product has demand, you can figure out how to scale your product. We took this advice to heart. In the early days of Instacart, you could place orders on our service without there being any shoppers to fulfill those orders. Of course, this meant that I would drop everything I was doing and fulfill the order myself. Now, I don't have a car and getting a cab in San Francisco is next to impossible.

So, in the early days of Instacart, there was a high likelihood that when you would place an order, the order would arrive in the luxury of an Uber black car. [laughter] After going to Y Combinator, my focus changed to raising a seed round. And, raising a seed round is one of the hardest things that a founder does. You have the least amount of data by your company. You have the least amount of traction in your company so convincing investors that this is a good idea is actually very, very difficult.

And, it was exceptionally difficult for us because of the space that we were operating in. There have been some spectacular failures in grocery delivery before, like Webvan, Cosmo, and many others. So, investors were pretty reluctant to invest in Instacart early on. In fact, I had one meeting with a venture capitalist when suddenly he decided to get up and leave the room. And, he came back with a floppy disk and he said, "You should go home and open this because this has the Webvan business plan."

I didn't really know how to find a floppy drive so I didn't really open it. But we were able to close a seed round with some investors who believed in us and this was our revenue graph at the time. So, definitely, by no means is it a rocket ship. Even after raising the seed round, our approach towards unscalable doing things did not change. And, the only thing that mattered to us was how fast we were growing and how fast we were executing.

One example of this was when we decided to add Trader Joe's to Instacart's offering. When we add a store in Instacart, the first thing we have to do is find the items that are available in that store and get that catalog and put that onto Instacart.com or in the apps. Now, there is no API or website, which had the item catalog for Trader Joe's, so the only way we could actually get hold of the item information was to buy one of every single item at Trader Joe's, take it to a studio, take pictures of all those things and then put them into our catalog.

And, so that's exactly what we did. Here are actually all the photos of all the items being lined up before us taking the picture. And, you know, many of you may think this was a fool's errand but our team ate like kings for the next two weeks. [laughter] Using the same unscalable techniques, we added Whole Foods, Costco, and many other stores. And, we realized that we had the best product in the market. We were growing so fast and our customers loved Instacart.

After figuring this out in San Francisco, we decided that it was time to take this outside of the Bay Area to a city that represented the United States, you know, accurately. And, so we decided to launch in Chicago. What we found there, to our surprise, was that, in three weeks, we were doing more deliveries than we had done in 33 weeks in the Bay Area. Then, we launched Boston and Boston was growing even faster than Chicago did. Then, we launched DC.

DC was growing even faster than Boston, Chicago, or the Bay Area. Then, we continued to launch more and more cities and, today, we're in 10 cities in the United States and our revenue is growing by 10 percent week over week and has been going like that for 20 weeks so far. As we have grown as a company and as a team, we now have to make everything scalable. And, this is exceptionally hard.

We have customers who are placing orders for two items or for 60 items. We have customers placing instant orders or scheduled orders. They could be from any part of the city at any time of the day. And then, we have crowdsource shoppers who could be working from any part of the city at any time of the day and some of them are slower, some of them are faster. And then, we have stores that are located on all parts of the city with different selection, different inventory levels.

So, how do you create this Amazon.com-like experience when you don't have any warehouses, when you don't have any trucks, and when you don't hold any inventory? This is a very, very difficult computer science and operations research problem. But, we believe this is a very important problem to solve.

Because for the first time in history, we have retailers all across the United States who are coming online for the first time. For the first time in history, we have retailers who are able to provide a one hour, two hour, and same day delivery experience to their customers. And, for the first time in history, they're able to do that without having any infrastructure.

Now, I know, this is something where we want to be and we are one percent on the way there. But, if there's something that I've learned so far in my journey, it's that there are going to be hundreds of failures and hopefully some successes. So, if there's one thing that I'd like you to take away from this chat, it's the journey as a founder is an extremely exciting one. One that's filled with hundreds of failures. But, if you persist for long enough, you may just get lucky. Best of luck. [applause]