Combining Data and AI

1. Combining Data and AI

A feature alone isn't enough to monetize data and AI long term. That's one of the challenges many generative AI startups have encountered. They've shipped an interesting feature. It's gathered a ton of interest and a lot of sign-ups. How do they go from that initial feature to something with longevity?

2. Building a platform

Instacart did an excellent job growing from a simplistic feature to a product and, eventually, a platform. The power of having a unified vision for all AI products is consistency and efficient monetization. AI must fit into an overarching vision for how the business moves forward. AI must amplify the strengths of the existing business and operating models. It must enable new opportunities that the business would not have or wouldn't be able to pursue otherwise. Instacart supports digital grocery buying and delivery. Digital grocery sales are actually growing faster than in-store grocery sales. The digital or online channel is the primary growth engine for grocery store chains. But it's only 11% of all grocery sales today, so this is a massive opportunity that Instacart has built a platform around.

3. A deeper look

Instacart’s platform has multiple aspects that aren’t all obvious from an outsider’s view. The first is the marketplace of grocery stores, retailers, and convenience stores. The second is the consumers buying groceries or other products on Instacart. The third is the Instacart shoppers who are fulfilling orders. Finally, the fourth is the grocery stores and brands buying ads on Instacart’s platform.

4. Bringing it all together

That's where you see the power of a platform. Obviously, Instacart can monetize the person who's buying the groceries online and having them delivered. There are additional monetization opportunities that are less obvious. The other amazing thing about platforms is they gather data natively. Everything is done on the platform. Instacart has data about retailers, products, brands, Instacart shoppers, and consumers. The company has a wealth of data to develop AI based on consumer buying and habits.

5. Bountiful opportunities

Instacart has the ability to develop interesting solutions that they can deliver to a larger, multi-sided marketplace. Instacart serves more than the customers who buy groceries but also the grocery stores, Instacart shoppers, and partners. They deliver different features for Instacart shoppers to help them plan the optimal route around the store and reduce the time it takes to fulfill each order. Instacart has predictive models that ensure a product ordered will still be available when the Instacart shopper arrives. A wealth of machine learning is living under the covers of Instacart’s platform. It's only possible because the platform enables data gathering and allows the business to deliver AI features that it can monetize. This data enables Instacart’s advertising marketplace, and machine learning optimizations.

6. Matching intent

Data and AI are woven into Instacart through the platform. Instacart is having success where other companies are failing because it transitioned from a simple feature, go online, order groceries, and have them delivered to you, to a platform that supports multiple products. Instacart has grown beyond just groceries to luxury items and convenience stores. The two ends of the shopping spectrum are represented on the same platform, and people can get them delivered. A marketplace has grown on Instacart, and they can monetize high-intent ads. High-intent ads are when a brand can serve you an ad at the moment when you are making a buying decision. Those are the most valuable and most lucrative ads. On Instacart, much of the ad marketplace is driven by machine learning and data.

7. Replicating success

Looking at the big picture covering 10 years of Instacart’s growth, you see how they transformed from a basic set of features to a product and now a platform that supports multiple monetization opportunities. The platform enables Instacart to monetize the ecosystem in new ways and add pieces supporting a growing ecosystem. If we needed to replicate that arc in a structured way, how would we do it? That’s where monetization frameworks help and the purpose of the following lessons. The business won’t wait 10 years, so we need to duplicate the arc but optimize the journey. Instacart has a platform comprising products that further break down into features. Platforms support ecosystems that can be monetized in multiple ways. Data gathering is less expensive with a platform, and delivering AI features to customers is simpler.

8. Growth opportunities

Instacart has several growth opportunities because of the platform. It could offer financial products or sell more data and reporting to its partners. But Instacart chose the highest value opportunity and the most closely aligned with their business model. It is selling its enterprise platform to retailers. Instacart’s enterprise platform product enables retailers to handle ads, manage operations, stand up an online store, and grow the business on Instacart’s e-commerce engine. This section will explain how we build and transition from a feature to a product to a platform.