Operators Ep 27 Transcript
Delian:
Hi everyone. My name is Delian and I'm a principle at Founders Fund, a venture capital firm based in San Francisco. This is Operators, where I interview non-VC, non-CEO, non-founder operators that make the startup world go round. Today, I am interviewing Nilam Ganenthiran, president of Instacart. Prior to joining Instacart in 2013, Nilam was a management consultant with A.T. Kearney's consumer retail practice and worked in shopper marketing and brand management at Proctor & Gamble before that.
Delian:
Nilam is a graduate of York University's Schulich School of Business and also holds an MBA from the Harvard Business School. I hope you enjoy the show. Cool. Well, Nilam, thanks so much for coming onto the podcast. Excited to have you today. You might be the very first guest that we've had that is also, I guess, an avid listener given that that's how you originally reached out, so thank you for being a listener and reaching out.
Nilam Ganenthiran:
Yeah, absolutely. I'm a fan and excited about what you're doing here, so thanks for having me.
Delian:
Cool, well, as you know, with these types of conversations I like to always, before we actually talk about Instacart, I like to dive back into people's early career stints. Your first professional job was at P&G. Actually, one of my close friends from [inaudible 00:01:24] also did a whole stint at P&G and had many interesting lessons learned from that time, so I'd love to learn what you worked on there, some of the big takeaways, why P&G out of all places, and tell us a little bit about what you worked on while you were there.
Nilam Ganenthiran:
Yeah, yeah. It's an interesting story. When I went to undergrad, I never thought of sales and marketing as a career path. I actually went to school and thought I wanted to be a CPA. I wanted to be an accountant because I thought that was a nice, safe career and a great way to learn the fundamentals of a business and transferrable skill set. It was the second year of undergrad, and I was applying for and interviewing for internships, and I couldn't get a job at any of the big four accounting firms, but I did get a sales internship at Proctors & Gamble, and I said, "Okay, a kind of Fortune 50 company and brand name that I recognize."
Nilam Ganenthiran:
I thought, "Okay, this would be a great place to spend a summer to learn more and go back to the goal of being an accountant," so I joined P&G in a sales function. I was selling into one of their accounts in Canada called Zellers. It's a change that no longer exists. It's kind of a Walmart competitor and got taken out by Walmart, and my eyes were opened to this whole career path around sales and marketing that I didn't even know existed, and I kind of fell in love with the company first, with Proctor & Gamble and this idea of retail and consumer brands.
Nilam Ganenthiran:
I thought I'd never leave. I went back to P&G for a second summer, this time working on the Walmart team, selling to Walmart which was the fastest growing and biggest retailer for P&G at the time, learned a ton there, and then decided, in my last year of college, to go back to college part time but then keep working at P&G while I was going to college part time to finish my degree, and then I was offered this role in shopper marketing, which they hadn't done traditionally but they had a need and I was already there, so they said, "Can you just stay and don't go back to school?"
Nilam Ganenthiran:
I did this gig in shopper marketing which is a hybrid between sales and marketing, and I thought it was just a great experience. I learned a lot about how customers interact with brands in stores. I learned a lot about the nuances of how the grocery sector work, and then joined P&G full time as a brand manager, did traditional marketing. It's a mini-GM type role, and there, in my early 20s, kind of learned how to manage, cross-functionally, a bunch of people who were specialists in their fields and had been at the company for a lot longer than me, so, manage through influence, et cetera.
Nilam Ganenthiran:
Anyway, still, I look back, and the skills I learned at P&G are ones I use, and I never thought I'd leave the company, but I ended up going back to grad school and not going back to P&G but still one of the best parts of my career journey to date.
Delian:
Was there a [inaudible 00:04:35], where as you're interacting with these grocery chains, selling goods, did you ever think about, "Hey, one day, this is something where I feel like I've identified, have a really strong understanding of the problem set here, how people interact. Maybe I'll start something some day to try to disrupt this all," or was that never in the back of your head during your P&G days?
Nilam Ganenthiran:
No, it was never in my head. Why did I like P&G? It's probably different than most of the folks that come on your podcast. I never thought I'd be in tech. I never thought I'd be in the startup world. I wanted to be a big company person. I wanted to be a general manager and go up the career ladder at a big company, so, never dreamed of a career in tech, and I just was building a set of skills that I thought would be valuable in terms of managing large teams and operating in a big company context, and that was kind of how I was shaping my career. We can talk a little bit about how I ended up in tech, but literally never thought I'd do startups or tech.
Delian:
Yeah, I was going to say, I feel like you took the very, even post-P&G, which was already a big corporate route, to an even bigger and even more corporate route of going to HBS and then going to McKinsey, which is about as corporate of a logo as you can get. I guess, why HBS and then, maybe more importantly, at McKinsey it seems like you also continued to double down into this area of drugstore, grocery, et cetera. What was that fascination, because it sounds like it wasn't something you were thinking about in undergrad or anything like that, but kind of stumbled into via P&G, but I feel like a lot of times people will choose a particular industry or sector for the first couple years of their career and then start to shift around, versus, one can argue that you've effectively worked in grocery store related things for 17 years now.
Nilam Ganenthiran:
Yeah, yeah.
Delian:
At what point was it like, "Hey, actually, I like this stuff so much and I find it so fascinating that I'm going to stick with it even though HBS, sometimes, is kind of an opportunity for a reset?"
Nilam Ganenthiran:
Yeah, yeah. I went to HBS and the plan was to go back to P&G, and I joined A.T. Kearney as a management consultant instead of going back to P&G, and the reason I did that was because, during my time at HBS, I realized that I love the grocery sector, love retail, and the background was, I'd actually been working in a grocery store since I was 16 years old, so, started as a cashier and working in the produce department, so I've never actually left the grocery store since I was 16 years old. Of course, that was not the plan, but when I was at HBS, you do all these cases, you meet a bunch of interesting people, and then I realized, wait a minute.
Nilam Ganenthiran:
The thing I actually like most and relate most to, I'm already doing, so I joined A.T. Kearney mostly to get breadth of experience from ... I thought P&G was one company. Consulting allows you to interact with a number of companies and problem sets across the stack, so that's why I joined this management consulting firm called A.T. Kearney, and I chose them, really, because they guaranteed me a path to stay in the retail consumer sector so I could specialized early, and they were more operationally focused and not just strategy focused.
Nilam Ganenthiran:
One of the things I realized when I was at P&G is, "Wow, okay. I'm learning a lot about how brands get built and traditional marketing and big company navigation, but I really don't know the nuts and bolts of this sector. I don't know how product gets into stores. I don't know about the raw ingredients. I don't know how buyers buy stuff, [inaudible 00:08:12] the supply chain, all of this stuff."
Nilam Ganenthiran:
I said, "Okay, if I want to be an expert in this field, if I'm going to go super narrow on this pretty massive industry, but still pretty narrow relative to all my peers, I better try to know everything I can, and this was the quickest path to learning," so I joined Kearney and lucky for me, sometimes you join these places, then you never know what they promise you in the recruiting process ends up being what they full on. Kearney kind of hit everything they promised me, so I didn't work outside of retail consumer. I worked for the biggest grocery retailers in North America and I got to interact right top of house to the store and everything in between, so, projects from strategy, procurement, supply chain, reorgs, everything in between.
Nilam Ganenthiran:
I kind of learned all this stuff through that journey that I don't think I could have learned any other way as quickly, so that was kind of how I ended up at A.T. Kearney.
Delian:
Makes sense, and, yeah, apologies for [crosstalk 00:09:17].
Nilam Ganenthiran:
Oh, no, no, no, no problem.
Delian:
At A.T. Kearney, I'm curious, with these various groups that you were working with, they're obviously a different segment of the supply chain or the staff than P&G. Was there anything that, maybe you had an assumption about how they worked from your days at P&G, that through diving in, it was actually incorrect and that the correct answer was actually quite counterintuitive in some ways, but you wouldn't have learned if not for basically diving in, and obviously I understand you can't talk super specifically on the clients that you worked with, but do you have a particular favorite moment that was this a-ha, that you were like, "Thank God I actually dove in deep because the narrow view of just P&G wouldn't have given me accurate understanding of the market"?
Nilam Ganenthiran:
Yeah, yeah. Absolutely. There are a number, so I'll try to identify a few that might be applicable. The first thing is, and I think this is really applicable for us in tech, broadly, is grocery has always been viewed as this industry that has existed forever, and the bias that tech has for industries that are old is, they must be doing a lot of stuff wrong and the keyword disrupted, there's a bunch of stuff to be disrupted. It must be sub-optimized, like, the stuff they're doing is not consumer focused, and when I was on the CPG side, I kind of had that view of grocery, as well, because the power dynamics between the supplier and retailer are kind of interesting, and historically, you can just look at the P&L of a manufacturer and the P&L of a retailer and you get the historic power dynamics.
Nilam Ganenthiran:
What I was most surprised by when I really spent time with these grocers while I was at A.T. Kearney is how well they operated and how fiercely competitive North American grocery is. I don't think this is true everywhere. Now that I've kind of seen this internationally, I think North American grocery and US grocery in particular is hyper competitive, hyper optimized. The people that operate these companies really know what they're doing and have, often, for generations, and they think about the customer often more obsessively than us in Silicon Valley think about the customer, and we're always, like, "Okay, we're building stuff for the customer."
Nilam Ganenthiran:
No. Go into a grocery store and talk to someone who's a third generation grocer and talk to them about how intimately they actually understand their customers' jobs to be done and pain points. It's like nothing you've ever imagined. That's how they've survived all these years in an industry that's really hard to operate in, has a lot of waste, has a lot of people taking rents across the system. That was surprise number one, was just, frankly, how optimized the system was.
Nilam Ganenthiran:
Surprise number two was a little bit about how under-tooled they were to kind of compete with what I believe was a new set of competitors to come, and obviously, Amazon being the canonical example. I really started to observe that smart people doing a good job for their customer didn't have the right set of tools, both from a technology and people perspective, to take on the challenge that I thought was coming over the next decade.
Nilam Ganenthiran:
This is probably pretty obvious. That kind of led to the insight about joining Instacart, but I am so glad I did. Again, I've just had a very fortunate path where I've had three jobs, essentially, and I loved each of the three, so that's probably pretty rare, I guess.
Delian:
I think a lot of the times when people talk about some of these startups that were founded, let's say, from the late 2000s, early 2010s, that a lot of them were predicated on purely technological trends, like the fact that the iPhone had a lot of distribution. You had cheap GPS. You could do this type of digital coordination, but getting such an internal view on the industry, did you feel like there were other, let's say, non purely technological trends within the grocery industry that led to something like Instacart being an obvious, let's say, next step or potential addition to the ecosystem beyond just the pure, let's say, technological trends?
Nilam Ganenthiran:
Yeah, yeah, yeah. Great point. I think the first thing that was underappreciated about the grocery sector that was a reality and a trend is, grocery, if you zoom out to just all of the US as an example, it looks like a fragmented industry. However, the right unit of measure actually is at a local and regional level and when you zoom in at the local and regional level, it's actually really concentrated. One to three grocers in each of these cities, in San Francisco, it'd be a Safeway, a Kroger, et cetera, it's basically the top two to three grocers make up 50 to 70% market share at the local and regional levels, but when you zoom out you don't get that perspective.
Nilam Ganenthiran:
It looks more like a lot of these other highly fragmented industries, and that really helped Instacart along the way because it allowed us to go deeper on supply side relationships than you would if you were trying to solve a heavily fragmented market, and it allowed us to invest far more deeply with our partnerships with retailers, versus, you'd take a different strategy if you were trying to build a marketplace for widgets or something else.
Nilam Ganenthiran:
The second structural trend, and this was one is a trend that I think has been evolving over the past couple of decades is the value of retail brands versus consumer brands, and this, I think, it's still not fully matriculated but it's been happening for decades, and the rise of private labels in North America is an output of this. Consumers in the '50s, '60s and '70s used to buy brands. It was brand led, and brands were the draw that brought you into the store that you shopped into. Starting, really, with Walmart and then subsequently perfected, increasingly, grocery brands are winning the day. Trader Joe's, Publix in the southeast, Wegmans in the northeast, et cetera, you name it, every region's got these favorite grocers. People have developed these real deep connections with the grocery brands they know and trust and that is actually why, the thesis of Instacart is part of why we have worked where so many others have failed, is because we led with the retailer brands.
Nilam Ganenthiran:
We didn't try to insert a new brand and take away something. We tried to add, and that was playing on this trend that ... It's a very intimate retail category where mom is buying food to feed her family. It's different than buying a book or CD from Amazon, so that trend around the strength of retailer brands was something we leaned into.
Delian:
Right, the point being that people actually now trust Costco more than they do Kirkland.
Nilam Ganenthiran:
That's a great, great example, yeah.
Delian:
Super interesting. Yeah, that makes a ton of sense and why there'd be an advantage for Instacart. Yeah, I'd love to dive into Instacart now. You had a great run at A.T. Kearney for three and a half years and then decided to move over to Instacart. Instacart was really young when you joined, which was obviously quite the departure from the prior sets of career moves. Obviously, you had a ton of understanding of the market, but I guess, why Instacart? How did that opportunity come about and what gave you conviction in taking on such a high risk opportunity?
Nilam Ganenthiran:
Yeah. It's actually funny as I reflect on this, because, obviously, I do a lot of recruiting for the company and I see the rigor and diligence that people put when they're making these types of career changes, and I'll tell you, I had none of that. I first came across Instacart when I was introduced to Apoorva, our founder and CEO, back when this was an idea and wireframe stage before he submitted the company to YC, he was looking for someone to help start the company with him, and I was introduced to him by a close friend of mine who I went to school with named Raphael Corvallis who's a VC. He put us together because of my grocery sector experience and what Apoorva was building and it just wasn't the right time for me to jump on board because my wife and I were starting a family.
Nilam Ganenthiran:
Lo and behold, we kind of stayed in touch, and about a year later, my daughter was born and Apoorva texted me saying, "Hey, we should reconnect," and I was going to go off on paternity leave so I started talking to him and doing Skype calls with him back when people did Skype calls instead of Zoom. I said, "Okay, wait a minute. I'm going to have some time off for paternity leave. Why don't I just fly to San Francisco, I live in Toronto, and just spend some time with Apoorva and see what he's building," really just thought I'd be helpful, and my wife didn't say no, so I hopped on a plane, flew to San Francisco that week.
Nilam Ganenthiran:
Instacart was headquartered in a house in South Park. It was about 12 people in the house. I walk in and I spent the week just kind of jamming with Apoorva on ideas and thinking about the business. We were in San Francisco at the time. That was our first market, and at the end of the week, I remember going to the airport, going to SFO, about to fly home, and I called my wife and I said, "Hon, I think we're going to have to talk when I get home. I think I want to quit my job and join Instacart." We talked that weekend. I called Apoorva. I'm like, "Hey, man, is there something I could do to help out full time?"
Nilam Ganenthiran:
Sure enough, that's actually how I joined Instacart, and I joined, and there wasn't really a role and I kind of played a jack of all trades. I ended up doing a lot of biz dev stuff in the early days, biz dev and strategy stuff. To answer your original question, the reason why I decided to jump on board, I wasn't joining the company because there wasn't much of a company. I was actually just joining a founder who so clearly was on this crazy mission, and I remember thinking to myself, my daughter was, like, three weeks old at the time, if there was ever somebody who was going to change the way that she shops for groceries, it was going to be Apoorva and whatever he was building, and I just want to be a part of that, someone who's been in the grocery sector forever. I just want to be a part of that journey, and it's exceeded all my expectations, because my daughter is almost eight now and I didn't have to wait until she's an adult for the way people to buy groceries change.
Nilam Ganenthiran:
All her friends and all of her friends' parents use Instacart every day, so it's far exceeded my expectations.
Delian:
That's amazing. Yeah, walk me through a little bit of those early days. You had 12 people in a room and you were sort of this jack of all trades. Were you just beginning to, sort of, early partnerships with these San Francisco based retailers and getting them comfortable with the idea of Instacart and helping with, I assume, everything from the catalog photographs or getting backend data to the operations? I remember, in the early days, even just setting up custom lines for the Instacart shoppers to go through and that type of operations? Walk me through some of those early projects, what was most impactful, how did you start to see success?
Nilam Ganenthiran:
Yeah. It's still probably the most fun times of the journey. The early days were really working with Apoorva and that founding team, so, Sir Michael Moritz was on our board and he's always been very, very involved, from the beginning, from the time I joined, about what is the business model for Instacart and how was this thing going to actually make money, from the beginning. It was a series of experiments of, okay, let's go talk to as many people as possible and see where we can add value, and some of the most fruitful ...
Nilam Ganenthiran:
In roles like BD, you have a lot of conversations and 99% of them don't go anywhere, but then when you find a swim lane where there's traction, it's a great feeling, so, probably no surprise now, the conversations that were fruitful early on were, we flew to Chicago, Apoorva and I, and we just started hitting up all of the local independent grocery stores, because Chicago was our second market and we were going to launch it.
Nilam Ganenthiran:
We weren't pitching anything, because we didn't know what we were selling them. We were more in discovery stage, saying, "This is the thing we're building. What are some of the problems that you have in your every day, going about doing your business that we can help you solve?" What became clear early on is digitization and support for e-commerce was not a problem that they were thinking about and didn't have a good set of solutions for, not just on the tech side but also on the labor and operations side.
Nilam Ganenthiran:
No one had a catalog. There was no master data for salary. There was none of that, so we kept identifying these problems and knocking them down one at a time, so, you know, "Okay, now that we have a contract with someone, how do we make sure our folks get through the store quicker? How do we get a dedicated checkout lane? How do we get a catalog file? Okay, we'll send in one of our engineers for a weekend into this small grocery store, spending all day with their IT manager to cobble together a file and that file will become our canonical example of what a data file looks like that we can go tell every other retailer, give us a file that looks like that.
Nilam Ganenthiran:
All of these little problems that you identify day to day through experimentation, all just in service of solving for the customer, so that's what the first year looked like, 12 to 15 meetings a day like this.
Delian:
Was success determined by just the supply and the catalog that you were able to put together on the platform? Was it, we improved the economics because Instacart shoppers before had to spend X, Y, Z number of minutes in the store versus now it's 20% less? How did you look back after the first year and a half and determine, okay, we're headed in the right direction, doing these types of BD partnerships and really diving deep with our retailers, is worth the value and time you spent setting those up?
Nilam Ganenthiran:
Yeah, it's such a good question and this is where I've observed startups getting tripped up and founders and BD functions getting tripped up. I think, being very open to multiple paths of success is important, so our first hypothesis is maybe this'll help us grow sales. We learned quickly that when we partnered, sales grew faster, and no surprise now, but it was at the time. The second hypothesis was we'd be able to deliver a better customer experience because we'd know what is actually in their store, so there are a set of metrics around that.
Nilam Ganenthiran:
Third hypothesis was, we'd be able to reduce our cost base because it'd be quicker to go through. Yeah, so then we proved that out. Fourth was, net, we'd generate more revenue as a company this way. Sure enough that was happening, so you go through the list and I believe when you're that early on, you've got to be pursuing multiple hypotheses at the same time because, like I said, many of them don't work out so, one of the things that we thought early on that took a lot longer to work out is actually something that we only started working on recently in the past couple of years is, we were trying to push buy online, pickup in store in some of the earliest conversations, or what's known as click and collect, and delivery was clearly the winning solution early on.
Nilam Ganenthiran:
That didn't mean that pickup was not a real thing. Five years later we ended up launching a pickup program that was in thousands of stores but the market wasn't ready for it at the time, so you've got to pursue multiple hypotheses at the same time.
Delian:
Were there any hypotheses early on that just completely didn't pan out, [inaudible 00:25:24] were way too much of a lift on the partner to actually deliver it to you or didn't end up having the net-positive impact that you were hoping for for either the customer experience, the economics, anything like that?
Nilam Ganenthiran:
Yeah. Yeah, there were a number. One of the silliest ones that sounds like it would make sense but in hindsight was just really bad for everyone was, I remember, we thought, at a time, that limiting the catalog that was available from a retailer would save us costs, would save our shopper running through the store time, and would just be good for everyone involved. The conversion and retention negatives that came from us truncating the catalog, yeah, we saved a bunch of costs and all that, but the bad customer experience that we generated, what we should have found out right away, took us months to figure out, and the reason we didn't figure it out is we set the wrong metric.
Nilam Ganenthiran:
Internally, we were tracking these metrics around how many orders were perfect orders, came exactly as people ordered, so then the teams that were working on this kind of gamed that metric by cutting the catalog short, and then you start looking at, wait a minute, why is our retention not great and why is our conversion rate going on, and you start talking to customers ... Anyway, there were many things like that that we pursued in the spirit of solving for a specific problem. It's like squeezing the balloon. You solve that problem but then something else explodes.
Delian:
Maybe, double clicking on that, I feel like a lot of the job, as an early startup employee, as a part of scaling up with the company and starting to take on more and more responsibilities is, mostly becomes the role of an editor and problem solver as opposed to being like a writer yourself, and one of the key components of that being, identifying the appropriate business formula and equation and way to orient and guide teams, because each individual, typically, ops manager, et cetera, can't hold the entire company in their head, because that's not their full time job.
Delian:
They need to have just a more limited scope with an appropriate set of certain KPIs that they particularly focus on, and so, over your time at Instacart, maybe this one particular, that's a KPI being an example, how have you learned to sort of think through, or what are the frameworks that you've used to identify whether or not you're on the right path, are you using the appropriate formula, or if not, how and when to really dig in and understand how to diagnose the warning signs of, [inaudible 00:27:57], being an executive is like being a doctor in the ER where, okay, they might have a rash on their back but if their femur's broken and they're bleeding out, you definitely got to deal with the femur first and you can worry about the rash later. They're not going to die from the rash. How do you figure out when the femur is broken versus when it's actually just a rash?
Nilam Ganenthiran:
It's such a good question, and you're right. It was so much of the job then, and it's, frankly, even more of the job now. Some things that I've learned, I think, first and foremost, is being deliberate and intentional upfront on what your hero metrics are, call them KPIs, call them, what have you, is so important. Defining those and having, starting with the outcome you want to solve, which is not numeric, so, I, over a multi-year period, one of the risks of the business that I want to take away is X, whatever it is. I'll make one up, growth, right? One of the risks of the business I want to take away is growth, so the outcome I want to see is customer activations, and then to set an activation number or retention number around that, whichever you want, so, getting precise, starting with the outcome, and then finding the right hero metric, I think, is critical, and then, again, this is going to be a pretty obvious statement, but making sure that the right counter metrics are also defined early.
Nilam Ganenthiran:
Some of the early struggles that I faced in learning on the job were, one, not having the right counter metrics, so really putting thought upfront on what the counter metrics should be, and then, two, having too many, especially early on. When I talk to founders now who are at smaller companies, if they're trying to do five things at the same time or even three things at the same time, chances of failure on two of the three are pretty high, so we really were maniacal about trying to move one to two big things at a time as a company, and we have a framework that we use. It's called P zeroes, or priority zeroes, and at any given time we'll have two to three, and there was a time we'd only have one at a time, just based on the bandwidth of the company, so that's kind of how we've approached that, being really deliberate upfront.
Delian:
I'm curious, you went through a phenomenal seven and a half years, or still, obviously, continuing to go at Instacart, but steadily evolved, so, expanded your scope and responsibilities over time. What were the areas that maybe initially came more naturally and were easy to expand into versus where did you start to stretch yourself and how would you guide, if somebody is listening to this and is a similar position of, head of BD and strategy at an early stage startup, but one day wants to get to a CVO, CRO, president position, how did you scale with the company and how did you start to expand your own capabilities and scope of responsibilities that you could handle over time? Honestly, especially with such a hyper growth company like Instacart, most are not able to. The company typically grows much faster than the individual can grow, and they're not able to keep up.
Nilam Ganenthiran:
Yeah. I think about this one a lot, so hopefully what I share can be helpful. I think the first thing is, one of the benefits that I found at Instacart was just this, we have a culture where we all feel comfortable solving problems even if they're not in our lanes, and that was a big attraction to me of joining an early stage startup. When you start early, you don't really have a lane, so you're just trying to solve problems and move rocks forward, and embracing that, I think, is really hard for people who've come from more traditional backgrounds. For whatever reason, I didn't have the dogma around lanes and all that, so I was lucky, but then I've seen folks that we've hired, sometimes get tripped up by that, so thing number one is just, solve problems, don't worry about functional ownership.
Nilam Ganenthiran:
I think thing number two on scaling is, and this is really hard, I do a thing where, there's no reminder in my calendar but every once in a while, call it once every year or year and a half, you kind of have to look yourself in the mirror, look at what the company has in front of it, and reaffirm that you're the right person for that. I think, luckily, I've got to the point that I'm not, but I think it's just a really healthy thing to do in a hyper growth setup, because otherwise you have all this friction, like, you're fighting, the company's fighting, and it's not good for ... Because of the wonders of aligned incentives that come from options and equity ownership, it's just something that's healthy for all of us to do.
Nilam Ganenthiran:
I think the third thing is, as you're looking to add value, it should just be natural places that you gravitate to, so, in my case, today, my scope of responsibility includes things like legal, policy, comms, parts of our operations teams, et cetera. Those were places that, over time, I ended up spending time solving problems, because no one else was, and it was like, "Okay, so, is this a place where I can add some value by either hiring an exec to lead the function or guide the function until we do?" If the answer is yes then, I've been able to have very transparent conversations with our founder and CEO and say, "Hey, do you need help there? Okay, let me go work on it for a year," and just having the mindset that these titles and functions in companies that are in hyper growth, they're all just like transitions, because you're only as good as, maybe, the next six month or one year crunch, and then these companies need to constantly evolve and reorg and upgrade their skill set.
Nilam Ganenthiran:
Just because the jigsaw pieces look a certain way today doesn't mean they need to look a certain way tomorrow. Especially when you're recruiting executives who've been executives elsewhere, I make no promises to people I recruit about the exact sub-functions they're going to own. I give them purviews of the types of problems that they're going to work on, and how the starting position is, but I think it's really important from a social contract perspective to set the expectation that stuff evolves, especially when you're growing at 2, 3, 400% year on year, it's going to have to evolve.
Delian:
I'm curious, was there ever a particular time where the experience at A.T. Kearney or P&G led to a particular, let's say, pivotal moment or strategic change that ended up being quite critical to the company?
Nilam Ganenthiran:
I think that some of the P&G experiences were critical in helping us develop what is now our advertising business. From the beginning of the company, Apoorva always had the point of view that we could build a very large, very meaningful, very resonant advertising business on behalf of the CPGs who sell on Instacart through our retailers, but having experience being a marketer at a P&G helped me develop real empathy for the type of problems that brand managers face every day in terms of where they can deploy capital and the type of returns they're looking for and the type of data they're looking for back, so that was something that, it basically led to this insight that CPG marketers are dramatically underserved in terms of return data that they were getting, and then, full final attribution, and this other insight that when a brand wants to spend money, they ideally want it to be across a full network of retailers, and both of those were problems that Instacart was uniquely able to solve.
Nilam Ganenthiran:
Amazon solves the return data problem but doesn't solve the breadth problem. We are able to solve both, luckily, so we made a number of design choices early in the company, knowing that that's where this was going to go. It was partially informed by the P&G experience, and then I think both the P&G experience and then the A.T. Kearney experience allowed me just to understand a little bit more about how retailers think from, they are our clients, so, I understand the buying process at these places, I understand the functional ownerships and just how decisions get made, which I would not have understood without those two experiences.
Delian:
Makes a ton of sense. Speaking of, you kind of talked about how traditional brands are accustomed to spending with retailers. This is maybe fast forwarding to a more recent initiative that you guys have launched, but traditionally, and obviously, correct me if I'm wrong, but brands can choose to spend with a retailer for sake of particular placement within the store, and in the world of e-commerce, obviously, placement works slightly differently. You guys have launched a new initiative, Instacart advertising. Can you walk me through a little bit about how that came to be and how you tried to mirror as much as possible the sort of in person experience, and then, also, I assume, the buying experience that brands were accustomed to when choosing to purchase shelf space?
Nilam Ganenthiran:
Yeah, yeah, absolutely. Instacart's advertising business, it's still very early days but it's the fastest growing part of the company. We've hired hundreds of people on both the commercial side and then the technical sides to lead these businesses for us. Our sales leader came from Amazon where he led Amazon's ad sales and marketing business, and our engineering leader came from Google. Our approach to advertising actually is to bring more dollars closer to the retailer, so our thesis was, a lot of the brand spend that was happening on national media on these platforms that are more disconnected from the purchase, call it search engines, call it social media sites, et cetera, should be brought closer to the point of purchase, because increasing on e-commerce sites, that's the point of discovery.
Nilam Ganenthiran:
That's where customers are discovering new brands and new items, et cetera. We started with that thesis, and what we're finding is that the dollars that we're attracting are basically national brand dollars that otherwise would lead to TV, print, physical mailers, et cetera, social media and search, and retailers have thus far been really excited about what we're building because it's funneling more dollars closer to generating transactions to them and it's stuff that used to lead, and brands are more excited because they get predictable return on ad spend, where we're able to tell you ... The targeting is just so much better, but I think we're in the first inning, broadly, of just kind of e-commerce advertising, not just in grocery, and we're such admirers of what folks like Amazon have built in this space, but we're so early.
Delian:
You guys went through a pretty extraordinary year in particular with COVID all of a sudden, in person grocery shopping effectively ground to a halt. You guys have obviously spoken about this extensively publicly, but I would love to hear what were those first couple weeks in April like? I imagine that was a lot of growth to go through. How did you guys keep up with that level of demand and sudden, let's say, pivot of what I imagine was relatively repeatable and consistent growth to the largest black swan event that could possibly happen that would massively accelerate your growth?
Nilam Ganenthiran:
Yeah, yeah. I think it's been such a crazy time for all of us, and obviously, so glad that we're almost at the other end of it, but as I reflect back on early March and, frankly, even in February we started thinking about this based on what we were seeing in China, and I think we all were kind of worried that this was going to happen, and there was an early decision that we made as a company that ended up being so fortuitous. I think it was some time early March, before stuff really broke, where a small group of us, Apoorva, myself, a few others on the exec team got together and we said, "If this thing is real, we're going to be completely overwhelmed really quickly and we're going to have let down our customers and our retailers," and that was kind of the thing that haunted us, and the choice that we made, and this was pre everything really breaking, was we scrapped our roadmap.
Nilam Ganenthiran:
We literally said, "Let's put everything on pause and let's rejigger our roadmap." We called an all hands the next day and we told the company we thought this was going to happen. We said, "We don't know what this means in terms of what we're building, but we're going to let you know in the next 24 to 48 hours."
Delian:
What was the time frame on this? Was this early March? Was this ...
Nilam Ganenthiran:
It was mid-March.
Delian:
Mid-March.
Nilam Ganenthiran:
I think it was first or second week of March.
Delian:
Okay, so, literally a week or two before the shutdown [crosstalk 00:41:27] going through ...
Nilam Ganenthiran:
It was before, yeah, like before Tom Hanks got COVID, which was kind of the marker in my head.
Delian:
Yep, yep, yep.
Nilam Ganenthiran:
We told the company we were going to get back together. We huddled with all the group leads, et cetera, and said, "Okay, what does this mean?" We redid our roadmap and it was all focused on two things. First, keeping our shoppers and customers safe, and secondly, scaling as quickly as possible, and then we got to work and we didn't stop for months and months and months. They were brutal months, but obviously, in hindsight, the most rewarding professional experience. I don't know. It's one of those things, like, I pinch myself. I don't think there will ever be a time where the work I'm doing is going to be so directly meaningful, not just for customers but for hundreds of thousands of people who lost their jobs.
Nilam Ganenthiran:
Examples of things we had to go build from scratch, one, we had to find a way to keep the site up as we were scaling, 5X day over day, some of these days, and we have a tremendous CTO and I think he didn't sleep for two months as he was trying to figure out how to do that. Two, we had to figure out how to onboard safely with new health and safety protocols, hundreds of thousands of new personal shoppers. We made these partnerships with folks like Hilton and American Airlines and everyone was furloughing employees, so we said, "Great. They're service employees. They want earnings opportunities. We have programs to keep them safe. Here you go."
Nilam Ganenthiran:
Three, we had to go acquire and distribute PPE across 5,500 cities when everything was shutdown. You can't go on Amazon and buy PPE at this point, so we had to go develop new supply chain routes. We contracted a bunch of manufacturers to get hand sanitizer because there was no hand sanitizer to be found, so we worked with some alcohol manufacturers to turn their facilities, I kid you not, so all of these crazy things that we had to do, and the thing I didn't realize at the time is, in these moments, you can either be paralyzed and sit there debating, or you can just pick a lane and run as fast as you can, and Instacart's instinct, that time, was most similar to 12 employees in a house.
Nilam Ganenthiran:
Instacart's instincts is, let's just pick a lane and go, and that's what we did and that ended up serving us really well. Again, still probably the most ... I don't know how I can top that experience. That was great, yeah.
Delian:
Yeah, you guys talked about the fact that you went from 200,000 shoppers to 500,000 shoppers, and so, bringing on an additional 300,000 employees just feels like a wild, wild, wild growth. It's almost difficult to humanly comprehend, if you put that in person, you're talking about many, many stadiums worth of people.
Nilam Ganenthiran:
While we were doing that, we were rebuilding our Shopper app which is the tool that these folks use to go and do their work, here's the crazy thing that, again, I'm so proud of. While we were doing this, our shopper NPCS, so the NPCS for the folks picking groceries, is at an all time high, so it kept going up while we're onboarding tens of thousands of new people every day. We do these twice daily standups where we're just constantly monitoring how much supply we have by city for these 5,500 cities across the country, and we'd have these red zones where we'd kind of swarm opportunities.
Nilam Ganenthiran:
We did things like spun up a senior support line because what we realized were a lot of people who were ordering groceries on Instacart, this was the first time they've ever ordered anything on e-commerce and many of them were from older populations. It was hard for them to learn how to use our site, so we said, "Great, let's create a call center," because we had tens of thousands of agents that we'd onboarded through this process, to help folks through that process.
Nilam Ganenthiran:
The really happy benefit of this is the systems, processes and tools we built through this process now serve, as well, as when we're more in steady state, so, yeah.
Delian:
Super, super cool. I'd be curious, you talked a little bit about this in terms of expansion of scope, but if you were advising somebody who was much earlier on in their career that was maybe just getting started at a similar size company, and is looking to eventually get into a CVO, president level at a super high growth company, what would be the biggest piece of advice that you'd give to them or maybe somebody that's even at Instacart today, I'm sure is similar advice?
Nilam Ganenthiran:
Yeah. I think, first and foremost, these types of jobs, the startup journey asks so much of you but can give so much back, so I think being thoughtful about every day you wake up and just being open to the fact that you're going to learn a bunch of stuff is really important. One of the big things from a hiring perspective we look for in candidates, is humility, and humility doesn't mean you don't have self confidence, but it's the humility to know that you don't know everything, and it's the humility to know that the market, the consumer, the competition can hand it to you on any given day, so you need to keep reinventing yourself and your approach.
Nilam Ganenthiran:
I think, thing number one is just having an openness to learn, a curiosity and a hunger and a humility when you approach your day. I think, thing number two is, you're not working for Proctor & Gamble when you work in one of these jobs. You're not working at a management consulting firm. There is no career ladder. There's no, let's sit down and map out the next five years. When I worked at P&G, there's a path there. They sit with you and tell you, "Here's how your next 5 to 10 years is going to look like," and there's folks for whom that's great, but when you're joining a high growth startup, again, you see a problem, you swarm that problem and it creates another opportunity for you in your career, so you have to get comfortable, there's no ladder, there's no functions, there's no lanes.
Nilam Ganenthiran:
Then, three, I think, it's having a desire to learn as much as you can about the business and that can come from developing a lot of relationships internally but also leveraging this fact that we're all in this cool bubble that is Silicon Valley, broadly. I live in Toronto but this North American tech, let's call it that, and a lot of the problems you face, there's analogies that others in the network have faced. One of the things that Instacart was really fortunate about is, we've got a great set of investors on our cap table. They've got a lot of portfolio companies, and one of the things I did early on and some of my peers, some of the other execs did early on is, I never ran BD before. I didn't even know what BD was, so I started talking to people in the Sequoia network who had done BD before.
Nilam Ganenthiran:
I didn't know what it meant to hire an operations leader or run operations. Okay, great, go talk to people and see what does that job look like in different places and try to figure out ... For whatever reason, people don't do as much of that as I think is available to them, so, anyway, just take advantage of that if you have the opportunity.
Delian:
Cool, and Nilam, thanks so much for coming on to the podcast. I really enjoyed the conversation today and absolutely fascinating journey that you've gone through over the past seven and a half years at Instacart, but the 17 years of grocery experience.
Nilam Ganenthiran:
Thank you so much for having me, really enjoyed this.