The Industry Standard - Where are they now: Webvan - Comments

Minor correction: WebVan

Belanda — Sun, 28 Dec 2008 13:18:49 -0800

Minor correction: WebVan never made any real deliveries in San Diego. I was watching closely and they went directly from "coming soon" to "out of business".
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The execs at Home Grocer

emek — Thu, 27 Nov 2008 12:12:35 -0800

The execs at Home Grocer took their huge payouts and moved on, leaving the employees and investors in Home Grocer to flounder in the morass that was Web Van.
It was an over ambitious, poorly thought out plan and it is still film izle amazing that the CEO, COO's and the other execs that were mentioned are still in leadership positions with other large companies.
It use to be the Captain went down with the ship, but now the ship can sink with all the crew and passengers as the Captain(s) sail away into the blue in the gold encrusted life boats.
Never invest in any company that has at it's head a person with a poor track record, It seems that the majority of these "turn around specialists" simply sell off all of the company assets and then turn around and leave, with a bundle.

I used Webvan in Orange

emek — Thu, 27 Nov 2008 12:11:00 -0800

I used Webvan in Orange County and was so pleased with their service, I almost stopped shopping for the mundane stuff physically and relied on Webvan. I was sad when they shutdown! The service was reliable, the website highly usable (e.g. reordering weekly replenishment in one click), and courteous delivery people. It was so nice!
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I used Webvan in Orange

emek — Thu, 27 Nov 2008 12:10:28 -0800

I used Webvan in Orange

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I used Webvan in Orange

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The execs at Home Grocer

Michaella — Fri, 19 Sep 2008 15:49:22 -0700

The execs at Home Grocer took their huge payouts and moved on, leaving the employees and investors in Home Grocer to flounder in the morass that was Web Van.
It was an over ambitious, poorly thought out plan and it is still film izle amazing that the CEO, COO's and the other execs that were mentioned are still in leadership positions with other large companies.
It use to be the Captain went down with the ship, but now the ship can sink with all the crew and passengers as the Captain(s) sail dizi izle away into the blue in the gold encrusted life boats.
Never invest in any company that has at it's head a person with a poor track record, It seems that the majority of these "turn around specialists" simply sell off all of the company assets and then turn around and leave, with a bundle.

I worked there for the first

flora — Wed, 17 Sep 2008 20:14:07 -0700

I worked there for the first 3 years. One of the things the technology team always forgot was that it was essentially a Grocery Store. They seemed to think it was strictly a tech company. Along with forgetting to prove the concept by starting small and expanding once it was proven, they just ignored what grocery shoppers really wanted--convenience, reliability, quality--not flashy structure.

I used Webvan in Orange

Motak — Sun, 08 Jun 2008 12:19:41 -0700

OK, help this old brain -

Tired old brain in TX — Wed, 04 Jun 2008 18:15:18 -0700

OK, help this old brain - wasn't Adam Lashinsky, then with thestreet.com,, now with Fortune, somehow involved in their downfall - exposing some things post IPO that directly led to the end of Webvan?

I was a contributing editor

Michelle Rafter — Wed, 04 Jun 2008 16:21:18 -0700

I was a contributing editor at The Industry Standard and wrote about HomeGrocer's move into southern California, specifically Orange County, before the company was acquired by WebVan. I'm sure that story is rattling around in the Standard archives somewhere. I did a couple test orders while reporting my story and then afterward, when I quit writing to have a baby, became a regular customer. My family loved HomeGrocer because the drivers were so nice. However, as a consumer my biggest problem with the service was you couldn't get the same brand names the supermarkets carried, and there were no club card-type discount programs. The company was so new it couldn't strike deals with major distributors, wholesalers or brands, an that hurt them, along with the enormous overhead and all the other things you mentioned.

Flash forward eight years. I now live in Portland, where Safeway and New Seasons, a regional organic grocery chain, both offer home delivery. I've used Safeway.com for the past six months and love it, especially now that gas is $4/gallon. If I had my way I'd never drive to the grocery store again. The Web-based interface is simple to use and stores my entire shopping list, which means I'm done with my $150 to $200 weekly order in about 10 to 15 minutes. Safeway.com's shoppers pick from one of the company's megastore locations, so the selection is even better than at the smaller outlet near me. I can use my club card to get discounts, and take advantage of frequent free-delivery promotions and other deals - this month, free movie tickets - just like I would in a regular brick and mortar store. And the delivery guy is really nice, guess that hasn't changed. Moral of the story: give customers convenience, a good Web site, huge selection and the same prices they'd pay in the stores. It can't be a high-margin business for them, but then again, the grocery business never has been.

Michelle V. Rafter

When Web Van bought Home

Jerry Edwards — Wed, 04 Jun 2008 06:38:07 -0700

When Web Van bought Home Grocer, it was done without the approval of the stock holders of Home Grocer, of which I was one.
I believed in the Home Grocer concept and it was profitable, unlike Web Van.
The execs at Home Grocer took their huge payouts and moved on, leaving the employees and investors in Home Grocer to flounder in the morass that was Web Van.
It was an over ambitious, poorly thought out plan and it is still amazing that the CEO, COO's and the other execs that were mentioned are still in leadership positions with other large companies.
It use to be the Captain went down with the ship, but now the ship can sink with all the crew and passengers as the Captain(s) sail away into the blue in the gold encrusted life boats.
Never invest in any company that has at it's head a person with a poor track record, It seems that the majority of these "turn around specialists" simply sell off all of the company assets and then turn around and leave, with a bundle.
How is it that any company share holders, no matter the size, would allow for a senior manager, whether CFO, CEO, COO or any other idiotic acronym, to receive hundreds of millions in compensation is beyond me.
What happened to maintaining profitability, how can the officers of any company tell it's employees that they must control costs, when they vote themselves millions in pay raises and golden parachutes..
Wake up America.. Is your corporate leader a "Captain Smith of the Titanic" will he/she take your company to the bottom? or will the shareholders rise up and take back their companies.
We don't need board members who are there for name recognition only, It seems that appointments are made by the heads of companies only to provide rubber stamps or flashy names.
Boards of directors are suppose to be the safety link between the shareholder and the management,
but when the management owns and appoints the Board of Directors, there is no link and no safety.

We are going to see many more huge failures, like Countrywide, Lehman Brothers, Bear Sterns and pick an airline. Look at the compensation package of all of the officers of these failing institutions, is there a nexus between poor performance and high management pay??
Would you still get paid if you drove your business into the ground?

Jerry

Webvan delivered for quite

Courtknee — Sat, 31 May 2008 06:33:10 -0700

Webvan delivered for quite some time in Atlanta and I enjoyed their service very much. When they started adding a delivery fee I did not mind too much since their prices were reasonable. The real benefit was the time savings and not having to go the store. Once you made your list, your recurring items were saved and future ordering was fast and easy. They never had critical mass in the market. It was great for busy people who didn't want to pick their own meat or produce but I believe these people are few and far between.

Where are they now: Webvan

David Cotriss — Thu, 29 May 2008 15:22:21 -0700

Founding: Webvan launched in 1999. It was founded by Borders bookstore co-founder Louis Borders. George Shaheen, previously head of Andersen Consulting, was appointed CEO. The company received over $400 million in funding from backers including Sequoia Capital, Benchmark Capital, Softbank, Kleiner Perkins, Goldman Sachs, Caufield & Byers, Knight Ridder, LVMH, CBS, former Netscape chief Jim Barksdale, and Amazon.com.

History: Webvan was an online grocer whose fancy green delivery trucks brought fresh produce to customers in select cities. Opening on June 2, 1999, Webvan started delivering groceries to just 10,000 homes in the San Francisco Bay Area before a rapid expansion plan took hold. The company hoped to eventually deliver everything from videos to pizza to clothes from the dry cleaners using automated warehouses.

Its first warehouse was a massive 330,000 square-foot facility in Oakland, California, equipped with more than 4 miles of conveyor belts to automate picking and packing. Webvan later placed a $1 billion order with Bechtel Corporation to build 25 similar warehouses nationwide.

The company’s November 5, 1999 IPO, filed just months after Webvan launched, raised $375 million, adding to its coffers but unable to stem ongoing losses. The IPO was priced at $15, opened at $26 and reached a high of $34 before closing at $24. The company acquired rival HomeGrocer.com for $1.2 billion in stock in June 2000.

This allowed Webvan to turn a profit in Orange County, California, the only market where it did so. Nevertheless, the merger caused various technical problems, and order quantities dropped. Shoppers soon headed back to the grocery store to pick up their milk and cereal.

What Happened: In April 2001, CEO George Shaheen was replaced by Bob Swan, Webvan's former CFO and COO, in an unsuccessful effort to turn things around. As part of that effort, operations in several cities were shut down, marketing expenses were trimmed, and Webvan began charging for deliveries, only to see demand further erode in its remaining markets.

Unable to raise more cash, the company auctioned off assets in an attempt to avoid bankruptcy. On July 9, 2001, Webvan filed for bankruptcy and began its liquidation. In August, the company auctioned $30 million worth of equipment including more than 200 delivery vans, a warehouse order-fulfillment system, several electric generators, office furniture, and computers.

One of the largest auctions was held in October for similar items. The company also sold its technology platform and Oakland distribution center to Kaiser Permanente for $2.65 million.

Where Are They Now? In the end, Webvan was making deliveries to about 750,000 customers in Chicago, Los Angeles, Orange County, Portland, San Diego, San Francisco, and Seattle.

Sunil Bhargava, who was on the founding team and the chief architect at Webvan, says that the customer base never reached a critical mass. There were other problems, too: “Any new way of doing things takes a while to set in,” Bhargava tells The Standard. “Webvan required customers to order the night before. Many would forget and then run out of, say, milk and go to their local grocery store. This made the habit hard to form, attrition high and resulted in us running a jumbo jet-like operation at 25 percent capacity. We were losing lots of money but the street expected us to expand to nine cities in a year. With hundreds of millions from the IPO in the bank we should have taken the hit, slowed down and expanded capacity with demand. Some of us pushed for this but the greed was intense.”

Bhargava is now co-founder of Tandem Entrepreneurs, a company that helps build startups. Louis Borders is chairman and CEO of online news site MyWire. George Shaheen is senior consultant for worldwide services at IT project management firm Innotas, and Bob Swan is CFO at eBay.

The Standard attempted to contact Borders, Shaheen and Swan but was unsuccessful. Webvan may be history, but other online grocers such as Peapod, a wholly-owned subsidiary of international food retailing and foodservice company Royal Ahold, continue to flourish.

Were you an employee, customer, or client of this service? Then share your memories below. What did you like about the company? What didn't work? What other factors contributed to its success or failure?

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