It was just necessary eight months for Jokr, the superfast delivery startup, to become a unicorn, and only six months for its strategy to begin to unravel. Jokr plastered New York City splash ads promises to deliver groceries within 15 minutes—for free! No minimum order!—and raised a total of $430 million in venture capital to continue rapid growth in cities around the world. From Boston to Bogotá, his turquoise-clad couriers zipped around on scooters, carrying pints of ice cream and jars of pasta sauce.
Jokr was also bleeding money. In the first half of 2021, the startup generated revenue of $1.7 million, but suffered a loss of $13.6 million, according to data reviewed by The Information. It was closed in Europe in April. This June—14 months after launching and a year after touting plans to build 100 microstorage locations in New York alone—Jokr announced it was pulling out of the United States and laid off 50 employees. The company still operates in cities such as Sao Paulo, Mexico City and Bogotá.
Other fast-shipping startups have also scaled back quickly. In May, Gorillas and Getir – two of the biggest companies in the sector – laid off thousands of staff and pulled out of top delivery cities across Europe. Gopuff, which was valued at $15 billion in 2021, vaporized 76 of its 500 distribution centers this summer. Those are the lucky ones. Others, such as Buyk, Fridge No More and Zero Grocery, have already failed, disappearing as quickly as they arrived.
The decline of superfast delivery reflects a sobering mood in 2022. In the past two years, venture capitalists have poured nearly $8 billion into six fast-delivery startups competing in New York, encouraging rapid growth and a land grab. Now investors are increasingly looking for profitability. The sudden turnaround by Thomas Eisenman, a professor at Harvard Business School, recalls the dotcom crash of 2000, when buzzing startups like Kozmo — which promised one-hour delivery of groceries and DVDs — folded just a few years after raising millions from VC. “What has changed with these new jobs?” he says. “It didn’t work then, and it doesn’t work now.”
Eisenmann teaches a class on startup errors, and last year wrote a treatise on the topic titled Why startups fail. He says fast delivery companies are vulnerable to a common pattern of failure, where early gains and growth are not sustainable. The first wave of user interest comes easily and for free, as people are willing to try a new service with an incredible promise. But to keep those customers and earn new ones, the startup needs to clarify its value proposition. For fast delivery, that means finding people who regularly need things like BandAids or bananas delivered urgently—and are willing to pay a premium for it—instead of walking to a bodega to get them themselves.
When new customer growth starts to slow down, Eisenmann says, “you start offering $20 of free groceries on every order to get new customers.” From there, the economy can quickly deteriorate. The new uncertain economic outlook and recent high inflation make it a bad time to try to convince people to adopt a new premium service.