JustFab Raises Another $40M Led By Hong Kong’s Shining Capital
techcrunch.com
techcrunch.com
"Why can a scam company raise $40 Million Series C + $76 Million Series B?"
1021 points by wenxun 3 days ago | flag | 456 comments
https://news.ycombinator.com/item?id=6455391
Here's a particularly good subthread. It would be at the top, but the root comment was controversial:
https://news.ycombinator.com/item?id=6455391
The thread hit the top spot of front page for a while, then somehow it was silently taken down, and my HN account "wenxun" was soft-banned.
If it was taken down at some point, it was corrected soon after. (I only know there are many mods, and not who they are...other than pg.)
I've only posted twice in threads about this company, with my reply to wenxun making it three. All three comments were in pretty different contexts.
... his credibility level on this topic is over 9000.
So, this is patently false assertion.
_______________
Betfair's business is illegal in the United States[1]
Betfair faces millions in fines after content ruled illegal [2]
[0] It is activity tolerated (cynically) for its ability to raise taxes, and even then only in small doses.
But I believe if you do some google research, there are other concerns.[3] These include things like time-delayed feeds to support real time betting (and fraudulent front running) as well as a variety of your typical deceptive TOS pseudo-scams (bonus schemes, etc).
[1] http://www.businessinsider.com/companies/betfair
[2] http://www.smh.com.au/articles/2003/04/01/1048962760523.html
[3] https://en.wikipedia.org/wiki/Betfair#In-play_betting_contro...
Which is to say, relatively low-damage varieties of evil.
It's a whole different ball game when you're using said patterns to directly extract money from people's bank accounts.
It's a little like calling a bank robbery "shoplifting". I feel like extremely egregious violations of basic morals and ethics shouldn't be described with the same word we use to describe garden variety sketchy practices.
Companies are going to continue to do it because they aren't likely to lose. Best we can do is name and shame everyone involved.
We already know "people don't read online" (anywhere?), so adding words outside of the experience itself justifying their actions isn't just a "dark pattern," it's much worse.
I think dignifying it with the name "dark pattern" makes it too easy to dismiss as "oh, one of those silly things people do to get more signups" versus "Uh, this iOS app just maxed out my credit card because I let my 5 year old play PAY-FOR-POINTS 2.0 FREE EDITION."
Wikipedia:
> In criminal law, fraud is intentional deception made for personal gain or to damage another individual
law.com:
> the intentional use of deceit, a trick or some dishonest means to deprive another of his/her/its money, property or a legal right
legal-dictionary.thefreedictionary.com
> A false representation of a matter of fact—whether by words or by conduct, by false or misleading allegations, or by concealment of what should have been disclosed—that deceives and is intended to deceive another so that the individual will act upon it to her or his legal injury.
fbi.gov, justice.gov:
> [Ponzi Schemes, Fake Lotteries, and Pump&Dump Schemes are typical examples of fraud]
I doubt that one of the above could save themselves from the wrath of the justice department by burying a disclaimer in a heap of legalese served up alongside their bait (otherwise they would be doing it en masse). So the question is what fundamentally separates these from smaller-denomination uses of dark patterns. I'd love for someone who knows what they're talking about to weigh in.
I love how this is the sales pitch to investors.[1] Meanwhile, the sales pitch to consumers is basically do everything possible to <hide> this. see, eg: Previous HN https://news.ycombinator.com/item?id=6455391
_________
[1] See linked article, in the Crunchbase Section.
https://news.ycombinator.com/item?id=6455391
It has >1000 upvotes and >450 comments. It was on the front page about 11am and then by noon had disappeared (I stopped looking after about 10 pages).
Honestly, I'd still like an answer as to why. I know pages without links degrade quicker but this isn't what happened here. Nothing drops from top of the front page to page 11+ that quickly.
This company is a scam and it concerns me greatly that this may have been taken down, which raises the obvious question of why. User jdh (Josh Hannah of Matrix Partners), an investor in JustFab, tried defending the company but copped a (deserved) beating from the HN masses to the deceptive (arguably fraudulent) tactics of the modern-day "shoe of the month" club that is JustFab.
As another user mentioned, TechCrunch covered the class auction lawsuit (from 2011?) on the same day.
TechCrunch wrote a whole post on the shady checkout practices on Friday: http://techcrunch.com/2013/09/27/not-so-vip/
It hit #3 then immediately dissappeared.
https://news.ycombinator.com/item?id=6455391
It hit the top spot of front page for a while, then was silently taken down, and my HN account "wenxun" was soft-banned.
Their investor, in a comment in a prior thread here at HN, claimed JustFab could offer such amazing deals(!) by foregoing advertising and new customer acquisition costs. But, I bet that's a tremendous lie. I bet they have to spend vastly more on marketing than most shoe stores, because they have to trick an ever growing pool of people into signing on for their bullshit VIP service or their growth will halt. Much like Groupon has tremendous customer acquisition costs, and a very high touch sales channel, JustFab is gonna have to figure out how to keep the funnel working, because old customers aren't going to be a thing they get to have.
I would give good odds on the following:
1. Their customer retention numbers are misrepresented. Probably not blatantly false, but certainly misleading by omission. Their funnel is so misleading as to make it impossible they are actually making people happy with their subscription service.
2. Their profit numbers required juggling of expenses to make it look good. As with Groupon, they're probably trying to pass off ongoing marketing expenses as one-time expenses. This would be a lie. But, it would not be the first time a venture-backed company lied.
3. Their investors are expecting a bigger fool to come along to relieve them of their stake long before the house of cards comes crashing down. They are probably right. It will probably be big, dumb, and slow money that is trying to look smart and agile. Unfortunately, big, dumb, and slow money is often money that most effects less wealthy folks.
Needless to say, I am not impressed with this company, its tactics, or its investors. It is a toxic culture that accepts this kind of shady dealings as "business as usual". This kind of thing shouldn't keep popping up every few months...investors should be ashamed of themselves for taking part in this. If the world were sane and just, they'd all lose their money, and a bit of their credibility. But, the world is not always sane or just. They'll probably make out like the bandits they are, just as the early investors in and founders of Groupon made a killing (while the last round of investors lost a fortune). Dishonesty pays off if the lie is big enough, it seems.
TL;DR JustFab is scam
JustFab took Time Life's business model and applied it to shoes.
Yes people complain. http://www.consumeraffairs.com/misc/timelife.html
Yes there is a life lesson in there about reading the Terms of Service.
No, I don't think they are illegal.
No, I don't think they are the scum of the earth.
What do you want VC's to do? Not invest in profitable companies that operate with in the law?
At the same time most of Hacker News cheers on Uber which operated illegally, and was losing money.
What kinds of companies do you expect VC's to throw Millions at? Cause it seems like the ones that are legal, profitable, and "scummy" are good investments for a while.. Zynga springs to mind. Google... Quite a few people don't like PayPal, put them on the list...
Mostly though the more you talk about JustFab the more press they will get. How do you think TechCrunch picks stories? Based on what gets read. So the more you vote them up the more they will write about them, the more they write about them the more money they will raise.
Maybe I should piss off the HackerNews crowd so my company will get more press....