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Confirmed: Walmart buys Jet.com for $3B in cash

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Re: Confirmed: Walmart buys Jet.com for $3B in cash

#101

Post by sbierwagen »

swalsh wrote: post #96
rogerdpack wrote: post #92

I figured out what is going on here. Walmart thinks to themselves "we want to be like amazon, we want to be huge online" and then jet comes along and is something of an almost competitor to amazon, so corporate thinks "oh we should snap this up" but...my gut reaction here is this is going to be a terrible deal for walmart, what are they going to do, keep dumping $500M/yr for it at a loss or what? Pretty desperate, bu…

If you're a cynical person that is an easy thought... but something tells me a 3B acquisition of a company that is losing money in so many places isn't a decision taken lightly. A public company like Walmart, there's some people doing some math here.

  A public company like Walmart, there's some people doing 
  some math here.
http://www.zdnet.com/article/yahoo-reports-another-big-loss-...

  Yahoo also reported that it's writing down $482 million 
  in charges related to the declining value of Tumblr, 
  the social-blogging service that Yahoo acquired for 
  $1.1 billion in 2013.
http://www.theverge.com/2015/7/8/8910999/microsoft-job-cuts-...

  and the company is writing off $7.6 billion related to 
  its acquisition of the Nokia phone business. That's more 
  than the $7.2 billion Microsoft paid for Nokia's phone 
  business last year.
Public companies "do some math", but that doesn't mean their math is always right. Acquisitions are bets, and bets don't always pay off.

Re: Confirmed: Walmart buys Jet.com for $3B in cash

#102

Post by tedmiston »

arenaninja wrote: post #17
dclowd9901 wrote: post #14

Earlier quoted context omitted.

I see this as Wal-Mart buying their place into the online market. It's hard for a company like that to be able to spin up an entire division, and do it right. A cynical person might also believe Jet created itself to be sold off in this very way, too.

To be fair, I installed the Walmart mobile app as well as Jet over the weekend. The Walmart experience is miles ahead. Pricing was also better, and Walmart has better pricing than Amazon on a lot of things lately. I'm not sure that they're 'buying' their place, because it seems to me they're ahead of the game on anything but name

Walmart's e-commerce growth has been declining every quarter, except Q4 2014 where it jumped +1%, since the beginning of 2014.

http://fortune.com/2016/05/20/the-silver-lining-in-walmarts-...

Re: Confirmed: Walmart buys Jet.com for $3B in cash

#104

Post by SixSigma »

mikhailt wrote: post #90
rdlecler1 wrote: post #29

I get why Walmart would buy them, but it seems to me they could have waited 6-12 months and bought the company for $300m. There's just no way they were showing growth. The only thing that makes sense is that Jet would have been damaged goods in 12 months and this was the only option for Walmart to build a millennial friendly competitor to Amazon.

Why couldn't they show growth? Amazon is getting worse for non-prime users. They've increased their free shipping limit, longer shipments, and kept pushing their deals onto Prime users only. I've bought more from Jet.com this year than Amazon in the last two years and Jet was faster with its free 2 day shipping than Amazon's free shipping.

I just moved from the UK to the US. It is quite surprising how useless Amazon just became for me.

So far, every item I wanted to buy has $49 min spend for free shipping attached to it, which is not something I have had to deal with - except for a few add-on items.

So I just switched to eBay sellers instead.

I realize the price may end up being similar but I want to know what that price is while browsing, not "add $5.99" at checkout.

Re: Confirmed: Walmart buys Jet.com for $3B in cash

#105

Post by throwaway324328 »

chatmasta wrote: post #34
harryh wrote: post #31

Earlier quoted context omitted.

They're not just buying a pile of code. They're also buying an energized and engaged team that they hope will be able to modernize Walmart's ecommerce systems. They wouldn't have gotten that if they had purchased a broken failure of a company somewhere down the road.

Doesn't Walmart already have pretty decent tech? I recall seeing some impressive scalability blog posts from the team st "Walmart labs."

(Throw away for obvious reasons)

It is all total crap. We dumped a bunch of time and money into rebuilding everything as SOA and on all the latest technologies. Most of the work was done by an army of Indians that couldn't get jobs elsewhere in the valley. Absolutely nothing scales.

We have more servers in total than peak users to the site, and still can't get any respectable performance numbers.

The few smart people left here are super excited to jump over to Jet ASAP.

Re: Confirmed: Walmart buys Jet.com for $3B in cash

#106

Post by danielweber »

emagdnim2100 wrote: post #62
tyre wrote: post #33

Earlier quoted context omitted.

Great question. The answer is the same for all of them: roughly 0. Jet's last valuation was $1.6bn and it was, and continues to, burn cash like crazy. Investors aren't dumb, they see that. So they add a terms to their investment whereby they guarantee a return on their investment. For a company that needs hundreds of millions of dollars and is trying to beat Amazon? Let's say 3x. That means that if I put in $100m dol…

This is a badly inaccurate description of how liquidation preferences work, both mechanically and also with respect to what's "market." First, it's exceptionally unusual to see anything more than a 1x liquidation preference (i.e. investors receive their initial investment back before anyone else gets paid) among well-funded companies. It's somewhat common to see a 6-10% interest rate added on top, but a 3x liquidatio…

> First, it's exceptionally unusual to see anything more than a 1x liquidation preference (i.e. investors receive their initial investment back before anyone else gets paid) among well-funded companies

I've had options zero-out because the company, after investing with absolutely no preference given (which was part of what induced me to join), they took another round with preference funding at greater than 1x.

Re: Confirmed: Walmart buys Jet.com for $3B in cash

#107

Post by throwawaymsft »

toxican wrote: post #77
Systemic33 wrote: post #59

Earlier quoted context omitted.

It's what makes HN so great. Even the original Dropbox "Show HN" pitch was agressively cynical about it; "I can do the same thing with a linux box and some scripts...", etc.

I'll never understand remarks like that. The people who can put together something with similar functionality to Dropbox are by far in the minority. It's like having access to tons of scrap and be able to weld and dismissing metal bed frames because "I can do the same thing with some welding and scraps". Also the claim that it would eliminate my need for a USB drive was 100% on point.

It's strange how many aren't self-aware enough to realize when they aren't the target market.

Re: Confirmed: Walmart buys Jet.com for $3B in cash

#108

Post by jhatax »

tedmiston wrote: post #39

I really hope Walmart doesn't scrap the Jet Anywhere cash back program [0]. It seems not well known and somewhat controversial, but offers generous rates higher than everywhere else. For example, 4.8% from Expedia, 5.6% from Orbitz. Unlike every other cash back program they do not cap the amount for flights. JetCash is effectively real cash because many items are available cheaper than even from Walmart, Amazon, or C…

This looks like a great program.

The next logical thing to do with the Jet Anywhere program is to launch a credit card that creates customer stickiness to Jet.com. While some of the incentives are great, e.g., 20% cash back at Nike, the process is cumbersome (receipt -> photo -> email -> wait -> cash back!!).

A cashback credit card would significantly reduce friction, with minimum overhead for Jet. If Jet doesn't want to get into the credit business, it can piggyback on the system deployed by MasterCard for Sam's Club [1]. Sam's Club is part of the Walmart umbrella of companies.

1. http://www.samsclub.com/sams/pagedetails/content.jsp?pageNam...

edit: Deleted redundant reference to Jet in the 2nd paragraph.

Re: Confirmed: Walmart buys Jet.com for $3B in cash

#109

Post by tedmiston »

ikeboy wrote: post #99
tedmiston wrote: post #82

Earlier quoted context omitted.

Most (all?) programs have a global cap. Where this one is unique is lack of per transaction caps. A $2k roundtrip ticket gets you flat $2.25 from Orbitz [0], or $112.00 from Jet. To hit $1k per year off the 5.6% rate is ~$18k spent on flights & hotels. I think most people won't come close. [0]: http://www.ebates.com/coupons/orbitz/index.htm

I've made more than $1000 on more than one program (discover deals, shopathome, possibly splendor or close, somewhere in the same range on topcashback). None of those have per transaction or total limits. I don't spend on travel, though, so rules may be different there. I resell, so I'm also explicitly excluded from jet's program.

I wouldn't expect the average consumer to be a reseller, but that's an interesting point to consider.

Travel is a heavily restricted category. I wasn't able to find complete terms and exceptions for all of the programs you mentioned quickly, but for example, TopCashback caps flights from Orbitz at $3 [0]. Discover Deals doesn't seem to support flights besides one weird deal with CheapOAir [1].

[0]: https://www.topcashback.com/orbitz/

[1]: https://www.discover.com/credit-cards/deals/all-deals.html?c...

Re: Confirmed: Walmart buys Jet.com for $3B in cash

#110

Post by chillydawg »

ido wrote: post #98
toxican wrote: post #77

Earlier quoted context omitted.

I'll never understand remarks like that. The people who can put together something with similar functionality to Dropbox are by far in the minority. It's like having access to tons of scrap and be able to weld and dismissing metal bed frames because "I can do the same thing with some welding and scraps". Also the claim that it would eliminate my need for a USB drive was 100% on point.

"No wireless. Less space than a Nomad. Lame."[0] [0] https://slashdot.org/story/01/10/23/1816257/apple-releases-i...

Some great throwback comments in that /. thread. Love it.
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