There's a reason webvan was tempted into scaling too fast.
For mass market groceries, there are two virtuous cycles a retailer needs to trigger. The first is:
1. Get higher customer density
2. more deliveries per driver shift
3. reduced delivery costs
4. attract more customers with lower delivery prices
5. go to 1
The second is:
1. Get more customers
2. better economies of scale and more negotiating leverage with suppliers
3. reduced grocery costs
4. attract more customers with lower item prices
5. go to 1
Now, the first virtuous cycle only works at the city level - operating in two cities doesn't improve your customer density. But for the second virtuous cycle you need overall market share, not just local market share. To get Wal-Mart market share (~30%) and prices you need Wal-Mart buying power.
Of course, that's no excuse for building loads of warehouses full of tech that can't achieve the performance you need and to 'iterate' costs a few hundred million per warehouse! But it's understandable why the business plan would call for national expansion at some time - and I can also understand why people immersed in the SV community would find it hard to slow down and not break things :)
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There's a reason webvan was tempted into scaling too fast.
For mass market groceries, there are two virtuous cycles a retailer needs to trigger. The first is:
1. Get higher customer density
2. more deliveries per driver shift
3. reduced delivery costs
4. attract more customers with lower delivery prices
5. go to 1
The second is:
1. Get more customers
2. better economies of scale and more negotiating leverage with suppliers
3. reduced grocery costs
4. attract more customers with lower item prices
5. go to 1
Now, the first virtuous cycle only works at the city level - operating in two cities doesn't improve your customer density. But for the second virtuous cycle you need overall market share, not just local market share. To get Wal-Mart market share (~30%) and prices you need Wal-Mart buying power.
Of course, that's no excuse for building loads of warehouses full of tech that can't achieve the performance you need and to 'iterate' costs a few hundred million per warehouse! But it's understandable why the business plan would call for national expansion at some time - and I can also understand why people immersed in the SV community would find it hard to slow down and not break things :)