The story of Webvan's rush to go public features prime examples of what not to do when trying to scale. I recently joined this episode of the Rockship.fm podcast to talk about three critical but often overlooked mistakes the company made when trying to revolutionize home grocery deliveries.
Here are the top three takeaways:
- Prove a business model. Do this before over-investing in customer acquisition, growth, and scaled operations to keep costs low initially and your teams and systems nimble. At Webvan, we built an expensive warehouse and order fulfillment infrastructure to operate at scale before we had the demand for it.
- Start with a narrow market. Delight a smaller market first and figure out how to expand later to avoid biting off more than you can chew. Webvan tried to cater to all grocery shoppers, unlike others like Whole Foods who focused on the premium segment.
- Design for the way people actually behave. A new technology that is too transformative has a significant risk of backfiring so take cues from your customer's experiences and slowly improve. We learned at Webvan that our novel way of searching for groceries didn't match the mental model of shoppers based on grocery store aisles.