The day of an IPO is for most startup founders a victory lap, a crowning achievement at the end of a long arduous road and a final public validation that they tilted at windmills and won. For Apoorva Mehta, who created grocery delivery app Instacart when he was 26, the company’s trading debut later today will make him rich but will also mark the end of his tenure at the company that’s he’s referred to as his “life’s work”.
Mehta was replaced as CEO of Instacart in July 2021 following a messy dispute with some of the company’s largest investors. He stayed on as executive chairman of the board but in Summer of 2022 announced that he would be resigning that position once the company goes public.
So when the company completes its IPO later today, raising $660 million at a valuation of $9.9 billion, Mehta will personally walk away with at least $20 million from the sale and be left sitting on a 10% stake in the company worth $869 million. At the same time, he will be saying goodbye to “the one thing [he has] thought about for every waking minute of the last decade.”
From No Frills to Safeway
Mehta was born in India and moved with his family to Libya before eventually settling in Hamilton, Ontario, a small city outside of Toronto. His mother, a schoolteacher, would often send him to discount supermarket No Frills to get groceries, a chore he hated. It was Mehta’s memories of waiting for the bus on Ontario’s subarctic winters, plastic grocery bags digging into his hands that years later would form the basis for Instacart’s ah-ha moment.
Mehta went on to study electrical engineering at The University of Waterloo and after graduating landed a job as a software engineer at Amazon.
“To be honest, I loved it,” Mehta said in an interview with NPR in 2017, “I wasn’t even sure why they were even paying me.” But after 2 years, Mehta said he felt that he was no longer growing or being challenged. He started going to tech meetups around Seattle and eventually attended a talk given by Bing Gordon, a former executive at Electronic Arts as well as a partner at venture firm Kleiner Perkins.
“I remember sort of listening to this talk and they could have been talking in Hebrew for all it mattered,” said Mehta, who says he had zero understanding of what Gordon was talking about, thinking that the phrase “enterprise startup” referred to the car rental company.
But he was determined to learn, so in 2010 he quit his job at Amazon and moved to San Francisco where he slept on a friend’s couch and began building prototypes of apps and websites. He claims that he started 20 failed businesses during that time. In one instance, he says he raised a million dollars in venture money to build a social network for lawyers, but gave up on it after a year, informing his investors “my heart’s not in it.”
“I remember this was a pretty low point in my life,” Mehta said, “when I was like, well, am I even cut out to be an entrepreneur at all?”
After a few months of wallowing, he remembered those agonizing trips to the No Frills and the idea for Instacart, an app that would bring the grocery trip into the 21st century, was born.
He built the first version of the site over the course of few weeks in 2012 by scraping the website of grocery chain Safeway. Initially he was doing all the shopping himself: orders would come in, he’d scurry down to the store and drive the bags of food to his customers door.
The app started gaining momentum and Mehta put out ads on Craigslist for shoppers to do the grocery runs for him. With his bank account zeroing out, he realized he would need outside capital to keep growing this business and he eyed Y Combinator, the most prestigious incubator in the valley.
But he’d missed the application deadline by two months and was told by multiple YC partners, including Garry Tan, that it would be impossible to get his company in.
“As I thought about this final rejection, I realized that so far, no one had seen my product in action” Mehta wrote in a post for TechCrunch in 2012. So he used his app to order a six-pack of beer to YC’s headquarters addressed to Tan. “Half an hour later I got a call from Garry. “What is this?” Garry asked. “This is Instacart!” I exclaimed.” The stunt landed Mehta an interview with the YC partners, during which he convinced the incubator to become Instacart’s first investor.
‘A thermonuclear bomb’ for the grocery industry
Over the next 5 years the company would attract investment from the some of the biggest names in venture, including Sequoia Capital, Andreessen Horowitz, and Khosla Ventures. By 2017, the company was worth more than $3 billion, catapulting Mehta to #31 on Forbes list of richest people under 40.
That same year many were ready to proclaim Instacart’s demise when Amazon, its biggest competitor, purchased Whole Foods, its largest customer.
Whole Foods reportedly broke the news to Mehta and a fellow Instacart executive on an early morning call. Rather than be discouraged, the two sent each other thumbs-up emojis. “That morning in San Francisco, he stood in front of Instacart’s 300 employees and told them it was time for war,” Forbes wrote in 2017.
Over the next few months, Instacart had penned lucrative new deals with Costco and Kroger and was looking stronger than ever. “It really was like a thermonuclear bomb against the entire grocery industry,” Mehta said of the Amazon deal, “when we look back, that may have been a turning point for Instacart.”
But the real turning point came during the pandemic, when the entire world was forced inside, creating an unprecedented gold rush for delivery apps. Instacart saw sales grown more than 300% year over year and at its peak it secured a valuation as high as $39 billion.
It was around this time that some of Instacart’s investors, including Sequoia’s Mike Moritz, reportedly started pushing for the company to go public and capitalize on the frothy valuation, setting the stage for a messy dispute between Mehta and some of his most important backers. In addition to disagreements over going public, some investors reportedly had concerns about his chaotic management style and high executive turnover. At one point tensions apparently ran so high that Sequoia even surveyed fellow investors about firing Mehta.
Though Mehta may have staved off some attempts to oust him and ultimately succeeded in delaying an IPO (a move that likely cost shareholders billions), it appears to have been a Pyrrhic victory. He stepped down as CEO in 2021, telling people at the time that he was burnt out, and was replaced by Facebook alum Fidji Simo.
Simo has since diversified Instacart’s business by moving into digital advertising. While the company has been profitable in the first half of 2023, its unlikely that it will return to the explosive level of growth it saw during the pandemic. That’s left Instacart staring down a valuation that’s only about a quarter of what it was at its peak, and has left some investors potentially under water on their investments.
Mehta’s next act
Mehta has said that he’s leaving his position as chairman of Instacart’s board to pursue a new mission. For a time it looked like that new mission would be Sunrise, a platform for streamlining the process of getting prescription weight loss drugs such as Ozempic that in 2022 received a $30 million investment led by Thrive Capital. Mehta started the company in late 2022 along with his friend Tejasvi “Tej” Singh who at the time was living in Mehta’s $6 million Marin County home and who, according to legal filings, had previously worked with disgraced FTX Founder Sam Bankman-Fried on a failed NFT project.
Sunrise has since become embroiled in a lawsuit brought by competitor NextMed alleging that Sunrise is a copycat business built using stolen trade secrets. The lawsuit offered an unusual view into the internal machinations of a Silicon Valley startup.
It alleges that Singh falsely claimed to be working for a VC fund performing due diligence on NextMed while Mehta claimed to be interested in starting a separate business with the company’s CEO so that the two could gain access to NextMed’s proprietary information including its Stripe account, its customer data, and its go-to-market strategy. “Mehta saw an opportunity to cheat his way to the top of a flourishing industry,” the lawsuit alleges.
In a sworn affidavit, Mehta denies that he misappropriated any trade secrets and says he’s since cut ties with Singh. But in court filings, NextMed presented evidence showing the striking similarities between the two companies’ websites and advertisements, including code that was apparently lifted directly off NextMed’s website.
The lawsuit was settled in February 2023, with unknown terms, and both websites are still up and running. But Mehta has been notably less vocal about his new project in recent months and it’s not exactly clear what his involvement in the company will be going forward.
So on a day that should be an unmitigated triumph for one of Silicon Valley’s most prominent founders, he finds himself estranged from the company he spent a decade building, with a pocket full of cash and a fledgling startup that’s already been the subject of litigation. It’s hard to say what Apoorva Mehta’s second act will look like.