Instacart, an internet based delivery service, is a relatively new startup unicorn with a valuation of about $2 billion. It works similar to PostMates, by receiving either online or mobile requests from users and then sending employees to pick up the order from a variety of nearby supermarkets. Surprisingly, Instacart has no published patents! As an IP strategy expert, this lack of an IP portfolio is an immediate red flag. Despite this company being coined “America’s most promising company” by Forbes, Instacart may run into some trouble soon, as more and more competitors see this same type of opportunity in this market and might have better ideas that can be patented, which would ultimately hurt and curb Instacart’s marketability.
In an interview, Instacart’s CEO Apoorva Mehta exclaimed that this $2 billion valuation means that they must allocate a large amount of resources towards expanding into different geographical areas, developing other categories of delivery services and increasing their delivery speeds. I somewhat disagree with Mehta’s strategy. Quickly expanding this company is going to thin in out and make it weaker internally. I fear that if Instacart doesn’t have a base of valuable intangible assets, such as patents, more meticulous competitors may end up outpacing Instacart.
Three of Instacart’s competitors, FreshDirect, Hellofood, and Munchery are all more recent, smaller startups who are attempting to outpace Instacart in this exact fashion. As a food delivery service, Instacart’s marketing reach may be able to expand into meal delivery, but in order to do so they must find ways to outpace delivery giant’s such as PostMates and DoorDash. Instacart must first step back from their rapid expansion and bolster their IP portfolio. They can do this by focusing on ways to patent their mobile delivery technology and to find more protective methods that strengthen their relationship with supermarket so these markets will allow Instacart to offer deals to consumers that are better than competitors’. Having at least a few patent assets in their IP portfolio will surely give Instacart a leg up over all its competitors in this type of market.
YouTube: https://www.youtube.com/watch?v=9VI7VnXq98U&feature=youtu.be
Wow, this article was really well done. I agree that Instacart should take the first step in getting patents to beat FreshDirect and the other food delivery giants. The problem is that some grocery stores are already doing food deliveries for themselves.
ReplyDeleteDaniel,
ReplyDeleteYou did a very good job here. You pretty much covered all of the information about the situation and provided some really insightful ideas for developing an IP portfolio.
Hi Daniel, interesting article about Instacart's patent portfolio. I wonder how exactly Instacart was even able to receive a $2 billion valuation, as its business model seems to be the exact one that signaled the beginning of the crash in the early 2000s! It will be interesting to see how exactly Instacart develops its business in the future with patents, either by entering the seemingly treacherous area of food delivery (see Spoonrocket's recent closing) or hoping to be bought out by a larger supermarket chain with a larger existing food delivery service. Thanks!
ReplyDeleteHi Daniel,
ReplyDeleteYour post was very informative. It is shocking to see that Instacart lacks patents. It seems to me that, while Instacart is a great idea, there are many other services out there that provide that exact same service. The fact that Instacart does not have any patents might make for problems in the future. Great post!