just about everything to everyone in America?
A: The competitive environment I don't think has changed a whole lot. What you have seen happen is a lot of entrants in the market have come and gone. Our position, with a technology that has developed over the last four years and the relationships in our current markets, will serve as quite a bit of a barrier to entry in the markets that we are in. And those capabilities give us a three- to four-year headstart as we enter new markets. We have a very powerful integrated technology platform that is not easily replicable. We think we have a pretty good competitive position.
Q: During the earnings call Thursday, you said the path to profitability was dependent on operating improvements, not order growth. Can you explain?
A: The path to profitability is less dependent on order growth. What we are trying to do is make it more dependent on things that are within our control. Changing consumer behavior, we can influence. Our marketing programs are tailored to influence getting consumers out of their practice of going to the brick-and-mortar [stores]. But along the way, we want to bring as much of the control of our operating model within our own destiny. And that is by focusing on offering more products, based on customer suggestions and being more productive in terms of our ability deliver into the home.
Q: Have you given up on order growth?
A: Absolutely not. Order growth will be more to enhance our operating plan. We think we can deliver our operating plan with the things that are more directly within our control.
Q: There are analysts out there who believe that Webvan's best bet is to team up with a brick-and-mortar grocery chain. What do you think about that?
A: I would say that we are teamed up with a brick-and-mortar and that is Fleming. They are a very strategic partner of ours. As a national wholesaler, they bring us a lot of buying leverage with their $20 billion in annual buy.
What people on Wall Street are referring to is something more like a relationship with a supermarket chain lie Kroger or Albertson's modeled after the partnership that Peapod has with Royal Ahold-owned chains Stop&Shop and Giant in the East Coast.
I think the strategic alliances can come in a variety of different forms. There is a variety of different relationships we can form with supply-chain companies and other retailers to enhance our offering.
Q: Are you ruling out a sale of all or part of the company to a brick-and-mortar supermarket chain like Peapod has done?
A: I think our challenge is to continue to explore alliances and relationships that enhance the proposition we offer to the consumer, while addressing the economics required to deliver value to our shareholders.
Q: I realize that the capital markets have changed dramatically. But beyond that, what do you think was Webvan's biggest mistake? If you were to start over, what would you do differently?
A: Given the current environment: Build a model, prove a model and expand the model, is, I think, the approach we would have taken. With the capital markets as they are today, I think that proof-of-concept before expansion would probably make a little more sense.
Q: Did it make sense 18 months ago to expand the Webvan model before proving it was viable?
A: I think first-mover advantage is a very powerful strategic advantage to have, provided there is capital sufficient to enable you to establish that first-mover advantage. As external factors change, good companies adapt. And that's what we at Webvan have been forced to do.
Q: As a new CEO coming in, what do you see as the biggest challenges ahead?
A: Proving to the outside world what the employees here totally believe: the viability of the business model.
