Monsanto and Cargill are food technology firms. Advances in food technology are what allow us to feed 9 billion people with a fixed resource (arable land). There are serious innovations in food production and distribution that have saved millions of lives in the last half century (Norman Borlaug and the Green Revolution).
An online seller of local produce is not "food tech". It is simply using the web to sell food. Add to that their dislike of synthetic pesticide/fertilizer and other real advances in food technology (advances that in the developing world mean a real reduction in deadly diseases that spread through the use of animal manure [natural fertilizer]), and it makes them just another anti-tech firm that happens to peddle goods on the Internet.
The point is simply that firms that reject technology should not be described as "tech" companies simply because they use the Internet in some way.
I'm not suggesting in any way that companies should not exist if they don't solve planet-scale problems.
People don't say "Ferrari isn't a car technology company" because their technology isn't targeted towards the masses.
Without a citation I'm disinclined to believe this. Populations have managed to feed themselves without Monsanto/Cargill-style advances for pretty much all of human history. Something like a third of food goes wasted as it is.
Certainly a lot more important selling ads, or providing an internet-based service to pick up your laundry.
But it isn't true. Maybe someday.
Supply Chain Management is a field that is heuristic-driven because there isn't a solution. The heuristics that drive modern food distribution are the result of a real world genetic algorithm that is already thousands of generations deep...and miniscule incremental improvements have been the subject of PhD Theses for over a hundred years now. You don't optimize on top of that by writing a web service. Supply Chain Management may not be technologically advanced in its usage of enterprise software, but that doesn't mean that their ideas and processes are stupid. At best, it means there are some annoying frictions in the industry in the way that they interact with other industries (and there are actually plenty of viable startup opportunities to fix this). The presumption of stupidity[2] regarding the existing state of logistics and supply chain management killed this company, just like how it killed Webvan, and is going to kill a whole host of startups in the distribution and delivery space within the next few years. [3]
[1] https://static.googleusercontent.com/media/www.itasoftware.c...
[2] http://www.aaronkharris.com/presumption-of-stupitidy
[3] PS: If you are in VC and have a stake in any startup that is doing last mile delivery, liquidate now. There isn't a single startup in the space, whether they are currently valued at $1 or $1B, that can sustainably provide their existing value proposition that they are promising to their customers. It is possible to force scale some of them into something sustainable, but your valuations make me believe your cash flow neutrality projections are off by more than an order of magnitude.
That's an interesting post.
I notice the presumption of stupidity on Hacker News is very strong in the fields of auto manufacturing and banking.
Eating food is an animal need, and therefore we have instinctual animal behaviors around supplying it and consuming it that just can't fit into any sort of rational mental model. There are functions around food behavior built into our DNA and we haven't had enough generations since the invention of agriculture to evolve beyond them yet. Heck, I'd even guess we would all benefit if food supply chains were more decentralized and chaotic than they are already.
This irrationality is unfortunately a difficult thing for engineering-minded people to accept, so it makes sense that the valley would just keep on making these same mistakes with every generation. So it goes
Our genetics have been influenced by agriculture, already. I don't know what it means to 'move beyond' behavior. Humans are very good at changing their behavior at time scales far, far shorter than any evolutionary time scale. Even for behaviors that one would consider particularly basic, like sex or... eating behavior.
All I see is an assertion that some behavior is 'logical', actual human behavior is 'irrational', and the reason why humans are acting so irrational is because its ingrained in their DNA. The allegedly logical argument for eating Soylent is left unexplained. I doubt there is one. I doubt modern humans could yet design a single nutrition product that outcompetes a diverse diet in all benefits. I think you just use the word logical to designate things as good, and irrational to designate things as bad.
Instead of actually considering why people eat the way they do, you're not saying anything at all except that you think it's dumb. It's a very boring point to make and it looks flimsy and downright silly when your justification is Argumentum Ad DNA.
Boring, boring, boring, and unfortunately incredibly prolific on the Internet.
I wonder if there's a good startup opportunity in this industry in Asia; many firms possibly haven't figured out the application of mathematics/ops-research to their supply chains yet, at least compared to the level of top US firms.
Logistics (delivery) startups are burgeoning in Asia, but no doubt will face these issues soon - maybe specialized mathematical expertise will help.
This is a repeat of Webvan. Webvan had a good idea, but tried to "scale" fast. They had about 3% market share in 30 cities, and needed 30% market share in 3 cities.
I've read a few bitter stories about people with ramen-profitable businesses who got a late-stage investment into their bootstrapped company. Basically you spend years slowly kindling a small fire, and the VC comes over a dumps a truckload of lumber on it. Might get the bonfire they're looking for, but they don't really care if they just smother your campfire instead.
For mass market groceries, there are two virtuous cycles a retailer needs to trigger. The first is:
1. Get higher customer density
2. more deliveries per driver shift
3. reduced delivery costs
4. attract more customers with lower delivery prices
5. go to 1
The second is:
1. Get more customers
2. better economies of scale and more negotiating leverage with suppliers
3. reduced grocery costs
4. attract more customers with lower item prices
5. go to 1
Now, the first virtuous cycle only works at the city level - operating in two cities doesn't improve your customer density. But for the second virtuous cycle you need overall market share, not just local market share. To get Wal-Mart market share (~30%) and prices you need Wal-Mart buying power.
Of course, that's no excuse for building loads of warehouses full of tech that can't achieve the performance you need and to 'iterate' costs a few hundred million per warehouse! But it's understandable why the business plan would call for national expansion at some time - and I can also understand why people immersed in the SV community would find it hard to slow down and not break things :)
It feels like some kind of tech-myopia that anyone should think code was the key to a successful food company. The old "when you're holding a hammer..."
I've heard this argument over and over again and it never is good advice. It ignores the context completely as well as whether the developers know Haskell or not.
You can screw things up in any language, especially if a large part of your business model involves stuff not related to code, like shipping perishable food.
No, it isn't. It is fairly straightforward and thousands of companies have scaled across the world.
Scaling a two-sided network focusing on providing a niche seasonal product to a niche audience is really, really hard. It wasn't the food distribution that wasn't scalable, it was the business model.
"We were motivated by enthusiasm for our mission and eagerness to bring Good Eggs to more people. But the best of intentions were not enough to overcome the complexity."
No, you were motivated by aggressive expansion targets to provide returns for the dozens of millions of dollars you took as investment and to make a lot of money.
C&S Grocer does $22 Billion per year in revenue, and is profitable, doing just food distribution.
http://www.cswg.com/ and https://en.wikipedia.org/wiki/C%26S_Wholesale_Grocers
Every one of us in the USA probably ate C&S distributed food today.
I'm guessing the logistical and financial troubles described in the OP were pretty clear 2 months ago...was expanding service to Manhattan a Hail Mary to attract additional investment?
As a result, 140 people got laid off all at once, rather than in waves. Had it been done in waves there would have been mass confusion, low morale, and an inability to buy into the new plan because there wouldn't have been a new plan yet.
And for the same exact reason plans to roll out to Manhattan, which were surely started many months ago and enshrined in yearly and quarterly goals, were axed abruptly.
It's possible it was a cynical ploy for fundraising, but I really doubt that. It's very hard to pull off momentum games at GoodEgg's size — investment scrutiny is much higher, and decisions are based more on spreadsheets. Not that hype doesn't factor into it, but it's not going to float you if your core economics are busted.
Disruptive innovation is about ripping out the assumptions that incumbents made and operating under a new set of assumptions that may not have been possible when the incumbents started. But sometimes, the incumbents' assumptions/constraints are still valid, and new entrants don't have as much of an advantage (or the new entrants' advantage is easily copied).
Specifically, I've been a customer of theirs for years, and in the past two years in particular, I've seen prices go up pretty dramatically and quality in some cases go down.
It used to be the case that Good Eggs produce and meats were farmers-market quality at really good prices, delivered. Now it's the case that the produce feels like farmers-market seconds (the produce I get from them regularly has only a few more days of freshness left and are decidedly not the fruits or veggies I would pick if I went to the store on my own), and the meat and fish prices have gone well beyond the cost of the same meat from other sources (say a trip to a regular market). Top this all off with persistent packaging and logistics errors - my last order contained someone else's frozen lunch pies, didn't contain any of the cheese I ordered, and was delivered an hour before the actual delivery window I requested (and contained fish, so if I hadn't already been home, this would have been a problem).
Good Eggs is really good at fixing these problems - I email their customer service and they credit me for stuff I don't have and throw in a $5 off coupon for next time or whatever. If inconsistent quality or mispacks were rare, this'd be perfect. The problem is, it is not rare at all. I have definitely fallen off in my use of their service - if I'm paying the same price, I might as well just go to Andronico's, Whole Foods, or the Ferry Building (or Gus's or Rainbow, or Berkeley Bowl ... there's a lot of great grocery stores in the SF region) so I can pick out what I want, and sometimes (especially at Berkeley Bowl) get a way better price.
They need a better process for vetting the product they get from distributors (and possibly a better contract when it comes to rejecting low-quality stuff) and a better process for getting people's stuff into their bags. That's not scaling, that's core competency. It may be the case that this doesn't scale, can they deliver food that's sufficiently high quality that I could say, 'If I went to the store, I'd have chosen that tomato' at a price that's competitive with the store? That's a difficult problem to solve and requires well-established relationships with vendors.
1. A lot of people who care about organic and farm-to-table ethos already live in areas with significant market coverage. Those people will tend to have existing behaviors — GoodEggs sought to displace these. This can be hard if existing players do good-enough job.
2. The paradox of some delivery services is that the people who need them most are sometimes the most economically unviable customers (because they are geographically spread out, because they are lacking in funds or both).
re: software and food. The truth is nuanced:
- obviously, code won't overcome the challenges of immature, lower-scale logistics and business operations. Roll up your sleeves like everyone else!
- no, it's not about "big data" as much as business process software.
- but yes, code can help in some ways: - analytics/BI/decision-support: smarter decisions, fewer meetings. - running ops: fewer managers, automated monitoring and project followup. - use code to help manage your supply chain.
- but yes, "tech thinking" does help: - faster, safer process change - remote monitoring - application of classic compsci algorithms vs reinventing wheels.
cheers! adam
Buyer's Best Friend leading provider of office snacks to silicon valley http://bbf.io/snacks
As the article says, "Figure Out Your Model Before Scaling".
Not a big deal, but it was a bit annoying coming from a company I'd always used specifically for their great customer service.
