Instacart is a redo of kozmo.com on a global scale | Stock Spotlight
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I went to Stern NYU undergad during a magical time, the dot-com boom and bust. One of those companies that really made a big splash in Manhattan was kozmo.com. Basically the Instacart of yesterday, that first started in NYC and expanded out to other cities like LA, ATL etc.
When it was only a NYC thing, it was the talk of the tech world. Funding was flush, and people were ordering condoms, toothpaste and snacks from grocery stores with 1 hour delivery.
Bike messengers all over the city were proudly wearing huge orange kozmo logo messenger bags.
That is why I find it so ironic that Instacart and other services like UberEats, Seamless etc are doing so well. It shows how important timing is in business and life.
Speaking of life - I actually was offered the role of Expansion Manager at kozmo soon after my graduation in 1999. I luckily passed on this role as they shut down a year later. But the job description was truly crazy. They wanted to relocate me to Memphis as employee #3 there. The role was to replicate and expand kozmo offerings in that region from scratch. I had no experience in such a role which was my 1st red flag.
kozmo also ignited fierce competition with the starting of Urbanfetch, which was basically the same service offering. Urbanfetch, founded in 1999 and closed down in 2000, was a dot-com company which enabled customers to order products online and have them delivered by bike messenger in less than an hour within certain delivery areas covering most of Manhattan and London. The company's business plan was essentially identical to that of Kozmo.com, which led to a lawsuit from them.
Source material for the below section is Wiki
Kozmo.com was a venture-capital-funded online company that promised free one-hour delivery of "videos, games, DVDs, music, mags, books, food, basics & more"[1] and Starbucks coffee in several major cities in the United States. It was founded in March 1998 by young investment bankers Joseph Park and Yong Kang in New York City, and was out of business by April 2001. The company is often referred to as an example of the dot-com bubble.[2] In January 2013, the brand was bought by Yummy.com and announced that they would relaunch soon. In March 2018, Kozmo was relaunched as a warehouse club.[3] The Kozmo.com website is offline as of July 2023.
Kozmo.com's headquarters was located in New York City. According to documents filed with the Securities and Exchange Commission, in 1999 the company had revenue of $3.5 million, with a resulting net loss of $26.3 million.[6] The company had raised probably about $250 million, including $28 million from a group of investors in 1999 which included Flatiron, Oak and Chase[7] and $60 million from Amazon.com in 2000.[8] It had entered a five-year co-marketing agreement with Starbucks in February 2000, in which it agreed to pay Starbucks $150 million (~$243 million in 2022) to promote its services inside the company's coffee shops.[9] This included up to 500 Starbucks locations to host drop-boxes in-store for video returns.[10] Kozmo.com ended its deal in March 2001 after paying out $15 million (~$23.8 million in 2022). In July 2000, at the height of its business, the company operated in Atlanta, Chicago, Houston, San Francisco, Seattle, Portland, Boston, New York, Washington, D.C., San Diego and Los Angeles.[4] Kozmo had filed an IPO with Credit Suisse First Boston, but it never went public.[11]
While popular with college students and young professionals,[14] the company failed soon after the burst of the dot-com bubble, laying off its staff of 1,100 employees and shutting down in April 2001.[15][16] Employees of the company in many of their 18 locations nationwide found out about the shutdown only after arriving to work their scheduled shifts, and finding the doors locked.
The documentary film e-Dreams, released in June 2001, depicts the growth and fate of the company. In April 2005, former CTO Chris Siragusa launched MaxDelivery, a Kozmo-like service in downtown Manhattan specializing in the delivery of food, wine, DVDs and essentials, and is still in business as of November, 2018.[17][18]
Joseph Park, former co-founder and CEO, went on to co-found Askville in 2006, which is now part of Amazon.com. Park left Amazon.com in June 2009 to become president of BibleGateway.com, which is owned by Zondervan, a Christian publisher that is a unit of HarperCollins (which is owned by News Corp.).[19]
Yong Kang, former co-founder, returned to Wall Street, and as of June 2008 listed his occupation as investment banking at Lehman Brothers (now Barclays Capital).[20]
Who is the CEO? Fidji Simo
Instacart intrigues me as I want to see if they can succeed and grow? Will they get bought out? Will they flop like kozmo? Just like Uber only being able to grow with the mass layoffs of the Great Financial crisis to pick up drivers, Instacart benefited greatly from the global pandemic shutdowns and workers being available to pick up gig jobs.
Q4 2023 Letter and Full Release
Some Highlights
Layoffs
7% of workforce laid off to streamline
Departure of CTO and CIO. No plans to backfill CIO.
Increased Buyback Program
Instacart authorized an additional $500 million for share repurchases, bringing our total buyback program to $1 billion.
Q1’24 Financial Outlook