How this high school dropout built a business that sold to Target for $550 million. via CNBCMakeIt
On Thursday, Target is rolling out same-day delivery at its stores in Washington, D.C. and Baltimore, thanks to Shipt, the online same-day grocery delivery service the retail giant bought in December for $550 million, one of its largest deals yet. With Target already offering the service in a number of cities, including New Orleans and Phoenix, the retailer is aiming to offer same-day delivery from half its stores by early 2018.
"My father was not supportive at all," Smith recalls, laughing."He actually thought it was a horrible idea...and I remember him coming to the school and meeting with the counselors about this, and the counselors actually told my dad, 'We are not worried about Bill. He is going to be just fine.' Smith spent his early career as a serial entrepreneur — after running his cellular business for three years, he built a company that issued small loans. Then, in 2009, he founded Insight Card Services, a company offering re-loadable, prepaid Visa cards.
Smith wanted customers to be able to go to a retailer's website, place an order and have it delivered to their door that same day. To make that happen, Shipt would use a network of independent contractors, or"shoppers." Smith invested $3 million of his own capital into the company, which started with a $100,000 check, gradually investing more over time.
At that time, in December 2014, Smith says the company was on the brink of shutting down. The model wasn't working and people were telling him there was more of a demand for groceries than anything else. "Literally in the parking lot of the grocery store I told my wife, 'You know a lot of people have been asking for grocery delivery and I want to figure out a way to solve this problem.'"
"I said, 'Look, we're going to try this. If you guys are in, awesome. If you're not interested, it's cool.' And everybody stayed on board," Smith says. "It was at that point that I said, 'Okay, this is real, people really want this.' And you know Birmingham is just a normal, middle-America type city," Smith says."This is not San Francisco, so to be able to have that much early adoption, I thought, man there's real demand."Shipt currently offers unlimited, same-day delivery service for its members for $99 a year, or $14 a month.
"We were the first ones to bring the service [there], so people viewed us as the ones creating the market," he adds.
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