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The Unrelenting Drive of Apoorva Mehta
How He Built Instacart Into One of the World's Most Transformational Internet Companies
Justin Gordon
September 28, 2023
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Apoorva Mehta
Apoorva Mehta tackled an incredibly difficult problem, same-day grocery delivery, and built Instacart into one of the most transformational internet companies of the last decade, creating a multi-billion dollar behemoth in the process.
To attack the same problem that led to one of the biggest failures of the dot-com era, Webvan, Apoorva, with the benefit of impeccable timing, took a different approach to solving the problem.
It paid off mightly.
But how did he succeed in solving a problem that even Amazon didn’t know was possible a decade ago?
And why was he the one to build this company?
Let’s get to it.
Early Days
Apoorva was born in India, but shortly after his birth in 1986, his family moved to Libya.
When he was 14, his family moved to Hamilton, a city in the Canadian province of Ontario where he saw his first Western grocery store.
It was a memorable experience, to say the least:
I had never seen so many Kit-Kats in my entire life. That was just a massive culture shock. I would be lying if I were to say that starting Instacart wasn’t a direct consequence of that.
There were more than just grocery stores that caught his attention.
For the first time, he had access to all sorts of technology:
When I moved to Hamilton, Ontario I was just thrilled to have access to all this technology. I started programming right away. I worked on autonomous cars. I didn't really know what type of technology I liked but I started picking up everything.
Apoorva would end up going to college at the University of Waterloo, studying electrical engineering, and spending a few months working at BlackBerry before taking a job at Amazon after graduating in 2008.
There, working as a supply-chain engineer, he gained valuable experience that would later help him start Instacart.
He enjoyed his time at Amazon and liked building software, but, two years in, he felt his learning had plateaued and he lacked the challenges he craved.
So what did he do?
He quit.
But not before spending his time at Amazon attending Seattle startup meetups, reading business books, and talking to as many founders and venture capitalists as he could.
Apoorva was a complete novice in the world of entrepreneurship and these meetups and discussions proved incredibly valuable.
They also showed him where the place to be was - San Francisco.
So he left:
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.
2 Years of Exploration
Apoorva didn’t waste any time when he arrived in SF:
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.
Around this time we must have built 20 products or so but the results were always the same. Failed product after failed product after failed product.
One of the ideas that showed the most promise was a social network for lawyers.
For this company, Apoorva and his co-founder raised about $1 million in funding, but after a year he learned a very important lesson:
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.
But remember that $1 million he raised?
Yup, Apoorva had to tell his investors the same thing:
The odds of success in a startup are so low anyway you sort of have to put everything that you have into it. You just can’t do that in an idea you don’t care about. That’s when I said I just can’t do this and I quit my own startup.
I remember telling my investor the same thing, which was that my heart is not in it. I felt just terrible. This was likely the worst few weeks of my life.
The good thing here was these guys were very experienced investors and they had seen this happen before and they knew that it was the right thing to do for the company and it was the right thing to do for me and they were extremely supportive during this time.
This was an incredibly difficult time for Apoorva, his investors just lost all their money, and he began to question his entrepreneurial abilities:
After going through all of these ideas I was getting pretty tired. I was getting tired of failing. I remember this was a pretty low point in my life. I thought, well, am I even cut out to be an entrepreneur at all?
Thankfully for Apoorva and millions of future customers, he found the right idea a few weeks later.
Starting Instacart
It’s 2012 and Apoorva is at one of the lowest points of his life.
He had 20 different startup ideas fail, most recently his lawyer social network.
A few weeks later, his energy tank is empty and so is his fridge, except for a bottle of Sriracha, which ends up being the spark for one more idea - grocery delivery.
It’s an idea Apoorva can’t stop thinking about and one he’d compare to a feeling almost like being in love.
You see, Apoorva’s frustrations with grocery shopping run deep, back to his days as a kid in Canada:
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 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.
So Apoorva got right to work.
He saw that Safeway had all their inventory available online, so he scraped it and built the app over the next few weeks.
The first order?
It was from Apoorva himself, ordering through his app and going to the grocery store to fulfill it.
Of course, he had friends try the app and it quickly started to spread:
The first version of the app, anytime anyone would place an order I would get a text. Anytime I would get a text I would look at it and say, “Oh let’s look and see who placed the order.”
For the first few weeks, I just saw my friends using the app on a regular basis, which was really cool, and then I saw people who were using the app who I didn’t even know.
What had happened was that my friends were sharing the app with their friends. This word of mouth was starting.
And Apoorva was doing things that don’t scale early on:
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.
Where did he get shoppers to fulfill these orders?
He started by posting ads on Craigslist.
Eventually, in June 2012, when he was running out of money, he decided to apply to Y Combinator.
Only one problem - it was two months past the application deadline.
But Apoorva wasn’t about to let that deter him.
Y Combinator
Most people, seeing that a deadline is two months past, would let that be the end of things.
But Apoorva is not like most people.
He had just been through 20 failed startup ideas, was determined to make Instacart work, and felt confident that getting into YC would improve Instacart’s chances of success.
So he got scrappy.
After reaching out to all of the YC alumni in his network for introductions to YC partners, each of the partners told him “no.”
However, one of them, Garry Tan, told him it would be “nearly impossible” to get in now.
He had a chance!
So he applied… and got another “no.”
But Apoorva still wasn’t deterred.
In a TechCrunch article on how he hacked YC, he described what he did next:
As I thought about this final rejection, I realized that so far, no one had seen my product in action. Did they even know what I was doing, and why it was different?
I was determined to make one last effort to convince YC that I was worthy.
I opened my app and placed an order for one six pack of beer. I addressed it to Garry Tan at Y-Combinator’s headquarters. John, one of my drivers, handled the order and sent me a text letting me know when he was done.
Half an hour later I got a call from Garry. “What is this?” Garry asked. “This is Instacart!” I exclaimed.
Garry asked me to come to Y-Combinator the next day to explain my company in more detail. I was so excited, I barely slept that night.
The next day, I arrived at the meeting location. I faced four YC partners and a barrage of questions about how my business worked and why it would succeed. We talked for almost an hour, but it felt like just a few minutes. I answered questions non-stop.
When our chat was over, I was asked to leave, and told that if they chose to fund me, I’d receive a call. This is standard practice for Y-Combinator, but at the time it felt cold, like there was no chance I would be accepted. It felt like the string of “no’s” would only continue.
Ten minutes passed. My phone rang. “Hello, this is Harj from Y-Combinator. I can’t believe we’re doing this. We haven’t let anyone in this late. Ever. But if you’re interested, we would love to have you. Call me back.”
Of course, Apoorva accepted and he joined YC in their summer 2012 batch, getting the initial investment he needed to solve his financial hurdles.
Through YC, Apoorva brought on two co-founders, Brandon Leonardo and Max Mullen, to help Instacart overcome the next set of hurdles in the near term and in the long term.
Then, in August 2012, on a second-quarter earnings call, Amazon’s CFO, Tom Szkutak said Amazon “doesn’t see a way to do same-day delivery on a broad scale, economically.”
Apoorva saw things differently.
He thought Instacart’s approach would win.
At the time, Instacart was only available on the iPhone, was invite-only, and Apoorva had a fleet of personal shoppers to pick up items and deliver them to customers.
San Francisco, Mountain View, and Palo Alto were the only markets where they operated, allowing customers to order from 10am to 9pm, paying a $9.99 one-hour delivery fee or $3.99 three-hour delivery fee.
Then, in October 2012, Instacart closed a $2.3 million seed round led by Khosla Ventures and Canaan Partners, fueling their expansion.
When Apoorva and his team were adding stores early on, they did the most manual thing:
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 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.
In July 2013, they raised a $8.5 million Series A led by Sequoia to fund further expansion, with a goal of 10 cities by the end of 2014.
Michael Moritz of Sequoia, who was formerly on the Board of Webvan, the company that failed spectacularly more than a decade earlier, joined Instacart’s Board of Directors at this time.
Apoorva quickly grew Instacart outside of the Bay Area, with a new city in September 2013:
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.
They launched Boston next, which grew faster than Chicago, and then in D.C.
By June 2014, they had already reached their 10-city goal and Instacart was rolling.
Early Growth
By 2014, Instacart was delivering groceries from major stores like Whole Foods and Costco, but this took time:
Most retailers in the very early days didn’t want anything to do with us. It took us many years of just showing up. It is entirely about trust.
Securing key partnerships like those and continuing their growth trajectory caught the attention of a number of venture capital firms that competed to lead their Series B.
Jeff Jordan, an investor at Andreessen Horowitz, who previously invested in Airbnb, won out and they invested $16 million as part of Instacart’s $44 million Series B in June 2014, with Jeff joining the Board of Directors.
In what would be a trend of raising enormous sums of money, by January 2015, Instacart had raised another round of funding, this time led by Mary Meeker at Kleiner Perkins, who invested around $50 million.
This $220 million round of funding came after Instacart had grown its revenue 10x in 2014 and had a team of more than 100 full-time employees and 4,000 personal shoppers.
Of course, it wasn’t all smooth sailing, as Apoorva had to deal with a number of challenges during this time and shortly after.
Growing Pains
Like many disruptive companies, Instacart got its share of pushback.
At one point, Albertsons, a large grocery chain headquartered in Boise, Idaho, and other grocers sent Instacart cease and desist letters.
Apoorva was unfazed and even hung them up in his room as a sort of badge of honor.
Those grocery store chains ended up partnering with Instacart.
Then, in 2015, Apoorva had to deal with a class-action lawsuit regarding his workers, who were allegedly misclassified as independent contractors.
So Instacart gave their shoppers the option of being part-time employees. As Apoorva would say at the time:
We went from having zero part-time employees to having people at thousands of individual store locations. We had to figure out scheduling and what kinds of training had to be provided. We needed to figure out a lot of things.
Instacart, much like Uber, would also have to deal with the issue of tipping, something more complicated than how it initially appears:
One of the things that we've noticed is that tips can only go to the last person who touched the order. Fundamentally it's legally required that that's the person…
That person may not have actually picked your order and that is something that we cannot actually give the tips to the person who picked your order.
And so we have to collect some part of the revenue to make sure that overall, because we have thousands of people who are picking the groceries for you that you never see, we want to make sure that those people are compensated really well as well. That's why there's a service fee and it's a 5% service fee for everyone.
Regardless of the challenges along the way, Apoorva and his team pushed on.
By 2016, their promoted ads business offered a glimpse of how they could capitalize on their growing platform:
We have partnerships with hundreds of retailers who also do a revenue share with us, but we also have CPG companies such as Pepsi, Proctor & Gamble, who promote their products on Instacart.
As a result of that we have a third source of revenue most people forget about. The key point here is that all on-demand companies do not look the same.
Instacart was rolling, but the next year?
Apoorva had to become a wartime CEO.
Whole Foods & Amazon
By January 2017, Instacart had more than 300 full-time employees, and tens of thousands of part-time shoppers, and was offering on-demand delivery in cities in 20 states.
Then, on June 16, 2017, Amazon announced they were going to acquire Whole Foods, Instacart’s largest partner, for more than $13 billion.
But Apoorva wasn’t going to let this deal kill Instacart after 20 previously failed startups:
Look, frankly, this was not going to be a 21st startup for me. There was absolutely no chance I was gonna allow that.
Lucky for him, Whole Foods agreed to wind down its partnership with Instacart over two years.
Nonetheless, the deal kicked Apoorva and his team into overdrive.
In the six months after the Whole Foods acquisition, Apoorva and his team went to work signing as many major grocers as they could.
They’d end up adding a number of partners including Kroger, Costco, Wegmans, and Publix.
These were long-term deals, 5-7-year contracts, and nationwide in scope.
It was a challenging time, but it forced the Instacart team to grow:
This was incredibly difficult but definitely made us stronger. Now, as a company, we have the scar tissue that allows us to take on very hard challenges.
Pandemic Boom
Instacart’s growth, as you probably could’ve guessed, absolutely exploded when the pandemic hit.
With the Covid lockdowns, Instacart proved essential.
Reflecting on the craziness of that growth, in January 2021 Apoorva told Forbes:
We saw five years of growth in a matter of five weeks.
Instacart had 600 retail partnerships by January 2021, 500,000 shoppers, and more than 45,000 stores.
Instacart’s revenue hit $1.5 billion and importantly, by mid-2020, they went from a loss of $2 per order to grossing $3 per order, a far cry from when they were losing $15 per order in 2015.
This growth also came with some controversy related to providing protective equipment for shoppers and yet, Instacart would grow 400% with the pandemic and overcome the numerous challenges, including inventory shortages, that came along with that.
Their valuation peaked at $39 billion in 2021.
Marc Andreessen, whose firm led Instacart’s Series B, would say of Apoorva:
Apoorva has cracked the code on one of the most operationally complex industries to ever come online. Where others have failed, he has created a sustainable, successful same-day delivery model that allows customers to shop from the same local grocers that they’ve loved for generations.
Of course, Instacart wasn’t the only delivery company that experienced a boom in 2020.
Amazon was delivering groceries as well, Uber acquired Postmates in July 2020 for $2.7 billion, and DoorDash, which I wrote about previously, was a well-funded and very capable competitor.
Some grocers themselves also started to rethink their Instacart partnerships around this time.
For example, Tony Antoci, owner of Erewhon, a high-end Southern California grocer that once had Instacart on its homepage, launched his own delivery service with the help of a partner, ECRS.
But many others, like Wegmans, a chain of 100+ supermarkets, remained loyal:
As a founder of a fast-growing technology company, his openness to evolve and seek input and industry knowledge is a true testament to the partner he is. After a 500% increase in his business this year, he is still asking how to get better. That is a key reason for his success.
Not resting on the pandemic success, Apoorva continued looking ahead, with a big focus on the advertising platform Instacart was building.
But the same year, Apoorva also made a difficult decision for the future of Instacart.
Stepping Back
On July 8, 2021, Apoorva published this letter on his future with Instacart.
In it, he reflected on his journey over nearly a decade working on his company:
Building Instacart over the last 10 years has been the most challenging and fulfilling experience of my life.
When we first started the company, most people didn’t think we would succeed.
We were rejected by investors who told us that bringing the grocery industry online would prove to be impossible.
Retailers were reluctant to work with us because they did not believe a technology startup out of San Francisco would understand the nuances of the grocery business or would want to help their companies thrive.
And, we were constantly questioned about whether we could be profitable in such a thin margin industry.
He also mentioned how he was stepping back as Instacart’s CEO and moving Fidji Simo into the role.
Fidji had worked at Facebook for more than a decade, starting before the company went public in 2012.
She would start her role as Instacart’s CEO in August 2021:
In addition to her proven track record shaping products and the Facebook business, she is perhaps best known for the way she leads: extending deep trust to her teams, compassionately navigating challenging moments, and inspiring incredible loyalty.
And, as the daughter, granddaughter, and great-granddaughter of fishermen, she grew up with an incredible work ethic and a deep appreciation for the power of food to bring people together.
That’s why, seven months ago, I invited Fidji to join Instacart’s Board. And since then, I’ve been blown away by her capabilities as a leader. We’ve spent hundreds of hours together, talking about everything from teams and products, to culture, strategy, and vision.
It became clear that we both shared an ambitious vision for Instacart’s future. And, the more I reflected on this, the more excited I got about the prospect of bringing Fidji into the company.
As I thought about the ideal role for Fidji, I realized that this advice now applied to my own situation. Fidji will simply be a better CEO than me for Instacart’s coming years. I won’t pretend that it was an easy decision. Instacart has been my life’s work. However, once I came to the conclusion that it would make for a better long-term future for our business, I knew that bringing Fidji on as CEO was the right path forward for the company.
Apoorva would remain the Executive Chairman and very engaged in the day-to-day of Instacart.
While there was speculation that Apoorva was forced out of Instacart, stemming from his desire to keep Instacart private longer than some investors like Sequoia Capital would have liked, Apoorva refutes those claims:
A lot of people have said that perhaps I was pushed out of the company. The reality is, if I wanted to be the CEO of Instacart, I would be the CEO of Instacart.
Nonetheless, a little more than two years later, Instacart would take the next step in its evolution.
IPO & Apoorva Today
On September 19th, 2023, Instacart made its debut on the Nasdaq stock exchange, valuing the company at about $10 billion. This was a far cry from its $39 billion valuation in 2021, but Apoorva, when asked about that dip, was much more concerned about the long-term prospects of the business.
While the price has of course fluctuated since, Apoorva’s 10% ownership stake was valued at around $1 billion.
Cory Weinberg from The Information wrote a great piece about Instacart’s biggest winners from the IPO, sharing this chart with the price of each funding round:
As part of the IPO, Apoorva also stepped away as its Chairman, with Fidji resuming that role as well.
So that begs the question: What’s next for Apoorva?
He’s working on his next startup, Cloud Health Systems, a company focused on metabolic health and obesity, with its first brand named Sunrise.
Apoorva actually raised $30 million for the company back in November 2022, with a massive $200 million valuation. The round was led by Josh Kushner’s firm, Thrive Capital, with Greenoaks Capital also participating.
The formation of this company was influenced by a conversation Apoorva had in 2020 with Neil Mehta, Greenoaks’ founder, who asked him, “Do you really want to be the grocery guy? Is this really your calling?”
According to Apoorva, the conversation got him thinking about what may be next after Instacart, even though at the time he couldn’t talk about it publicly.
Apoorva was also inspired by Wayne Huizenga, a business mogul who succeeded in multiple industries, founding AutoNation and Waste Management Inc., not to mention becoming co-owner of Blockbuster, the Miami Dolphins, Florida Panthers, and Florida Marlins.
With his relentlessness and previous experience, Apoorva has a great chance of succeeding in this new company as well.
Apoorva’s Wisdom
In each edition of the Just Go Grind newsletter, I like to include a few more quotes at the end from my research into the founder who is featured, sharing their wisdom.
It is substantially better to be a solo founder than have a co-founder that you're not confident about.
On leaving Amazon in 2010:
What would be fulfilling for me is to make a material difference in this world and I wouldn’t be able to do that working in a bigger company.
On competing with Amazon:
I realized, even from day one at Instacart, our biggest competitor was going to be Amazon and I realized in order to really compete with them I would have to be something that was meaningfully different.
It couldn’t be something that was cheaper or anything like that because Amazon has gobs and gobs of money. It wasn’t that. It just had to be something that they just wouldn’t be able to do.
It turns out there are a lot of retailers across the country where people really want to shop from, people get their favorite types of groceries from, and they don’t like Amazon.
On the role of luck in startups:
There are so many times when luck plays a part. I think it’s specifically true in startups because in startups what you have is this moment in time when a company is possible. Anything before that is too early, anything after that is way too late and there’s too much competition.
And so the timing, being there at the right place and the right time is everything.
His advice for other founders:
Great founders are learning machines. The more you know about business, mental models, technology and other pertinent areas for your business, the better you can be at making decisions. Many of these decisions can meaningfully change the trajectory of the company. So, go out of your way to learn – from books, from people and from experiences.
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