FORTUNE OCTOBER/NOVEMBER 2021 89Facebook’s flagship app in 2019, re-
porting directly to Zuckerberg until
June 2020, Simo publicly defended
the company’s policies and process.
Today, when asked about her role
in the scandals, Simo calls Face-
book’s decisions—and their some-
times grotesque consequences—a
result of poor planning rather than
the willful ignorance shown in inter-
nal documents reported by the Wall
Street Journal in September.
“When you connect so many
people, there are going to be abuses,
and preventing that was just not a
core skill set,” Simo says. “We could
have done a better job predicting the
ways in which things could go wrong.”
FOR MUCH of Instacart’s
nine-year history, things
have gone right.
The company was
founded in 2012 by Mehta, a former
Amazon engineer who until July was
also its chief executive. It acts as a
middleman between grocery compa-
nies, which pay Instacart to provide
delivery and other services, and con-
sumers, who pay either a delivery fee
or a subscription for someone else to
shop for and drop off their eggs and
ice cream. The company partners
with more than 600 retailers, in-
cluding some of the country’s largest
grocers and convenience stores—
Kroger, Walmart, Albertsons, CVS—
and offers delivery from more than
55,000 stores. Instacart generally
charges a $3.99 fee per order, plus
a service fee and tips. The company
has more than 500,000 gig-economy
shoppers who earn a minimum of $7
to $10 per “batch” of groceries—up
to three separate orders—plus tips.
(After a public outcry in 2019, In-
stacart stopped sometimes counting
tips toward a shopper’s guaranteed
base pay.)
For much of its existence, Instacart
stood out in the crowded on- demand
startup economy for its focus on
groceries, rather than the restaurant
takeout business that DoorDash
and Uber Eats initially served. Then
came the first few months of the
pandemic, which turned grocery
delivery from a nice-to-have luxury
into a risk-mitigation necessity—at
least for people who could afford
to pay someone else to brave the
supermarket for them. Sales on
Instacart’s platform soared; in
April 2020 alone, they grew 433%
year over year, according to Bloom-
berg Second Measure. Only about
13% of Americans order groceries
online, up from 2% before the pan-
demic by some estimates, leaving
plenty of room for growth.
But in 2021, Americans aren’t
afraid of going to grocery stores
anymore. Instacart’s year-over-year
sales have fallen in four of the past
five months, although they ticked
up 3.9% in August, according toBloomberg Second Measure data.
Meanwhile, foot traffic to grocery
stores has increased year over year in
each of the past five months, accord-
ing to data analytics firm Earnest
Research. With average margins
of 2%, grocers can’t afford to pay
the high labor and transportation
costs of external delivery services.
And, some analysts argue, there
isn’t enough demand for grocery
delivery to persuade consumers to
pay more for it at scale. U.S. grocery
stores are already large enough,
abundant enough, and open late
enough to easily serve most consum-
ers. Meanwhile, DoorDash, Uber,
Target-owned Shipt, and SoftBank-
backed Gopuff are crowding into the
grocery-delivery market, while some
retailers are building up their own
delivery operations.
By the end of last year, with Insta-
cart’s pandemic sales spurt slowing,
Mehta started courting Simo to
bring her product and advertising
expertise to Instacart’s board. (He
had previously tried—and failed—to
hire her as the company’s head of
product.) She joined Instacart as
a director in January—kicking off
an unusual round of CEO musical
chairs. Mehta initially approached
Simo this spring about becoming his
co-CEO, according to a person fa-
miliar with the matter. At the same
time, the Instacart founder was in
talks with DoorDash about purchas-
ing Instacart, according to people
familiar with the discussions (and as
first reported by tech-news site The
Information).
Simo agreed to replace Mehta as
CEO in early June and took over
the deal negotiations that eventu-
ally fell apart. Neither DoorDash
nor Instacart will officially comment
on the sale talks: “We are very, very
excited about running an indepen-
dent company for the long run, and
we have no intention to merge,” Simo
told Fortune in mid-September.
And Mehta, who remains executivePANDEMIC POP Instacart’s revenues ballooned early in the pandemic
as COVID-19 turned grocery shopping into a safety hazard. Grocery
delivery became a must-have service for those who could afford to pay
someone else to assume the risks. In April 2020 alone, Instacart’s sales
surged 433% from the year prior.