Instacart Co-founder Max Mullen on Building a $10B Consumer Marketplace | Ep. 47
The key moments of Instacart...how it got started, critical wins, tough losses, competitive dynamics, earned insights, going public, and Instacart's future.
Max Mullen is the co-founder of Instacart and an active investor having invested in 100+ companies including Gumloop, Mercury, Owner among others. He also runs a founder community in San Francisco called Workshop.
We discussed the full arc of building Instacart from a contrarian idea that investors rejected to a $10B consumer marketplace. Max highlighted the scrappy early days, marketplace product-market fit, and key inflection points like retailer partnerships and the Amazon–Whole Foods moment. We also explored what makes great consumer founders, why the best ideas look wrong at first, and how to build and scale in “hard mode” markets. Finally, the conversation touched on investing, decision-making frameworks, and what it takes to win in consumer over the long term.
Timestamps:
(0:00) Intro
(0:36) The inception of Instacart
(4:55) Finding product market fit
(7:20) Landing Trader Joe’s
(11:04) Big levers for growth
(13:36) Operationally complex businesses
(14:55) Amazon’s acquisition of Whole Foods
(17:50) COVID and Instacart’s IPO
(20:02) Prioritizing profitability
(23:21) Avoiding temptations
(24:59) The future of Instacart
(25:53) Investing in consumer
(28:21) Irrationally optimistic founders
(29:49) B2B vs consumer founders
(30:35) How to work with investors
(33:38) Building Workshop
Links:
https://x.com/Max
https://maxmullen.com/
Watch on YouTube; Listen on Apple Podcasts or Spotify
Clips
Prioritizing profitability
Such a good story about how Ravi Gupta helped Instacart focus on profitability when he was COO.
At an all hands he said "we okay we can spend $25k a month on blue bottle, leasing teslas, acquiring 5,000 customers, or 1,000 shoppers.
Raise your hand if you want the blue bottle!"
The Whole Foods crisis
Never let a good crisis go to waste.
One of the scariest moment's in Instacart's history was when Amazon bought Whole Foods...their biggest competitor buying their biggest client.
Max tells the story of how they locked in (before locking in was a term) and made it an advantage.
Transcript
Disclaimer: Transcript generated with AI assistance and lightly edited for clarity and accuracy.
Instacart’s Origin Story
Jack Altman
All right, Max, I’m very excited for this one. I love doing this with close friends, as we’ve had some other ones on the show. One of the things I was just sharing to you is we’ve hung out a million times and we barely talk about work. I barely know what you do. So I’m excited to learn about your work along with the rest of the audience.
Max Mullen
Thank you so much for having me, Jack.
Jack Altman
Let’s start with Instacart, because you obviously just completed the end-to-end dream of any entrepreneur. And then I want to go into your investing and some of your other work. But starting with Instacart…
I don’t even know all these stories, which I really should, given how much we’ve hung out. Can you talk about Instacart getting started? The early days, the idea coming together. I know this is YC, back in 2012, right? So tell me about the beginning.
Max Mullen
I’m so fortunate to be a founder of a consumer company because it’s a household name and everybody knows about it.
Jack Altman
And I use it like seven times a week. Or more.
Max Mullen
You really do order a lot.
Jack Altman
You probably know what I eat too.
Max Mullen
I do not look at customer accounts.
Jack Altman
Could you if you wanted to?
Max Mullen
I can’t, no.
Jack Altman
You probably could.
Max Mullen
But what’s great about being a consumer founder is that everybody knows what you do. You don’t need to repeat yourself anymore when you’re pitching the company. That wasn’t the case in the early days. In 2012, grocery delivery was basically something that didn’t exist in the US. It was quite a contrarian idea back then to have an app.
Jack Altman
Actually it’s even more contrarian because didn’t people try it in Web 1.0 and it was a big, highly-funded failure?
Max Mullen
Yeah. There were some spectacular failures in the dot-com era.
Jack Altman
Like hundreds of millions went in and it didn’t work.
Max Mullen
Yeah. Sequoia invested over a billion dollars in a company called Webvan and it failed. That was 10 years earlier, before we started.
Jack Altman
So did you have that when you were talking to investors? Was that the big thing? Like, “This has been tried, it doesn’t work.”
Max Mullen
Yeah. That was the elephant in the room. Most investors totally turned us down because they thought that it would not work again.
Jack Altman
So what changed?
Max Mullen
Okay, so a bunch of things changed, obviously, from the dot-com boom until 2012. First, more people were on the internet and those people were more accustomed to e-commerce. In 2012 there was lots of e-commerce going on, but nothing in the grocery industry.
The other thing that changed is that we had smartphones. On the supply side, the shoppers could have a smartphone that could help them do this work and had GPS and could help us make this an efficient marketplace.
Jack Altman
The shopper’s part was the key. I think a lot of people think about it as, “Oh, I’m going to order from my couch on the phone,” but it’s really the shoppers who are in the store needing the application.
Max Mullen
Yeah. The idea of using stores as warehouses was also new. Most people who had tried to do grocery delivery tried to build big warehouses, buy trucks, and it was very expensive. We didn’t do any of that. We just went into the same grocery store that you would and shopped just like you would and delivered.
Jack Altman
Obviously this was hard to raise money for, but you still got into YC. You were still able to raise capital. But then you still had to start a marketplace and you still had to get… apples. So what did you do to actually get this thing started? Day one you had nothing. Day two, what did you start doing?
Max Mullen
We always had the company launched from almost day one. So we had a not-very-well-designed app and a not-very-well-designed shopper experience, and we just put one foot after the other trying to build from a very small base of customers to a little bit larger and a little bit larger, and tried to pay attention to both the demand side and the supply side at the same time.
Jack Altman
So who’s the very first customer? Or what is their experience?
Max Mullen
Honestly, the very, very early customers, a lot of whom were our YC batchmates, probably placed orders that never arrived or were really late or didn’t contain all the items. It’s a human business. There’s a lot of processes involved and mistakes, and every week we would try to make these metrics go up.
Percent of late deliveries would go down, number of deliveries per week would go up, the percent of your items that were delivered perfectly—found rate—would go up. We would every week try to push those metrics up and just make little tweaks to the software to make that happen.
Jack Altman
Did you ever shop?
Max Mullen
I still shop.
Jack Altman
Really?
Max Mullen
Yeah. I still have a shopper credit card.
Jack Altman
But you go fulfill orders sometimes?
Max Mullen
Occasionally, yeah. It’s really fun and it’s super hard.
Jack Altman
Is it hard?
Max Mullen
It is really hard, yeah.
Jack Altman
What’s it like?
Max Mullen
First of all, when you’re shopping for yourself in the grocery store, you know exactly what you want. If something’s out of stock, you just make a quick replacement and you’re good with it. But when you’re shopping for someone else, it’s hard to understand what their intent is.
Jack Altman
You also don’t know if they’re going to be happy with the different chips or if they’re going to be really pissed because they wanted lemon lime.
Max Mullen
Or do they want a bigger size of the same brand or a smaller size of a different brand.
Jack Altman
Yeah. It’s a judgment call.
Max Mullen
Yeah.
Jack Altman
But then, you can ask questions in it.
Max Mullen
You can. Sometimes customers are really responsive, sometimes they’re not.
Jack Altman
So you get all of these initial pieces going, you start improving it consistently.
Max Mullen
Yeah. Very importantly, I was doing all of the customer support myself. Customers would call Instacart’s phone number and it would ring my phone. So the pain of anything that was wrong with our service was personally felt by me, basically seven days a week. And then I would go and make the roadmap and fix those problems so that I didn’t have to get those calls anymore.
Jack Altman
How pissed do people get? Is it an emotional thing for people or is it like, “Hey, my burgers aren’t here”?
Max Mullen
It really depends. Every customer’s different. Sometimes people are buying things for their office. They’re more chill. If you’re buying a rack of lamb for dinner and it needs to arrive before five, otherwise your dinner’s going to be late, then you’ll be really upset if it doesn’t arrive.
Jack Altman
Actually, later I’m going to want to ask you about fast delivery and some other adjacent markets that I know you’ve thought about and done work in. But I’m still interested in how you actually got this consumer marketplace going, because they’re so hard to get going.
Did you feel pull immediately, or was it the kind of thing where in order to get strong product-market fit you needed to add suppliers and selection, and it didn’t actually cross until you had more and more products in the catalog?
Max Mullen
My belief is that product-market fit is a spectrum. It doesn’t just happen in one moment. In the early days of Instacart, we sort of thought we had product-market fit. We had a lot of pull from customers who wanted deliveries of groceries that were quick, but they didn’t really care from what store. Our initial product was basically all coming from one conventional grocery store in San Francisco.
But real product-market fit was really from families, and that only happened later when we started adding retailers and their full catalog to the platform.
Jack Altman
Why was that important?
Max Mullen
You don’t want to buy groceries from a warehouse. You want to buy groceries from Sprouts. Or from Bi-Rite Market. You have a really strong loyalty toward the grocery stores that you already shop at and you want to get delivery from those on Instacart.
Jack Altman
How did the business itself work in the early days? I imagine it could not have been great margins when you were getting going, because you couldn’t charge $7 for an orange, but you still had to send somebody to go get the orange and bring it and all of that. Were you running on a wire at the beginning? What did it look like at first?
Max Mullen
To be quite honest, at first we weren’t very good at tracking our unit economics. We were definitely losing money, but it was a little bit unclear how much money. Our primary goal was just to get more deliveries and higher quality deliveries and more customers. We knew that we could achieve positive unit economics later, but it would take a lot of work and bigger scale.
The Trader Joe’s Story
Jack Altman
Zooming forward a little bit, were there landmark partnerships, grocery store deals, that really inflected the business? Could you talk through an example end to end?
Max Mullen
The first thing is that we didn’t know how important retailers were. In the early days, we asked our customers, “What could we do better? What could we do differently?”
Jack Altman
Because at first you were not shopping from a grocery store.
Max Mullen
We were always shopping from a grocery store, but at first you went on Instacart and you saw a catalog. We did not tell you where the groceries were going to come from.
Jack Altman
“I want some strawberries, where are they from?” And you’re like, “Don’t worry about it.”
Max Mullen
Our idea was going to be we’ll get them from the cheapest, closest store. People won’t care where the strawberries come from. So we asked our customers and they told us, “We love Trader Joe’s. We only want to shop at Trader Joe’s.”
So we went on this mission to try to figure out how we can partner with Trader Joe’s. We couldn’t get in touch with them. We tried everything, and at a certain point we went to the store and we looked around and said, “Maybe we can just shop out of a Trader Joe’s without a partnership.” In order to do that, we would need a picture of everything that they sell.
So we asked the manager, “Can we get a picture of everything that you sell?” They said, “Absolutely not. We don’t have that. We can’t give that to you.” And I said, “What if I took my own pictures? I’ll do it in the corner of the store, or let us take some items out of the store into the parking lot and we’ll take some photos and we’ll bring them back.” They were like, “No, no, no.”
So we came back and we said, “What if we bought one of everything in the whole store?” They were like, “That would be great. Come on a Thursday when it’s slow.” So I said, “Okay, great. We’ll be back on Thursday.” I went to that store with a bunch of other people over three days, and we bought one of every product in the entire Trader Joe’s.
Jack Altman
How much was that?
Max Mullen
$20,000.
Jack Altman
That’s okay.
Max Mullen
Not too bad. We had just raised the money from Demo Day, so we had a couple million bucks in the bank. We ran this experiment. We made this catalog of every Trader Joe’s item. We launched it on instacart.com.
At that time we had to add a toggle. So now instead of seeing no retailer, you would see Safeway or Trader Joe’s and you could switch between them. That was the moment I think we started to really find marketplace product-market fit.
Jack Altman
That’s interesting. It’s crazy. Airbnb had something similar where once they got good photos… It was worth it to them to go do super manual things apparently.
Max Mullen
You have to roll up your sleeves and go do these crazy things to get the first customers to be really excited, to tell their friends, to get the next set of customers, just to get one city going.
Jack Altman
Once you had that understanding, did you then shift a bunch of the company focus to going and getting more retailers?
Max Mullen
We did this with Whole Foods and Costco and a bunch of other retailers. Of course we eventually got to the point where we struck partnerships with those retailers, and then they would give us their catalog data, or they would at least let us in their stores to photograph it carefully.
Jack Altman
What was the argument that you needed to convince somebody like a Costco to serve products with you?
Max Mullen
We’re a few people in San Francisco, we’re a startup. No one’s ever heard of us, so it’s tough to strike a partnership with a really big public company.
Jack Altman
Because also, I assume the deal is, “We’re going to come buy from you, maybe we’re going to cannibalize some of your online sales.” I don’t really know how the math works out, but I assume that there might be some idea of them thinking, “No, I should just own this channel directly, if I can.”
Max Mullen
Honestly, back then it was more a lack of awareness. Retailers didn’t understand how important e-commerce was going to become. They didn’t have a good strategy yet. In fact, retailers pay Instacart a commission for bringing them growth.
Jack Altman
So at some point that flipped where you’re like, “Hey, I’ve got the traffic.” Now you can command a different sort of price dynamic.
Max Mullen
At first we started with little local retailers, Bi-Rite, Rainbow Grocery, right over here. They were thrilled to partner with us, and then eventually we got to the bigger Whole Foods Markets of the world.
Growth and Geographic Expansion
Jack Altman
What were your levers for growth? It sounds like adding retailers equals more growth in general. What else were the big levers? I’ve got to assume price.
Max Mullen
Geographic expansion. Geographic expansion was another big one. We learned how to launch new cities. We launched Chicago, we launched Boston, we launched Washington DC, we launched New York City.
Jack Altman
How do you launch a city?
Max Mullen
Oh man. At first I just went there with an engineer and we would catalog the stores, make sure that our operations were set up correctly to understand the borders of the city and the zip codes that we could serve efficiently. We’d hire shoppers and hire operations folks to get things going on the supply side, and then we’d do demand-side marketing and try to match those and grow those.
Jack Altman
What worked?
Max Mullen
In 2013, when we first launched the first city outside of San Francisco, it was Chicago. Luckily I had a girlfriend there who’s now my wife, and she was going to business school. So we got all the business school students, all the MBA students at University of Chicago to become customers.
They told their friends, we threw events, we did PR. There was something novel. There still is actually something novel about putting in your grocery list on an app and then in an hour it all just shows up.
Jack Altman
I get a rush every time.
Max Mullen
And so we would try to use that.
Jack Altman
You know what I’m ordering?
Max Mullen
Ice cream.
Jack Altman
Yeah. See, that’s what I told you. That’s what I thought.
Max Mullen
I don’t judge.
Jack Altman
So there’s geographic expansion. Was price a big lever? Was it the kind of thing where you’re like, “I change these prices.” Am I playing with that tool carefully or is it not that big of a deal?
Max Mullen
Retailers set prices, but we would make delivery free. We offered an annual membership that we discounted and would give free trials of, Instacart+.
Jack Altman
Did you ever do referral programs?
Max Mullen
Absolutely. In fact, I designed this killer referral program that was like a third of our traffic in the early days.
Jack Altman
When I first moved to San Francisco in 2013 or something like that, I was doing these crazy Uber referrals. I was deep in there just doing paid marketing for Uber to get more drivers and it was great.
Max Mullen
Just for fun.
Jack Altman
No, I got Uber credit. It was great. I think they stopped it at some point, but it was great for a little while.
So you had those referral programs going for shoppers? Or for customers?
Max Mullen
The key thing we figured out is that after your first order, right when you placed it but before it was delivered, you were really keen to share the service with other people. So we would have this “give $10, get $10” offer, or we would change those values to play around with them and experiment. That got a lot of people to share with their friends.
Jack Altman
When I think about the overall story of Instacart, obviously you needed a nice piece of software. But a lot of this is building a business in terms of partnerships, business development, the hard work of city expansion, boots on the ground, hiring people. Is that common, do you think? Do you think a lot of consumer marketplaces require these other components besides just the technology more than B2B companies?
Max Mullen
There are some consumer and some B2B marketplaces that are what I call operationally complex. Ours is probably hard mode, extra hard mode. If you think about it, there’s the consumer app, which of course you know as a consumer who orders a lot of ice cream. There’s the shopper app. They have to have an app that’s beautiful and works really well and is performant in low-WiFi situations in the back of a grocery store, and has all the photos of all the items.
We have a huge ads business. We’re partnered with almost every consumer packaged goods company in the US and in Canada. Then we have the retailer component. We’re delivering enterprise-grade software to retailers.
And we have a logistics system that routes and batches orders, and we have lots more stuff, analytics. There are so many facets to the business. That’s uncommon. A lot of the business models that you and I invest in are pretty much the SaaS business model or AI applications, a lot less complicated. So I think it’s not for the faint of heart to try to build such a complex business.
Amazon Buys Whole Foods
Jack Altman
Talking about other hard-mode moments, Whole Foods was obviously a big customer of yours. I remember one day I was shopping with Whole Foods and then one day we’re not. Can you talk about what happened there, what it meant for you, how it affected the company?
Max Mullen
So the company’s chugging along. We’re signing retailers and we signed this big long-term deal with Whole Foods Market, which is not the largest retailer but a really important one from a brand perspective. Seven in the morning, I get woken up one morning in 2017 and we find out that Amazon has bought Whole Foods.
Now, Amazon is our biggest competitor. They’re really focused. They have been working on online grocery for decades, and they have essentially infinite resources. Whole Foods Market is our biggest client in terms of the number of orders that we send them. So this is an existential crisis for the company.
And then the headlines started coming out. “Amazon buys Whole Foods for $13.7 billion.” “Amazon buys Whole Foods. What does it mean for the grocery industry?” “Amazon buys Whole Foods. Will Instacart succeed or fail?” “Amazon buys Whole Foods. Instacart’s toast.”
We were kind of freaking out. So what do you do? What do you do when you get hit with something like that as an early company? We had an all hands and we declared wartime. We realized that this was going to be not a terrible thing for the company, but a dynamic situation we could make the most of.
Every other retailer saw this news as well. They were asking questions like, “What is our e-commerce strategy? What are we going to do now that Amazon has entered our industry?” And we used that to our advantage. We reengaged with—or they reengaged with us—almost every retailer that we hadn’t signed yet.
Jack Altman
You’re arming the rebels.
Max Mullen
Yeah. And we really used that wartime crisis moment inside the company to motivate people to work extremely hard and extremely fast, and with retailers, to get them to finally come aboard. In the 18 months after that happened, we signed basically every major retailer that had been a holdout, including Costco and Kroger and others.
Jack Altman
And you think those wouldn’t have happened without it?
Max Mullen
Certainly not on that timeline.
Jack Altman
So then the net effect might have been positive.
Max Mullen
Absolutely. It was one of the best things that ever happened to the company. One of the scariest things.
Jack Altman
It’s a good reminder that you can’t always know whether some piece of news is good or bad.
Max Mullen
One thing’s for sure. If you start a company and it takes a really long time to build it, you’re going to face luck of some kind—good luck and bad luck—and great companies figure out how to take those moments and flip them and leverage them.
Also, when things that could be potentially bad for the company happen, you’ve got to have a thicker skin. You’ve got to become anti-fragile. For sure, Instacart is what I would call an anti-fragile company. Things happen and we don’t get worse. We don’t stay the same and just repair, we get stronger. People get emboldened and we get galvanized and we go off and do amazing things.
COVID and the Road to IPO
Jack Altman
Another one comes to mind. It’s a champagne problem. Instacart’s a $10 billion public company, which is a remarkable achievement by any standard. There was one venture financing that was at $40 billion. With a lot of companies, when that happens, it ends up killing them and they can’t get through it and it creates all these issues. But you got through it, you got public, you’re now a public decacorn, and that’s amazing. So at some level, that’s okay.
Can you talk about that journey too? Because I’m sure that didn’t feel good at every moment. There were probably some cultural things you needed to work through and all of that.
Max Mullen
It starts at the beginning of COVID. COVID happened. Our business took off.
Jack Altman
It went nuts.
Max Mullen
We grew 4x in 2020. We were suddenly remote and we had to scale the company. Even with hiring more people, everybody was working seven days a week, two standups a day, just trying to keep the business afloat because there was so much demand.
Jack Altman
Talk about a COVID beneficiary. People just not wanting to go to the grocery store…
Max Mullen
Even my own parents, obviously they’re super fans of Instacart, but they were using Instacart sometimes and going to the grocery store sometimes. And then during the pandemic they completely switched.
Jack Altman
And then you build a habit. It lasted long enough that people built habits. You acquired users.
Max Mullen
And they’ve stuck around. We’ve never had a down year. But that’s a challenging thing, not being able to forecast what the next year and the next year were going to look like. Especially during 2021, the way the markets were, our valuation went up and down and the whole thing looked like a roller coaster.
It’s emotional. People get attached to the value of their shares. People thought that our IPO timeline was going to be one thing, and because of the markets that had to shift and happen later. We had to manage through all of that.
Also, it was a new era for the company. Up until that moment, almost everyone that joined the company was joining a company that wasn’t yet really a household name. You kind of had to squint to believe that we were going to do all the crazy things that we said we were going to do and achieve the scale that we said we were going to achieve.
After COVID, it was pretty obvious. Instacart was on a great track, and so different types of people were attracted to the company at that point. We had to manage through the changing culture that was necessary there.
The Path to Profitability
Jack Altman
Obviously now you’re a profitable company. At the beginning you talked about, “We didn’t even know what our margins were.” Let’s just pretend they were definitely super negative. When did you go through that cultural journey of “this is going to be a profitable business now”?
Max Mullen
Two and a half years into the company we raised a round of financing that valued us at around $2 billion. That was sort of the beginning of us growing up as a company. We hired this guy, Ravi Gupta, who then became a partner at Sequoia and is still on our board. He was the first… adult in the room, let’s say. After a few months of joining—actually really after a week or two of joining—he looked at our financials and he was like, “Guys, I don’t know if you know this, but we’re losing a lot of money on every order.”
We were like, “Yeah, we know. But how much money are we losing?” We quantified it and we realized that as good as things were going, the company was growing very fast, and if we grew as fast as we were growing—
Jack Altman
All the money was going to be gone.
Max Mullen
We might run out of money. It was epic, but Ravi had this all-hands at Instacart in his first few weeks. He put up a slide and he said, “Okay, we spend $25,000 a month, let’s say, on Blue Bottle Cold Brew in our fridge. For that amount of money, we could lease a Tesla for the company. A few Teslas, right? We could have a fleet of Teslas. That’d be cool.
Or for that amount of money, we could acquire 5,000 customers, or we could acquire a thousand shoppers.” He asked people to raise their hands. “Who wants to acquire the customers? Who wants to acquire the shoppers? Who wants to buy a Tesla? Or who wants to have Blue Bottle coffee?”
Of course everybody realized that the company was probably spending too much money on some silly things. So we made some changes. We cut some things like that. More importantly, we taught the company this object lesson about being more resourceful.
Jack Altman
So what went into that from there? That’s a moment where you galvanize everybody and you’re like, “Hey, we care about this now.” But what do you need to change besides the Blue Bottle?
Max Mullen
Not buying Blue Bottle coffee, as painful as that was, was the object lesson. But then the attitude we all had to have was, we all own some little slice of our P&L. This team works on taxes. That team works on bottle deposits. This team works on batching efficiency. Everybody was responsible for 5 cents, 25 cents, $1 of the bridge from negative $15 of unit economics to neutral gross margins.
We had to do it fast, because otherwise we would literally go out of business. That put this really big pressure on all of us. It was hard. We had a lot of arguments about what to cut and what not to cut. Every team, everyone in the company was involved in this initiative. We set a goal to become gross-margin profitable.
We started to make little bits of progress towards it and then big wins would happen. We would figure something out. We would change prices in this city that was more expensive. We would take away some marketing thing we were doing that wasn’t working. We slowly got the company margin positive.
And then we threw this wonderful party, which everyone who was there remembers. We threw a very resourceful party. We didn’t spend any money on the venue. We had it in our office. We just turned on the music, and then we got dollar hamburgers from McDonald’s. So we got 300 $1 hamburgers and very cheap champagne from Costco and we just had this big, huge celebration of this crazy win as a company.
Jack Altman
I’m also curious about some of the decisions that you decided not to do. In these retellings of history, it’s easy to focus on the amazing decisions you did make. There’s also a lot of decisions you actively decided not to make that might have been big blunders or distractions. I’m curious about some of the temptations that you avoided.
Maybe there’s things that you didn’t do at one moment, but later it was the right thing to do. Maybe it’s international, maybe it’s rapid delivery, maybe it’s new products you would offer to consumers. What were the things that were hotly contested that you decided to hold off on?
Max Mullen
In every company there’s this “should we build our second product?” question, or “should we focus on the first product more?” We, for a long time, thought about international expansion. We thought about other products that we could do. We kept realizing that just focusing on the US and focusing on our core business, which we still weren’t done with, was a better use of resources. We kept the main thing the main thing for a really long time.
I think that was the right decision, but every year there would be different debates about international expansion. Now, 13 years after we started the company, we are an international company. We are doing it and it’s not too late.
Jack Altman
It’s the “right idea at the wrong time is the wrong idea” kind of thing.
Max Mullen
Yeah.
Jack Altman
You also, I’m sure, could have considered acquisitions. I’m sure you looked at that. Did you end up deciding that it’s just too complicated?
Max Mullen
We looked at acquisitions and still do, but we just realized there wasn’t the perfect company to acquire in most of the places we wanted to be.
Jack Altman
Thanks for sharing a bunch of that story. It’s cool for me to hear because I haven’t even gotten to ask you all those questions despite knowing you so well. It’s just an amazing accomplishment.
Before we move on to the next topic, I’m interested in what you’re most excited about for Instacart going forward. Obviously it’s a great business as it is, but what are the things that you’re excited to see?
Max Mullen
The last thing I worked on at Instacart was a bunch of our AI initiatives. The company has really embraced AI, both internally and using it in our products. We’re just now launching some of the first consumer-facing, agentic AI products that I worked on. I’m very excited to see those roll out. I just think that every consumer app in the near future will have incredible features where you’ll be able to push a button and have magical things done for you.
Jack Altman
I want you to integrate with a home robot that cooks, and I just want to tell the robot what I want for dinner.
Max Mullen
I don’t think that’s that far into the future.
Jack Altman
That’s what I want.
Max Mullen
And I think Instacart will be a key part of getting—
Jack Altman
I asked Kyle Vogt this when he was on the show, Bot cofounder. I was like, “Could that happen?” and he’s like, “I think it could happen.” So you guys need to partner.
Max Mullen
I love Kyle and I think we should do it.
Building Consumer Companies
Jack Altman
Obviously you’ve been a great angel investor for a long time. Now you are a full-time investor. I want to hear your opinions on consumer in general. There’s always these memes about “consumer is dead, it’s so hard.” Obviously there are some amazing runaway consumer successes, but they are few and far between compared to B2B. I’m curious to hear from you, as someone who’s done it and has lived it, the building blocks of a good consumer business. Maybe let’s start with the founder. What makes a good consumer founder?
Max Mullen
I think to be a good consumer founder and to build a really big consumer company over the long term, you have to have some view on consumer preferences. You have to see the world through a younger generational lens.
Usually that means an idea that looks contrarian today, that has some sort of stigma associated with it, where most consumers would say, “That’s not for me.” But you see that in the near future that stigma is going to lift. As that Overton window moves, you go from looking contrarian to consensus.
You wouldn’t stay in the spare bedroom of a stranger twenty years ago, and then Airbnb made that a normal thing to do. You wouldn’t get in a stranger’s car, and then you had Uber. Having someone do your grocery shopping for you wasn’t a normal thing prior to 2012, and then we willed that into existence.
You have to have this attitude of, “There’s something I know is going to happen in the near future. We are going to build it so that when people are ready, the product will be there.” You have to be right and you have to time it perfectly.
Jack Altman
So the idea almost has to be a little uncomfortable at first.
Max Mullen
Otherwise you’re in perfect competition. By the way, there are really great large public consumer companies that would love to do the consensus things before startups can. So you have to be a little edgy.
I gave some examples there. Mental health is something that had a stigma that seems to have lifted recently. AI companions are something that today is very edgy, and I think in the future will probably be more normal and many people will use those.
Jack Altman
What else comes to mind for consumer founders besides this?
Max Mullen
So contrarian idea. That means you also have to tolerate looking wrong and looking silly for many years. You have to have a thick skin. You have to really have conviction and tenacity and not pivot.
Then the third thing is you have to run really fast. Once the opportunity becomes obvious, there will be lots of competition. You’ll have to be way ahead, and you have to have a machine that can execute really fast and build the product faster than anyone else. I think there are no great consumer companies where there’s not an extremely high sense of urgency in the DNA of the company.
Jack Altman
Generally speaking, if you had to pick the thing that you’re looking for when you meet founders, how would you name it?
Max Mullen
I’m always looking for people that are what I call irrationally optimistic, that are so excited about their version of the future that they’ll tell everyone about it and attract talent that way. But investing at seed is really tough. You don’t always know. You try to get in person with founders and figure out if they’re the real deal and what their motivations are.
At a certain point, I kind of started looking down. I look at their sneakers. It’s the craziest thing. I’m giving away the alpha here. If you’re looking at a founder and they’ve got dirty white sneakers on—
Jack Altman
Look at my sneakers.
Max Mullen
Perfect. You’ve got dirty white sneakers on. You’re a real builder. You’re in the arena.
The reason why this is an interesting tell is that people who are busy building, they’re locked in on their companies. They’re sleeping at the office. They’re working out of a house in close proximity to their cofounders seven days a week. They don’t have time to buy nice sneakers. They just put on the same pair of sneakers and they get dirty.
I invested in a company that Benchmark is an investor in, Gumloop. One of the founders of Gumloop had such dirty sneakers. They were falling apart. Literally, they’re like flapping.
Jack Altman
You’re like, “I don’t need to hear anything else.”
Max Mullen
First of all, obviously I love the company and both founders, but I had to buy him new shoes. His shoes were so bad. Anyway, I’ve just found that the real builders, they just look the part.
Jack Altman
What’s different here versus a B2B founder, if anything? Some of this stuff exists in B2B, but you’ve also obviously invested in a lot of B2B companies. What’s different? When you’re meeting somebody on a B2B idea, do you think differently about any of those things you just said?
Max Mullen
With B2B founders and B2B companies, you need a little bit more subject matter expertise. You may not be the customer. So you have to have lived the problem or know lots of the customers or have deep insights from having worked in the space.
Starting a consumer company really only requires those three things: You are a consumer, I’m a consumer, and if you have the taste. If you have the judgment and you know where people’s ideas are going in the near future, you can build a consumer company without much domain expertise.
Advice, Investors, and Workshop
Jack Altman
This is a question that’s relevant for you now as a full-time investor. This is a selfish question for me. When you think about the investors that were helpful to you throughout your whole journey through Instacart—the types of investors or the specific actions—what was genuinely valuable to you?
Max Mullen
We obviously have had some amazing investors at Instacart. When you think about what founders get from investors, they get three things in my opinion. Obviously the capital, on some sort of terms that you negotiate. They get the help, and some investors are more helpful than others. And then they get the signal.
Particularly for early rounds, I think founders underappreciate the signal. Having a great foundation of your company and having exceptional investors is going to be something that follows you for the rest of your company. Every subsequent round, the new investors who are going to issue a term sheet are going to call the existing investors. So you want to have a great relationship with your early investors and you want them to be high-signal, awesome investors.
Jack Altman
Why do you think it’s underappreciated?
Max Mullen
Because I think founders often negotiate a lot around the terms and the valuation.
Jack Altman
The focus at the moment of the deal is the equity.
Max Mullen
Rather than that, the focus should really be, “Who is going to help me get from here to the next major milestone? Who is going to help me raise the next round, in terms of having great signal?” Having Jack Altman invest in your company is a way bigger deal at a certain stage than having just a party round of other random investors.
Jack Altman
I assume, implied in the language you’re using, at some point it’s not the most important thing. Once your company has its own big brand, your brand is bigger than your VCs at some point, and so it doesn’t matter anymore.
Max Mullen
I think you get people around the table and on the board that can help you in all the places you need help. And then the incremental next investor is maybe not as valuable in terms of help or signal, and more valuable in terms of capital.
Jack Altman
It’s like you only need one or two of those.
Max Mullen
And you’ve got to be careful not to take advice from too many investors.
Jack Altman
I actually think that’s the flip side. You have too many people like that, you have too many egos around, that can also be a problem.
Max Mullen
I have a framework for founders on how to take advice or not take advice from investors. You’ve got three kinds of decisions in your company: science, art, and religion.
Science decisions have a right answer. Great, get advice from investors on that. Either they’ve solved the problem themselves or they’re on five boards where those companies have solved the problem. Get the advice.
Then you have art. That’s why you’re a great founder. You have taste and judgment. You’re inventing things. You’re engaged in creative destruction. Only you can make the art decisions. Those are the ones that don’t have a right answer, where you’re really blazing a path. You can’t outsource that and you can’t get advice on that. You’ve got to hold that to yourself.
And then there’s religion. This is how you work. What kind of company do you want to be? There are a lot of right answers to that question, but it’s a personal decision. You ask yourself, “What are my values? What are my cofounder or my early team’s values?” And then you make a set of values and you answer that question by looking at your values.
Get advice all day long about science-related things from investors, but on anything else, especially on the taste-type decisions, just ignore them.
Jack Altman
How does all of this make you think about you as an investor and what you want to build and how you’re doing Workshop and all of that?
Max Mullen
I’m trying to be the investor that I wish we had when we were this early, and help people in the first year of their companies. I try to be very careful not to give too much advice, not to give advice on topics where I’m not an expert, and instead to help people network.
Jack Altman
That’s a good instinct, by the way, because a lot of people would be like, “Hey, you founded Instacart. Whatever you say, I’m going to run with.”
Max Mullen
If you’re building an operationally complex marketplace, I have every piece of advice you could possibly want.
Jack Altman
By the way, a note to founders, no matter how good your investors are you should definitely not listen to a hundred percent of whatever anybody thinks.
Max Mullen
A hundred percent. Also don’t take a bunch of people’s opinions and average them. That’s also a bad way to go.
Jack Altman
That’s a horrible way to go.
Max Mullen
A lot of founders do that.
Jack Altman
They do. Why are you building Workshop in this sort of coworking type of way? Why do you have a space for that?
Max Mullen
I’ve got a founder space. I like to work alongside founders, in person. I just think San Francisco is the best place in the world to build a technology startup.
Jack Altman
It’s crazy how it recentered. During COVID we almost lost it.
Max Mullen
I don’t really think it was ever gone. I mean, I stayed.
Jack Altman
You know I’m a big suburbs guy.
Max Mullen
And I’m a big city guy. I think the city’s great and the founders stayed and new founders have come. It’s really the best place to build.
Jack Altman
A funny thing I was realizing… We’ve got this friend group and people have been on the show. There was a point earlier on where both you and I were founders and had a bunch of VC friends. And then a couple years ago I became a VC. Now look at you. It’s just a crazy life cycle, isn’t it?
Max Mullen
It gets everyone.
Jack Altman
Are you excited for it?
Max Mullen
I love helping founders and this is just the best platform on which I can help founders. So that’s why I’m excited.
Jack Altman
This was really nice to have a serious conversation with you for once. I really enjoyed it.
Max Mullen
For once. Maybe we should do more of this.
Jack Altman
We should do more of this. This has been special. I haven’t seen you do a lot of podcasts, but maybe this will be part of your new media strategy. Are we going to get some more Max in the media? What do you think about it all?
Max Mullen
I’m excited to build a little bit more of my brand and tell a little bit more of my story. Garry Tan is very good at this.
Jack Altman
He was your partner?
Max Mullen
Garry Tan was our YC partner. I think he’s obviously executing this very differentiated media strategy.
Jack Altman
He had a YouTube channel before he took over at YC too. That was really good.
Max Mullen
Yeah, for Initialized
Jack Altman
All right, Max. Thank you for doing this.
Max Mullen
Thanks, Jack.