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Wal-Mart in Talks to Buy Web Retailer Jet.com for $3B

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Re: Wal-Mart in Talks to Buy Web Retailer Jet.com for $3B

#101

Post by dragonwriter »

Someone1234 wrote: post #97
michaelbuddy wrote: post #81

Earlier quoted context omitted.

Jet, based on its promotional content is heavy into the home products category. Walmart would love to knock them out to absorb that competition to getting delivery and even subscription delivery of home products. So it may be the price Walmart is willing to pay to ensure nobody is making Jet their new source for houseware products and avoiding the WalMart Brand. We also don't know what else Jet has in the pipeline, n…

What surprises me is that in many European countries, you can now order ALL of your groceries delivered. You place an order, and someone physically walks around a local supermarket, picks up stuff, they put on a van, and it is delivered to your home. It is actually very inexpensive (and free if you spend enough). Yet nobody in the US does that (well nobody outside of big cities). Walmart right now today has a HUGE ad…

> What surprises me is that in many European countries, you can now order ALL of your groceries delivered.

You can do it in much of the US, too; a number of brick-and-mortar grocery chains offer online ordering home-delivery services, even before considering third-party or online-only grocers.

Re: Wal-Mart in Talks to Buy Web Retailer Jet.com for $3B

#103

Post by systems »

cm3 wrote: post #77

Does the sale mean F# is having its WhatsApp (Erlang) moment, in other words major industry validation?

well, I didn't know whatsapp uses erlang until now and I think it didn't really help make erlang more popular

for me I believe it was couchdb that brought erlang to light .. but now it seems erlang isn't really getting any more popular

but yea, of course being used by whatsapp is very strong validation for erlang

Re: Wal-Mart in Talks to Buy Web Retailer Jet.com for $3B

#104

Post by api »

carsongross wrote: post #78
ktamura wrote: post #55

This buyout is based on FUD, and FUD-based investment is a recipe for disaster. From the OP: >But for both Jet and Wal-Mart, Amazon’s frenzy of warehouse construction and fast delivery—as quickly as one-hour—have proved formidable. The retailer has logged three straight quarters of record profit while locking in an estimated 60 million members to its $99-per-year Prime service, cultivating a loyal customer base and g…

Upper management is filled with cargo cult thinking around technology. I see it even in software companies. Someone advocating a rational, realistic way forward (like you) would be pushed out in favor of people who "get it" and want to "move things forwards dramatically"

Business in general is filled with cargo cult thinking in my experience.

Re: Wal-Mart in Talks to Buy Web Retailer Jet.com for $3B

#105

Post by potatolicious »

zd4akaq85a wrote: post #82
swingbridge wrote: post #67

Given the proposed price relative to funding raised it's likely the investors will get their money back plus a small return, employees with options will likely get nothing or perhaps a token amount (after all the preferred terms are cashed in) and the founder gets to sell off another highly unprofitable business. This will be chalked up as a "failed" startup but at least the investors get to take their money and play…

Really, you are claiming that if a company raised $570M and sold for $3B, the common shareholders will get screwed? Do you have some information we don't? The publicly reported valuation at the last funding round was $1.4B. Those would have to be some impossibly harsh terms to not leave well over $1B to the common shareholders.

> "Those would have to be some impossibly harsh terms"

Harsh terms yes, but not uncommon.

Preferred shares are common for investors that pay out at a multiple of the common shares, so in an exit the preferred pool can be paid at a dramatically higher rate than common shares.

Funding often also comes with guarantees on return - i.e., if the exit price is below a threshold, the investor gets a guaranteed minimum return before other are paid. This works out for the company if it's a smashing success (the upside is also capped) but can wipe out common shareholders if the company sells for anything less than stratospheric valuations.

This should be a lesson to anyone thinking about working for a startup: a company raised $570M and sold for $3B, and in all likelihood the employees will receive very little from this sale.

In the modern startup fundraising scene, and the way startup equity is structured for employees, if your company exits for anything less than a mind-boggling headline-making valuation, you are almost certainly receiving little to nothing.

Re: Wal-Mart in Talks to Buy Web Retailer Jet.com for $3B

#106

Post by swingbridge »

brianbreslin wrote: post #83
ktamura wrote: post #55

This buyout is based on FUD, and FUD-based investment is a recipe for disaster. From the OP: >But for both Jet and Wal-Mart, Amazon’s frenzy of warehouse construction and fast delivery—as quickly as one-hour—have proved formidable. The retailer has logged three straight quarters of record profit while locking in an estimated 60 million members to its $99-per-year Prime service, cultivating a loyal customer base and g…

Walmart has already spent close to $12B funding walmart.com/labs and not made a dent in catching Amazon. Jet has a super smart team looking at ways to gain margins in areas amazon is ignoring. short term their investors won't appreciate this buy.

The may be smart, but the business model seems to be failing. Not clear how this helps WalMart much.

Re: Wal-Mart in Talks to Buy Web Retailer Jet.com for $3B

#107

Post by dawhizkid »

ktamura wrote: post #55

This buyout is based on FUD, and FUD-based investment is a recipe for disaster. From the OP: >But for both Jet and Wal-Mart, Amazon’s frenzy of warehouse construction and fast delivery—as quickly as one-hour—have proved formidable. The retailer has logged three straight quarters of record profit while locking in an estimated 60 million members to its $99-per-year Prime service, cultivating a loyal customer base and g…

Could the same have been said for Dollar Shave Club?

Maybe a good time to join a CPG/e-commerce startup :)

Re: Wal-Mart in Talks to Buy Web Retailer Jet.com for $3B

#108

Post by ktamura »

dawhizkid wrote: post #107
ktamura wrote: post #55

This buyout is based on FUD, and FUD-based investment is a recipe for disaster. From the OP: >But for both Jet and Wal-Mart, Amazon’s frenzy of warehouse construction and fast delivery—as quickly as one-hour—have proved formidable. The retailer has logged three straight quarters of record profit while locking in an estimated 60 million members to its $99-per-year Prime service, cultivating a loyal customer base and g…

Could the same have been said for Dollar Shave Club? Maybe a good time to join a CPG/e-commerce startup :)

It's definitely a good time to join or start one: Verticalized Consumer Packaged Goods startups with solid software infrastructure (hence the ability to power logistics/distribution/etc. with software) can undercut incumbents while maintaining a healthy margin.

I think the key phrase here is _verticalized_. Go-to-market as well as scaling operations is much easier when you can focus on a single product category.

Re: Wal-Mart in Talks to Buy Web Retailer Jet.com for $3B

#109

Post by zd4akaq85a »

potatolicious wrote: post #105
zd4akaq85a wrote: post #82

Earlier quoted context omitted.

Really, you are claiming that if a company raised $570M and sold for $3B, the common shareholders will get screwed? Do you have some information we don't? The publicly reported valuation at the last funding round was $1.4B. Those would have to be some impossibly harsh terms to not leave well over $1B to the common shareholders.

> "Those would have to be some impossibly harsh terms" Harsh terms yes, but not uncommon. Preferred shares are common for investors that pay out at a multiple of the common shares, so in an exit the preferred pool can be paid at a dramatically higher rate than common shares. Funding often also comes with guarantees on return - i.e., if the exit price is below a threshold, the investor gets a guaranteed minimum return…

I feel you just haven't proved your claim given the numbers. Even if the last round's investors were guaranteed a 3x return, that only takes up $1B of this $3B.
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