The grocery delivery giant’s founder and former CEO speaks exclusively to Forbes about his decision to exit the board as the company debuts on the public markets at a fraction of its 2021 valuation.
In the conference room of a sparse downtown office in San Francisco, Apoorva Mehta recounts his time at Instacart, the grocery delivery company he cofounded and led until two years ago. Sitting in the headquarters of his new startup, a still-unlaunched digital health company called Cloud Health Systems, Mehta addresses controversy that has long swirled around his departure.
He doesn’t mince words: “A lot of people have said that perhaps I was pushed out of the company. The reality is, if I wanted to be the CEO of Instacart, I would be the CEO of Instacart.” He left, he says, because his new startup demanded his “singular focus.”
Mehta hasn’t given an interview since stepping down as CEO in July 2021, when he handed the company reins to Fidji Simo, the longtime Meta executive who ran the Facebook app. He’s been serving as executive chairman since then, with the intention of leaving the board after Instacart listed on the public markets. On Tuesday, when Instacart went public, raising $660 million in a $9.9 billion IPO — a dramatic discount from its high-flying valuation of $39 billion just years earlier — he made good on that promise.
Going public was a dream Mehta may or may not have wanted, depending on who you ask. Mehta had a contentious relationship with board member Michael Mortiz, the former boss at Sequoia and an early investor in Instacart, three people with knowledge of the situation told Forbes. The fissure was largely due to Mehta’s reluctance to take the company public.
Mehta tells Forbes now that he wasn’t against going public eventually, but he didn’t think it was the right move at the time. The company’s growth had exploded during the pandemic, and its infrastructure had been stretched thin. Meanwhile, CFO Sagar Sanghvi had recently left the company, Mehta said, a crucial loss ahead of a complicated financial process. Sanghvi’s replacement, Nick Giovani, started in January 2021. An IPO was just too much for that moment.
Instacart declined to comment. Sequoia didn’t respond to requests for comment.
Mehta now faces a dramatic transition—as the company that he calls his “life’s work” has hit a momentous milestone, and he is walking away. “It’s pretty surreal,” he said.
He still stands to make a fortune, though his net worth has fallen with Instacart’s valuation drop. As the largest individual shareholder with a 10% holding, Mehta became a billionaire when Instacart hit a $13.7 billion valuation in 2020. The company’s value peaked a year later at $39 billion. After valuations cratered across the tech industry in 2022, Forbes estimated the value of Mehta’s shares to be worth $1.3 billion in January 2023. With the company going public at a $9.9 billion valuation, his stake is worth an estimated $800 million. Instacart announced that he will sell 700,000 shares at IPO.
Launched before Obama’s second term, Instacart achieved a longtime Silicon Valley dream that had eluded the tech industry since the dot-com bubble: on-demand grocery delivery. (Webvan, founded in 1996, was a notoriously doomed forebearer.)
Instacart eventually became a pandemic darling, taking on new importance amid Covid lockdowns around the world. The unprecedented event saw the company’s business grew 400% as the pandemic ballooned, Mehta said. That success — which also came with controversies around sourcing protective equipment for its shoppers and bait-and-switch tipping scams, where customers dangled high tips before taking them away — helped vault Instacart to a $39 billion valuation in 2021. But the luster began to fade as lockdowns ended and people began to venture out into the world again. Now the company is going public at only 25% of that valuation, with its IPO priced at $30 per share. Early Nasdaq data indicates that the company could start trading at $41 per share, up 30% from its listing price.
“I think that it’s far more interesting to think about the long term value of the company, versus what the day one price of the IPO is,” Mehta said, addressing the deflated valuation. “If you look at all the companies that went public around 2021 and look at their valuation today, they have normalized just like ours has.”
Instacart’s competitors, like DoorDash, have been at a comparable place in recent trading, said Ali Mogharabi, an analyst at Morningstar Research. “Instacart’s IPO pricing, in terms of valuation multiples like price to sales, appears to be pretty much in the same range,” he said.
Instacart’s public debut is part of a volley of companies that have ended a drought in tech IPOs in recent weeks. Arm Holdings, the chip design company controlled by Softbank, re-entered the public markets last week, seven years after being taken private. Shares popped 25% on its first day of trading. Klaviyo, a marketing automation platform, also expects to go public this week.
However, Instacart’s growth has slowed, and it will increasingly look to advertising to offset the sputtering. Last year, ads accounted for 29% of Instacart’s $2.5 billion in total revenue, the company’s first profitable year. In the first half of 2023, the company reported $242 million in net income on about $1.49 billion in revenue. The company thinks its ad platform can make a viable alternative to industry juggernauts Google and Facebook because of its very specific use case and inventory. “How often do you search for ketchup on Google?” Sri Batchu, Instacart’s former head of advertising, told Forbes.
Silicon Valley Success Story
The story behind Instacart’s beginnings is now well-known lore in startup circles: As it’s told, Mehta started the company with Max Mullen and Brandon Leonardo 11 years ago after Mehta opened his fridge and found nothing but a bottle of Sriracha. After building the app, he missed the application deadline for elite startup incubator Y Combinator by two months. Desperately emailing YC partners, he eventually got a response from Garry Tan, who told him he could try and apply, but it would be nearly impossible to get admitted. Mehta turned in his application and afterwards sent Tan a case of beer using Instacart (a 21st Amendment stout, Tan told Forbes.) Shortly after, he was admitted to YC’s 2012 spring batch. A year later, he made Forbes’ 30 Under 30 list.
As the company took off, it raised a $8.5 million Series A from Sequoia and a $44 million Series B from Andreessen Horowitz, with investors like Coatue and Tiger Global piling in on later rounds. Sequoia is Instacart’s largest investor, with a 15% stake.
Mary Meeker, the legendary investor, managed her firm’s investment in Instacart’s Series C when she was at the venture giant Kleiner Perkins. “We believe the Trojan horse to build this business starts with the basic needs – food & water (aka grocery stores),” Meeker and the firm wrote circa 2014 about Instacart, according to a copy of her notes she shared with Forbes. “We believe Instacart has the key tenets of successful big-idea companies: 1) Huge market; 2) fabulous / missionary founder; 3) great products / service… augmented with the key ‘right product, right place, right time’ mojo.” (With the 75% drop in the company’s valuation over the last two years, many of its later-stage investors, including hedge fund D1 Capital and VC firm General Catalyst, stand to lose money on their investment.)
As Instacart grew, it started to ruffle local grocers. Management at grocery stores soon began to recognize the same set of Instacart shoppers perusing their aisles, and big grocery chains including Albertson’s sent Instacart cease and desist letters. Mehta hung the letters in his room, Brad Menezes, Mehta’s old San Francisco roommate, told Forbes. “He took it as a badge of honor,” said Menezes, now CEO of the developer tools startup Superblocks. “He was unfazed.” The chains eventually joined Instacart as partners.
Mehta, who was born in India and moved to Libya with his parents as a baby, immigrated to Canada when he was 14. After graduating from the University of Waterloo, he did a four-month stint at mobile device maker BlackBerry before landing at Amazon in 2008 as a supply-chain engineer. It was at the e-commerce giant that Mehta honed the operations skills that would be foundational to getting Instacart off the ground. His entrepreneurial zeal was evident even that early on—a double edged sword.
“You often have to believe very wholeheartedly that this is the right way to do it, or this is the right product to build,” Karney Li, Mehta’s first boss at Amazon, told Forbes. “But I think it can also be blinding.”
“He will probably be the one that literally says, ‘I know this better than anyone else,’” Li added. “Because he’s probably spent more time thinking about it than anyone else.”
Indeed, Mehta has been criticized for his “chaotic management” in the past. The founder reportedly kept a tight grip on product development, which grated on some executives in the department and pushed at least four of them to depart the company.
“This was during a time when we grew by 400% in a year. So it’s hard to see things not being a little chaotic,” Mehta said when asked about the claims. “I don’t think it was a fair characterization to say that because if you look at our actual data, the attrition rate at Instacart is extremely low.”
But even Mehta’s most ardent supporters remarked on his inflexibility on certain issues. “It requires an incredible amount of fortitude to have nine out of 10 people telling you that something’s a bad idea, but to actually just go through with it anyway and find a way to make it happen,” Brian Armstrong, the CEO of Coinbase who was in the same Y Combinator class with Mehta, told Forbes. Tan, meanwhile, pointed to Mehta’s “unrelenting” nature. “The other way to say ‘unrelenting’ is ‘incredibly stubborn,’” he said.
Mehta’s Next Act
Two years ago in an interview with Forbes, Mehta reflected on losing Whole Foods as a customer after Amazon acquired the retailer for $13.7 billion. He likened it to Pizza Hut suddenly lacking pizza — a code red crisis. For the serial entrepreneur, who had famously founded 20 startups when he struck gold with Instacart, it was a make-or-break moment. In the face of that adversity, he was resolute: “Look, frankly, this was not going to be a 21st startup for me,” he told Forbes in 2021. “There was absolutely no chance I was gonna allow that.”
But even after his exit from Instacart, Mehta still has that entrepreneurial itch. Today, Mehta is building a digital health firm called Cloud Health Systems, a still-unlaunched company that is tackling metabolic health under the brand name Sunrise.
Mehta said he had been mulling his exit for a long time. In 2020, Greenoaks Capital founder Neil Mehta, a mentor to Apoorva and investor in Instacart, asked the Instacart founder what he wanted to do with the rest of his career. “Do you really want to be the grocery guy?” he recalled asking. “Is this really your calling?”
Apoorva said the conversation was impactful and “got him thinking.” But he claims it’s not an attempt at revisionist history — his ambitions beyond the company weren’t something he could talk about publicly when he was still running Instacart.
Cloud Health, which raised a $30 million round led by Joshua Kushner’s Thrive Capital, has already courted controversy. Last December, Mehta and his business partner Tejasvi Singh were sued for allegedly ripping off another startup to create a “copycat” company. The lawsuit, brought on by a company called Helio Logistics, claims Singh stole trade secrets during a due diligence process for investors. The lawsuit was settled in February. Mehta denies any wrongdoing. “We did not copy any intellectual property,” he said. “We do not have any [of their] trade secrets.”
With this new venture, Mehta has his sights on remaking more than one industry over the course of his career. He says he’s inspired by the path of business mogul Wayne Huizenga, who started an environmental services company and an automotive retailer, then became co-owner of Blockbuster Video and the NFL’s Miami Dolphins.
With Mehta officially stepping off the board to pursue other endeavors, CEO Simo will take over his position as chair. (Instacart declined an interview with Simo for this story.) He says he believes in her leadership for Instacart’s next era. Simo will “simply be a better CEO than me for Instacart’s coming years,” he wrote when he stepped down.
That doesn’t mean they don’t disagree sometimes. Mehta said he believes in Simo’s leadership, and when they’ve had conflicting opinions while he’s been board chairman, he’s trusted her judgment. “There are arguments to be made on both sides,” he said. “And at that point, you have to trust the person who’s closer to the action.”
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