How Instacart Became A Lifeline For Users During A Global Crisis (with Daniel Danker, Instacart’s CPO)

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Hannah Clark: March 2020. I know, I don't have to remind you—you remember. The world shut down, we all locked ourselves inside, and our entire way of life was disrupted in ways we never could have predicted. And while there was no shortage of things to worry about in that moment, core among them was the question we all had to answer on day one— how are we going to get our groceries? That moment is what makes Instacart's story so fascinating—it's the story of a company that overnight transitioned from a convenient option to a household necessity. 

My guest today is Daniel Danker, Instacart's Chief Product Officer. While the pandemic suddenly put millions of families in a state of uncertainty and financial instability, Instacart was ready to meet the moment. Since its founding in 2012, the org had gradually perfected a business model that, combined with the team's adaptability and ingenuity, would come to keep hundreds of thousands of people safe, fed, and employed during the pandemic. I spoke to Daniel to get the inside story and what it was like to answer that call and how Instacart managed to rise to the occasion under unimaginable duress. Let's jump in. 

Welcome back to The Product Manager podcast!

Daniel, thank you so much for making the time to join us today. 

Daniel Danker: Pleasure. It's exciting to be here. 

Hannah Clark: Yeah. So can you tell us a little bit about your background and how you ended up at Instacart?

Daniel Danker: I have been working in a variety of different areas throughout my career. Most of my career was spent in the kind of video and music space, places like the BBC or Shazam or Facebook. But eventually I made my way over to Uber, where initially I worked on the driver team and then looked after the Uber Eats product team and then joined Instacart right in the middle of the pandemic. You know in part, the opportunity to work with some of my favorite people that I've worked with in the past. In part, because it's a wonderful problem to try to solve and real convenience in people's lives.

And then in part because for a long time, I've cared a great deal about the people who earn on these platforms. I grew up quite poor with a single mom who would have had a much easier time raising me if she'd been able to earn on a platform like Instacart. And I see a lot of parallels between the experience of shoppers on our platform and my own mother's experience in raising me. 

And I see that as a great opportunity and kind of privilege for us to get to affect people's lives and livelihoods in that way. Both the convenience for customers, a really interesting space, but also kind of an important space, I think, in people's lives as they are on these platforms as well.

Hannah Clark: It's been a really interesting and unique journey just due to the realities of the pandemic for this company. 

So do you mind telling us a little bit about the story of Instacart and how the product offering has evolved over time?

Daniel Danker: Yeah, well, the original service and insight was in realizing that people getting their groceries every week are spending a lot of time and often getting a lot of the same things every single week.

And it's a real, real drain on people's time. And there's a real convenience in being able to get it delivered. I think what's important about this too is like any good product team, you always have to really understand your customer, and there are a lot of customers for Instacart. And I don't just mean a lot of consumers using Instacart. I mean that there was an insight that regular people would benefit, families would benefit, people who look after their households and are often carrying the burden of trying to go to the store and fit that into a very, very busy week raising their families that they would benefit from this. But also a realization that more and more commerce was shifting online and that the job of shifting something like grocery online is actually really complicated.

You have retailers who for in many cases have been around for many decades in our household names and core parts of our community, but they're not necessarily technology companies. And figuring out how to bring that service that they offer in the store to a digital world is not at all straightforward. Not only because building out these storefronts with inventory that has to handle tens of thousands of items, some of which are fresh, some of which are perishable, some of which are not all ending up in one person's basket.

Those are quite complicated things to figure out and then figuring out how to actually handle the logistics of moving those goods. And you know, often those goods include a tub of ice cream that's going to sit on your front door. You need to know exactly when that's going to get to that customer so that it ends up in their freezer as soon as possible.

These are complicated end-to-end systems. And I think the magic of what the folks who started Instacart have been able to do is take that complexity and strip it all away. It actually feels quite effortless. But the story of Instacart started with that prompt. Now, the history over time has expanded to the point where now there's over 85,000 stores from 1500 different retailers on the platform.

There's over 600,000 shoppers completing orders for customers all around the country. There's different types of stores that you can order from everything from grocery to even home improvement. You have Lowe's on the platform now, beauty products and electronics and everything. So it's become much more complete as an offering, and it's also now underpinned by a membership that's become a really easy way to get instant access to your local stores.

And so it's evolved quite a bit over time. I'm sure we're going to talk more about the pandemic in a moment. It is unusual in the history of a company to have something like that, take your product from being a convenience to being an absolute essential. But I think the story of Instacart was accelerated by the pandemic, but the motivation behind it has been the same.

Hannah Clark: I'm curious what it was like once the pandemic really set in and that necessity arose, how did that impact some of the strategic choices that you had to make at Instacart and how things had to just scale to meet demand so rapidly?

Daniel Danker: Well, I think it's very focusing for one. There are many companies in history that you can think about, which were met with sudden, incredible demand and weren't able to handle it and weren't able to rise to the occasion.

And we often forget about many of those companies because they go by the wayside. So something I think that the Instacart team should be extremely proud of is that they were able to see the need and pounce on it and rise to the occasion in a really effective way. Now that meant at times hiring hundreds of thousands of additional shoppers onto the platform almost overnight.

And when you think about what that meant historically as a shopper, you would sign up. You would wait for the debit card to show up so that when you go to the store, you could actually complete the order. In that time, we do the background check and all these various things. They had to squeeze that process into a matter of minutes.

And so all of a sudden, it invented new things like, now when you sign up to be a shopper, you can actually get approved. Your background check gets approved almost immediately and you receive an Apple Pay or Google Pay payment mechanism immediately. And so you no longer waiting for something to show up in the mail.

You can actually sign up to be a shopper and start earning in a matter of minutes now. That's amazing today. During the pandemic, it was absolutely essential. And so you can see how things like that that might not have been the top of the priority list before the pandemic, all of a sudden rose to instant fame because they became so necessary.

Hannah Clark: So we've talked on this podcast before in a previous conversation about getting the right people on the bus, and I think this is something that's really applicable to this idea of like these really rapid, really pivotal strategic choices and really tight deadlines that have people have to rise to the occasion in order to meet.

So what's been the role of having the right people on the bus at Instacart in terms of contributing to that success and making those things happen at the right time in order to meet that demand?

Daniel Danker: It's a certain type of person that can rise to that occasion. Not everyone is similarly motivated. Instacart is a company full of people who deeply understand their customer and who are extremely focused on making outcomes happen. And so there's loose attachment to the 'how', and there's strong conviction about the 'what'. You can see how that comes together during a pandemic where all of a sudden the 'what' is very clear, get people their groceries. Or what ended up being even more important was, get people toilet paper. And like these things that you've got at the store and there was just, it was ransacked.

There was nothing there. So solving problems like that is a basic need. Very, very clear. There are secondary and tertiary needs there as well that the team was very good at noticing. So for example, making it so that people who might've had jobs where they were able to earn before, and all of a sudden their livelihood is put at risk because the sources of work were suddenly drying up.

Well, enabling them to earn immediately as well. That's a secondary goal that is actually really important in service of the main goal. So being very, very clear about the outcome, but loosely tied to the how, because you have to get pretty creative. You know at that moment, it wasn't as simple as going to the store.

There were lines outside the store where individuals were separated by five feet each, where they would only allow a small number of people into the store at any given time. Things that we might have held tightly onto in the past, like predicting how long it would take for your order to get to you, all of a sudden needed to be opened way up.

It gave way to features like fast and flexible, which is this option that showed up when we really didn't know how quickly we'd be able to get you your order. And you didn't really care how long it would take to get your order. You just needed your order. And so it was a service option designed around flexibility and attuned to the way of the world in that moment.

That's what I mean by not being overly stubborn about how you get from here to there and being willing to change and adapt. There were, historically, you would shop the storefront and you were always picking by SKU. What I mean is you weren't just picking toilet paper. You were picking a specific brand and quantity and type.

During the pandemic, when all of a sudden the stores themselves didn't know what was going to be on the shelves, and it might take a while for those to get replenished. And in the time between when you place your order and when you managed to get into the store, that inventory would change. Well, the team started adding things like, just by toilet paper, any toilet paper. So it would be this kind of representative item in the catalog that wasn't tied to a specific barcode, but was just a more general item. Things like that, where when we design the product in the happy path, we forget about them or we don't even prioritize them.

But when you start designing the product to be more resilient to a certain situation, you might design it very differently. 

Hannah Clark: Yeah, I can see that organizational efficiency is really baked into the strategy at so many different levels of Instacart. 

What do you think that a lot of companies could be doing better in terms of building some efficient, sustainable business structures?

Daniel Danker: It's a good question. I think sustainable business comes from a couple of different places. One is, the sustainability of the product itself. Does it have strong unit economics? Do you understand what retains customers, attracts them, retains them and causes them to engage more and what that feedback loop is versus you don't understand that so you're turning through customers? 

These are all key contributors to whether a product and a product-driven company can be successful and sustainable. At a place like Instacart, where you're dealing with what is structurally a low margin business, and where there are a lot of mouths to feed, the retailers need to earn money, the advertisers need to have a successful outcome, the customer needs to have an affordable product to work with, and the shoppers on the platform need to earn a successful living. You have to be really, really precise about the math that powers every single order.

Interestingly, that doesn't mean every order is profitable. In fact, I just went shopping with a few people on the team yesterday. We did a couple of orders and I guarantee you there was unexpected traffic on the way. I don't think we made any money on that order, but it doesn't necessarily need to be quite that simplistic because we might satisfy a customer there that's going to be with us for years and some of those orders are profitable and some of those are not.

So that's completely fine. But having real precision around that is just key. Some people are lucky enough to work at companies where, you know, the margins are really, really big and you can be a little bit sloppy about this. That's not the case in the kind of business that we're in. And so we're very, very precise about that.

I think the other piece of it is, do you operate in an efficient way? And you could take that thought process down the path of how much are we spending on different parts of our team, et cetera. Are there ways to cut corners and save money there? I would actually suggest there's a whole other way of thinking about it that's even more important for product management and that kind of perspective, which is do we make it easy to build? 

How do we decide what we're going to work on? How do we make sure we can bite off a small number of things that are the right things and that are going to be the most impactful? And how do we make sure that everybody is synchronizing their watches so they're all working on the same thing at the same time when they're needed for it so that you minimize the distraction of managing dependencies across teams and schedules that are not aligned, et cetera.

It sounds a little boring to talk about. But we've all been on teams where you can build quickly because everybody is locked and loaded working on the thing at the same time. Everybody's contributing at once. And we've all been on teams where you're taking a whole bunch of dependencies on others, where they're not going to be ready to do the thing for another month and you need it right now.

And all of a sudden, everything just feels harder. This also ends up applying to, who's making decisions? Who's empowered to make decisions throughout the team? How do you make that as fast as possible? Do you have a culture where anybody on the team can flag something to the most senior people who might be needed in order to unblock something and where that's a completely open conversation where that feedback loop happens in minutes and hours, not weeks and months.

Those are the key building blocks of moving fast. And the funny thing is, it's not about typing faster. It's not about working longer hours. It's about structurally designing the work so that it happens efficiently. The funny thing about it is, if you do that, it's also way more fun to build it.

Hannah Clark: Yeah, I would agree. I think that there's something to be said about creating some kind of a structure that people can thrive within because it's, you know, it's predictable. Do you speak in the same language? You speak in my language. 

I'm glad we're talking about people also because I wanted to talk a little bit more about career trajectories in Instacart. Sounds like folks at the organization have pretty multi-faceted jobs for the most part. What's Instacart's approach to building career trajectories for the people working for the company?

Daniel Danker: There's a few kind of underlying value props of getting to work at a company like Instacart. We pitch these value props when people come in to interview with us.

One of them is that building a breadth of knowledge is more valuable than only being expert in one area. So we believe in people moving around the organization. Another is that we believe that outcomes matter more than just putting in hard work. So hard working almost goes without saying, but being really focused on the outcome and being really focused on the customer are strong values of ours.

When you put some of these values together, and layer them on an organization like Instacart, which is actually doing multiple things at the same time. It might seem like we're just doing online grocery, but in fact, we have our app. We have the white label sites that power some of the biggest retailer ecommerce sites in the country.

We have the shopper experience in a platform. We have the retailer facing platform. We have the advertising platform. So actually, when you break it apart, you could work on quite a few different things at Instacart at any given moment. And so what we do is we try to encourage the mobility across the teams quite a bit. Increasingly, we're also paying attention to what happens as people are getting promoted to levels like director and beyond. And almost insisting that if you're going to get to that level, you need to have walked in the shoes of multiple of our customers. You need to have been in multiple parts of our organization.

A vertical ascent, while it might seem faster, actually doesn't produce the level of depth and breadth that you want in great leaders. And so we're encouraging more of that cross pollination. The place where it possibly happens the most, and it's because it's designed structurally this way is our APM program, where we welcome people who have just graduated and are interested in product and they come in and they do a six month rotation in three separate teams. It's 18 month program. By the end of it, they get promoted out of the program. There's some brilliant people. We just opened up our APM program to staff this year's round.

And it was so popular that we got 14,000 applications within a matter of a few days. And I think it's because one, obviously, we have the pleasure of working on what is a household brand and a very exciting consumer facing product, which is unusual. Nonetheless, it's something that we don't take for granted. But two is because I think people see the value of getting to work on a multi-sided marketplace and work on multiple sides of it.

The APM program is really special. Now, what's crazy is that out of 14,000 applications, we only had six slots. And so, brace yourself, we doubled the number of slots to 12. It's still 12 out of 14,000, which unfortunately means most people won't get to join us. But it's a very exciting program that is structurally designed to get that kind of cross pollination.

Hannah Clark: Yeah, it sounds like a great opportunity for those 12 really excellent go getters. 

So the pandemic had brought about some myriad changes and also fostered an enormous amount of rapid innovation. Obviously, Instacart is a prime example of that. So what are some of the changes that you've observed in the ways that tech companies have developed that have become the new standard convention since the dawn of the pandemic?

Daniel Danker: I think that the pandemic does a couple of interesting things. One is it's undeniable. A whole bunch more of us are working from home at this point, so we're operating a little bit differently from that perspective. We hired brilliant people during the pandemic. They are not all located in San Francisco, so we are a very flexible, remote first essentially company.

Thankfully, we gather around the table quite often on what we call jams. It won't surprise you. Everything at Instacart is a food pun. So we have these jams that we bring people together around, and those are great, but they're a mechanism for creating joint creativity in a world where we are all quite remote.

So that's one thing. I am constantly blown away by how much we're able to accomplish together living on Zoom. But I also, I'm not gonna lie, I love getting together in person with my team and my colleagues. And so nothing replaces that. But it is a new capability for us as a company that has meant that we're able to reach talent in way more places, which means we have some really brilliant talent.

So that's one very exciting thing that changed. I think another thing that changed is just recognizing that you can't always predict the sudden sources of growth, which means you need to build a resilient system and a resilient architecture that you can draw on in the moments where it needs to rise to a new occasion and often one you wouldn't have been able to predict. It's easy to cut corners, especially when you're a small startup and time is of the essence and you don't know how much runway you have. So it's very tempting to cut so many corners that you get only the happy path built and the unhappy path isn't really there.

And I think that it's a good thing. And I'm sure Instacart cut many corners in the early days. Don't get me wrong, but clearly it didn't cut the ones that were make or break for those moments and it was able to rise to that occasion. A third thing that I would point out is we don't wish for another pandemic.

We don't wish for anything like that. But what we've learned from it is that there are moments where you get a spike of activity. And the key is to figure out how to retain as many of those customers as possible. There is a category of customers that used Instacart because of the pandemic out of the necessity for whom post pandemic, the thing that made most sense was to go back to the store.

But what happened that was really powerful is that our membership really emerged as a strong value problem. Our habituation techniques inside of the product became much more mature. So now not only do we welcome customers and sometimes unexpectedly, because there's a hurricane and a bunch of people are preparing for it or anything, any of the kinds of things that can happen day to day that suddenly caused spikes, but now we're able to retain those customers much, much better.

And it's a topic that has a unique spin on it now that we understand that it's not about just steady growth. It's also about recognizing that there are moments of disruption. Again, hopefully never something like a pandemic again. But when you have a major food oriented holiday or any of these other situations that suddenly result in a spike, now we know how to retain those customers. 

Hannah Clark: So what advice would you give to product leaders in the process of scaling up their teams?

Daniel Danker: I think there's a couple of things that are important to think about. One is as you're scaling up, it's tempting to just do more of what you were already doing. And sometimes there's a need for that, right?

We scale up our teams because we have a greater need for more capacity and that's okay. But I think there's also a necessary step in scaling up for all of us in our careers, which is that when your role grows, it's not the same role you had before. And so doing it the way you did it before, but just more. While it's the most obvious incremental thing, actually is missing a trick.

And so I encourage leaders in my team, but also myself as my own role evolves to take a step back and say, if I were approaching this on day one now and mapping out what are the most important things to do and how do I want to design a team in order to do them? What would I prioritize? And it may be a lot of things that were already happening in that team, but it may be a few new things.

Generally, what I've found when I take a moment to take a beat with that and really digest it, I come back with something that has some amount of work that's incremental, but some new things that I wouldn't have thought of otherwise that are more zero-to-one, more green shoots that end up being some of the most important things we end up working on.

So I would just encourage people not to just scale up the thing you had, but do it 20% more or 30% more. And actually ask yourself, what does this new scope or what does this new amount of capacity enable us to do that we weren't doing before? That might be the most important thing. 

Hannah Clark: That's great advice.

Well, Daniel, thank you so much for making the time to join us. Where can people follow you online? 

Daniel Danker: LinkedIn is probably the best at this point. 

Hannah Clark: Alright, it was good to hear from you here. Thanks so much for coming. 

Daniel Danker: Take care. Bye bye. 

Hannah Clark: Thanks for listening in. For more great insights, how-to guides, and tool reviews, subscribe to our newsletter at theproductmanager.com/subscribe. You can hear more conversations like this by subscribing to The Product Manager wherever you get your podcasts.