Fidji Simo is fine if you call her an optimist. The former head of the Facebook app at Facebook took the helm at grocery app Instacart in July 2021, immediately seeding her technology-evangelism throughout the grocery app. Nowhere is that more evident than in the partnerships she’s built to help the company take on the biggest competitor of them all: Amazon.
“If you think about really the biggest threat to Amazon, it’s always speed,” she says. “They’re continuing to increase speed of delivery, but because we leverage the physical stores of all of our retailers we can deliver within an hour.”
Instacart also expanded who can order and receive deliveries from its service, by welcoming government plans including EBT and SNAP two years ago. This certainly extends Instacart’s reach, but to Simo it also lifts customers lives too: they can budget better, spend less money on gas or public transportation and have more time to select nutritious food for themselves and their families.
“Grocery delivery was a little bit seen as a luxury, something for affluent audiences,” she says. “Since we rolled that out, we have seen a completely new demographics of people coming to our service and finding value in it. So that’s good for us, that’s good for retailers who have access to this new category of consumers, and that is creating a lot of good for consumers.”
You can hear more about Simo’s focus for Instacart, including her personal views on the gig economy in this recent conversation between Simo and Signal360’s John Battelle below.
Watch the full conversation or scroll down for the lightly-edited transcript:
TRANSCRIPT
John Battelle
Our next speaker has an incredible background.Fidji Simo is the Chief Executive Officer of Instacart. I imagine most of you in the room have heard of Instacart. She came via Facebook, when it was called Facebook and brought a wealth of experience from there to Instacart. I’m looking forward to having a conversation with her, wide ranging I’m sure. So please join me and welcome Fidji to the Signal stage. Welcome.
Fidji Simo
Thank you. Thanks for having me.
I’m so pleased you could come in person.
Absolutely. Although I’m going right after Mark Pritchard, which is a tough act to follow.
Yes, absolutely. I think most folks at least in the room know what Instacart is and does. But we’ve got a lot of folks around the world who might not have heard of it and don’t know, you joined almost exactly a year ago. Is that correct?
Yes.
So what was it that drew you to the company? And could you just give me a state of Instacart at the moment.
So I actually joined the board of the company six months before becoming CEO. I had no intention at all of leaving Facebook. But the thing that I discovered is that Instacart is very much known by most as an online delivery company. It’s very simple. You can order from more than 800 retailers, and you get our products delivered within an hour to your house. It’s a fantastic service. But the thing I didn’t expect to discover, as I learn more about the company, is that it’s actually much more than that. It’s a company that really develops all the technologies that are powering the digital disruption of the grocery industry. The thing that’s really interesting about that is that if you look at grocery, it’s the largest category of commerce, and yet, it’s the least penetrated online. It’s an industry that’s actually pretty behind in terms of adoption of technology. So what Instacart has done is developed all the technologies, whether it’s an e-commerce website, all the way to fulfillment and delivery, to really help all of the grocery partners that we work with, which represent about 80% of the U.S. market, really embraces digital transformation.
I have a feeling you saw something big on the horizon, when you joined, and that’s a big deal, just helping a very large and important industry take digital and make it integral to the whole industry. But what would Instacart be in five to 10 years? What did you see that was a bit around the corner?
If you project that vision of building all of the technologies that powers the industry in five to 10 years, you quickly realize that, as you are in fact saying in your video, that the online world and some of the physical world really need to blend. If you look at the technologies that exist today, a physical store experience still hasn’t been really that disrupted by new technology. Amazon knows that. But it really wants to capture that category of commerce that they don’t own right now, which is the grocery. The way of approaching this is through technology. So there’s a real opportunity to be the company that really develops all of the technologies that all of the incumbents cannot develop on their own because they don’t have the deep pockets that Amazon has. But we can enable them with these technologies. If you ask, what does that look like in five to 10 years, you can imagine bringing the absolute best of online, which is personalization, inspiration with the best of offline and which is the discovery, which is actually kind of interesting, because when we ask people, why do you go to physical stores, they tell you to discover and experience. The inspiration is still better than online, whereas online is much more convenient, much more personalized. So imagine if we could blend all of these different advantages, and you could walk into a physical store and immediately you have a smart card that knows your shopping list, recommends the absolute best products for your specific diets for your family, and inspires you to try new recipes. That’s an experience that blends the physical offline experience with the online one that could be really revolutionary for families but also for retailers.
Now let me make sure I understand this, you’re going to turn me into my own Instacart shopper. I’m happy to do it. That’s cool. Because it’s a good experience. Right?
I think that’s kind of the point. When we ask, customers are telling us, ‘Yes.’ In many cases, they want their groceries delivered to their house. But that’s not as if they’re going to stop going to physical stores. I you look at every other category of commerce, they have about 30% penetrated online, there is still 7% that happens in stores. When we talk to our retailers and brands, we found they really want to crack that omni channel experience. We can be the technology provider that allows them to do that.
That is a big business. I could see where that might go. What about outside the grocery store? We had a presentation this morning from getir, who’s coming into your market, from Istanbul. There were a lot of things on the menu that he was saying he wants to get into. Is that your menu as well? You’ve got a distribution network, you’re doing the last mile across the country and increasingly looking to international waters. Will you be doing more than groceries?
Absolutely, and we already are. Right now, you can order from Sephora, you can order from Best Buy from Dick’s Sporting Goods from Staples. We’re following what consumers want, and we’re seeing that people who order for multiple categories obviously retain more, so that’s definitely an expansion area for us. The thing that’s interesting, though, is that because we started in grocery, people open up with the intention of spending $110, when they come in. So when we expand what the customers is are already accustomed to spending as much as they spend on these other platforms. That’s very different from the types of players you’re seeing entering the market right now that are much more focused on the convenience market, which are $20 to $30 baskets. That’s why we have a very big advantage when we expand into these new verticals.
Got it. Now, the other piece. When the news came first that you were joining the board, and then that you became CEO, I’m an avid reader of what might be called the industry press, which is to say all of my friends in journalism who like to pontificate about what it all means that a senior executive from Facebook is going to Instacart. The first thing they said was, Fidji is going to obviously going to build a huge advertising business. The fact is that the merchandising business in the grocery store is a huge business. It’s a very important business. And it is, by all intents and purposes, an advertising business. So what’s up with that?
It is a big and growing part of our revenue. That’s going to be a big part of the gross in our future. The thing that’s really interesting about Instacart ads, and just for people who are not familiar with it, the majority of our products are basically you search for razors, and we could see we could show you a Gillette ad. We’re expanding beyond search into display and video as well. What’s interesting with that is that we have now a platform that combines some measure abilities at targeting the precision of online advertising, but with also the ability to get more products off the shelves at retail and get them in the hands of customers in an hour. Most CPG brands haven’t had that immediacy of showing a video that inspires someone and having the person be able to experience a product within an hour. So it’s really compelling, really high performing products. We’re continuing to expand our measurement capabilities to prove all of those incrementally.
Are you looking at the playbook of Amazon? Amazon was not an advertising player of much scale 10 years ago. It’s now the fastest-growing at scale advertising player in the country in the world. Is that the opportunity you see in front of you?
There’s a lot to learn from what they’ve done, and certainly it is very product search-focused. There’s a lot of parallels with what we do. I think we have some advantages in that we are very strong in grocery and they’re still not as strong there. And we have the immediacy. If you think about really the biggest threat to Amazon, it’s always speed. They’re continuing to increase speed of delivery, but because we can leverage the physical stores of all of our retailers we can deliver within an hour. That’s a really big advantage when you’re talking about advertising because they actually immediately have your product.
Fascinating data and more to come. We’ll have to come back, we can talk about how it’s going a year or two from now. But let’s move on you. Instacart is known for, having done my research, having a very good relationship with retailers. That seems to be part of his strategy. Perhaps the sort of 500-pound gorilla in the room of Amazon might also inform that strategy. I noticed you have a new relationship with Walmart in Canada that you just announced. How do you play partner with enterprise players at that scale like Walmart?
The thing that was really interesting when I started as CEO is that there was a little bit of this narrative of, our grocers worried about us, or, are we a key partner. I spent obviously my first year with our partners, because without them the company doesn’t exist. The thing that was really interesting is that we have full alignment of incentives, because we’re not just powering the business on our marketplace. We’re also powering their business on their own website. People don’t know that. But we power the e-commerce website of Publix, Wegmans, Costco. So we do e-commerce for them, we do the fulfillment for them. That’s a really big important fact. Because if you’re a grocer, of course, you’re going to prefer developing your business, on your own properties. On the marketplace, I totally understand that. For us, the economics are the same. So we’re really agnostic as to whether we see on our marketplace, or whether it happens on Costco.com. Ss a result, we are able to be a strategic partner for grocers, because we’re not just here to have them sit on our marketplace. We’re here to grow their business as well.
Interesting. I actually did not realize all those different platforms that you power. That circles back to the thing that you said at the top about the opportunities that can scale.
Exactly.
I want to shift gears. One of the horizontal themes of Signal over the few years is, what Mark mentioned, the force for good snd purpose. And coming out of the valley, that’s sort of a big part of the mythology of these companies, they were all started to make the world a better place. What’s Instacart role in that?
Our mission is to make food more accessible to all. That’s incredibly important, because in this day and age, it’s really crazy that a lot of people still don’t have easy access to not just food, but actually nutritious, healthy food. A lot of what we are doing through expanding the service is really giving access to people to the service. The thing I love about what Mark says about the good being aligned with the business is that for us, the good that we do in the world only happens as the service expands. A good example of that is that two years ago, we started putting the food assistance programs, EBT and SNAP program, online. That means that anyone who has access to food assistance dollars can now pay for their grocery using these funds online. That means that 29 million people who are considered food insecure, now have access to grocery delivery, which is a very big advantage. Because one, we see that when they use grocery deliveries, they can manage their budget better, it’s easier to do online than in the store calculating my shelf spending, and not spending money on public transportation on gas. Then also they have more time to pick more nutritious food, that is a really big advantage. We have seen enormous adoption of a completely different category of consumers. Grocery delivery was a little bit seen as a luxury something for affluent audiences. Since we rolled that out, we have seen a completely new demographics of people coming to our service and finding value in it. So that’s good for us, that’s good for retailers who have access to this new category of consumers, and that is creating a lot of good for consumers. We are deploying a lot of different initiatives just to make sure that we address a food desert problem across the U.S.. We continue to have options for low-income population, especially in this market while inflation is rampant.
I want to turn, as we have a few more minutes left, to one of the pillars that that I went over earlier, the employee experience. You’re one of the major players in what’s come to be called the gig economy. People can pick up this work pretty quickly, they can get good at it, they can make money on their own time at the shifts that work for them. But what does it mean to you? How do you think about managing employees in that kind of a gig economy?
I grew up in a family of fishermen, where it was hard to make ends meet. So I can really relate to a lot of what our shoppers are going through, which is a lot of them. This is jobs that you don’t necessarily pick in great times. So I’ve been spending a lot of time with them to really understand all of the different reasons why people do these jobs. The thing that’s interesting is that flexibility is really at the core of the gig economy model, and that’s where these people are independent contractors and not employees, is really at the root of the values that this model provides. I was talking the other day to a mom has a kid with severe disabilities. She was saying that her schedule constantly changes based on medical appointment, and there was no way she can have a regular job with this situation, and that Instacart is really allowing us to pay its bills. On a more upbeat note, I was talking to another shopper who dreamed of traveling across the U.S. and going through all the states. She was saying Instacart gives her a job in every city that she visits, which is a really interesting thing. So really what we’re trying to do with this model is combine the benefit of this flexibility while giving gig workers all of the security and benefits that they certainly deserve. And we’re advancing a policy agenda that really kind of balances this out.
Just a quick follow on that, when you start advancing the policy agenda, I know you’ve been active in that. I love my magic wand question. But if you could wave one, what would you change as it relates to policy in this sort of economic framework?
I think the main thing is really stabilizing the policy framework around independent contractors. There’s a lot of states that have had conversations around, ‘Oh, should these people be employees?’ Not really realizing that, for most of them, it doesn’t work. That’s why we see kind of poll after poll, that this is not what they want. When you ask them do you want to remain an independent contractor or be an employee, the vast majority of them want to remain independent contractors. In fact, they work for several companies at once, you may have a main job and complement their income with Instacart. Having stability of that framework, and having policymakers really spend time with these people and understand their needs, so that we can call policy solutions that really are novel, because this is a new model. Every time you’re trying to take a new model, and try to make it fit into existing ones, it doesn’t work. We kind of have to invent a new framework that gives them all of the benefits that they need, but with the flexibility that this model offers.
Well, good luck with getting that through the skulls of our highly functional legislative bodies. I would be remiss if I didn’t ask you about this. A year ago when you joined, besides the buzz in the business pages about Fidji sees that advertising and the data opportunity. The other was the economy was minting IPOs. Instagram is one of the most highly-anticipated potential IPOs and I’m not gonna ask you to make future forward looking statements.
The SEC would not be happy with that.
They wouldn’t be upset with me. Maybe with you. But maybe I can ask you to kind of look out and say, this world seems very uncertain. We referred to that, Mark and I just just earlier. Is it possible that you could just give us some hope that that there’s going to be a good story coming out of Instacart in the next few years, about an IPO that just makes us all realize that we could get back on the upswing again, and stop being so pessimistic about the future?
I really can’t tell you anything about the markets. I wish I could control them somehow with a magic wand. But right now as well, not looking so hard, what I can tell you is that in terms of the business we’re incredibly bullish. This is a very nascent, very under-penetrated industry. We have a really good leadership position, we think we have a service that families loves. I think it’s going to be a good story over the long run. Market conditions will, will determine timing, but over the long run, I think it will be good.
One thing I’ll call out, on your point on hope is that you mentioned the employee experience being a big part of the conference. When I joined, I we framed values for the company. One value that we put kind of at the top was this notion of growing the pie, which I know is familiar to the P&G audience. The reason I thought it was so critical is because I think we’re in a world where people are going towards scarcity. You turn on the TV, and the news are depressing. There’s all kinds of bad stuff happening. I think it’s gonna be really important for leaders and all of us to really step up and show that there can be an abundant work world. That if we come together, there are still really big opportunities to transform consumer experiences, do good in a lot of different aspects and that just requires a different mindset. That is not a scarcity mindset, but it’s more of an abundant mindset where everybody can win and technology can lift all boats.
I think right now technology stocks are getting hammered. But fundamentally, I’m still an optimist when it comes to technology, because when you think about the biggest problems we have to solve, whether it’s information, whether it’s supply chain, etc, technology can really make all of that better. That’s my hope. That’s why fundamentally as a technologist, I believe that we can still do a lot of good no matter what the markets say.
That’s a good way to end. Please join me in thanking Fidji for being here today.
