Where are they now: Webvan

David Cotriss — Thu, 29 May 2008 15:22:21 -0700

Founding: Webvan launched in 1999. It was founded by Borders bookstore co-founder Louis Borders. George Shaheen, previously head of Andersen Consulting, was appointed CEO. The company received over $400 million in funding from backers including Sequoia Capital, Benchmark Capital, Softbank, Kleiner Perkins, Goldman Sachs, Caufield & Byers, Knight Ridder, LVMH, CBS, former Netscape chief Jim Barksdale, and Amazon.com.

History: Webvan was an online grocer whose fancy green delivery trucks brought fresh produce to customers in select cities. Opening on June 2, 1999, Webvan started delivering groceries to just 10,000 homes in the San Francisco Bay Area before a rapid expansion plan took hold. The company hoped to eventually deliver everything from videos to pizza to clothes from the dry cleaners using automated warehouses.

Its first warehouse was a massive 330,000 square-foot facility in Oakland, California, equipped with more than 4 miles of conveyor belts to automate picking and packing. Webvan later placed a $1 billion order with Bechtel Corporation to build 25 similar warehouses nationwide.

The company’s November 5, 1999 IPO, filed just months after Webvan launched, raised $375 million, adding to its coffers but unable to stem ongoing losses. The IPO was priced at $15, opened at $26 and reached a high of $34 before closing at $24. The company acquired rival HomeGrocer.com for $1.2 billion in stock in June 2000.

This allowed Webvan to turn a profit in Orange County, California, the only market where it did so. Nevertheless, the merger caused various technical problems, and order quantities dropped. Shoppers soon headed back to the grocery store to pick up their milk and cereal.

What Happened: In April 2001, CEO George Shaheen was replaced by Bob Swan, Webvan's former CFO and COO, in an unsuccessful effort to turn things around. As part of that effort, operations in several cities were shut down, marketing expenses were trimmed, and Webvan began charging for deliveries, only to see demand further erode in its remaining markets.

Unable to raise more cash, the company auctioned off assets in an attempt to avoid bankruptcy. On July 9, 2001, Webvan filed for bankruptcy and began its liquidation. In August, the company auctioned $30 million worth of equipment including more than 200 delivery vans, a warehouse order-fulfillment system, several electric generators, office furniture, and computers.

One of the largest auctions was held in October for similar items. The company also sold its technology platform and Oakland distribution center to Kaiser Permanente for $2.65 million.

Where Are They Now? In the end, Webvan was making deliveries to about 750,000 customers in Chicago, Los Angeles, Orange County, Portland, San Diego, San Francisco, and Seattle.

Sunil Bhargava, who was on the founding team and the chief architect at Webvan, says that the customer base never reached a critical mass. There were other problems, too: “Any new way of doing things takes a while to set in,” Bhargava tells The Standard. “Webvan required customers to order the night before. Many would forget and then run out of, say, milk and go to their local grocery store. This made the habit hard to form, attrition high and resulted in us running a jumbo jet-like operation at 25 percent capacity. We were losing lots of money but the street expected us to expand to nine cities in a year. With hundreds of millions from the IPO in the bank we should have taken the hit, slowed down and expanded capacity with demand. Some of us pushed for this but the greed was intense.”

Bhargava is now co-founder of Tandem Entrepreneurs, a company that helps build startups. Louis Borders is chairman and CEO of online news site MyWire. George Shaheen is senior consultant for worldwide services at IT project management firm Innotas, and Bob Swan is CFO at eBay.

The Standard attempted to contact Borders, Shaheen and Swan but was unsuccessful. Webvan may be history, but other online grocers such as Peapod, a wholly-owned subsidiary of international food retailing and foodservice company Royal Ahold, continue to flourish.

Were you an employee, customer, or client of this service? Then share your memories below. What did you like about the company? What didn't work? What other factors contributed to its success or failure?

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Where are they now: Webvan

David Cotriss — Thu, 29 May 2008 15:22:21 -0700

One of the largest auctions was held in October for similar items. The company also sold its technology platform and Oakland distribution center to Kaiser Permanente for $2.65 million.

Where Are They Now? In the end, Webvan was making deliveries to about 750,000 customers in Chicago, Los Angeles, Orange County, Portland, San Diego, San Francisco, and Seattle.

« eToys READ MORE Pets.com »

Where are they now: Webvan

David Cotriss — Thu, 29 May 2008 15:22:21 -0700

One of the largest auctions was held in October for similar items. The company also sold its technology platform and Oakland distribution center to Kaiser Permanente for $2.65 million.

Where Are They Now? In the end, Webvan was making deliveries to about 750,000 customers in Chicago, Los Angeles, Orange County, Portland, San Diego, San Francisco, and Seattle.

« eToys READ MORE Pets.com »

Where are they now: Webvan

David Cotriss — Thu, 29 May 2008 15:22:21 -0700

One of the largest auctions was held in October for similar items. The company also sold its technology platform and Oakland distribution center to Kaiser Permanente for $2.65 million.

Where Are They Now? In the end, Webvan was making deliveries to about 750,000 customers in Chicago, Los Angeles, Orange County, Portland, San Diego, San Francisco, and Seattle.

« eToys READ MORE Pets.com »

Where are they now: Webvan

David Cotriss — Thu, 29 May 2008 15:22:21 -0700

One of the largest auctions was held in October for similar items. The company also sold its technology platform and Oakland distribution center to Kaiser Permanente for $2.65 million.

Where Are They Now? In the end, Webvan was making deliveries to about 750,000 customers in Chicago, Los Angeles, Orange County, Portland, San Diego, San Francisco, and Seattle.

« eToys READ MORE Pets.com »

Where are they now: Webvan

David Cotriss — Thu, 29 May 2008 15:22:21 -0700

One of the largest auctions was held in October for similar items. The company also sold its technology platform and Oakland distribution center to Kaiser Permanente for $2.65 million.

Where Are They Now? In the end, Webvan was making deliveries to about 750,000 customers in Chicago, Los Angeles, Orange County, Portland, San Diego, San Francisco, and Seattle.

« eToys READ MORE Pets.com »

Where are they now: Webvan

David Cotriss — Thu, 29 May 2008 15:22:21 -0700

One of the largest auctions was held in October for similar items. The company also sold its technology platform and Oakland distribution center to Kaiser Permanente for $2.65 million.

Where Are They Now? In the end, Webvan was making deliveries to about 750,000 customers in Chicago, Los Angeles, Orange County, Portland, San Diego, San Francisco, and Seattle.

« eToys READ MORE Pets.com »

Where are they now: Webvan

David Cotriss — Thu, 29 May 2008 15:22:21 -0700

One of the largest auctions was held in October for similar items. The company also sold its technology platform and Oakland distribution center to Kaiser Permanente for $2.65 million.

Where Are They Now? In the end, Webvan was making deliveries to about 750,000 customers in Chicago, Los Angeles, Orange County, Portland, San Diego, San Francisco, and Seattle.

« eToys READ MORE Pets.com »

Where are they now: Webvan

David Cotriss — Thu, 29 May 2008 15:22:21 -0700

One of the largest auctions was held in October for similar items. The company also sold its technology platform and Oakland distribution center to Kaiser Permanente for $2.65 million.

Where Are They Now? In the end, Webvan was making deliveries to about 750,000 customers in Chicago, Los Angeles, Orange County, Portland, San Diego, San Francisco, and Seattle.

« eToys READ MORE Pets.com »

Where are they now: Webvan

David Cotriss — Thu, 29 May 2008 15:22:21 -0700

One of the largest auctions was held in October for similar items. The company also sold its technology platform and Oakland distribution center to Kaiser Permanente for $2.65 million.

Where Are They Now? In the end, Webvan was making deliveries to about 750,000 customers in Chicago, Los Angeles, Orange County, Portland, San Diego, San Francisco, and Seattle.

« eToys READ MORE Pets.com »

Where are they now: Webvan

David Cotriss — Thu, 29 May 2008 15:22:21 -0700

One of the largest auctions was held in October for similar items. The company also sold its technology platform and Oakland distribution center to Kaiser Permanente for $2.65 million.

Where Are They Now? In the end, Webvan was making deliveries to about 750,000 customers in Chicago, Los Angeles, Orange County, Portland, San Diego, San Francisco, and Seattle.

« eToys READ MORE Pets.com »

Where are they now: Webvan

David Cotriss — Thu, 29 May 2008 15:22:21 -0700

One of the largest auctions was held in October for similar items. The company also sold its technology platform and Oakland distribution center to Kaiser Permanente for $2.65 million.

Where Are They Now? In the end, Webvan was making deliveries to about 750,000 customers in Chicago, Los Angeles, Orange County, Portland, San Diego, San Francisco, and Seattle.

« eToys READ MORE Pets.com »

Where are they now: Webvan

David Cotriss — Thu, 29 May 2008 15:22:21 -0700

One of the largest auctions was held in October for similar items. The company also sold its technology platform and Oakland distribution center to Kaiser Permanente for $2.65 million.

Where Are They Now? In the end, Webvan was making deliveries to about 750,000 customers in Chicago, Los Angeles, Orange County, Portland, San Diego, San Francisco, and Seattle.

« eToys READ MORE Pets.com »

Where are they now: Webvan

David Cotriss — Thu, 29 May 2008 15:22:21 -0700

One of the largest auctions was held in October for similar items. The company also sold its technology platform and Oakland distribution center to Kaiser Permanente for $2.65 million.

Where Are They Now? In the end, Webvan was making deliveries to about 750,000 customers in Chicago, Los Angeles, Orange County, Portland, San Diego, San Francisco, and Seattle.

« eToys READ MORE Pets.com »