How Blue Apron Became a Massive $2 Billion Disaster
An anonymous reader quotes a report from Observer: If you like to cook but not to shop or plan your own meals, and if you weren't too hungry, and if you didn't like cooking for too many friends, then Blue Apron -- the startup delivering precisely measured, prepackaged amounts of just enough salmon, green beans, butter and lemon for one meal, no leftovers -- was for you. Exactly who it was that was both upwardly mobile to pay for this service while also having a barren kitchen, nobody really knew -- but by the divine math of Silicon Valley gamblers, your existence made this an idea worth several billion dollars and potent enough to "disrupt" the grocery business. People actually believed this. Or they did until Jeff Bezos and Amazon went shopping and bought out Whole Foods. Or until HelloFresh launched. Or until Blue Apron spent millions on packaging and shipping, as well as marketing, literally gifting away boxes of neatly assorted ingredients to millennials who never ordered another box. All this conspired to, one-by-one, wreck Blue Apron's IPO, crater stock prices to all-time list lows, kick founders out of company leadership and now, at last, the seemingly undeniable, ultimate doom of the company. After losing another $23.7 million in the last three months of 2019, Blue Apron is laying off 240 workers and shutting down the shop at its Arlington, Texas warehouse location. Blue Apron will keep, for now, its California and New York assembly-and-distribution shops, while leaders ponder peddling what's left at a paltry $50 million price tag. Meanwhile, customers continue to desert Blue Apron, down to 351,000 in the last quarter of 2019, from 557,000 the year before. Selling off Blue Apron that low would mean a loss in the neighborhood of $143 million for Blue Apron's capital investors, including Fidelity and Goldman Sachs. That hurts, but as usual, retail investors took the worst hit. Stock-market playing rubes, who bought in when Blue Apron went public at $11 a share, have lost more than 80% on their investment -- and that represents a recovery. Shares were trading for $3.60 at the close on Wednesday, up from 2018 when Blue Apron was worth less than a dollar. There's no other analysis than this: Blue Apron was one of the biggest-ever Silicon Valley catastrophes, a mix of hubris, unrealistic expectations, a misunderstanding of how people exist in the world -- and, Amazon.
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