Latest / Retail Media Breakfast Club / Instacart’s Turnaround CEO Heads To The AI Frontier
Transcript
- Fidji Simo === [00:00:00] Fidji Simo's Transition to OpenAI --- mo Instacart, CEO, since August, 2021 said last week that she will move to open ai. Later this year to run its consumer products division. Her departure comes after transforming Instacart from a pandemic boosted delivery service into a retail technology powerhouse with a profitable. Advertising business. In this episode, I'm going to read to you a story that I wrote for Forbes on May the eighth about Fidji Simo. I find her so inspirational. What she has done at Instacart is nothing short of incredible, and I think it also tells us a little bit about what. The future looks like at Open AI as well. Given Fidji's, experience at Instacart and her interests, I think we can do a little bit of future casting by looking at her career. so let's jump in. Introduction to Retail Media Breakfast Club --- Good morning and welcome to [00:01:00] the Retail Media Breakfast Club. I'm your host, Kerry Masters, and every weekday at 6:00 AM Eastern, I bring you candid and real discussions in the world of retail, media and marketplaces in just 10 minutes. So bring your own cup of coffee and we'll get smarter about retail media together. Fidji Simo's Impact at Instacart --- first thing I wanna share is that when Fidji Simo first accepted the Instacart CEO role, she could have been stepping into what management researchers call a glass cliff. This is where women are appointed to leadership positions during periods of crisis, increasing their risk of failure. At the time, Instacart's pandemic, hypergrowth had stalled. Valuations were collapsing and competition with Amazon, Walmart, DoorDash, and Uber was intensifying, but she managed to steer the company back to growth instead of the slide that many analysts [00:02:00] expected. OpenAI is likely betting that her retail media experience will translate into new. Revenue generating consumer tools. She will be the CEO of applications at OpenAI, she will continue reporting into Sam Altman, but applications is one of the three operational pillars at OpenAI. The other two being research and compute. So . CO becomes the day-to-day steward of every customer facing product, including chat, GPT, and Dali, and the GPT store. Let's rewind a little bit about how Fidji Simo Scaled Instacart's a business specifically, and this is. Obviously of personal interest to me and to you, and it, but it is one of her most notable contributions at Instacart. taking the nascent advertising business into a [00:03:00] retail media powerhouse. Instacart had rolled out its itself serve advertising platform before Fidji Simo came on board around May, 2020. And the platform was still in its early stages, but under Simos leadership, what began as a basic advertising offering evolved into a sophisticated retail media network generating nearly $1 billion in annual revenue in 2024. Not too shabby. Carrot Ads and Retail Media Network --- Back in 2022, Fidji Simo Unveiled Carrot Ads. One of the four modules of the new Instacart platform and Carrot Ads is essentially a retail media network module that lets retailers graph Instacart's entire retail media stack onto their own digital storefronts. So think of it kind of like a. Competitor to Criteo or Citrus AD where a retailer is installing that technology and using it [00:04:00] to stand up their own RMN. Carrot Ads has appealed to some mid-size grocers in particular. Um, I interviewed April Lane, the chief merchandising officer of Thrive Market a few months ago, and she told me that the company chose carrot ads after testing multiple platforms because it balanced ad density with a cleaner UX for our members To support Kara Ads, Simo introduced Carrot Insights, which were dashboards that merged in-app ad data with store level sales and inventory. Giving CPG brands a single return on ad spend view and providing grocers evidence that they weren't cannibalizing their brick and mortar lanes. And as an aside, I didn't put this in the article, but I wrote a book back in 2020 called Instacart for CMOs. And this was the big paradox at the time. It was a real [00:05:00] frenemy situation that Instacart had. Trying to balance the needs of a four-sided marketplace. They have their retail partners, consumers. Shoppers, who were the people going into the store and picking the items? And then advertisers who are often you, they're the brands and it's difficult with a four-sided marketplace to make everybody happy. And there was some strained relationships between Instacart and retailers who felt like they were starting to lose connection with the consumers maybe being. Disintermediated a little bit and what has been incredible to watch from my perspective is how Fidji Simo, , shepherded that company to a place where retailers have accepted Instacart as part of the landscape and retailers are using a lot of Instacart's [00:06:00] technology, whether that is the Carrot Ads, RMN platform, carrot Insights, the caper carts that I'm gonna talk about in a second. But that's been the big takeaway for me is just how. Well, she managed the competing interests of all those four different stakeholders, and in particular, getting the retailers on their side and proving that they were more friend than enemy. The revenue brought in from retail media surpassed a billion dollars, on a run rate basis in Q4 2024, with the platform being used by more than 220 retailer banners and 7,000 CPG brands. While retail media formed a cornerstone of Simos strategy, her broader vision included connecting digital and physical shopping experiences through technology. In January of last year, we saw the introduction of. Personalized advertisements inside caper [00:07:00] smart carts, bringing Instacarts targeting capabilities directly into the physical store aisles and giving brands a consistent campaign canvas from phone to cart screen. AI Innovation in Grocery --- Now let's talk about AI innovation in grocery and probably why she got picked for this top job at OpenAI. In her final months at Instacart, Simo laid groundwork that could inform her approach at OpenAI, particularly in applying generative AI to shopping experiences. In March of this year, Simo Unveiled Smart Shop, a generative AI layer that analyzes 17 million SKUs and billions of past purchases to serve real time diet tags and dynamic shopping prompts. Establishing a foundation for health centric AI driven merchandising. This capability could potentially transfer directly to open AI applications. And here's the fun part. Future Prospects at OpenAI --- [00:08:00] What could Fidji Simo bring to open ai? And this is just spit balling, but here are some things that I personally think she's likely to do in her new role. Number one is bringing that retail media expertise with her advertising chops. Fidji Simo could develop a privacy sensitive AI media network featuring. Sponsored answers, shoppable Chat and Contextual Commerce inside GPTs with brand Safe Controls. This would mirror her carrot, a strategy of expanding Monet monetizable services beyond traditional confines. So of course, open AI leaked recently a partnership with Shopify, which would allow in. Conversation commerce to happen within Chat GBT, but we haven't yet seen within chat GBT what advertising could look like. So I think she's definitely going to make that first order of priority. [00:09:00] Another thing she could bring is physical digital integration. Her experience with caper smart cards and connected stores could inform how open AI integrates vision models into physical world devices. Consider something like voice ai, kiosks to augmented reality, shelf advice, and cashier list checkout systems, and finally, operational discipline. Conclusion and Final Thoughts --- In her statement about joining OpenAI, Simo highlighted the transformative potential of the role. She said, joining OpenAI at this critical moment is an incredible privilege and responsibility. This organization has the potential of accelerating human potential at a pace never seen before, and I'm deeply committed to shaping these applications toward the public good. With retail media networks now proliferating across the industry. Simos experience building a differentiated offering at Instacart could help OpenAI establish unique value [00:10:00] propositions in what is becoming an increasingly crowded space. Her understanding of both retail economics and cutting edge technology positions her uniquely to bridge those worlds at open ai.