Yesterday Fred Wilson penned a nostalgic post about Kozmo. it was a poignant piece for me, because I remember the Kozmo era well. But before I get to that, I encourage you to read Fred’s post because it carries some important lessons, such as carrying scars from your failures and recognizing when an idea is ahead of its time.
Although I must embarrassingly admit that I contributed in small part to Kozmo’s demise by taking advantage of their free customer acquisition promos on a few occasions during a summer in NYC (my sincere apologies, Fred), the real recipient of my abusive early adopter behavior was Peapod.
Peapod launched in 1996 as a website for online grocery shopping. They counted as their core founding partner the Jewel supermarket chain in the Chicagoland area. Peapod represented one of the early posterchilds of dotcom startups and at one point ranked 69th on the Inc. 500 list of fast-growing privately held U.S. companies.
I was in business school at the time, didn’t have a lot of spare time to spend on things like grocery shopping, so for me home grocery delivery was a godsend. Better yet, as part of the startup’s aggressive customer acquisition campaign, Peapod offered something like $75 worth of free groceries for new users, with free delivery included. And it seemed like every month I received a new promotion of $75 in free groceries. I must have benefited from that promotion at least half a dozen times, so frequently that I developed a rapport with the delivery man (it was usually the same guy). Being a pseudo-intellectual eagerly aspiring mba student at the time, I quizzed the delivery guy about the economics of his company — whether he was an employee or a contractor (an employee), whether his compensation provided for tipping (tips were explicitly discouraged), how well customer traction was developing (not very well).
I even expressed my concern about how his business could remain viable when a guy like me profits from hundreds of dollars of free groceries. I’ll never forget the delivery guy’s confident explanation in response to my concern: “Don’t worry, at Peapod our business model has two sources of revenue: money from customers, and money from investors.”
This was in early 2000, and it couldn’t have been a more glaring signal that we were approaching the peak of the euphoria.
The number one reason I’ve witnessed that French startups fail stems from improperly reading the market. Often this means building a product before detecting a market need. It can also mean trying to bring an idea to market that is simply ahead of its time. Just the other day I ran into a former employee of now defunct French startup Goojet, which strikes me as a perfect example of this second case. I recall meeting the company way back in 2007, and at that time I struggled with the requirement that users download widgets to their mobile phone to onboard users to the product. This is not meant to be a criticism of Goojet; the founder is a brilliant entrepreneur who continues to build great companies. He was only slightly ahead of his time with that particular endeavour, however, as the App Store and the native app economy really caught fire the following year in France, making the act of downloading apps totally natural.
In some ways, France presents a challenge for visionary founders as the culture tends toward more conservative habits which can slow consumer experimentation and adoption of new products.
I’m grateful for entrepreneurs like Marc Rougier and VCs like Fred Wilson. A side effect of seeing the future means occasionally creating or funding an idea that is ahead of its time.