Today, our portfolio company, Jet.com, is officially open for business!
Jet is a marketplace that empowers shoppers and retailers to pull supply chain costs out of the system. The proprietary system is built to optimize the retail supply chain and eliminate logistical inefficiencies that lead to higher costs for customers. As a membership site, Jet is able to pass all such savings back to members in the form of lower prices—resulting in prices 10-15% below any other retailer.
The tech press has extensively covered the formation and launch of Jet, which raised $220 million before its launch. Hearing this, it would be fair to ask: Is this a reasonable amount of funding? Is Jet a good business concept?
But you have to think of it in the context of the team and the market opportunity.
Jet is co-founded by one of the best startup e-Commerce teams in the country right now: Quidsi co-founder and former CEO Marc Lore and his former Quidsi colleagues Nate Faust and Michael Hanrahan. This team built Quidsi, which is the parent company of a family of websites including Diapers.com and Soap.com, into a $550 million exit to Amazon in 2010. The team is back with their sights set on greater things.
When we invested in February, it was rooted in the idea that we haven’t seen any large-scale, disruptive innovation in e-Commerce since Amazon was founded in 1994. Amazon has a disproportionate share of the market and the market is certainly large enough for other players: U.S. e-Commerce sales is expected to reach $334 billion in 2015 and will surge to $480 billion by 2019, according to Forrester Research.
The Costco business model was created 21 years after Walmart was founded and it worked. Costco didn’t crush Walmart or hurt Walmart, but just introduced a new way to save. The market was large enough for both of them. We believe there’s a similar opportunity here. Jet is doing to Amazon what Costco did to Walmart: not trying to hurt them, but introduce a new way to save. Jet is the shopping club reinvented for the digital age. Coincidentally, Jet is launching 21 years after Amazon was founded.
We think Jet is the biggest initiative to come along in e-Commerce in years. This is as good a team as you’ll see, and they are taking a swing at an enormous opportunity. The chance to invest in Marc getting his A team back together is an opportunity you simply have to pay attention to.
And consumers are paying attention as well. About 450,000 “Jet Insiders” have been allowed access on a rolling basis since April. The Jet Insiders originally signed up for the service through word-of-mouth marketing.
Jet is set out to make shopping more transparent, more efficient, and at the same time, a little more fun. Jet has a very simple brand promise: pay $49.99 a year and you will save on literally every single product you want to buy online.
To celebrate, we’re giving all of our readers a free one-year membership. Use the promo code Norwest0721M. It’s good for you and anyone who enters it at checkout until 7/29/2015.