HomeGrocer.com : Anatomy of a Failure (Teaching Note)

This case study examines the initiation, financing, development, and failed merger of an ambitious online grocery retail venture: HomeGrocer.com. The case allows for a discussion focused on the assessment of the viability of an entrepreneurial opportunity, the inter-relatedness between the financing and growth of new ventures, the risks and challenges associated with developing a revolutionary venture, the difficulty in making important strategic decisions when facing a crisis in a high-growth business, and the inherent risks and challenges in merging two competitive entities. The case highlights how, although the HomeGrocer.com team did many things right in developing the venture, a few key errors and some unfortunate timing resulted in them expanding too quickly, running low on cash, and having to confront a tough strategic decision about whether to scale back operations and renege on commitments made in their initial product offering (IPO) prospectus or merge with Webvan, a well-funded yet unfriendly competitor