So is the On Demand Economy Dead?
Delivery startups don’t deliver — that is the gist of the big feature story on GoPuff, a delivery service that started selling hookahs and other smoking paraphernalia in Philadelphia. The company is the latest in what seems to be a long line of money-losing attempts at instant (or near-instant) delivery. From Amazon to Deliveroo to Instacart — all have learned that hard lesson. GoPuff isn’t the first.
The story might give you the impression that the “on-demand” economy that gained enormous traction during the pandemic was dead. Or that the nearly $10 billion of venture capital that went into quick commerce companies in 2021 was dead money. But I don’t buy that — on-demand has now become an endemic (urban) social behavior, and it will only become more pervasive.
But first, let’s talk about GoPuff. Like many others before, you can easily tell GoPuff’s misery is mostly self-afflicted.
It seemed like such a great story when I first heard about them. It was the brainchild of Drexel University friends Yakir Gola and Rafael Ilishayev. The scrappy startup was founded in 2013, away from the glare of Silicon Valley in Philadelphia. In 2016, it raised a modest $8.25 million. Three years later, it raised $750 million, with $250 million coming from Softbank. By March 2021, the company had raised nearly $3 billion, including Softbank’s Vision Fund.
Things started to go wrong for GoPuff (much like its competitors) when it got too much (Read more...)