Webvan was founded in the heyday of the
dot-com bubble in 1996 by
Louis Borders, who also co-founded
Borders in 1971.
Growth The company's investors pressured it to grow very fast to obtain
first-mover advantage. This rapid growth was cited as one of the reasons for the downfall of the company. Webvan started taking orders in the San Francisco Bay Area in June 1999. Webvan placed a $1 billion order with
Bechtel to build its warehouses, and bought a fleet of delivery trucks. In 2000, Webvan bought
HomeGrocer, a competitor that was also losing money, for $1.2 billion in stock. At its peak in 2000, Webvan had $178.5 million in sales but it also had $525.4 million in expenses. Sequoia later invested another $50 million,
Softbank Capital later invested $160.3 million, and Goldman Sachs' venture arm invested $50 million. Up to that time, the company had reported cumulative revenue of $395,000 and cumulative net losses of more than $50 million.
Management None of Webvan's senior executives or major investors had any management experience in the supermarket industry, including its CEO
George Shaheen, who had resigned as head of Andersen Consulting (now
Accenture), a management consulting firm, to join the venture. When the company filed bankruptcy in July 2001, Shaheen was an
unsecured creditor. Shaheen resigned in April 2001, while the company was on the verge of shutting down.
Bankruptcy The company lost over $800 million and shut down in June 2001, filing for
bankruptcy and laying off 2,000 employees. As part of its shutdown process, all non-perishable food was donated to local food banks. ==Reasons for failure==