> That'd be a killer position for Microsoft to be in.
What do you mean by this? I don't deal with things of that scale, but I would imagine it would put Wal-Mart in a very good position to negotiate down near at-cost. It could be good for Microsoft on the PR front against Amazon, but bad for profit margins (on this one account).
Depends. Netflix doesn't get any kind of sweetheart deal with AWS. As far as I'm aware the prices they pay are exactly the same as what any other high volume customer would pay.
They would be a hero customer. From my understanding, Jet.com is already a reference customer, which means that they talk about intimate details about their infrastructure with prospective Microsoft customers.
A hero customer typically pushes your platform in radical ways to let you know what to improve. They're also someone you can talk about, and it instantly gains you credibility. For Azure, actual workloads are lacking, especially workloads that are volume, B2C businesses a la AWS's Netflix, and GCE's Spotify.
Wonder if the "tip" is part of a strategy to shop the deal, like the LinkedIn post-mortem revealed. Last I heard, Jet.com was haemorrhaging cash buying more growth with massive discounts.
Looks like it would be a good exit given how much capital they've raised: $565M per crunchbase.com/organization/jet. 6x capital in means everyone should make good money.
When Jet.com came out, I often checked it against Amazon, and did make some purchases through it. But there's some odd gaps, it has no category through which I can buy Blu-rays, for example. And it has huge inventory gaps on very basic current items. I honestly forgot to keep checking what I could get through it, as the gimmick of adding up a bunch of items for savings rarely amounted to very much.
Totally agree, jet just...doesn't have some things. But it does have some other things, and sometimes slightly lower than amazon. It's so low I almost made a purchase with them once!
I have tried them a few times but it's a lot of work finding the items where they are actually significantly cheaper than Amazon. They also don't have reviews and the item descriptions are often really short and incomplete.
Interestingly not a huge exit its "just" 3x. (Edited from 6x I looked at investment not valuation originally) For all the news around Jet taking on Amazon I'm not sure this is signaling a win for them.
It looks like the $1B figure is a pre-money valuation for the $500M raised.[0] If so, that results in a 2x exit for those investors.[1] This assumes those investors don't have rights that would entitle them to more than their pro rata of the acquisition proceeds, such as special liquidation preference rights that would entitle them to more than a 1x liquidation preference. It's these kinds of special liquidation preference rights that have attracted some attention for helping "juice" valuations, particularly with unicorns.[2]
[1] Math: $500M invested at $1B results in those investors owning 1/3 of the company. Assuming pro rata distribution of the acquisition proceeds, they would get $1B in a $3B acquisition.
There are a lot of product categories I've found its impossible to compete in because jet has this combination of impossibly low prices, and stupid high cpc's on Google. I wonder if an acquisition will bring things to more sustainable levels?
Walmart has been offering 3rd party sellers/products for more than a few months now, if I had to guess. I bought a USB cable from Cable Matters, but the names of some of the companies/sellers on Walmart's website also lead me to believe they are selling products which aren't certified and have the correct components to be safe with our devices.
Yeah I know what you mean, I just ordered a cable from Walmart.com the other day not realizing it was from a third party seller until after it shipped. Felt like a bait and switch.
When you are an investor and have tens or possible hundreds of investments, 3x will not cover much. You need one to leave orbit in order to stay in the game.
Jet.com was founded in 2014. How did they get enough traction to be viable when there are so many other online retailers like Amazon, and all the other brick and mortar retailers that also have large online presence.
They've actually done very well with "hype" as it were. I guess this goes to show that you too can spend tons of VC dollars, make yourself "popular" and never make any money, but the popularity is enough to make you worth money, even though you're losing money. Fascinating. I almost wonder if they should sell now, just in case they run out of VC "at some point in the near future" and stuff hits the fan...or maybe they'll be "worth" far more in the future, hard to tell...
This has worked with chat apps and other kinds of community-based social networks for ages, where the promise that after you've grown large, you'll figure out a way to monetize later.
What's remarkable is Jet was able to pull this off by being in meatspace, by acting as a VC-subsidized arbitrage broker for consumer products, hoping to get enough mindshare to be considered more of a threat than a nuisance so it can get bought out. It worked!
I'd be careful about drawing too many conclusions from this story. For one thing, you are not Marc Lore. With a successful Amazon sale under his belt, he certainly had a leg up on fundraising over almost anyone. His name alone helped to generate buzz.
But even being Marc Lore is enough. I worked for his cofounder from diapers.com and you've probably never even heard of that company—building hype requires a compelling narrative, not just a big name.
It's just a misunderstanding of what the acquiring company is actually buying. When a company acquires a startup, they're doing it so they can get control over that startup's users. They really don't care about the technical or financial details, they just want authority over those millions of eyeballs.
I'd love to see their return customer number. If you hand out money, user acquisition if measured by signups is pretty meaningless.
I tried this site once and it was a disastrous experience. Their customer service is horrendous, and the complete opposite of Amazon. After that purchase it became pretty clear to me that Amazon has nothing to worry about.
This reminds me, I have around $100 in credits from 1 failed order because they messed up multiple times. Would be awesome if they sold Amazon gift cards.
I think they've been spending a lot of money getting new users. They've been offering new accounts discounts, I think you can get 15% to 20% off right now. They've had a bunch of items show up on some discount shopping forums like slickdeals. I think they've lost money on some purchases.
Yeah, I even remember a rumor going around that they were dropshipping for some items. If something was out of stock they would get it from newegg or amazon and send it to you.
I have a theory about this, it happened to us when we bought some childrens books on Jet. They came in the mail from Barnes and Noble with a packing slip that had a price higher than we paid included with it.
It doesn't explain the Amazon example you mentioned, but I was under the impression they have special affiliate arrangements with 3rd party retailers and that they were somehow being allowed to invest their affiliate commissions into the consumer (which is typically not allowed).
So if they're making 15% affiliate commissions from B&N they're able to drop the consumer price 10%. They've been focused on scale more than margin since day 1, so it would make sense that they would just operate on something razor thin and continue to drive home that they have unbeatable prices.
For the 3rd party retailers it's a way to compete with AMZN on price without actually having to drop their prices and I can see how that would be attractive to a retailer that's losing market share.
No - Many sellers that sell on Jet are just re-selling their Amazon inventory in a new market. Amazon will happily ship it for you to Jet company through the MCF program.
We should understand that this is really what companies are buying when they buy a product. There seems to be an impression that companies buy technology because it's cool. That's almost never true, because they could hire similar engineers and build it out themselves for much cheaper than they could buy a company.
They buy the company because they want something that they can't easily replicate (which, again, is NOT the technology, because they can hire engineers and replicate your work product).
Typically it's one of these things:
a. they want your installed userbase. It's really hard to get people to use something new. If you have a lot of users, they will buy you even if your stuff is total crap so that they can get access to your users.
b. they want your intellectual property, like a patent and/or trademark portfolio. Patents are a great way to make companies think about buying your company instead of just ripping it off and copying it internally.
c. they want to retain the personal goodwill of someone they care about. For example, investors will often buy each others' portfolio companies, even when they're worthless, as a way to save face and ingratiate themselves one to another.
It's important, as entrepreneurs, that we understand what really goes into a big exit, and how it's not tech (unless you have patents, in which case they're buying the patents), but installed base.
They raise about $820 million and just spent virtually all of it, outside of operating expenses on marketing. For almost a year, they were advertising everywhere before they had even launched. If i am not mistaken, i think they were boasting of the highest number of pre-launch signups for any company. So that already gave them a huge valuation and potential traction.
They eventually launched, with a mixed reception, but they had enough numbers to keep them relevant.
I've often wondered about this. Each time I've compared Jet against prices from other retailers, the results have been underwhelming. Occasionally someone mentions a slightly better deal on Jet, but nothing that would rationalize the hype around this company. I'm assuming that Jet was just intended to be a short term play, ending with a float to an established retailer.
I have to hand it to Marc Lore. Two spectacularly unprofitable businesses, with two spectacularly large exits. If this guy had been doing startups in the late 90's, he'd probably be the worlds first trillionaire by now.
While this is a definite failure for Jet's optimistic investors, it's likely a great opportunity for Wal-Mart to challenge Amazon, and a win for consumers. It's also a big win for OCaml.
I tried shopping at Jet and while some of the prices were very good, others were worse than Amazon, and little things like product detail information, pictures, etc., were strongly subpar. Product search was also in serious need of tuning.
Does anyone know which pieces of infrastructure (or ops) that Jet built have the most value to Wal-Mart?
All i know is i shopped on the site exactly once. i ordered 2 cases of monster drinks at a fantastic price. Looked exactly like the amazon page. When they arrived they were 'monster hide safe cans'. Basically empty cans. When i tried to return they wanted 40% restocking. Total Fraud.
I have mixed feelings about this. Jet started up next to the town where I live, and after growing for a while they moved to the town where I used to live. I'd been watching their job postings since early on, and I probably could've gotten hired early. Their recruiter recently reached out to me, so I could probably still get hired there.
If they get bought out, I'd have missed out on potentially a very nice options payout. But then I'd have to find a new job, because I definitely wouldn't want to work for Wal-Mart. So I guess I'm happy with the decision to stay where I am, despite some of the drawbacks of working for a really tiny non-startup company. (Not that there aren't good perks too.)
For those of you who spend your careers in startups, how do you feel about new owners after a buy out? If you have reservations about them, do you stick around and see how it goes, or head straight for the exit?
Being acquired is always seen as this awesome thing but it can be terrible for a lot of people. I didn't have enough equity to make enough to buy a used Honda Civic. I don't care for the culture of the new company but I'm still working there. Pretty much everyone on my direct team left, found a new position in the new company, or were let go. The same thing happened in most areas. Our founders did take care of us by ensuring we get 4 weeks of vacation instead of having to wait 15 years for that, so that's something. Another plus is that I managed to double my startup salary.
This buyout is based on FUD, and FUD-based investment is a recipe for disaster.
From the OP:
>But for both Jet and Wal-Mart, Amazon’s frenzy of warehouse construction and fast delivery—as quickly as one-hour—have proved formidable. The retailer has logged three straight quarters of record profit while locking in an estimated 60 million members to its $99-per-year Prime service, cultivating a loyal customer base and giving consumers fewer reasons to shop at traditional stores.
The answer is not buying a unicorn startup with seemingly no fundamental advantage over Amazon. If I were Wal-Mart, I would take the $3B and try to build a great technology organization and/or fund Wal-Mart Labs more. So much of what makes Amazon better is the data accrued over the last 18 years and the insight mined from them by their super-talented team.
And Jet.com is definitely not going to give that to Wal-Mart overnight. If I were them, I'd focus on long-term viability, not a short-term hack to placate shareholders.
Upper management is filled with cargo cult thinking around technology. I see it even in software companies.
Someone advocating a rational, realistic way forward (like you) would be pushed out in favor of people who "get it" and want to "move things forwards dramatically"
Isn't that what the culture of a business is? A bunch of people who think similar things. If you take a bunch of similar people and apply the same rewards, behavior would tend to be similar.
partially why consultants can come in and clean up shop. They don't care about following the conventions.
Jet, based on its promotional content is heavy into the home products category. Walmart would love to knock them out to absorb that competition to getting delivery and even subscription delivery of home products.
So it may be the price Walmart is willing to pay to ensure nobody is making Jet their new source for houseware products and avoiding the WalMart Brand. We also don't know what else Jet has in the pipeline, negotiating with them and through their research may be revealing more to WalMart.
all said, I hope Walmart doesn't buy Jet. I want Jet to exist on its own. Competition is the way forward in shopping, if not against Walmart, definitely against Amazon.
What surprises me is that in many European countries, you can now order ALL of your groceries delivered.
You place an order, and someone physically walks around a local supermarket, picks up stuff, they put on a van, and it is delivered to your home. It is actually very inexpensive (and free if you spend enough).
Yet nobody in the US does that (well nobody outside of big cities). Walmart right now today has a HUGE advantage, they can deliver products impossible to Amazon like fresh fruit and veg, meats, and all kinds of things.
But yet, do they? No. Walmart already has "warehouses" in every state, city, location. They're called stores. But instead of double dipping on that advantage, they keep using them as traditional retailers while Amazon rules the home delivery advantage.
Amazon are currently moving into an area Walmart already has an advantage in (being local) but because Walmart under utilises their advantage to such a large degree, Amazon is left alone to do so.
> What surprises me is that in many European countries, you can now order ALL of your groceries delivered.
You can do it in much of the US, too; a number of brick-and-mortar grocery chains offer online ordering home-delivery services, even before considering third-party or online-only grocers.
Walmart's brand in the UK - ASDA - provides online shopping with both collection and home delivery services. Not really sure why they don't do it in the US.
I live in Maine, I bet it's Hannaford that you did this with. I use it all the time, in fact I almost never actually into the store anymore if I can avoid it. Not sure I could live with out it any more! :)
I have three young kids and it's very difficult to go shopping with them. If they're not causing problems, they're taking up space in the cart. Sometimes when my wife and I go together with the kids, we push one cart with the kids piled in and one cart for the actual groceries.
Being able to order our groceries online and have them delivered or picking them up in some kind of drive-through lane is a huge quality of life improvement for families like mine.
> What surprises me is that in many European countries, you can now order ALL of your groceries delivered.
In the US my local grocery (Harris Teeter) has a service where you order online and go through a drive through to pick up. The cost was $4.95/order or $99/year. They have recently added full delivery for $14.95/order (not sure on the yearly fee).
Man, I must seriously have been unlucky in the places I've lived so far. Seriously never even heard of this being a thing until reading articles about Instacart and then Amazon Fresh, and thought "wow, wonder why nobody has done this before". Until this thread I still thought those were practically the only ones, and then only in like one or two cities.
For packaged things sure, but who wants someone else picking out potentially crummy vegetables/fruit/meats? Do you inspect them while they arrive, and then what about rejecting them? Looking through produce and meats is part of the market shopping process.
> Yet nobody in the US does that (well nobody outside of big cities).
Because outside of the big cities, you don't give up a minimum of 2 hours of your daily life just driving to and from work. It wouldn't make sense to have someone take of tasks like that.
one or more shops near me in the U.S. suburbs has delivery. It's inexpensive but to keep it efficient the product range is more narrow. So they wont be getting your particular favorites, the essentials are covered. as somebody else pointed out though inspecting produce for delectability isn't going to be their concern.
> Jet has a super smart team looking at ways to gain margins in areas amazon is ignoring
So does Walmart Labs, though. What makes Jet a better buy? Even if they've proven successful as their own company I'm super-skeptical of any startup merging with a larger organisation and retaining anywhere near 100% efficiency.
One of the way forward I see is that, Walmart will let Jet be Jet but will the major source of the products etc. Mostly growing from the back-end of it. Enabling things like same day delivery in certain instances. I would actually let Walmart groom Jet as a separate brand.
They might be smart but they haven't been successful. They almost immediately abandoned their original value proposition-- make money on the subscriptions like Costco and break even on sales.
And the response was clearly questioning the argument put in favor of that point, thus making the point itself questionable.
It's a strange world when a startup that was just founded 2 years ago and is steadily growing [0][1][2], is considered a failure because they haven't already wiped out a 22-year-old goliath that has had a long history of struggling to break even, and operates in several other markets (AWS, Streaming Video, Devices, etc) that aren't this startup's main focus.
My question, though, is whether Jet is "losing money on every sale but making it up in volume." That is, your articles mention how jet aims to be about 5% cheaper than Amazon, but they say nothing about the long term cost structure that would let them sell at these cheaper prices and still be profitable.
This super smart team didn't even know how to configure Cloudflare. Non-US access got blocked with a captcha. This same company disabled downloading their app if you weren't in the US. And then the site would plaster big scary banners telling you a ZIP code was mandatory and if you weren't in the US, beware! Who comes up with this stuff?
Somehow, with all that money raised, they failed to realise there'd be some customers using freight forwarders.
When I went to purchase, the site stopped working, just providing some sort of generic error page. I called them up. A lady told me they were "performing maintenance" (middle of day). The website provided zero indication; just appeared broken.
Shipping took a while.
I'm certain they have smart people. But my anecdotal experience was that things were a bit clueless and not even remotely close to the level of taking on Amazon in any way.
You seem to forget its a startup and not a well oiled industry giant that has been around for ~20 years.
Maintenance to fix a security critical bug in the middle of the day to remain in compliance for credit card processing could have been a reason for this nuisance. Lots of factors and variables.
I'm not sure I understand, or rather I don't think you understand their business model...
I think they set up their CloudFlare 100% correctly.
Jet does not sell outside the U.S., they have no plans to ever sell outside they U.S. Most of the cyber attacks against them are from outside the U.S. Their entire business plan is cutting cost out of the supply chain inside the U.S. By bundling items together in the same box and saving the consumer in the U.S. Money.
The entire point is to reduce the risk footprint, when most startups are being hacked left and right jet is being very smart by throwing captchas and saying to everyone outside the U.S. we don't want your scammy business.
They do sell to people that are outside of the US. They just sell via freight forwarders. In Central America (and probably all over) there are many businesses that exist entirely to service customers. The biggest bank in the country I'm in now (Guatemala) gives people credit cards and a Miami address specifically marketed to buy stuff off Amazon.
You'd think with all that money spent, they'd have recognized this. FWIW, they eventually fixed it, a week or two (or so) after several poorly-written emails I sent them. So I think it is more likely to be the result of bad thinking, or just being unaware of the situation.
Furthermore, if their anti-hacking defense relies on a captcha or not being able to easily download their app, they're beyond screwed. I don't think they are that incompetent, it might have been, at best, oversight.
Probably the fault is at least partially on Cloudflare, though. Trump's read-only campaign website throws up a captcha at least to Guatemala. And GT isn't known as a centre of any hackers, to say the least. So if they have high profile sites like that which are misconfigured, perhaps they don't do enough review or customer education.
The captchas serve to stop bot nets and DDoS attackers who are all over the world. It is why many sites throw those up. It is not a miss configuration. It is a smart move.
It is 100% the wrong thing to do. On a static page like Trump's website, it is absolutely unacceptable that it ever shows a captcha to obtain readonly information. They are already handling the TCP connection, they are sending back the static assets (custom error page). They just don't send the main content.
Unless it's under a current attack, and even then it should go by IP or something. Visiting from an IP never used before should now throw up a captcha. Nor should it continue to do so on repeated visits.
It's broken, full stop.
Edit: I mention Trump's site because it's a reasonably high profile, static, site that I've seen CF blocking on. Also, FWIW, after I sent several emails to Jet, they seemed to reverse course and their app and site are available. Seems like an oversight/not knowing to me. CF's defaults are not very good so they probably didn't change them. CF should review their customers and suggest better defaults, at least to high end clients.
Just to clarify, given the highly defensive yet also authoritative sounding posts this account has made since being created apparently specifically to respond here: do you _work_ for Jet, fowlerpower?
my guess is that the IT department for the whole organization for x years totals $12B. Some IT manager probably mentioned to someone near the c-suite that they were working on some cool internet commerce stuff. And then after the story has been passed on and on it gets reduced down to "$12B spent on labs"
It's definitely a good time to join or start one: Verticalized Consumer Packaged Goods startups with solid software infrastructure (hence the ability to power logistics/distribution/etc. with software) can undercut incumbents while maintaining a healthy margin.
I think the key phrase here is _verticalized_. Go-to-market as well as scaling operations is much easier when you can focus on a single product category.
Given the proposed price relative to funding raised it's likely the investors will get their money back plus a small return, employees with options will likely get nothing or perhaps a token amount (after all the preferred terms are cashed in) and the founder gets to sell off another highly unprofitable business.
This will be chalked up as a "failed" startup but at least the investors get to take their money and play another round elsewhere. For the employees this is likely not a great thing. I'm guessing when they joined a hyped up startup it was in large part because they didn't want to work for companies like WalMart and stood to strike it rich if Jet went public or hit it big. Now they could be wearing a WalMart badge and the company sold out to save the ass of its investors.
Really, you are claiming that if a company raised $570M and sold for $3B, the common shareholders will get screwed? Do you have some information we don't? The publicly reported valuation at the last funding round was $1.4B. Those would have to be some impossibly harsh terms to not leave well over $1B to the common shareholders.
The price in these "the business model didn't work so let's save the investors and sell" type deals is primarily driven by paying off the early investors. Term sheets typically say these investors make a decent return before anyone else gets paid.
Conversation at the deal table is usually something like "we need X valuation to meet our term sheet with investors so the founders and a few others get paid." The rescue buyer generally doesn't care about what the employees get, in fact it's very much in the buyers interest that the employees don't get too much.
In other words the size of the valuation being bounced around is likely not driven by the value of assets for shareholders but rather the size of the contractual hole in the ground that founders dug with their investors... to escape that hole $X is needed.
> "Those would have to be some impossibly harsh terms"
Harsh terms yes, but not uncommon.
Preferred shares are common for investors that pay out at a multiple of the common shares, so in an exit the preferred pool can be paid at a dramatically higher rate than common shares.
Funding often also comes with guarantees on return - i.e., if the exit price is below a threshold, the investor gets a guaranteed minimum return before other are paid. This works out for the company if it's a smashing success (the upside is also capped) but can wipe out common shareholders if the company sells for anything less than stratospheric valuations.
This should be a lesson to anyone thinking about working for a startup: a company raised $570M and sold for $3B, and in all likelihood the employees will receive very little from this sale.
In the modern startup fundraising scene, and the way startup equity is structured for employees, if your company exits for anything less than a mind-boggling headline-making valuation, you are almost certainly receiving little to nothing.
I feel you just haven't proved your claim given the numbers. Even if the last round's investors were guaranteed a 3x return, that only takes up $1B of this $3B.
Granted, I don't think many engineers are making out with seven figures here, but they should be making whatever their shares were supposed to be worth at the most recent valuation. That's if they joined after the last funding round, more if they joined earlier.
Goes to show just how entrenched some of the negative feeling (not everywhere, but where it exists, including with many in the Amazon demographic) is about Walmart.
Erlang has been and is in use in many less visible places, same as other frameworks, but WhatsApp provided visibility in the contemporary world of short-lived startups.
What asset does Jet have that it is worth anything close to $3bn?
Loyal users? Nope. Their version of "prime" is the proverbial pig in a poke, as you need to buy that one before you can actually figure out if you like to become a longstanding customer (experience, logistics, price/value, positive surprises). Most users are just the coupon cutters who will switch to whatever next crazy person is offering loss leaders.
A strong brand? Plastering NYC subways without having launched does not mean a viable brand. Also they nowadays focus pretty much only on performance marketing. So nope.
Strong technology? Meeeh...
The rationalization at Walmart HQ probably is that with Walmart's purchasing muscle they might improve the unit economics a lot. But why buy a flash in the pan in the first place...
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[ 3.4 ms ] story [ 250 ms ] threadWhat do you mean by this? I don't deal with things of that scale, but I would imagine it would put Wal-Mart in a very good position to negotiate down near at-cost. It could be good for Microsoft on the PR front against Amazon, but bad for profit margins (on this one account).
A hero customer typically pushes your platform in radical ways to let you know what to improve. They're also someone you can talk about, and it instantly gains you credibility. For Azure, actual workloads are lacking, especially workloads that are volume, B2C businesses a la AWS's Netflix, and GCE's Spotify.
Looks like it would be a good exit given how much capital they've raised: $565M per crunchbase.com/organization/jet. 6x capital in means everyone should make good money.
I don't think they are even close to Amazon.
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[0] https://www.crunchbase.com/funding-round/79d35bb376dcc222a8a...
[1] Math: $500M invested at $1B results in those investors owning 1/3 of the company. Assuming pro rata distribution of the acquisition proceeds, they would get $1B in a $3B acquisition.
[2] http://www.bloomberg.com/news/articles/2015-03-17/the-fuzzy-...
Decent article on this from Fred Wilson http://avc.com/2009/03/what-is-a-good-venture-return/
This is a company which was all but guaranteed to succeed and sell in <3 years for billions.
Also, at this point I feel safer buying cables and chargers from Wal-Mart. I now worry about any retailer doing fulfillment for other sellers.
Is someone actually not doing this?
That led to a ton of funding which allowed for extremely aggressive marketing and customer acquisition, not to mention plenty of media coverage.
If anyone can battle Amazon, it's probably Jet. I can see why Walmart would want Jet (and Marc) in their camp.
What's remarkable is Jet was able to pull this off by being in meatspace, by acting as a VC-subsidized arbitrage broker for consumer products, hoping to get enough mindshare to be considered more of a threat than a nuisance so it can get bought out. It worked!
I'd be careful about drawing too many conclusions from this story. For one thing, you are not Marc Lore. With a successful Amazon sale under his belt, he certainly had a leg up on fundraising over almost anyone. His name alone helped to generate buzz.
But even being Marc Lore is enough. I worked for his cofounder from diapers.com and you've probably never even heard of that company—building hype requires a compelling narrative, not just a big name.
I tried this site once and it was a disastrous experience. Their customer service is horrendous, and the complete opposite of Amazon. After that purchase it became pretty clear to me that Amazon has nothing to worry about.
This reminds me, I have around $100 in credits from 1 failed order because they messed up multiple times. Would be awesome if they sold Amazon gift cards.
It doesn't explain the Amazon example you mentioned, but I was under the impression they have special affiliate arrangements with 3rd party retailers and that they were somehow being allowed to invest their affiliate commissions into the consumer (which is typically not allowed).
So if they're making 15% affiliate commissions from B&N they're able to drop the consumer price 10%. They've been focused on scale more than margin since day 1, so it would make sense that they would just operate on something razor thin and continue to drive home that they have unbeatable prices.
For the 3rd party retailers it's a way to compete with AMZN on price without actually having to drop their prices and I can see how that would be attractive to a retailer that's losing market share.
No basis for this, just one man's theory.
https://jet.com/anywhere
The more items you buy, the bigger cut of the commission Jet gives you off. The buyer almost never pays the same cost as what the seller got paid.
http://www.amazon.com/gp/help/customer/display.html/?nodeId=...
Jet had a rule though - No boxes with competitor logo. So you had to pay Amazon $1 per box to ship it without a logo.
An Amazon email just went out they are discontinuing the unmarked boxes for $1 program. Likely directly to fight Jet.
Let me know if you had any more questions about how any of this work.
Source - Worked at a startup that let people sell on places like Jet with Amazon inventory.
They're probably loss leading on almost every product sold right now.
They buy the company because they want something that they can't easily replicate (which, again, is NOT the technology, because they can hire engineers and replicate your work product).
Typically it's one of these things:
a. they want your installed userbase. It's really hard to get people to use something new. If you have a lot of users, they will buy you even if your stuff is total crap so that they can get access to your users.
b. they want your intellectual property, like a patent and/or trademark portfolio. Patents are a great way to make companies think about buying your company instead of just ripping it off and copying it internally.
c. they want to retain the personal goodwill of someone they care about. For example, investors will often buy each others' portfolio companies, even when they're worthless, as a way to save face and ingratiate themselves one to another.
It's important, as entrepreneurs, that we understand what really goes into a big exit, and how it's not tech (unless you have patents, in which case they're buying the patents), but installed base.
They eventually launched, with a mixed reception, but they had enough numbers to keep them relevant.
I tried shopping at Jet and while some of the prices were very good, others were worse than Amazon, and little things like product detail information, pictures, etc., were strongly subpar. Product search was also in serious need of tuning.
Does anyone know which pieces of infrastructure (or ops) that Jet built have the most value to Wal-Mart?
[0] - https://tech.jet.com/blog/2015/03-22-on-how-jet-chose/
If they get bought out, I'd have missed out on potentially a very nice options payout. But then I'd have to find a new job, because I definitely wouldn't want to work for Wal-Mart. So I guess I'm happy with the decision to stay where I am, despite some of the drawbacks of working for a really tiny non-startup company. (Not that there aren't good perks too.)
For those of you who spend your careers in startups, how do you feel about new owners after a buy out? If you have reservations about them, do you stick around and see how it goes, or head straight for the exit?
They raised 820M so I highly doubt it'll be that great of a payout considering that's only 4x what they raised.
As for a buyout, it's typically crappy because the company buying you ruins the culture.
Edit: I've been through the buyout ruining the company culture, so I definitely agree with you there.
From the OP:
>But for both Jet and Wal-Mart, Amazon’s frenzy of warehouse construction and fast delivery—as quickly as one-hour—have proved formidable. The retailer has logged three straight quarters of record profit while locking in an estimated 60 million members to its $99-per-year Prime service, cultivating a loyal customer base and giving consumers fewer reasons to shop at traditional stores.
The answer is not buying a unicorn startup with seemingly no fundamental advantage over Amazon. If I were Wal-Mart, I would take the $3B and try to build a great technology organization and/or fund Wal-Mart Labs more. So much of what makes Amazon better is the data accrued over the last 18 years and the insight mined from them by their super-talented team.
And Jet.com is definitely not going to give that to Wal-Mart overnight. If I were them, I'd focus on long-term viability, not a short-term hack to placate shareholders.
Someone advocating a rational, realistic way forward (like you) would be pushed out in favor of people who "get it" and want to "move things forwards dramatically"
partially why consultants can come in and clean up shop. They don't care about following the conventions.
So it may be the price Walmart is willing to pay to ensure nobody is making Jet their new source for houseware products and avoiding the WalMart Brand. We also don't know what else Jet has in the pipeline, negotiating with them and through their research may be revealing more to WalMart.
all said, I hope Walmart doesn't buy Jet. I want Jet to exist on its own. Competition is the way forward in shopping, if not against Walmart, definitely against Amazon.
You place an order, and someone physically walks around a local supermarket, picks up stuff, they put on a van, and it is delivered to your home. It is actually very inexpensive (and free if you spend enough).
Yet nobody in the US does that (well nobody outside of big cities). Walmart right now today has a HUGE advantage, they can deliver products impossible to Amazon like fresh fruit and veg, meats, and all kinds of things.
But yet, do they? No. Walmart already has "warehouses" in every state, city, location. They're called stores. But instead of double dipping on that advantage, they keep using them as traditional retailers while Amazon rules the home delivery advantage.
Amazon are currently moving into an area Walmart already has an advantage in (being local) but because Walmart under utilises their advantage to such a large degree, Amazon is left alone to do so.
You can do it in much of the US, too; a number of brick-and-mortar grocery chains offer online ordering home-delivery services, even before considering third-party or online-only grocers.
Awesome service but I asked the lady how many pick ups they did this Sunday and she said 35. and I said what's the most and she said 65 - 70.
Grocery pick-up has not caught on yet and grocery delivery I would imagine is even less than that
Being able to order our groceries online and have them delivered or picking them up in some kind of drive-through lane is a huge quality of life improvement for families like mine.
In the US my local grocery (Harris Teeter) has a service where you order online and go through a drive through to pick up. The cost was $4.95/order or $99/year. They have recently added full delivery for $14.95/order (not sure on the yearly fee).
I live in a medium sized city.
Because outside of the big cities, you don't give up a minimum of 2 hours of your daily life just driving to and from work. It wouldn't make sense to have someone take of tasks like that.
Jet has a super smart team looking at ways to gain margins in areas amazon is ignoring. short term their investors won't appreciate this buy.
So does Walmart Labs, though. What makes Jet a better buy? Even if they've proven successful as their own company I'm super-skeptical of any startup merging with a larger organisation and retaining anywhere near 100% efficiency.
They might be smart but they haven't been successful. They almost immediately abandoned their original value proposition-- make money on the subscriptions like Costco and break even on sales.
It's a strange world when a startup that was just founded 2 years ago and is steadily growing [0][1][2], is considered a failure because they haven't already wiped out a 22-year-old goliath that has had a long history of struggling to break even, and operates in several other markets (AWS, Streaming Video, Devices, etc) that aren't this startup's main focus.
[0] https://www.snapagency.com/blog/jet-com-vs-amazon-mean-ecomm...
[1] https://www.internetretailer.com/2016/04/15/jetcom-predicts-...
[2] http://time.com/money/4337044/jet-com-lowest-prices-amazon-w...
Somehow, with all that money raised, they failed to realise there'd be some customers using freight forwarders.
When I went to purchase, the site stopped working, just providing some sort of generic error page. I called them up. A lady told me they were "performing maintenance" (middle of day). The website provided zero indication; just appeared broken.
Shipping took a while.
I'm certain they have smart people. But my anecdotal experience was that things were a bit clueless and not even remotely close to the level of taking on Amazon in any way.
Walmart.com blocks the VPN I use with a generic 403 Forbidden.
Maintenance to fix a security critical bug in the middle of the day to remain in compliance for credit card processing could have been a reason for this nuisance. Lots of factors and variables.
I think they set up their CloudFlare 100% correctly.
Jet does not sell outside the U.S., they have no plans to ever sell outside they U.S. Most of the cyber attacks against them are from outside the U.S. Their entire business plan is cutting cost out of the supply chain inside the U.S. By bundling items together in the same box and saving the consumer in the U.S. Money.
The entire point is to reduce the risk footprint, when most startups are being hacked left and right jet is being very smart by throwing captchas and saying to everyone outside the U.S. we don't want your scammy business.
You'd think with all that money spent, they'd have recognized this. FWIW, they eventually fixed it, a week or two (or so) after several poorly-written emails I sent them. So I think it is more likely to be the result of bad thinking, or just being unaware of the situation.
Furthermore, if their anti-hacking defense relies on a captcha or not being able to easily download their app, they're beyond screwed. I don't think they are that incompetent, it might have been, at best, oversight.
Probably the fault is at least partially on Cloudflare, though. Trump's read-only campaign website throws up a captcha at least to Guatemala. And GT isn't known as a centre of any hackers, to say the least. So if they have high profile sites like that which are misconfigured, perhaps they don't do enough review or customer education.
Unless it's under a current attack, and even then it should go by IP or something. Visiting from an IP never used before should now throw up a captcha. Nor should it continue to do so on repeated visits.
It's broken, full stop.
Edit: I mention Trump's site because it's a reasonably high profile, static, site that I've seen CF blocking on. Also, FWIW, after I sent several emails to Jet, they seemed to reverse course and their app and site are available. Seems like an oversight/not knowing to me. CF's defaults are not very good so they probably didn't change them. CF should review their customers and suggest better defaults, at least to high end clients.
Maybe a good time to join a CPG/e-commerce startup :)
I think the key phrase here is _verticalized_. Go-to-market as well as scaling operations is much easier when you can focus on a single product category.
Maybe it's a sign Walmart is doing better than it had promised and the time is right
This will be chalked up as a "failed" startup but at least the investors get to take their money and play another round elsewhere. For the employees this is likely not a great thing. I'm guessing when they joined a hyped up startup it was in large part because they didn't want to work for companies like WalMart and stood to strike it rich if Jet went public or hit it big. Now they could be wearing a WalMart badge and the company sold out to save the ass of its investors.
Conversation at the deal table is usually something like "we need X valuation to meet our term sheet with investors so the founders and a few others get paid." The rescue buyer generally doesn't care about what the employees get, in fact it's very much in the buyers interest that the employees don't get too much.
In other words the size of the valuation being bounced around is likely not driven by the value of assets for shareholders but rather the size of the contractual hole in the ground that founders dug with their investors... to escape that hole $X is needed.
Harsh terms yes, but not uncommon.
Preferred shares are common for investors that pay out at a multiple of the common shares, so in an exit the preferred pool can be paid at a dramatically higher rate than common shares.
Funding often also comes with guarantees on return - i.e., if the exit price is below a threshold, the investor gets a guaranteed minimum return before other are paid. This works out for the company if it's a smashing success (the upside is also capped) but can wipe out common shareholders if the company sells for anything less than stratospheric valuations.
This should be a lesson to anyone thinking about working for a startup: a company raised $570M and sold for $3B, and in all likelihood the employees will receive very little from this sale.
In the modern startup fundraising scene, and the way startup equity is structured for employees, if your company exits for anything less than a mind-boggling headline-making valuation, you are almost certainly receiving little to nothing.
Goes to show just how entrenched some of the negative feeling (not everywhere, but where it exists, including with many in the Amazon demographic) is about Walmart.
for me I believe it was couchdb that brought erlang to light .. but now it seems erlang isn't really getting any more popular
but yea, of course being used by whatsapp is very strong validation for erlang
Loyal users? Nope. Their version of "prime" is the proverbial pig in a poke, as you need to buy that one before you can actually figure out if you like to become a longstanding customer (experience, logistics, price/value, positive surprises). Most users are just the coupon cutters who will switch to whatever next crazy person is offering loss leaders.
A strong brand? Plastering NYC subways without having launched does not mean a viable brand. Also they nowadays focus pretty much only on performance marketing. So nope.
Strong technology? Meeeh...
The rationalization at Walmart HQ probably is that with Walmart's purchasing muscle they might improve the unit economics a lot. But why buy a flash in the pan in the first place...