Are we finally moving from sock puppets to paper bag puppets

I awoke on New Year’s eve to the news that Instacart has raised over $200 million in a new round of funding, giving it a valuation of close to $2 billion.

I did a double take as I verified it was 2014/2015 and not 1999/2000.  You may recall that it was 15 years ago that and it’s simple (yet brilliant) mascot appeared in a Super Bowl advertisement, not to mention on good Morning America.  The dot-com bubble and bust were epitomized by many epic failures and poor decisions-remember when Excite@Home acquired Blue Mountain Arts (online greeting cards) for $780 million representing $71 per unique visitor and sold it less than 2 years later (weeks before its own bankruptcy) for $35 million representing $3.23 per unique visitor-but no one industry captured the magic of the period like the online pet food market.

sock puppet

In the S-1 filing for’s IPO on Feb 10, 2000, the company reported a loss of $42.4 million during the 4th quarter on $5.2 million in sales and included this little nugget, is operating on negative gross margins, meaning that the goods and services it sells cost the company more than it earns back in revenue. 

This was by no means the exception, as was fighting to gain market share from worthy adversaries such as:, and of course  We all know the fate of and its brethren, most went belly-up soon after the Super Bowl with the most desirable, eye-catching urls getting scooped up by large brick-and-mortar retailers for pennies on the dollar.

Needless to say, the concept of selling pet food online AND making money was ahead of its time.

Which brings me back to InstaCart and the insta-delivery business model.  Speaking of poster-children from the dot-bomb period, many refer to Webvan as the biggest example of how to raise a lot of money based on a flawed business plan and then spend it as fast as possible-Brewster’s Millions style.  brewster-s-millions-poster-112581

InstaCart has now built a formidable war chest but they are playing in a crowded field that includes:  FreshDirect, Postmates, Seamless, Peapod, EAT24, not to mention a couple of companies named Amazon and Google.

Have we reached our sock puppet moment in the current business cycle?  Only time will tell.

I do feel like enough of us were around (and conscious) during the dot-com bubble to make better decisions about the current state of affairs but I am concerned that we may look back on the time that very smart investors like Sequoia Capital, Canaan Partners, Khosla Ventures and Andreesen-Horowitz made a $200+ million bet on making money delivering groceries on-demand while competing with some deep-pocketed foes.

Fandango puppet




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I lead business development for KPMG's Emerging Technology practice in the western region. I enjoy discussing the next great thing coming out of Silicon Valley and Silicon others.

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