Uncapped #47 | Max Mullen from Instacart

Summary

Uncapped #47 | Max Mullen from Instacart (April 16, 2026): Podcast Summary

Episode Overview

Jack Altman of Alt Capital sits down with Max Mullen, co-founder of Instacart, for an in-depth conversation about building one of the most recognized consumer technology companies, navigating crises, achieving operational excellence, and transitioning into full-time investing. The discussion spans Instacart’s early days, pivotal growth moments, the impact of the Amazon-Whole Foods deal, lessons in company building, and Max’s evolving philosophy as an investor.

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Key Discussion Points & Insights

1. The Genesis of Instacart and Consumer Marketplace Building

• Origins in YC (2012): Max reflects on building a consumer company that’s now a household name, a feat that wasn't obvious in the beginning. Grocery delivery was considered a contrarian idea, scarred by the failure of Webvan in the dot-com era.

  • Quote: “In 2012, grocery delivery was basically something that didn't exist in the U.S. It was quite a contrarian idea back then to have an app.” (01:19, Max)

• Major Enablers: Changes between 2000 and 2012—namely the rise of e-commerce and smartphones—made real-time, store-based shopping by gig workers technically and culturally feasible.

  • “On the supply side, the shoppers could have a smartphone that could help them do this work... had GPS and it could help us make this an efficient marketplace.” (02:11, Max)

• Bootstrapping Both Sides: Early shoppers were Instacart’s YC batchmates; many faced rough experiences but constant iteration improved reliability each week (03:43–04:15).

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2. Instacart Operations & The Toughness of Early Execution

• Founder in the Trenches: Max did customer support himself—calls rang straight to his phone, giving keen awareness of pain points (05:01–05:20).

  • “The pain of anything that was wrong with our service was personally felt by me basically seven days a week.” (05:05, Max)

• Emphasizing Real-World Experience: Max still occasionally shops orders, underscoring the complexity and human judgment required—unlike shopping for yourself (04:17–04:49).

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3. Achieving Product-Market Fit and Growth Levers

• Product-Market Fit as a Spectrum: Early “fit” came from people desiring grocery delivery. Deeper fit—especially with families—emerged after adding major retailers (06:00–06:32).

  • “People have a really strong loyalty toward the grocery stores that they already shop at, and you want to get delivery from those on Instacart.” (06:32, Max)

• Groundbreaking Retailer Partnerships: The turning point was cataloging entire stores (like Trader Joe’s) by hand, buying one of everything for $20,000 to get the data needed for selection (07:54–09:03).

  • “We bought one of every product in the entire Trader Joe's.” (08:59, Max)

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4. Scaling Nationwide: Playbook & Tactics

• Expansion Playbook:

  • Local launches required building new catalogs and hiring ops teams on the ground (11:22, Max).
  • Growth levers: Adding more retailers, geographic expansion, price promotions, and aggressive referral programs (11:04–12:54).
  • Referral Tactics: A “killer referral program” drove ~one third of early traffic (12:47–13:17).

• Operational Complexity: Instacart’s marketplace has multiple moving parts: consumer and shopper apps, a retailer “admin” portal, ad marketplace, and advanced logistics—all harder than most B2B or SaaS businesses (14:01–14:55).

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5. Crisis, Adaptation, and the Amazon–Whole Foods Shock

• Existential Crisis: Amazon’s acquisition of Whole Foods (Instacart’s biggest client) triggered massive uncertainty:

  • “Seven in the morning, I get woken up...we find out that Amazon has bought Whole Foods. Now Amazon...is our biggest competitor.” (15:10, Max)
  • News put pressure on Instacart but catalyzed urgency—turning 'wartime' internally and, externally, convinced every competing retailer to sign with Instacart (16:38–17:03).
  • Quote: "In the 18 months after that happened, we signed basically every major retailer that had been a holdout." (16:58, Max)

• Lessons in Antifragility: Surviving shocks (Webvan skepticism, Amazon, COVID) gave Instacart thick skin and an “antifragile” culture, growing stronger after crises (17:34–17:50).

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6. Growth, COVID, and Profitability Journey

• COVID-Fueled Hypergrowth: The pandemic quadrupled business but created major supply chain/ops challenges (18:25–19:03).

  • “We grew like 4.4x in 2020. We were suddenly remote... everybody was working seven days a week, two standups a day, just trying to keep the business afloat.” (18:31, Max)

• Profitable Discipline: Instacart didn’t track unit economics closely at first; new hires (like Ravi Gupta) enforced discipline, culminating in an all-hands focus on scrappiness, cutting unnecessary spend (“$25k/month on Blue Bottle cold brew”), and driving every team to own P&L improvements (20:16–23:16).

  • “Everybody was responsible for $0.05, $0.25, $1 of the bridge from negative $15 of unit economics to neutral gross margins.” (21:56, Max)
  • Memorable Moment: Celebrating their first profitability milestone with $1 McDonald's hamburgers and cheap Costco champagne (23:16).

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7. Critical Decisions: Saying No and Focus

• Resisting Distraction: Max describes how resisting temptations—international expansion, adjacent verticals, new products—helped Instacart “keep the main thing the main thing” before expanding globally much later (24:00–24:33).
  • “The right idea at the wrong time is the wrong idea.” (24:33, Jack; 24:36, Max concurs)

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8. Looking Forward: AI and the Future

• AI Initiatives: Max is excited for Instacart’s new agentic AI features and sees magical consumer automation as imminent.
  • “Every consumer app in the near future will have incredible features where you'll be able to push a button and have magical things done for you.” (25:35, Max)

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9. Max Mullen’s Investing Philosophy

• What Makes a Great Consumer Founder:

  • Must see and bet on shifts in consumer stigma—ideas that seem contrarian but will soon be the norm (Airbnb, Uber, Instacart's own example) (26:23–27:34).
  • Needs to tolerate “looking wrong” for a long time, be thick-skinned, tenacious, and run extremely fast once the opportunity opens up (27:48–28:21).
  • “The idea almost has to be a little uncomfortable at first, otherwise you're in perfect competition.” (27:21, Max)

• The ‘Dirty Sneakers’ Test: Max’s informal but telling founder filter.

  • “If you're looking at a founder and they got dirty white sneakers on... that's a real builder, right, they're in the arena.” (29:03, Max)

• B2B vs. Consumer Founders: B2B demands more domain expertise; consumer is about taste, boldness, and timing (30:04–30:35).

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10. What Founders Should Want from Investors

• Three Things Investors Provide:

  • Capital
  • Help
  • Signal: Often underappreciated; great investors provide reputational value that compounds (30:51–31:31).
  • Quote: “Having Jack Altman invest in your company is a way bigger deal at a certain stage than just a party round of other random investors.” (31:40, Max)

• Decision-Making Framework — Science, Art, Religion:

  • “Science decisions have a right answer... get advice from investors. Art is why you're a great founder... only you can make the art decisions. Religion is about how you work—your core values...Get advice all day long about science, but on anything else, especially taste, just ignore them.” (32:36–33:38, Max)

• Supporting Founders Now: Max aims to be the investor he wished he had—helpful, present, but careful not to over-advise or advise outside his expertise (33:45–34:04).

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11. Community, San Francisco, and the Founder-to-Investor Journey

• Why SF Still Wins: Max strongly believes in in-person exchange and the unique density of founders in the city (34:28–34:51).
• On Becoming an Investor: Embracing the opportunity to help the next generation of founders more directly (35:06–35:10).

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Notable Quotes & Memorable Moments

• On Early Instacart:
  “Honestly, the very early customers, a lot of whom were our YC batchmates, probably placed orders that never arrived or were really late or didn't contain all the items.” (03:43, Max)

• On the Amazon-Whole Foods Crisis:
  “Amazon buys Whole Foods. Instacart's toast. And we were kind of freaking out. And so what do you do? …We declared wartime.” (15:58, Max)

• On Luck and Building Resilience:
  “If you start a company and it takes a really long time to build it, you're going to face luck of some kind. Great companies figure out how to take those moments and flip them.” (17:14, Max)

• On Company Culture Shift:
  “We threw this wonderful party which was like everyone who was there remembers this. We threw a very resourceful party... 300 $1 hamburgers and cheap champagne from Costco.” (23:16, Max)

• The Dirty Sneakers Test:
  “If you're looking at a founder and they got dirty white sneakers on... they're locked in on their companies, they're sleeping at the office. They just put on the same pair of sneakers and they get dirty. And like, the real builders, they look the part.” (29:03, Max)

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Important Timestamps

• Instacart Beginnings and Dot-Com Skepticism: 01:00–03:20
• Building the Double-sided Marketplace: 03:20–06:31
• Trader Joe’s ‘Buy Everything’ Story: 07:54–09:03
• Geographic Expansion (Launch Playbook): 11:21–12:16
• Coping with the Amazon-Whole Foods Crisis: 15:10–17:14
• COVID Hypergrowth and Cultural Shift: 18:25–19:58
• The Blue Bottle Coffee Unit Economics Story: 20:16–23:16
• Focus vs. Distraction/Expansion: 24:00–24:33
• Max’s Investing Philosophy and ‘Dirty Sneakers’ Test: 28:28–29:48
• Advice on Taking Advice from Investors (Science, Art, Religion): 32:36–33:38
• Reflections on SF and the Founder-VC Cycle: 34:28–35:10

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Tone & Takeaways

The conversation is candid, often humorous, and hands-on. Max demonstrates humility and conviction about the power of focus, cultural resilience, and the essential weirdness and tenacity required to build enduring consumer companies.

For listeners and readers:

• Instacart’s journey serves as a primer in operational complexity, crisis management, and the human elements of company building.
• Max’s framework for founders (contrarian ideas, conviction, urgency), the “dirty sneakers” builder test, and his nuanced view of investor utility are valuable whether you’re building, investing, or reflecting on tech narratives.

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Summary prepared by Podcast Summarizer AI | April 17, 2026

Transcript

[A]

And I look at their sneakers. If you're looking at a founder and they got dirty white sneakers on people that are busy building, they're locked in on their companies, they're sleeping at the office. Right. They don't have time to buy nice sneakers. Right. They just put on the same pair of sneakers and they get dirty. And like the real builders, you know, they sort of just. They look the part.

[B]

All right, Max, I'm very excited for this one. I love doing this with close friends. As you know, we've had some other ones on the show. And one of the things I was just sharing to you is we've hung out a million times and we barely talk about work. I barely know what you do. So I'm excited to learn about your work along with the rest of the audience.

[A]

Well, thank you so much for having me, Jack.

[B]

Let's start with Instacart, because you obviously just completed, you know, sort of the, the end to end dream of any entrepreneur. And then I want to go into sort of your investing and some of your other work, but starting with Instacart. And I don't even know all these stories, which I, I really should, given how much we've hung out. Can you talk about Instacart getting started, like the early days, the idea coming together? I know this is YC, like back in 2012. Right. So tell me about the beginning.

[A]

I'm so fortunate to be. To be able to be a founder of a consumer company because it's like a household name and everybody knows about it.

[B]

And today I use it like seven times a week.

[A]

You really do order a lot.

[B]

You probably know what I eat too.

[A]

I do not look at customer accounts,

[B]

but could you if you wanted to?

[A]

I can't.

[B]

No. Okay, you probably could.

[A]

But what's great about being a consumer founder is that, you know, everybody knows kind of what you do. You don't need to repeat yourself anymore when you're pitching the company. And that wasn't the case in the early days. Right. In 2012, grocery delivery was basically something that didn't exist in the U.S. it was quite a contrarian idea back then to have an app.

[B]

Well, actually it's even more contrarian because didn't people try it in like web 1.0 and it was like a big, high funded failure?

[A]

Yeah, there were some spectacular failures in 20 in like the dot com, like

[B]

hundreds of millions went in and didn't work.

[A]

Sequoia invested over a billion dollars in a company called Webvan.

[B]

Yeah.

[A]

And it failed. And that was 10 years earlier, before we started.

[B]

So did you have that when you were talking to. Was that like the big thing when you were talking to investors was like, this has been tried. It doesn't work.

[A]

Yeah, that was the elephant in the room. And most investors totally turned us down because they thought that it would not work again.

[B]

And so what changed?

[A]

Okay, so a bunch of things changed, obviously, from the dot com boom until 2012. First, more people were on the Internet and those people were more accustomed to E commerce. Right. So in 2012, there was lots of E commerce going on, but nothing in the grocery industry. And the other thing that changed is that we had smartphones. Right. And so on the supply side, the shoppers could have a smartphone that could help them do this work and, you know, had GPS and it could help us make this an efficient marketplace.

[B]

The shoppers part was the key. I think a lot of people think about it as like, oh, I'm going to order from my couch on the phone, but it's really the shoppers who are in the store needing the application.

[A]

Yeah. And the idea of using stores as where, warehouses, it was also new. Right. Most people who had tried to do grocery delivery tried to build big warehouses, buy trucks, and it was very expensive. And we didn't do any of that. We just went into the same grocery store that you would and shopped just like you would and delivered just like you would.

[B]

Obviously, this was hard to raise money for, but you still got into yc, you were still able to raise capital, but you still didn't had to start a marketplace and you still had to get apples. So what did you do to actually get this thing started? Day one, you had nothing to do. Day two, what did you start doing?

[A]

We sort of always had the company launch, like from almost day one. So we, we had a not very well designed app and a not very well designed shopper experience. And we sort of just put one foot after the other, trying to, like, build from a very small base of customers to a little bit larger and a little bit larger and try to pay attention to both the demand side and supply side at the same time.

[B]

So, like, who's the very first customer? Like, or like, what is their experience?

[A]

Honestly, the very, very early customers, a lot of whom were our YC batchmates, probably placed orders that never arrived or were really late or didn't contain all the items. It's a human business. Right. There's a lot of processes involved and mistakes. And every week we would try to make these metrics go up. Right. Percent of late deliveries would go down, and number of deliveries per week would go up, and the percent of your items that were delivered perfectly found rate would go up. And just. We would every week try to push those metrics up and just make little tweaks to the software to make that happen.

[B]

Did you ever shop?

[A]

I still shop.

[B]

Really?

[A]

Yeah, I still have a shopper credit card and.

[B]

But you go fulfill orders sometimes.

[A]

Occasionally, yeah. It's really fun. And it's super hard.

[B]

Is it hard?

[A]

It is really hard.

[B]

What's it like?

[A]

Well, first of all, when you're shopping for yourself in the grocery store, you know exactly what you want. And if something's out of stock, you just make a quick replacement and you're. You're good with it.

[B]

Right.

[A]

But when you're shopping for someone else, it's kind of hard to understand what their intent is.

[B]

You also don't know if they're gonna be, like, happy with the different chips or if they're gonna be really pissed. Cause they wanted lemon lime.

[A]

Right. Or do they want a bigger size of a same brand or a smaller size of the, you know, different brand.

[B]

Yeah, yeah, yeah. It's a judgment call.

[A]

Yeah.

[B]

But then, I mean, you can ask questions in it.

[A]

You can. Sometimes customers are really responsive, sometimes they're not.

[B]

Yeah. Okay. So you get all these initial pieces going. You know, you start kind of improving it consistently.

[A]

Yeah. And very importantly, we were doing. I was like, doing all of the customer support myself. So customers would call Instacart's phone number and it would ring my phone. So the pain of anything that was wrong with our service was personally felt by me basically seven days a week. And then I would go and make the roadmap and fix those problems so that I didn't have to get those calls anymore.

[B]

Wow. How pissed do people get? Like, is it, like an emotional thing for people who are like, hey, my burgers aren't here?

[A]

It really depends. You know, every customer is different, and it really depends. Sometimes people are buying, you know, things for their office. They're more chill.

[B]

Yeah.

[A]

You know, if you're buying a rack of lamb for dinner and it needs to arrive before five, otherwise your dinner's gonna be late. Then you'll be really upset if it doesn't.

[B]

Yeah. Actually, later, I'm gonna. I wanna ask you about, like, fast delivery and adjacent markets that I know you've thought about and done work in. But I'm still interested in how you, like, actually got this consumer marketplace going. Because they're so hard to get going. So, like, did you feel pull immediately, or was it the kind of thing where in order to get strong product market fit, you needed to add suppliers and selection, and it didn't actually cross until you had more and more products in the catalog.

[A]

My belief is that product market fit is like a spectrum. It doesn't just happen in one moment. And so the early days of Instacart, we sort of thought we had product market fit. We had a lot of pull from customers who wanted deliveries of groceries that were quick, but they didn't really care from what store. Our initial product was basically all coming from one conventional grocery store in San Francisco. But a real product market fit was really from families. And that only happened later when we started adding retailers and their full catalog to the platform.

[B]

Why was that important?

[A]

I mean, you don't want to buy groceries from a warehouse. You want to buy groceries from sprouts. Yeah. Or from buy Right market. Right. You have a really strong loyalty toward the grocery stores that you already shop at, and you want to get delivery from those on Instacart.

[B]

How did the business, like itself work in the early days? Like, I imagine it could not have been great margins when you were getting going, because you couldn't, like, charge $7 for an orange, but you still had to go, like, send somebody to go get the orange and bring it and all of that. So were you, like, running, like, on a wire at the beginning? Like, what did it look like at first?

[A]

To be quite honest, at first, we weren't very good at tracking our unit economics.

[B]

Like, I don't know.

[A]

And we were definitely losing money, but it was a little bit unclear how much. Yeah, our primary goal was just to get more deliveries and higher quality deliveries and more customers. And we knew that we could achieve positive unit economics later, but it would take, you know, a lot of work and bigger scale, zooming forward a little bit.

[B]

Were there, like, landmark partnerships, grocery store deals, like, whatever that, like, really inflected the business. And could you, like, talk through, you know, an example, like, end to end?

[A]

Yeah, I mean, I mean, the first thing is we. We. We didn't know how important retailers were. And in the early days, we asked our customers, you know, what could we do better? What could we do differently?

[B]

Because at first, you were not shopping from a grocery store.

[A]

At first, we were always shopping from a grocery store. But at first you went on Instacart and you saw a catalog, and we did not tell you where the groceries were going to come from.

[B]

Yeah, it's like, I Want some strawberries? Where are they from? You're like, don't worry about it.

[A]

And our idea was going to be, we'll get them from the cheapest, closest store. Right. People won't care where the strawberries come from. And so we asked our customers, and they told us, we love Trader Joe's. We want only to shop at Trader Joe's. So we went on this mission to try to figure out how can we partner with Trader Joe's. Right? And we couldn't get in touch with them. We tried everything, and at a certain point, we went to the store and we looked around and we said, well, maybe we can just shop out of a Trader Joe's without a partnership. And in order to do that, we would need a picture of everything that they sell. And so we asked the manager, can we get a picture of everything that you sell? And they said, absolutely not. We don't have that. We can't give that to you. And I said, well, what if I took my own pictures? I'll do it in the corner of the store. Or let us take some items out of the store in the parking lot, and we'll take some photos and we'll bring them back. And they were like, no, no, no. And so we came back, actually, and we said, what if we bought one of everything in the whole store? And they were like, that would be great. Come on a Thursday when it's slow. And so we said, okay, great. We'll be back on Thursday. And I went to that store with a bunch of other people over three days, and we bought one of every product in the entire Trader Joe's.

[B]

How much was that?

[A]

$20,000.

[B]

That's okay.

[A]

Yeah, not too bad.

[B]

Yeah.

[A]

We had just raised the money from, you know, from demo day, so we had a couple million bucks in the bank. We ran this experiment. We made the catalog of every Trader Joe's item. We launched it on Instacart.com and at that time, we had to add, like, a toggle, right? So now, instead of seeing no retailer names, you would see Safeway or Trader Joe's, and you could switch between them. And that was the moment, I think, we started to really find Marketplace Market.

[B]

That's interesting. It's crazy how. I mean, Airbnb had something similar where once they got good photos, it's like, you know, it was worth it to them to go do super manual things, apparently.

[A]

Yeah. And you have to sort of roll up your sleeves and go do these crazy things to get. To get the first customers to be really excited to tell their friends to get the next set of customers, you know, just to get one city going.

[B]

Once you had that understanding, did you then shift a bunch of the company focus to going and getting more retailers?

[A]

Yeah, we did this with, you know, Whole Foods and Costco and sort of a bunch of other retailers. And of course, we eventually got to the point where we struck partnerships with those retailers and then they would give us their catalog data or they would at least let us in their stores to photograph it carefully.

[B]

What was the argument that you needed to convince somebody like a Costco to serve products with you?

[A]

Well, we're, you know, a few people in San Francisco. We're a startup. No one's ever heard of us, you know, so it's tough to strike a partnership with a really big public company.

[B]

Well, because also, I assume the deal is, you know, we're going to buy. We're just going to come buy from you. You maybe we're going to cannibalize some of your online sales. I don't really know, you know, how the math works out, but I assume that there might be some idea of them thinking, no, I should just own this channel directly if I can.

[A]

Honestly, back then, it was a bit more of lack of awareness. You know, retailers didn't understand how important sort of E commerce was going to become, and they didn't have a good strategy yet. And in fact, retailers pay instacart. Right. A commission for bringing them.

[B]

Right. Well, now you have all this traffic. Yeah.

[A]

More growth.

[B]

Yes. And at some point that flipped where you're like, hey, I've got the traffic now. You can. You can come in at a different sort of price dynamic.

[A]

And. And at first we started with little. Little local retailers, you know, buy. Right. Rainbow Grocery right over here. And they were thrilled to partner with us. And then eventually we kind of got to the bigger sort of Whole Foods Markets of the world.

[B]

What were your levers for growth other than, I mean. So it sounds like adding retailers equals more growth in general.

[A]

Yep.

[B]

What else were the big levers? I mean, I gotta assume price.

[A]

Geographic expansion. Geographic expansion was another big one. Right. Like, we learned how to launch new cities. We launched Chicago, we launched Boston, we launched Washington D.C. we launched new York City.

[B]

How do you launch the city?

[A]

Oh, man. At first I just went there with an engineer and we would, you know, catalog the stores, make sure that our sort of. Our operations were set up correctly to understand the sort of borders of the city and the zip codes that we could serve efficiently. We'd Hire shoppers and hire operations folks to sort of get things going on the supply side. And then we do demand side marketing and kind of try to match those and grow those. What worked, man? I mean, I think there's. At first. In 2013, when we first launched, you know, the first city outside of San Francisco, which was Chicago. Luckily I had a girlfriend there who's now my wife, and she was going to business school. And so we got all the business school students, all the MBA students at Chicago University to become customers and they told their friends, we threw events, we did pr. And there was something like, novel. There still is actually something novel about putting in your grocery list. And then in an hour, it all just shows.

[B]

I get a rush every time.

[A]

And so we would try to use that. Yeah, try to use that as, you

[B]

know, you know what I'm, you know. Yeah, you know. Yeah, See, that's what I told you. Yeah, yeah, that's what I thought.

[A]

I don't judge.

[B]

Okay, so there's that. So there's, there's geographic expansion. Was price a big lever? Like, was it the kind of thing where you're like, I change these prices and I just like, you know, am I playing with that tool carefully or is it not that big of a deal?

[A]

Yeah, I mean, retailer set prices. But we would, we would make. Make delivery. We would make delivery free. You know, we offered an annual membership that we sort of discounted and would give free trials of Instacart Pl.

[B]

Did you do referral programs?

[A]

Absolutely. In fact, I designed this killer referral program that was like a third of our traffic in the early days.

[B]

When I first moved to San Francisco in like 2013 or something like that, I was like doing these crazy Uber referral. I was like an Uber referrer. Like, I was deep in there just doing paid marketing for Uber to get more drivers. And it was great.

[A]

And I assume it was great just for fun.

[B]

No, I got Uber credit.

[A]

Oh, nice.

[B]

Yeah, it was great. I think they'd stopped it at some point, but it was great for a little while. So you had those referral programs going for shoppers. We had customers.

[A]

Right. Like, like the key thing we figured out is that after your first order, right. When you placed it, but before it was delivered, you were really keen to share the service with other people. And so we would have this give $10, get $10 offer or we would change those. Those values to play around with them and experiment.

[B]

Yeah.

[A]

And that got a lot of people to share with their friends.

[B]

When I think about the overall Story of Instacart. Obviously you needed a nice piece of software too, but a lot of this is building a business in terms of like partnerships, business development, you know, the hard work of CD expansion, boots on the ground, hiring people. Is that common, do you think? Like, do you think a lot of consumer marketplaces are more require these other components besides just the technology? More than like B2B companies?

[A]

There's some consumer and some B2B marketplaces that are, that are what I call operationally complex. And ours is like probably hard mode, like extra hard mode if you think about it. There's the consumer app, which of course you know, as a consumer who orders a lot of ice cream.

[B]

Yeah.

[A]

There's the shopper app. Right. They have to have an app that's beautiful and works really well and is performant in like low wi fi situations. In the back of a grocery store, has all the photos of all the items. We have a huge ads business. Right. We're partnered with almost every consumer packaged goods company in the US and Canada. And then we have the retailer component. Right. We're delivering enterprise grade software to retailers.

[B]

Yeah.

[A]

And then we have a logistics system. Right. That routes in batches, orders, and we have lots more stuff, analytics. There's so many facets to the business. Right. You know, that's uncommon. A lot of the business models that you and I invest in are like pretty much the SaaS business model or sort of AI applications, a lot less complicated. And so I think it's not for the faint of heart to try to build such a complex business.

[B]

Yeah. Talking about other like hardmode moments, Whole Foods was obviously like a big customer of yours. I remember one day I was shopping with Whole Foods and then one day we're not. Can you talk about like what happened there, what it meant for you, like how, how it sort of affected the company.

[A]

So the company's chugging along and we're signing retailers and we signed this big long term deal with Whole Foods Market, which is, you know, not the largest retailer, but a really important one from a brand perspective. Seven in the morning, I get woken up one morning in 2017 and we find out that Amazon has bought Whole Foods. Now Amazon, you know, is our biggest competitor. They're really focused. They have been working on online grocery for decades and they have essentially infinite resources. And Whole Foods Market is our biggest client in terms of, you know, the number of orders that we send them. And so this is kind of an existential crisis for the company. And then the headlines started coming out. You Know, Amazon buys whole foods for $13.7 billion. Amazon buys whole Foods. What does it mean for the grocery industry? Amazon buys Whole Foods. Will Instacart succeed or fail?

[B]

Yeah, it's crazy.

[A]

Amazon buys Whole Foods. Instacart's toast. And we were kind of freaking out. Right. And so what do you do, what do you do when you get hit with something like that? As an early company, we had an all hands and we declared wartime. And we realized that this was going to be not a terrible thing for the company, but a dynamic situation we could kind of make the most of. Every other retailer saw this news as well and they were asking questions like, what is our e commerce strategy? You know, what are we going to do now that Amazon has entered our industry? And we used that to our advantage and we re engaged with, or they re engaged with us, almost every retailer that we hadn't signed yet.

[B]

You're like arming the rebels.

[A]

Yeah. And we really, you know, used that wartime crisis moment inside the company to motivate people to work extremely hard and extremely fast and with retailers to kind of get them to finally come aboard. And in the 18 months after that happened, we signed basically every major retailer that had been a holdout, including, you know, Costco and Kroger and others.

[B]

And you think those wouldn't have happened without it?

[A]

Certainly not on that timeline.

[B]

Wow. So the net effect might have been positive.

[A]

Absolutely. It was one of the best things that ever happened to the company. One of the scariest things.

[B]

It is crazy how, like when something like that happens, it's, it's a good reminder that you can't always know whether some piece of news is good or bad.

[A]

One thing's for sure, if you start a company and it takes a really long time to build it, you're going to face luck of some, some kind, good luck and bad luck. And great companies figure out how to take those moments and kind of flip them and leverage them totally. And you know, also when things that could be potentially bad for the company kind of happen. Yeah, you gotta like have a thicker skin.

[B]

Yes.

[A]

You, you gotta, you gotta become antifragile. And for sure, Instacart is what I would call an antifragile company. Things happen and we don't get worse, we don't stay the same and just repair. We get stronger. Right. People get emboldened and we get galvanized and we go off and do amazing things.

[B]

I mean, another one that kind of comes to mind that is both. It's like a champagne problem. Is Instacart's like a $10 billion public company, which is like, a remarkable achievement by any standard. There was one venture financing that was at like, 40 billion.

[A]

Yeah.

[B]

And a lot of companies, when that happens, that, like, ends up killing them, and they can't get through it. And it creates all these issues. But you got through it. You got public. You're now, you know, it's a public decacorn, and that's amazing. And who. You know, some level, it's okay that, you know. Can you talk about, like, that journey too? Because I'm sure that didn't feel good at every moment. And there was probably some cultural things you needed to work through and all of that.

[A]

Yeah. It sort of starts with the beginning of COVID Right. Covid happened. Our business sort of.

[B]

It went nuts, Right?

[A]

Yeah, yeah. I mean, we. We grew like 4.4x in. In 2020. We were suddenly remote. Right. And we had to scale the company. And even with hiring more people, everybody was working seven days a week, two standups a day, just trying to keep the business afloat because there was so much demand.

[B]

I mean, talk about COVID beneficiary. People just, like, not wanting to go to the grocery.

[A]

It's.

[B]

You can't.

[A]

Yeah. And like, even my own parents. Right. Obviously they're super fans of Instacart, but they were, like, using Instacart sometimes and going to the grocery store sometimes. And then during the pandemic, they completely switched.

[B]

And then you build a habit, and it lasted long enough that people built habits.

[A]

Yeah.

[B]

You acquired users and they stuck around,

[A]

and they've never down year. But that's a challenging thing. And sort of not being able to forecast what the next year and the next year were going to look like. And especially during 2021, the way the markets were. Right. So our valuation kind of went up and down, and this whole thing looked like a rollercoaster. It's emotional. People get attached to the value of their shares, and people thought that our IPO timeline was going to be one thing, and because of the markets, it had to shift and happened later, and we had to manage through all of that also, you know, it was. It was a new era of the company. Right up until that moment, almost everyone that joined the company was joining a company that wasn't yet really a household name. Right. You kind of had to squint to believe that we were going to do all the crazy things that we were. That we said we were going to do and achieve the scale that we said we were going to achieve. After Covid, it was pretty obvious, right? Instacart was on a great track, and so different types of people were attracted to the company at that point.

[B]

Yeah.

[A]

And we sort of had to manage through the changing culture that was necessary there.

[B]

Obviously, now you're a profitable company. At the beginning, you talked about we didn't even know what our margins were. Let's just pretend they were definitely super negative. When did you sort of, like, go through that cultural journey of, like, this is going to be. This is going to be a profitable business now?

[A]

So, two and a half years into the company, we raised a round of financing that valued us at around $2 billion. And that was sort of the beginning of us growing up as a company. We hired this guy, Ravi Gupta, you know, who then became a partner at Sequoia and is still on our board. And he was like the first, you know, adult in the room, let's say. And after a few months of joining, actually, really, after like, a week or two of joining, he looked at our financials and he was like, guys, I don't know if you know this, but we're losing a lot of money on every order. And we were like, yeah, we sort of know, but, like, how much money are we losing? And we sort of quantified it, and we realized that as good as things were going, you know, the company was growing very fast. And if we grew as fast as we were growing, all the money was

[B]

going to be gone.

[A]

We might run out of money. And so it was kind of epic. But Ravi had this all hands at Instacart in his first few weeks, and he put up a slide and he said, okay, we spend $25,000 a month, let's say, on blue bottle cold brew in our fridge. For that amount of money, we could, like, lease a Tesla for the company. A few Teslas, right? We could have a fleet of Teslas. That'd be cool, right? Or for that amount of money, we could, let's say, acquire 5,000 customers or we could acquire a thousand shoppers, right? And he asked people to raise their hands. Who wants to acquire the customers? Who wants to acquire the shoppers? Who wants to buy a Tesla? Or who wants to have blue bottle coffee?

[B]

That's good.

[A]

And of course, everybody realized that, you know, the company was probably spending too much money on some silly things. And so we. We made some changes. We cut some things like that. More importantly, like, we taught the company this object lesson about being more resourceful.

[B]

So what went into that from there? That's like a moment where you like galvanize everybody and you're like, hey, we care about this now, but what do you need to change besides the blue bottle?

[A]

Not buying blue bottle coffee as that was, was the object lesson. But then the attitude we all had to have was we all own some little slice of our P and L, right? This team works on taxes, that team works on bottle deposits. This team works on batching efficiency. And everybody was responsible for $0.05, $0.25, $1 of the bridge from negative $15 of unit economics to neutral gross margins. And we had to do it fast, right? Because otherwise we would literally got a business. And so that put this, this really big pressure on all of us. And we, it was hard. You know, we had a lot of arguments about what to cut and what not to cut. And every team, everyone in the company was involved in this, in this initiative. And we set a goal to become gross margin profitable. And we started to make little bits of progress towards it. And then big, big wins would happen, right? And we would figure something out. We would change prices in this city that was more expensive. And we would take away some marketing thing we were doing that wasn't working. And we slowly got the company margin positive. And then we threw this wonderful party which was like everyone who was there remembers this. We threw like a very resourceful party. Like, we didn't spend any money on the venue. We had it in our, in our office, just like turned on the music. And then we got $hamburgers from McDonald's. So we got like 300 $1 hamburgers and like very cheap champagne from Costco. And we just had this like big, huge celebration of this crazy win as a company.

[B]

I'm also curious about some of the decisions that you decided not to do. I'm kind of coming to this from a lens of. It's always in these sort of retellings of history. It's easy to focus on the amazing decisions you did make. There's also a lot of decisions you decided actively to not make that might have been big blunders or distractions or whatever. I'm just curious about what are some of the temptations that you avoided. And I'm thinking about, you know, Internet and maybe there's things that you didn't do at one moment, but later it was the right thing to do. You know, maybe it's international, maybe it's rapid delivery, maybe it's new products that you would like offer to consumers. Like what were the things that like, were hotly contested that you decided to hold off on.

[A]

In every company there's like this should we build our second product question or should we focus on the first product more? And we for a long time thought about international expansion. We thought about other products that we could do. We, we kept realizing that just focusing on the US and focusing on our core business, which we still weren't done with, was a better use of resources. We kind of kept the main thing, the main thing for a really long time. I think that was the right decision. But there was, you know, every year there would be different debates about international expansion. And now 13 years after we started the company, we are an international company and we are doing it and it's not too late.

[B]

It's like the right idea at the wrong time is the wrong idea kind of thing.

[A]

Yeah.

[B]

Us I'm sure could have considered just like acquisitions to those things. I'm sure you looked at considering doing that. Did you end up deciding that? It's just complicated.

[A]

We looked at acquisitions and still do, but we just, I think we realized there weren't just the perfect company to acquire in, in most of the places we wanted to be.

[B]

Yeah. Thanks for sharing a bunch of that story. It's like very, it's cool for me to hear because I, I haven't even gotten to ask you all those questions despite knowing you so well. And it's just an amazing accomplishment. Maybe. Before we move on to the next topic, I'm interested in what you're most excited about for Instacart, like going forward. Obviously there's just going to be, you know, it's a great business as it is, but like what are the things that you're like, excited to see?

[A]

The last thing I worked on at Instacart was a bunch of our AI initiatives and the company has really embraced AI both internally and using it in our products. And we're just now launching some of the first consumer facing agentic AI products that I worked on and so I'm very excited to see those roll out. I just think that every consumer app in the near future will have incredible features where you'll be able to push a button and have magical things done for you.

[B]

I want you to integrate with a home robot that cooks and I just want to tell the robot that I want dinner.

[A]

I don't think that's that far into the future.

[B]

That's what I want.

[A]

And I think Instacart will be a key part of getting.

[B]

I asked Kyle Vogt this when he was on the show about co founder. Yeah, And I was like, could that happen? He's like, I think it could happen. So you guys need to partner.

[A]

I love Kyle and I think we should do it.

[B]

I want to talk about, obviously you've been, you know, a great angel investor for a long time now you're, you know, going to be, you are a full time investor. I want to hear your opinions on consumer in general. And I feel like there's been like a. There's like always these memes about like, consumer is dead. It's so hard. Obviously there's some like amazing runaway consumer successes, but they are few and far between compared to B2B. But I'm curious just to hear from you as someone who's done it and has like lived it. Kind of the building blocks of a good consumer business, maybe starting with like the founder, like what makes a good consumer founder.

[A]

I think to be a good consumer founder and to build a really big sort of consumer company over the long term, you have to have some view on consumer preferences. You have to kind of see the world through a younger generational lens. Usually that means an idea that looks contrarian today that has some sort of stigma associated with it. Where most consumers would say, that's not for me, but that you see that in the near future that stigma is going to lift. And that as that sort of Overton window moves, you go from looking contrarian to consensus. Right. You wouldn't stay in the spare bedroom of a stranger 20 years ago. And then Airbnb made that a normal thing to do. You wouldn't get in a stranger's car. And then you had Uber having someone do your grocery shopping for you. It wasn't a normal thing, you know, prior to 2012. And then we sort of willed that into existence. And so you have to have this attitude of, there's something I know is going to happen in the near future. We are going to build it so that when people are ready, the product will be there. You have to be right. And you have to time it perfectly.

[B]

So the idea almost has to be

[A]

a little uncomfortable at first, otherwise you're in perfect competition. And by the way, there's really great large public consumer companies that will be. They would love to do the consensus things before startups can.

[B]

Yes.

[A]

And so you have to be a little edgy.

[B]

Right.

[A]

I gave some examples there. Mental health is something that had a stigma that seems to have lifted recently. Companions. AI Companions is something that today is very edgy. And then I think in the future will probably be more normal. And many people Use those.

[B]

Yeah. What else comes to mind for consumer

[A]

founders besides this so contrarian idea? And that means you also have to tolerate looking wrong and sort of looking silly for many years.

[B]

Yes.

[A]

You have to have a thick skin. You have to really have conviction and tenacity and not pivot. And then the third thing is you have to run really, really fast. Right. Once the opportunity becomes obvious, there'll be lots of competition. And so you have to be way ahead, and you have to have a machine that can execute really, really fast and then, you know, build the product faster than anyone else. Like, I think there are no great consumer companies where there's not an extremely high sense of urgency in the DNA of the company.

[B]

Yeah. I guess, generally speaking, if you had to, like, pick the thing that you're looking for when you meet founders, like, how would you. How would you name it?

[A]

I mean, I'm always looking for people that. That are what I call irrationally optimistic, you know, that are just, like, so excited about their version of the future that they'll tell everyone about it and sort of attract talent that way. But, you know, investing at Seed is really tough. Right. You just don't always know and try to get in person with founders and you try to figure out if they're the real deal and kind of, like, what their motivations are. And then at a certain point, I kind of started looking down and I look at their sneakers, and it's the craziest thing. I'm giving away the alpha here, but if you're looking at a founder and they got dirty white sneakers on.

[B]

Look at my sneakers.

[A]

Yeah, perfect. You got dirty white sneakers on. You're a real builder, right. You're in the arena. And the reason why this is an interesting tell is that people that are busy building, they're locked in on their companies, they're sleeping at the office, they're working out of a house in close proximity to their founders seven days a week, they don't have time to buy nice sneakers. Right. They just put on the same pair of sneakers and they get dirty. And like, I invested in. In a company that. That benchmark is an investor in Gumlu, and one of the founders of Gumlu had such dirty sneakers. They were falling apart, literally. They're, like, flapping.

[B]

You're like, I don't need to hear anything else.

[A]

No. First of all, obviously, I love the company and both founders, but. But I. I had to buy him new new shoes, right? Like. Like, his shoes were so bad. And so, anyway, I've just found that like the, the. They sort of just, they look the part.

[B]

I love that. What's different here versus like a B2B founder, if anything, you know, like some of this stuff exists in B2B. But I'm curious, like, you know, you've also obviously invested a lot of B2B companies. What's different? Like, is there something like when you're meeting somebody on a B2B idea, do you think differently about any of those things you just said?

[A]

Yeah, I mean, I think with B2B founders and B2B companies, you kind of need like a little bit more subject matter expertise. You know, you may not be the customer and so you have to have lived the problem or know lots of the customers or sort of have deep, deep insights from having worked in the, in the space. Starting a consumer company, it really only requires those three things. Right. Like you are a consumer, I'm a consumer, and if you have the taste, if you have the judgment, and you kind of know where people's ideas are going in the near future, you can build a consumer company without, without much domain expertise.

[B]

Yeah. This is a question that's relevant for you now as a full time investor. This is a selfish question for me. When you think about the investors that were helpful to you and you know, on your whole journey through Instacart, the types of investors or the specific actions, like what was genuinely valuable to you,

[A]

we obviously have had some amazing investors at Instacart. And I think when you think about what founders get from investors, they get three things in my opinion. Obviously the capital. Right. On some sort of terms that you negotiate, they get the help and some investors are more helpful than others, and then they get the signal. And particularly for early, early rounds, I think founders underappreciate the signal. Having a great foundation of your company and having exceptional investors is going to be something that follows you for the rest of your company. And every subsequent round, the new investors who are going to issue a term sheet are going to call the existing investors. Right. So you want to have a great relationship with your early investors and you want them to be high signal, awesome investors.

[B]

Why do you think it's underappreciated?

[A]

Because I think founders often negotiate a lot around the terms and the valuation.

[B]

Just the focus at the moment of the deal is the equity.

[A]

Yeah. And rather than that, the focus should really be like, who is going to help me get from here to the next major milestone and who is going to help me raise the next round in terms of having a great signal? Right. Having Jack Altman invest in your company is a way bigger deal at a certain stage than it is having just a party round of other random investors.

[B]

And then I mean, I assume implied in sort of the language you're using. At some point it's not the most important thing. Like once your company has its own big brand, it's like your brand is bigger than your VCs at some point. And so it doesn't matter anymore.

[A]

And I think you get people around the table and on the board that can help you in all the places you need help. And then the incremental next investor is maybe not as valuable in terms of help or signal.

[B]

Right.

[A]

And more valuable in terms of capital.

[B]

Right. It's like you only need one or two of those.

[A]

Yeah. And you got to be careful not to take advice from too many investors. Right.

[B]

I actually think that's the other. The flip side is you have too many people like that, you have too many egos around. Like that can also be a problem.

[A]

And I have sort of a framework for founders on, on, on how to take advice or not take advice from investors.

[B]

Let's hear it.

[A]

So you got three kinds of decisions

[B]

in your company, all right?

[A]

Science, art and religion.

[B]

We're going to put a little visual up behind here.

[A]

Science, art and religion. Science decisions have a right answer. Okay, great. Get advice from investors on that. Either they've solved the problem themselves or they're on five boards where those companies have solved the problem. Get the advice. Then you have art. Right. That's why you're a great founder. You have taste and judgment. Right. But you're inventing things. You're engaged in creative destruction. Right. Only you can make the art decisions. Those are the ones that don't have a right answer. And where you're really generating sort of a new. You're blazing a path. Right. You can't outsource that and you can't get advice on that. You got to hold that to yourself. And then there's religion. Right. This is how you work. Like what kind of company do you want to be? And there's a lot of right answers to that question. But it's a personal decision and you ask yourself, what are my values? What are my co founder or my early team's values? And then you make a set of values and you, and you sort of answer that question by looking at your values. Get advice all day long about science related things from investors. But on anything else, especially on, on sort of the taste type decisions, just ignore them.

[B]

Yeah. How does all of this make you think about like, you as an investor and like what you want to build and how you're doing workshop and all of that.

[A]

I'm trying to be the investor that I wish we had when we were this, this early. Right. And help people in the first year of their companies. And I try to be very careful not to give too much advice, not to give advice on topics where I'm not an expert and instead to. To help people network.

[B]

That's a good instinct, by the way, because a lot of people would be like, hey, you founded Instacart. Whatever you say, I'm going to run with. Yeah.

[A]

I mean, if you're building an operationally complex marketplace, I have every piece of advice you could.

[B]

By the way, as note to founders, no matter how good your investors are, you should definitely listen to 100% of whatever anybody thinks.

[A]

100%, yeah. Yeah. And also don't take a bunch of people's opinions and average them. That is also a bad way to get.

[B]

That's a horrible way to go. That's awful.

[A]

A lot of founders do that.

[B]

Yeah, they do. Why are you building workshop in the sort of like co working type of way? Like, why do you have a space for that?

[A]

So I got a founder space. I like to work alongside founders, you know, in person. And I just think San Francisco is the best place in the world to build a technology startup.

[B]

It's crazy how it recenter. I mean, during COVID we like almost lost it.

[A]

I don't really think it was ever gone. I mean, I stayed and you know,

[B]

I'm a big suburbs guy. Yeah.

[A]

And you know, I'm a big city guy and I think, I think the city's great and I think the founders stayed and new founders have come and like, it's really the best place to build.

[B]

A funny thing I was realizing, you know, we've got this friend group and you know, people have had on the show and there was a point earlier on where both you and I were founders and you know, a bunch of VC friends. And then a couple of years ago I became vc and now look at you. It's just a crazy life cycle, isn't it?

[A]

Yeah, it sort of gets, gets everyone.

[B]

Yeah, it's. Are you excited for it?

[A]

I love helping founders and this is just like the best platform on which I can help founders, so that's why I'm excited.

[B]

Well, this is really nice to have a serious conversation with you for once. I really enjoyed it.

[A]

Yeah. For once. Maybe we should do more of this.

[B]

We should do more of this. This has been special. All right, Max. Thank you for doing this.

[A]

Thanks, Jack.