Uber for X Startups that Failed | Hacker News Reader

Uber for X Startups that Failed

nextjuggernaut.com

92 pointssillysaurus338 comments

A bit off topic, but one thing I've always wondered about Homejoy is how it went bankrupt, yet somehow the leadership team seem to have gotten out richer than when they started. At least, I assume you have to have some money on the bank to be able to become a YC Partner, and Adora Cheung is a YC Partner now. Maybe this is an incorrect assumpion on my part.

Anyway, I'm not trying to single them out, they seem great people and had enough shit to handle. But I am wondering how this happens because IIRC Homejoy isn't the only case like this. If a company tanks, how is it possible for the founders to cash out? Did they sell some shares to investors in earlier rounds? Is that common? Wouldn't it be a huge red flag for investors for a founder/exec to cash out early?

That was the case for the Secret (the app) founders. Sold founder shares in their A round (which is very rare to see that early)

Amazing. If I were an investor in that I'd really wonder what the founders know and aren't telling me.

What the founders know - and are telling investors - is they have an offer to sell the company and they don't want to take it, but it's so much money they'd be stupid not to. The investors want the company to keep going -- and growing -- so they cash out the founders a bit to make sure everyone is aligned on the same goal: to make a huge company.

Ah! Ok that makes a lot of sense :-)

It's possible the founders took out a "small" chunk during their large funding round, but it is equally possible they didn't. Taking out a huge amount (>10% of your equity) would be bad signaling and investors wouldn't go for it, but a founder turning a few percent of their equity into cash to cover life expenses isn't a big deal. Sometimes founders will have gone years with little or no salary so recouping some of that is very understandable to the investors. Still though a lot of founders are what I'd consider irrational and don't want to sell any stock because of their belief in the company. I know multiple instances of founders turning down massive paydays during a secondary round because of course the stock is going to be worth so much more later (and as of yet none of them are wrong -- though I imagine in the future some will be).

The founders and employees didn't get anything from their stock after Homejoy's sale. I highly doubt the founders ended up being "rich" from Homejoy.

Maybe they are "rich" now that they are a YC partner. I don't know. But I don't know how those things would be related. Startups have a lot of luck. Just because a startup fails doesn't mean the founders weren't really good at it. It doesn't mean they aren't exceptional investors or startup advisors. It just means their startup didn't succeed.

The reason websites like the OP are extremely stupid is because they distill down a startups failure to a bunch of points that if flipped around could be reasons for success for another startup. I worked for a company that was a direct competitor to many of these companies and their "Fatal Flaws" worked just fine for us. Yes, there are obviously better and worse decisions a startup can make, but everything is so context specific these general rules are worthless.

Fantastic response, thanks a lot!

Any HN commentary about Homejoy is not complete without this cringe-inducing job post on Christmas Eve by the founder: https://news.ycombinator.com/item?id=8794956

For everyone that has ever been a part of something exciting, that's not cringe inducing at all. I feel sorry for anyone who never got to experience a driven team putting all they have on the line. These are the times I felt most alive.

How does Über, Deliveroo, etc work? They pretend spending in marketing but actually subsidizes market acquisition with VC money (for instance Deliveroo pays the delivery guy at least 7.5€, but charges the customer 2.5€: it just doesn't add up), with the assumption that they can form an actual monopoly and eventually reimburse investors by ripping off workers and customers in the mid term.

The only upside I see is that they actually spend money from quantitative easing and market bubbles in the real economy. They're a symptom of a sick financial system and a sick economy.

This business model doesn't belong to companies, but free association of workers. They all (Über included) should be closed down, the sooner the better.

I am not a big fan of Deliveroo, Foodera, etc. either, but from what I've seen reported they are not too bad when it comes to treating their drivers (at least here in Berlin). The restaurants/kitchens also seem to profit from it and a lot of new places opened up specifically with those services in mind.

AFAIK your calculation also isn't true. Deliveroo pays it drivers 7.5€/__hour__ + 1€/delivery (or something like that), so as long as they do enough deliveries/hour, that should work out. I'm still more concerned about the absurd marketing battle, but in my personal perception it slowed down quite a lot the last months in Berlin.

In Paris they just dropped the hourly wage. No delivery, no money. Once they're ahead of competition, they screw their "partners".

wow that's appalling.

to add to this, in Australia they bypass our award wages for couriers by making their workers self-employed.

really, the only innovation they are doing is the exploitation of labour laws.

It does add up because Deliveroo gets more than just the delivery fee, they charge a commission on the sale.

The following passage explains it better:

"The components of Deliveroo’s revenue come from users in the form of delivery fees at £2.50 and commission fees from restaurants. The commission they charge is generally 10% of the order, with the average order being around £30. Therefore a typical order will generate around £5.50 and within an hour Deliveroo can typically generate around £16.50 per driver."

Source: https://thebusinessoftech.wordpress.com/2016/05/08/deliveroo...

My startup was in this space (Not the UK though) -- if you have any questions feel free to drop me a line

OT but maybe the right place to ask: How can I as a marketplace avoid disintermediation where users try to deal directly with each other after a short while (eg Homejoy).

Put fines for the suppliers in the contract that they have to pay for each violation of contract, ban them from the platform and be public about it. There should also be rules about not handing out direct contact info to the client, only marketplace-supplied business cards.

They will try to be clever about it, but sooner or later it will come out. Often the users don't even they did it and accidentally blow their cover. You can also make test appointments with someone who will report back to you about attempted rule violations, once you have suspicions.

You can also counteract the leakage by setting up analytics about "unusual" canceling customers, which you will then manually contact (which should be part of your anti-churn strategy anyway). E.g. it could be somewhat suspicious that customers stop booking on your platform after they booked a specific supplier once. This is actually a pretty good use-case for ML.

On the more "positive" side, you can try to build a hard to replicate tech solution that helps their workflow but is also so deeply ingrained that circumventing the system becomes more of a hassle.

You will never get to 0% leakage, but there are a few techniques to get close.

Provide a platform so that people want to use it to bill and communicate with their customers rather than a yellow pages so people can find them. Then they won't leave.

Provide a tremendous amount of value through the product that will lock one (or both sides) into your platform. Example, credit card merchants provide buyers with fraud protection, improve cash flow, rewards points.

Alternately, create a marketplace that is focused on high margin, episodic transactions where customers don't feel the need to dis-intermediate. Airbnb is a good example.

HelloParking - this sounds like just a failed startup.

http://SpotHero.com has done this and pivoted towards working more directly with parking garages.

They're doing quite well as of late - https://www.crunchbase.com/organization/spothero

Funny that it mentions TaskRabbit, which hasn't failed (I know because I work there). We pivoted a long time ago sure but that's very different from the fate of the other companies..and the title of the article.

Indeed, if anything they have become more Uber like after the pivot - just click here to have your furniture assembled rather than an auction site.

Is there a list of Uber for X that are still around?

Example: Lyft is like Uber for car rides.

well Uber copied Lyft that in turn had copied Sidecar (that even had a patent)

You can even make a strong case that what fundamentaly differentiates the three outcomes it's the CEO.

http://fortune.com/2016/03/16/sidecar-uber-innovation/

LetGo is Uber for Craigslist, and it's still around.

I'm taking "Uber for X" to mean sharing, not the gig economy.

There are lots but who knows which of them are actually sustainable. Check again in 5 years.

It remains to be seen if Uber itself eventually ends up on that list.

well I guess uber for home cleaning = HomeJoy failed. But feel free to disagree.

I know your comment is more of a joke, but Uber has already seen enough success to never end up on this kind of list.

They might be in a different list along with Pets.com or Myspace though.

Depends on how you measure success. Uber has yet to make a profit and they depend on VC capital to subsidize every ride. It hasn't yet established itself as a legitimate business model.

In my opinion, Uber has a legitimate software model, but it's business is not sustainable. The software, and ease of use is their selling point outside of fake deflated prices. They need to sell it to cab companies, and be the OS that runs them.

They're waiting for driverless cars to become a thing...so they can fire all of their non-employees and reap huge profits. They're playing the long game.

Full driverless cars that can go down your high street with no one in the vehicle are a way off. Uber's cash will last about 2 years at the present rate.

What if Waymo releases driverless cars before Uber? Then Uber will be the guy who brought a knife to a gun fight.

"Uber for X" is a way of describing companies that facilitate gigs, like a workforce marketplace, I think. Freelancer.com would count(not as a failed example, but an example).

not mentioned is washio, which was one of the few uber-for-x startups I was surprised to see fail. solved a real problem.

I presume they were selling a $10 service for $5 and ran out of VC money.

possible, though I don't think that was it. their prices were more than 2x the cost of the low end of wash-and-fold services, maybe a little below the high end. their infrastructure shouldn't have cost much. maybe they hired too many people too quickly. my own guess is that growth stagnated.

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