Embattled local delivery company GoPuff announced this week that ex-Disney CEO Bob Iger is now an investor and advisor.
The $15 billion Philadelphia-based company made its bones delivering six-packs and snacks pronto to impatient consumers. And GoPuff has done so not from existing stores like Instacart. GoPuff instead built a network of owned and operated micro-warehouses to ensure rapid delivery via a network of drivers.
This announcement will no doubt bring much-needed positive attention to the company. GoPuff has been facing growing scrutiny over its strategy, burn rate, and leadership.
According to a company release, Iger’s role will advise GoPuff’s founders “to help deepen Gopuff’s consumer engagement and growth globally.” The amount of Iger’s investment was not disclosed. We assume it is well below the $1 billion GoPuff was reportedly seeking last fall.
Engaging Iger is good PR for GoPuff. Co-CEOs Yakir Gola and Rafael Ilishayev founded GoPuff in 2013.
The PR effort is also likely targeting GoPuff’s internal audience.
A recent report in The Information reported that GoPuff faces a restless workforce. Some employees have openly questioned the founders’ business skills and savvy. The founders launched the company as students at Drexel University.
How better to ease those concerns than by bringing in a steady hand like Iger? The corporate legend recently retired from Disney after a highly successful 15-year run as CEO.
“It’s been exciting to spend time with Gopuff leadership learning about the company, the founders, and their aspirations,” Iger said in the statement.
“I am excited to advise, mentor, and support the executive team as they continue building a company uniquely designed for how consumers are changing and growing. I believe consumer commerce will be very different in the near future. And Gopuff is building the platform to power it.”
Headwinds and Tailwinds
GoPuff was among a long list of delivery companies that benefited from the strong covid tailwind. But its business had a pre-Covid foundation in a certain type of consumer that was willing to pay for the fast delivery of a six-pack of beer, a bag of chips, and a bottle of Tylenol. Not that any of those three items are related.
However, the company’s rapid growth came at a cost. It had a burn rate that required endless funding rounds to support. And now, those Covid tailwinds are reversing course. GoPuff now has to sail into the wind against the great re-opening. And not to mention the inflation and market reckoning that comes with it.
What’s the Plan?
Iger’s investment is unlikely to be enough for GoPuff to carry on without deep cuts (which have already begun). But Iger’s involvement will help address some other challenges. It will shore up concerns about the founders. They are less likely to make bad choices under Iger’s tutelage. Assuming they listen to him. It may also help GoPuff retain top talent. This is an issue since the company recently lost some top execs recruited from Facebook and Airbnb.
In April GoPuff tapped Amazon vet Maria Renz as its new SVP of North America in another move to strengthen its leadership. We assume Renz is still on board. But it is notable that her LinkedIn profile has not been updated to reflect the new role.
Iger might also help GoPuff figure out a viable path forward. One opportunity, which GoPuff had been trying to do with its now-departed hires, is to build an advertising business. A la Amazon, Instacart, and others.
One issue with the delivery business is that expansion is costly. New micros-warehouses, new staff, new drivers, etc. And the dark store space was, at least until now, brutally competitive with players competing to offer the fastest delivery of a bag of chips and a Mountain Dew.
It’s also possible that Iger’s involvement presages deeper changes at GoPuff. Will the co-founders, for example, accept lesser roles and bring in a professional CEO? We will soon see if this move is serious or just window dressing to prop up the founders’. Given Iger’s reputation, we think this move is likely the first step toward meaningful change at GoPuff.
