Instacart Is a $14 Billion Capitulation

Photo-Illustration: Intelligencer; Photo: Instacart

Wall Street loves when people buy things. It is at the very heart of American capitalism — the more people consume, the more money traders, bankers, and brokers get. But what Wall Street loves even more is when someone comes up with a new way of selling something. Silicon Valley knew this during the 2010s tech boom. Uber, DoorDash, Peloton — all these companies were innovative in creating an experience rather than actually making a new thing that would change your life. Bad-mouth it all you want, but as far as the investing class cares, it works (or, in the case of Peloton, used to work).

Another company joined that club on Tuesday when Instacart — the company that buys your groceries for you — made its New York Stock Exchange debut as a $14 billion company. Maybe you see this number and think that, like the groceries you buy, that number is inflated and appalling. And maybe it is. But consider where it was just a few years ago. This is a company that was valued at $39 billion in early 2021, during that slog of the pandemic era when vaccines were around but not yet widely available. But Instacart is not as straightforward a story as a pandemic darling gone flat, or even a tech company that’s managed to find a way into your life and not let go. Instead, it’s about a Silicon Valley star capitulating, finding that its reason for existing doesn’t work the way it thought it would, and quietly changing its business model so that New York money can keep it going for longer.

There are two groups who made lots of money off Instacart on Tuesday: the people who held shares (or options) for a long time and those who held it for less than a day. According to the Wall Street Journal, those who invested in the company since 2015 — for the last eight years! — were under water upon the IPO pricing. To put that into perspective, Instacart was founded in 2012. Giant funds like T. Rowe Price and venture firms like DST Global have all lost money on their investments. And look — nobody’s crying over their getting hosed. Tech was an obvious bubble for a very long time, and anybody who didn’t see it pop gets what they get. It’s the other group of people that I think is the most interesting. These are the investors who bought the shares at $30 each, then figured that there was enough demand to make a killing. They were right. The shares started trading at $42. They made a tidy profit just for doing little more than being in a room with the right banker at the right time. (By the end of the day, it fell back down to $33.70.)

There is an obvious coastal divide in American money. How can the same company be beloved in California for $39 billion just two and a half years before Wall Street loves it at $14 billion? The reason is that, quietly, Instacart changed what it does. That joke tweet above is what most people think of when they see one of these tech companies — some app that’s supposed to make life more convenient is charging you a ton of money for inscrutable reasons. And for Instacart, that is certainly still true. But it’s found another way to make money, which is advertising. Financiers and traders love it because ad sales is an old, battle-tested industry that, even during a down year (like in 2023) is still understandable. It also makes sense. When someone opens up Instacart, they are there to spend money. You think they came in to get out of the rain? Guy doesn’t walk on the lot unless he wants to buy!

It’s worth it to contrast Instacart not so much to Uber or DoorDash, which basically do the same thing in different ways, but to Peloton. When that company debuted, it flopped. You can stick an iPad on a bike and call it a company, but that doesn’t mean that anybody has to like it. That changed during the pandemic when it reached its all-time high in January 2021 — right around the time that Instacart crested. The difference, though, is that Peloton is still basically the same thing that it was then. Or, at least, a zombie version that kind of resembles it.

The reality is that Silicon Valley is now two bubbles past the Uber-for-Blank craze. The crypto one was fun, both on the way up and down. The AI one is weird, disconcerting, and probably nowhere near over. If Instacart is any guide, then whatever it is that the VCs are hyping now will either burn out or find a long life as something else entirely.


Instacart Is a $14 Billion Capitulation