Can new CEO Fidji Simo turn Instacart into more than just a delivery company?

The former Facebook star and retail newcomer plans to push the startup beyond groceries and toward an IPO.
October 4, 2021, 9:30 AM UTC

Fidji Simo is one of the rising star execs on Fortune’s 2021 40 Under 40 and Most Powerful Women: Ones to Watch lists.

When Silicon Valley went into lockdown in March 2020, some tech executives got pandemic pets or expanded their Hawaiian estates. Fidji Simo went looking for a piece of home.

She found it in a $5 million gated villa in Carmel Valley, Calif., complete with landscaped greens and moss-covered roofs that seem magicked over, wholesale, from her native South of France. It’s a 90-minute drive south of the Menlo Park headquarters of Facebook, where Simo was a senior executive until July, and even farther from downtown San Francisco, home to grocery-delivery startup Instacart, where she’s the new CEO. But there’s a certain brand awareness to this pandemic splurge and its extensive gardens. Simo walks visitors past blackberry bushes, apple trees, and even a plot of carrots, the vegetable featured in her new company’s logo. Simo—glamorously goth in a purple and red dress, long black hair, and elaborate eyeliner—laughs as she waves at the patch: “They’re very appropriate for Instacart, no?”

The business those vegetables represent—Instacart’s fresh, fast grocery delivery—is why Simo left Facebook after a decade for a bigger role at a smaller company. Instacart, a third-party delivery service that sends shoppers to buy groceries other people order, saw sales volume quadruple and revenue hit $1.5 billion in 2020 as COVID-19 made in-person shopping a safety hazard. Venture capital investors including Andreessen Horowitz and Sequoia Capital have poured more than $2.8 billion into the company, privately valuing it at $39 billion and turning it into the third most valuable U.S. startup, according to PitchBook. Now the company is preparing for an IPO.

But despite the buzz and eye-popping valuation, Instacart has had a messy 2021. Simo’s tenure got off to a chaotic start: The former head of Facebook’s flagship app was named Instacart’s CEO in July, replacing founder Apoorva Mehta. At the same time, Mehta was quietly pitching DoorDash on buying his company. The gambit failed, and when it became public knowledge, it called the company’s prospects into question. Meanwhile, consumers were shaking off their pandemic anxiety and returning to the grocery store, cooling Instacart’s impressive growth streak.

Simo, once Facebook’s most senior female product executive, has an ambitious strategy for getting the company back on track. At its heart is a plan to expand Instacart’s business model, layering a Facebook-like social and ad platform over the company’s core grocery delivery service, and creating new tech products for retailers and other partners. 

Now she just needs to build her vision—and convince stakeholders ranging from partner grocers to skeptical would-be investors that this is the path to a thriving post-pandemic business.

Instacart and its competitors “offer a really high-cost solution—and it’s not even proven that there’s massive demand for it in the U.S., other than in the middle of a global health crisis,” says Sucharita Kodali, an e-commerce analyst for Forrester. “These companies all think that they’re going to be the next Amazon. But really, they’re all positioned to be the next Groupon.”

SIM.11.21.Instacart Shopper
An Instacart shopper fills a grocery order at a Harris Teeter in Washington, D.C., on April 6, 2020.
Evelyn Hockstein—The Washington Post/Getty Images

Simo, 35, is not an obvious pick to lead the company through the fraught months ahead. To begin with, she doesn’t have the retail background one might expect from the head of what is, essentially, an e-commerce business.

She’s also not Silicon Valley’s default gender. In fact, Simo appears to be one of the few female CEOs whom the most powerful venture investors seem to trust to replace a male founder, and to take a unicorn startup public. Women ran only 8.5% of all venture-backed companies that filed for IPOs between 2016 and 2020, according to PitchBook. 

“We hate losing great leaders—but seeing her go on to be CEO? That’s pretty awesome,” says Facebook chief operating officer Sheryl Sandberg.

Simo wears her outsider status proudly—and she’s used to wielding it to her advantage. Now Instacart’s board members, at least, are betting that she can do so again. 

“She’s got a really strong understanding of product innovation, a very disciplined business acumen, and people want to work for her,” says Daniel Sundheim, an Instacart board member and founder of hedge fund D1 Capital Partners. “I deal with plenty of CEOs—and I think she has the potential to be one of the best CEOs of our generation.”

Maybe a girl from a French fishing harbor who grew up dreaming of California was always destined to be slightly out of place. The daughter of a fisherman and a clothing-boutique owner, Simo was born in the Mediterranean coastal town of Sète, near Montpellier. She met her now-husband, Remy Miralles, on her first day of high school. The couple began dating two years later. As Simo became the first in her family to graduate high school and attend college, Miralles followed her: first to Paris, where Simo attended the elite HEC business school, then to California, where she attended UCLA for her final year of business school, and eventually to eBay, before Simo joined Facebook. 

Now Miralles is a stay-at-home father to their 6-year-old daughter, Willow. And Simo credits his support with helping her break into the male-dominated technical ranks of Facebook, where only 24.8% of tech employees are female. Simo started at the company as a marketer in 2011 but soon wanted to move into a product management role. At the time, Facebook usually expected product managers to have a computer science degree, 82% of which are earned by men. But Simo wrote product requirement documents to prove that she could “learn wicked fast,” says Asha Sharma, a former Facebook vice president of product, who’s now Instacart’s chief operating officer. 

The next hurdle came after she started the job and ran headlong into less official product mandates: ditch her high heels and fit into tech-bro hoodie drag. One senior product manager pulled Simo aside with a warning: “Engineers are not going to react well to you,” he told her. “Tie up your hair, remove your makeup—that’s the way you’re going to fit in.”

She came to work the next day in jeans and a bare face. “I felt horrible inside of my own skin—and I realized I wouldn’t be able to do the job if I’m not me,” she says. “So I’m sorry, but the heels and makeup were going to come back.” Eventually Simo even bent the monoculture to embrace her style: Facebook’s annual internal product-manager awards ceremony turned into “Dress Like Fidji Day”; formal attire optional. 

SIM.11.21.Fidji Simo Instacart CEO
Instacart is betting that its new CEO, Fidji Simo, a former Facebook executive and retail newcomer, can push its business beyond grocery delivery and toward an IPO.
Photograph by Kelsey McClellan

It helped that Simo was making Facebook money by leading the product team in charge of building a mobile ads platform. She also had powerful internal sponsors, including WhatsApp chief Will Cathcart and, eventually, founder and CEO Mark Zuckerberg, who both helped Simo develop her internal voice and her reputation for delivering blunt criticism—sometimes to Facebook’s most senior executives. During a big day of sales meetings with some of Facebook’s largest advertising clients, her bosses started goofing off, passing notes and ignoring the clients. So Simo, then a junior product manager, pulled aside Andrew “Boz” Bosworth—Zuckerberg’s close deputy—and told him to knock the hijinks off. “He did not take it the best way in the moment,” Simo recalls, though Bosworth, soon to be Facebook’s chief technology officer, now jokes about the incident. 

Simo also stood out at Facebook for reasons beyond her control. At times, she was working through acute physical pain. As a teen, she developed symptoms of endometriosis, the painful gynecological tissue disorder that affects about 10% of U.S. women and that often complicates their efforts to have children. As she took on greater responsibility at Facebook, Simo endured a miscarriage and then a difficult pregnancy with Willow, which required five months of bed rest. After giving birth, a surgery to treat her endometriosis triggered a blood-circulation disorder called POTS, or postural orthostatic tachycardia syndrome, which also made it hard for her to stand up.

With her health problems impossible to hide—and, she says, against her gut instinct to stay quiet about common reproductive-health problems in a male-dominated workplace—Simo started speaking publicly about them. She told her colleagues why she had to take video meetings from her bed; she wrote external blog posts and gave interviews about her miscarriage, her fraught pregnancy, and coping with POTS. Doing so made her into a better manager, Simo says, because her candor encouraged her employees to open up. “Women’s health is such a taboo,” she says. “But if I don’t talk about it, with all the privilege I have, then no one’s going to talk about it.” (She’s doing more than talking: Simo has cofounded a new women’s health clinic, The Metrodora Institute, which is expected to open next summer.)

Health problems didn’t derail Simo’s ascent at Facebook, where she became increasingly responsible for helping the company make money on mobile ads and embrace video products. In 2020, the company posted $84 billion in revenue from its ads business. Simo helped figure out how to build ads into Facebook’s news feed, and she had a knack for spotting—and nurturing—opportunities to enhance user engagement. During the summer of 2014, millions of people participated in the ALS “Ice Bucket Challenge” by recording videos of themselves dumping buckets of ice on their heads and uploading them to Facebook. Simo, whose team was working on text-based products for celebrities to interact with fans, saw a seed of something stickier in the clips and turned her efforts toward video. A year later, she oversaw the resulting launch of Facebook Live, which lets users broadcast themselves on Facebook in real time and which has now reached more than 10 billion broadcasts. 

Women’s health is such a taboo. But if I don’t talk about it, with all the privilege I have, then no one’s going to talk about it.” 

Fidji Simo, Instacart CEO

To get products off the ground at Facebook, “it’s very important that someone is that voice that fights for something, so that it actually sees the light of day,” says Deborah Liu, CEO of Ancestry and the former head of Facebook Marketplace. “She really puts herself out there.”

And during her tenure, Simo worked to make it easier for other women to follow her, including by cofounding the Women in Product nonprofit with Liu.

Simo also championed less successful products, including Facebook Watch, a struggling bid to compete with YouTube and other video-streaming services, and Facebook’s campaign to woo publishers and media companies onto its video platform. But Facebook vastly overestimated user viewership for video, the company acknowledged in 2016—to the detriment of many news organizations that had overhauled their newsrooms to produce more videos. In 2019 the company agreed to pay $40 million to settle an advertiser class-action lawsuit over those inaccurate metrics. The project’s storytelling “thesis” was right, Simo says, but it lacked “the monetization tools that would support this new media.”

A bigger problem for Simo was Facebook’s mounting track record of widely reported scandals and congressional hearings about how the company enables the spread of misinformation online; how it handles users’ privacy; and whether it effectively polices how authoritarian governments, violent extremists, and other bad actors use its platforms—including its app and live videos. Once she became head of Facebook’s flagship app in 2019, reporting directly to Zuckerberg until June 2020, Simo publicly defended the company’s policies and process.

Today, when asked about her role in the scandals, Simo calls Facebook’s decisions—and their sometimes grotesque consequences—a result of poor planning rather than the willful ignorance shown in internal documents reported by the Wall Street Journal in September and alleged by whistleblower and former employee Frances Haugen. 

“When you connect so many people, there are going to be abuses, and preventing that was just not a core skill set,” Simo says. “We could have done a better job predicting the ways in which things could go wrong.”

For much of Instacart’s nine-year history, things have gone right. 

The company was founded in 2012 by Mehta, a former Amazon engineer who until July was also its chief executive. It acts as a middleman between grocery companies, which pay Instacart to provide delivery and other services, and consumers, who pay either a delivery fee or a subscription for someone else to shop for and drop off their eggs and ice cream. The company partners with more than 600 retailers, including some of the country’s largest grocers and convenience stores—Kroger, Walmart, Albertsons, CVS—and offers delivery from more than 55,000 stores. Instacart generally charges a $3.99 fee per order, plus a service fee and tips. The company has more than 500,000 gig-economy shoppers who earn a minimum of $7 to $10 per “batch” of groceries—up to three separate orders—plus tips. (After a public outcry in 2019, Instacart stopped sometimes counting tips toward a shopper’s guaranteed base pay.) 

For much of its existence, Instacart stood out in the crowded on-demand startup economy for its focus on groceries, rather than the restaurant takeout business that DoorDash and Uber Eats initially served. Then came the first few months of the pandemic, which turned grocery delivery from a nice-to-have luxury into a risk-mitigation necessity—at least for people who could afford to pay someone else to brave the supermarket for them. Sales on Instacart’s platform soared; in April 2020 alone, they grew 433% year over year, according to Bloomberg Second Measure. Only about 13% of Americans order groceries online, up from 2% before the pandemic by some estimates, leaving plenty of room for growth. 

But in 2021, Americans aren’t afraid of going to grocery stores anymore. Instacart’s year-over-year sales have fallen in four of the past five months, although they ticked up 3.9% in August, according to Bloomberg Second Measure data. (Instacart says it expects sales volume to grow by a “double-digit percentage” in 2021, but declined to provide a more specific figure.) Meanwhile, foot traffic to grocery stores has increased year over year in each of the past five months, according to data analytics firm Earnest Research. With average margins of 2%, grocers can’t afford to pay the high labor and transportation costs of external delivery services. (Even Amazon is ending its free Whole Foods delivery for paying Prime subscribers; later this month, the company will start charging a $9.95 service fee per grocery order.) And, some analysts argue, there isn’t enough demand for grocery delivery to persuade consumers to pay more for it at scale. U.S. grocery stores are already large enough, abundant enough, and open late enough to easily serve most consumers. Meanwhile, DoorDash, Uber, Target-owned Shipt, and SoftBank-backed Gopuff are crowding into the grocery-delivery market, while some retailers are building up their own delivery operations.

By the end of last year, with Instacart’s pandemic sales spurt slowing, Mehta started courting Simo to bring her product and advertising expertise to Instacart’s board. (He had previously tried—and failed—to hire her as the company’s head of product.) She joined Instacart as a director in January—kicking off an unusual round of CEO musical chairs. Mehta initially approached Simo this spring about becoming his co-CEO, according to a person familiar with the matter. At the same time, the Instacart founder was in talks with DoorDash about purchasing Instacart, according to people familiar with the discussions (and as first reported by tech-news site The Information).

Simo agreed to replace Mehta as CEO in early June and took over the deal negotiations that eventually fell apart. Neither DoorDash nor Instacart will officially comment on the sale talks: “We are very, very excited about running an independent company for the long run, and we have no intention to merge,” Simo told Fortune in mid-September. And Mehta, who remains executive chairman, says he chose to step aside because he recognized that Simo “will be way better as a leader…with product, with people, and with different types of challenges.” But the turbulent transfer of power sparked speculation that Mehta was forced to step down; few venture-backed founders voluntarily relinquish the CEO title ahead of an IPO. 

The company is now preparing to go public, insiders say, and is relying on Simo’s management experience and tech expertise to expand its scope and product lineup. The new CEO pitches a lofty future for Instacart as a larger middleman up and down the food supply chain; a Shopify/Amazon/Facebook hybrid that will sell tech, ads, and data services to enterprise customers while speeding up its consumer-facing delivery options. She’s eyeing international markets, including her native Europe, and she’s considering ways to make Instacart more like a social media platform where users can follow celebrities (or each other) and shop for items that an influencer or friend recommends. 

But most immediately, Simo is focused on adding tech capabilities and shoring up existing partnerships. Instacart this summer enlisted robotics provider Fabric to build automated warehouses so the company can fulfill delivery orders faster. It also signed deals to provide more delivery services to customers of Kroger and Walmart.

433%

Amount by which Instacart’s sales surged YEAR OVER YEAR IN April 2020.

Simo has sketched out an ambitious expansion of Instacart’s advertising business, which the company says is “growing at triple-digit rates.” Instacart sells ads to consumer-product companies that pay to be “featured” at the top of a category or search result. She hired longtime friend and former colleague Carolyn Everson, Facebook’s former global ads chief, as Instacart’s president. The pair say their expansion will better serve retailers that don’t have internal ad data and tech capabilities. “Everything we do is in partnership with a retailer. We don’t compete with them,” says Simo. 

Some in the grocery industry still worry that Instacart’s growing ads business will cannibalize the ads retailers themselves sell to consumer packaged goods companies. For grocers, “it becomes really difficult when you’re not able to control the entire revenue pie,” says Sylvain Perrier, CEO of digital grocery platform Mercatus, which competes with some Instacart services. “The fear is that retailers will be left on the wayside.” He and his industry peers also grumble that Instacart’s advertising push plays to the strengths of Simo and Everson, but highlights the lack of senior retail experience on their leadership team. Simo says, “As long as you have the open-mindedness to realize what you don’t know, and to ask questions and ask for input, you can ramp up pretty fast.”

But some Instacart shoppers, essential workers who showed up in person through the worst of the pandemic, say she’s not addressing their needs fast enough. On Sept. 20, a group of Instacart shoppers called for a customer boycott of the company over dwindling pay and worsening working conditions; they now are urging workers to walk off the job starting Oct. 16. The grievances of the Gig Workers Collective, which represents contract workers at Instacart and other companies in the sector, predate Simo, but the group hasn’t seen “meaningful actions” from her so far, says Willy Solis of Texas, an Instacart shopper and a lead organizer with the collective. Even considering she is a newcomer, Simo’s answers “toe the line of what Instacart has been doing for years,” Solis says. 

Last year, Instacart backed California’s successful Prop 22 ballot referendum that lets tech companies classify workers as independent contractors rather than employees with full benefits. Under Simo, the company has supported a similar ballot proposal in Massachusetts. 

It becomes really difficult when you’re not able to control the entire revenue pie. The fear is that retailers will be left on the wayside.

Sylvain Perrier, Mercatus CEO

In an interview, Simo would not address the collective’s complaints directly but says, “There’s still a lot of progress to make” to improve the experience of Instacart’s contract workers. “This is a top priority for me.” (After the walk-off was announced, an Instacart spokesperson told Fortune that the company takes “shopper feedback very seriously,” but argued that the collective’s “claims do not reflect the current shopper experience.”)

The boycott demonstrated that to many of Instacart’s constituents, Simo is already an insider. It also marked the end of a summer spent working from her Carmel home, where she hosted meetings with grocery-store executives and, for three days in early September, eight members of her senior leadership team. 

With Willow headed to kindergarten, Simo and her family left their dreamy pandemic retreat for their other home in Silicon Valley. But even as she returns to a more pre-COVID routine and the epicenter of tech, Simo is trying to hold on to that outsider perspective. “I’ve built a lot of things in my life, but I haven’t built a $40 billion company,” she says. “I’m approaching everything with curiosity and humility, because I don’t have all the answers.”

Supermarket sweepstakes 

With a valuation of $39 billion and $1.5 billion in 2020 revenue, Instacart is competing in an increasingly crowded grocery-delivery field. 

Amazon | $1.7 trillion market cap

The original everything store got big into groceries—and stole Instacart’s then-major partner—when it bought Whole Foods in 2017. 

Walmart | $399.2  billion market cap

The retail giant has its own delivery service, but it also partners with third-party providers including Instacart, which in August announced a deal to deliver Walmart groceries to parts of New York City.

Uber | $87.9 billion market cap

The ride-share company introduced grocery-delivery services in July 2020. This summer it landed a deal to deliver for 1,200 Albertsons grocery stores.

DoorDash | $74.5  billion market cap

In Q2 of 2021, the onetime restaurant takeout specialist spent more than $1.3 billion, which included the costs of its grocery-expansion efforts.

Gopuff | $15 billion private valuation

The delivery startup backed by SoftBank, Blackstone, and Fidelity Management focuses on speed by operating and stocking mini-warehouses in 1,000 cities. 

Shipt | $550 million sale price (2017)

The Target-owned service operates as an independent subsidiary and also provides same-day delivery for customers of CVS, Costco, H-E-B, and other food and convenience retailers. 

This article appears in the October/November 2021 issue of Fortune with the headline, “Shopping outside the aisle.”

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