When news first broke of Walmart’s interest in acquiring Jet.com, the $3 billion price tag was a surprise to many. Why would Walmart pay such a premium for a startup that was unprofitable and just a year old?
One hypothesis was that Walmart may have been competing against other bidders for Jet — possibly Alibaba or even Google.
Turns out that was not the case, Jet CEO Marc Lore told Recode in an interview Monday afternoon.
“This was about trust between Doug and I,” Lore said in reference to Walmart CEO Doug McMillon, noting that the conversations between the two sides began in the spring.
“It never occurred to me to go out and get another offer, quite honestly,” he added.
A person familiar with the talks confirmed Lore’s account.
As part of the deal, Lore will take over as head of Walmart.com in addition to Jet, as Recode first reported Sunday evening. Neil Ashe, Walmart’s CEO of global e-commerce, will depart at the end of Walmart’s fiscal year.
In a conference call with reporters, McMillon outlined why Walmart found Jet so valuable. It was a combination of the speed of the shopping site’s growth (a $1 billion annualized sales volume run rate within eight months of launch); the expertise of the exec team led by Lore that is joining Walmart in the deal; and the proprietary pricing and back-end technology that is expected to eventually be used in some capacity on Walmart.com.
McMillon also spoke of the “empowerment” of shoppers in Jet’s model; customers earn bigger discounts on bigger orders and can earn additional savings by forfeiting their right to return an item or paying with a debit card instead of credit card.
For Lore, the opportunity to join forces with the world’s largest retailer was too good to pass up, he said. It actually almost happened five years ago, but Walmart was outbid by Amazon in the acquisition of Lore’s last startup, Diapers.com parent company Quidsi.
“It gives us the benefit of scale, and I’m really excited to carry this vision out over the next five to 10-plus years,” Lore said of the Jet sale. “This is a historic, once-in-a-lifetime opportunity for me and the team.”
Both McMillon and Lore said Jet.com will achieve profitability much more quickly under Walmart than it otherwise would have. The startup is currently spending $20 million to $25 million a month on advertising.
Lore also disputed the notion that the sale goes against the ambitious plans for Jet he laid out time and time again in the press.
“I never once said it had to be a standalone business,” he said. “This is an opportunity to have that vision come to fruition even sooner.”
This article originally appeared on Recode.net.