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Bits: Start-Up Delivery Services Run Into Reality


Sometimes reality is a cruel thing. The Mets will always break your heart. It is always cold in New England in February. And you will always discover your dog has had an accident overnight on the morning you are late for work.

A class of tech start-ups that specialize in food delivery is also being reminded of one of life’s hard truths: Trying to duplicate what local pizza shops have been doing for decades — usually for free — is not necessarily innovative.

Investors put more than $ 730 million on companies like DoorDash, Instacart and Postmates from early 2014 through the first half of 2015, according to data from CB Insights, a venture capital analytics firm. The hope was that once these companies became big enough, they’d be very profitable.

But as delivery start-ups like Kozmo.com and Webvan discovered in the dot-com boom, getting to that point is not easy. For starters, you have to pay for drivers. Then you have to cut deals with restaurants and manage orders from customers. And you have to find lots of people willing to pay a premium for that food delivery.

Will this new generation be a cautionary tale for the next generation of food delivery start-ups? Perhaps not. But turning this tricky business into a profitable enterprise is proving, yet again, to be elusive.


NYT > Technology

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