In the Spotlight:
Why Amazon’s purchase of Whole Foods gave Instacart a boost
Editor’s note: Here are three Bay Area startups worth watching this week.
When Amazon purchased Whole Foods last year, some people predicted it could spell the end for Instacart, a San Francisco startup that delivers groceries that customers order online.
But Nilam Ganenthiran, the well-funded startup’s chief business officer, says the megadeal helped him. That’s because it pushed grocery stores to realize the importance of online shopping. Instacart provides an app for consumers to place orders, contracts with shoppers who pack and deliver the goods, and takes a cut of the sales. In some cases, it has deals with grocers to keep online prices the same as in-store.
“It was truly a tipping point for the grocery industry,” Ganenthiran said. “We had been telling grocers that Amazon is coming and now it’s clear, Amazon is here.”
Instacart is trending on the Crunchbase startup database because it recently raised $350 million, bringing its valuation to $4.35 billion. Ganenthiran says the company will use that money to hire more staffers in engineering, product management and data science and invest in new products and services.
Instacart, founded in 2012, declined to state its annual revenue. The company also makes money by working with consumer brands and charging customers for delivery.
Funding: More than $1 billion
Grocery partners: More than 200
“It was truly a tipping point for the grocery industry. We had been telling grocers that Amazon is coming and now it’s clear, Amazon is here.”
Nilam Ganenthiran, Instacart chief business officer
Staff: About 400 employees at Instacart’s headquarters
Deal of the week
Polyvore, a technology business that let users build fashion collages, was sold to fashion retailer Ssense for an undisclosed price. Polyvore was previously owned by a subsidiary of Verizon as a result of the telecom’s $4.5 billion purchase of Yahoo’s Internet properties in 2017.
Why it matters: Yahoo bought Polyvore for around $200 million in 2015, according to tech news site Recode. It was part of former Yahoo CEO Marissa Mayer’s push to buy companies in order to bring talented people and technology to Yahoo, a strategy that had mixed results.
Verizon’s Oath subsidiary probably sold Polyvore for less than what Yahoo paid for it because it “was getting beat by Instagram and Pinterest,” said Gene Munster, a managing partner at venture firm Loup Ventures. “Something is better than nothing,” Munster said.
Backlash: After the acquisition, Ssense shut down Polyvore, and users were unhappy. Some did not like that Ssense forced them to opt out of giving their user name and email address to the new company, rather than letting them choose to move over. Ssense said that it regrets “the distress our actions have caused (in) the Polyvore community.”
Also trending
Apptimize, a San Francisco startup that helps companies test features with different groups of users in their apps, was in the news last week after BuzzFeed revealed that Apptimize could see information on Grindr user profiles, including ones that listed HIV status.
Grindr executive Scott Chen said in an email that Apptimize “did not capture or store any users’ profile data regarding HIV status,” but due to the concerns, Grindr will no longer let Apptimize and other contractors see that data. Grindr says that it has deleted HIV status data from Apptimize.
Apptimize said on its website that it “anonymizes all data that our customers pass on and does not share or disclose any information that we receive from mobile apps that use our product.” The company also says it does not “profit from selling user data or leveraging user data to sell ads.” Why it matters: HIV advocates were concerned that if the information were to leak out, it could make it difficult for those users to get life insurance. There are also some states that have laws against people with HIV having sex without disclosing their status.
“It runs the risk of people having their HIV status disclosed to people they would not have given that information” said San Francisco Supervisor Jeff Sheehy. Headquarters: San Francisco Funding: $18.5 million, according to Crunchbase