YC Demo Day Session 1
techcrunch.com
techcrunch.com
I don't understand this one - with a world focused on security and import taxes, how does this work out?
No kidding it's a $16 billion market in China alone, that's why people risk on getting EXECUTED to be in the smuggling business.
Edit: this is from their site, they call themselves the "only peer-to-peer platform that gives you access to the global market."
I actually bursted out laughing when I read it, I should start a money laundering service and call it the "only secure platform that unlocks the full potential of your earnings"
1. YC should fund riskier startups
2. Many good ideas sound bad at first.
Funding a criminal smuggling operation seems to fit both criteria.
Free idea for the next batch (or pivot!): often non-US citizens will be willing to work for lower wages in difficult jobs than US citizens. Why not match them up with people who are already driving across the US border, who can help get them in the country?
Here's the link: http://paulgraham.com/swan.html
Some laws need to catch up to the modern world, but thinking that they are all in place to enrich certain people is really far fetched. (I do think that all laws that were passed were voted in place by legislators who are self-serving...but that doesn't meant they dont have a good reason to exist.)
Not to say there aren't incumbents who feel threatened by the new world and will latch onto archaic laws to protect their empires...any good idea will have this hurdle, but the laws themselves almost always do serve a function that is in society's best interest.
Not sure who's being undemocratic here.
Also, whenever someone uses the word "sheeple" in their argument they lose all credibilities in my eyes.
Yes, all import tax laws exist with the sole reason of funneling money to specific group of evil people, this is absolutely true regardless of circumstance or the country or product category. Things like local market production and foreign trade balance and a gazillion other factors never play a role.
/sarcasm.
Even if the law is out of bad intention, the best way to get it changed is to break it right? Be..because JUSTICES TRIUMPHS ALL IN THE END RIGHT?
/facepalm
Personally I would never use Backpack after reading about people who unknowingly took a package to another country that had drugs and spent years in jail despite their ignorance.
However, if somehow there is a way to do this legally and still capitalize off arbitrage. For example, maybe brands have different MAP pricing in different countries, and even with paying taxes and securing the items, there is a gray market opportunity to exploit.
The simple reality is that this is done on a daily basis already, so finding a way to do it at scale in a legal way has massive potential.
If I was YC, I would consider investing a few bucks to try to tackle this problem knowing that there are hurdles to overcome and some creativity required to make it work.
Travelers won't be able to do this since they won't know the local language, laws and customs, and they won't be licensed importers, and they will be scammed by customs officials in poor countries, and their goods will eventually be forfeited if they don't have enough money to pay the/arbitrary taxes and accrue fees while they decide whether to abandon the merchandise or not.
So yes, the process of importing stuff into many places is shitty and in need of disruption. "Don't get caught, mule" is not that disruption. Customs agents everywhere are united on that and actively looking for people smuggling drugs, animals, produce, electronics, luxury goods and anything else.
Price discrepancies when you factor in transport and taxes are still going to exist and some are going to be opportunities to make small amounts of money, not big amounts.
First of all, the math used in the example only makes sense if the individual bringing the laptop doesn't pay the taxes forit. At least in Brazil, this is illegal. Even if you are bringing a laptop for personal use, you must pay some high taxes (~50%). Cabe na mala says in its pitch that all travelers pay the according taxes.
But the difference between USA and Brazil prices are so big that even with the taxes, it makes sense. The cost comes down from mainly two factors: distribution and price strategy from the manufactors. For distribution, a traveler in need of cash might be very cheap to carry a laptop back home. And as price strategy, Sony, Apple and others often position their products as a more "premium" product in Brazil than in USA. So in Brazil you are paying an extra for the brand, for the privilege, for the luxury of having an iPhone or a PS4.
EDIT: For clarifying, i used "we" in the sense of our startup community, as a brazilian or seomthing like that. I am in no way related to this startup, I don't even know the founders. Just listened a pitch from them.
Here are a few more things that dont fall into the bucket:
from http://www.techetron.com/11310/backpack-a-new-startup-in-tow...
Ever dreamed owning an original Bob Dylan autographed poster which you see auctioned at eBay? Ever gasped why eBay or Amazon products don’t get shipped to your country? Ever wondered how cool it would have been if you could hold first edition Harry Potter books right after they got published? What about having original jersey of your most favorite superstar?
This will be a short-lived company because if you have a significant volume of stuff you don't declare you will either be taxed on the spot or arrested. If you have a discrete amount of stuff then you'd need eg, 5 or 6 people to fulfill an order for 10 iphones, and if 1 of them eats a $1000 customs bill the entire order approaches worthless.
- "The way airports works in these destinations" - Customs officials don't stop and question everybody ; in most cases - if you are dressed well and speak respectfully , they let you go.
- I have heard Mumbai and Bangalore Customs officials could be unyielding at times ; they stick to the rule book and levy all taxes if caught . Not the case for other airports in India ;
- I m not sure about airports in Bangladesh ; Thailand ; Nepal ; Sri Lanka ; Malaysia and Indonesia - I guess the founders do have a certain insight into how these airports work.
It may break US exporting laws and embargos, or international laws too. It's almost certain the founders and everyone near them is going to end up arrested and probably imprisoned like any other smuggling organization.
These guys used ziplines instead of mules to move untaxed iPhones and iPads into Hong Kong, till the police shut them down.
http://www.intomobile.com/2011/08/09/chinese-ninjas-use-cros...
Here's some more people specifically dodging import taxes and then being arrested:
http://www.cnet.com/news/chinese-children-used-to-smuggle-ip...!
http://www.intomobile.com/2013/08/14/man-caught-smuggling-ip...
http://www.phonearena.com/news/Bad-ideas-lady-caught-smuggli...
This stuff is really black and white illegal.
And for your last point, no, it's not entirely legal without paying a tax in all countries. Please research your own country's custom laws before making a statement like that.
Ignoring the tax issue for a moment, I would expect the arbitrage to fluctuate with shipping costs and currency valuations, which is really interesting.
But unfortunately, it's really difficult to ignore the tax issue. In particular, China and the United States are sticklers for this, and getting caught smuggling a high priced item (I forget the threshold) won't be viewed as innocent arbitrage by customs.
This model would work equally well for drugs and human trafficking, so I would assume that most governments will/should have a problem with this form of tariff evasion.
Note: I'm not trying to imply that the founders have anything but the best intentions here. I'm simply pointing out that the very existence of a viable distribution network such as this might be of concern for authorities.
Even with the risks and paying all applicable duties, there should be some products where this idea can help to cap the maximum-possible regional differential pricing schemes; the invisible hand made visible.
Pretty much like Airbnb -- do it till someone notices and hope that you're big enough by then to fight back.
What's the complexity? Airports and felony charges instead of evictions and injunctions?
Municipality tax relevance is a far cry from international laws that are already in place.
Or... people could comply with the current municipal laws and not run commercial enterprises in non-commercially-zoned areas, or even just respect whatever HOA or landlord agreements they are party to.
HOA and landlord contractual agreements are not the same as municipal laws and are frivolous to the conversation about international import laws. Mentioning them makes it seem like you're scraping for excuses to attack air bnb.
1. "Is my startup idea legal?" https://news.ycombinator.com/item?id=7167200
2. "Is it possible to 'shop without borders'? https://news.ycombinator.com/item?id=7166333
Interesting discussion ensued. Read more about my tiny non-existent precursor to Backpack :) I am so intrigued by the fact that they actually went ahead, launched and executed! Hats off. I never progressed beyond just thinking about it.
In the last two years I have also seen facebook groups pop up to expand the network beyond family and friends so its incredibly smart of them to formalize the process and make it more accessible to everyone.
While it's technically breaking the law, its no more so than AirBnb and Uber/Lyft. And the demand is just as high if not more.
That's is absolutely not correct. Please do not compare individual countries' custom law to your local city's taxi law or hotel code. Lying on custom declaration form is an imprisonable offense in most countries.
When it's an informal practice it works because it's hard to prove and there is no paper trail. But when it's a real company doing the service all the customers data has a paper trail to it with financial records for each transaction, involving the monetary amount paid by the customer, received by the carrier, earned by the company, etc. It's literally a prosecutor's wet dream.
At least in China, these kind of organized smuggling rings do exist, but they exist very much underground with no paper trail, because if caught, the ring leaders (founders of Backpack in this case) would be subject to from prison terms to execution depends on the amount of tax they evaded.
Also, a lot of airports ask you directly if you are carrying something as a favor for someone else; so "backpack" has to tell its users to lie about it, otherwise the item gets confiscated.
- With respect to import taxes : You wont be stopped by the customs unless you are carrying a crazy amount of electronics ; Like if you carry a couple of laptops - and justify it as one for personal and one for work ; they let you go. With respect to this service , I guess its upto you to be cautious & decide how much to carry.
- And there are a lot of Duty free airports; And the purchase made at Duty free airports are mostly overlooked at the destination airport.
Transporting a MacBook, Xbox, PS4, etc. from the United States back to a South East Asian country (as you suggest), is illegal. For the casual traveler there probably isn't a great risk, since they can always claim it was an accident. But for the recurrent backpacker, the risks are potentially higher.
But thats not the case in developing countries. Products priced at an affordable cost in USA , could be insanely expensive in developing countries.
1. Are these due to local taxes in Germany ? 2. Is this price difference common in other parts of Europe as well ?
i think its mostly taxes, because when i add the 19% VAT that i would have to repay when entering germany with a us bought laptop (i think laptops are toll free, not sure ... but some electronic devices have tolls) im at ~$3000
I don't see why Backpack would be a "smuggling ring" at that point.
Casual observation, none of the above describe themselves as "X for Y".
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Uber for massage. Currently in LA operating for a year, expanding across the country over the next few months.
You can also be fined, arrested and imprisoned for smuggling. This is what you can expect if you have 4 laptops and 3 iphones in addition to your own and you didn't declare anything to customs.
Foreigners have a higher chance of talking their way out of it as long as there's some plausible reason why you have so much "personal stuff".
Chances are fantastic you'll go to prison if they find you work for a smuggling ring, like if your photo is on backpackbang.com as one of their mules.
Edit: actually if you don't have yourself/friends/family in poor countries so you're aware of the local prices you could be completely unaware of this stuff and the tax/legal obligations for importing them.
I m only curious to know about the "legalities" involved ; I m pretty sure this would have been addressed in the pitch. I was only looking for an answer that said : Here are the countries and Here is a list of things you can carry to those destinations without breaking any law.
Or if this fell into the "break first, fix later" philosophy of other shared economy startups as well.
The consequences will vary by country although the forms themselves are very uniform in my experience.
Every single item has some tax on it, however things like your clothes and personal possessions may be excluded at the customs' official's discretion.
Lying on those forms or omitting things you are required to declare is illegal and punishable with prison.
http://www.criminaldefenselawyer.com/crime-penalties/federal...
I buy something on amazon, they send it to AeroCasilla's warehouse in Miami, AeroCasilla bring it to Costa Rica and their customs and text me when I can pick it up.
I use non-YC companies on https://news.ycombinator.com/show, ProductHunt, and AngelList for comparison. In comparison the quality signal of recent YC companies (the ones not mentioned above and some others) is not that high* compared to Non YC companies. I looked at the profile of the founders, their twitter and github pages and most importantly the product; nothing stands out so much.
*I am not saying the YC companies are bad, I am just saying they seem to be of the same quality as what is out there. I would expect recent YC companies to have a higher quality signal than what is out there.
Also, you are over estimating your ability to detect the quality of a startup from public signals. I don't think it is that easy to identify which company will win on a specific sector based on profile of the founders, their twitter, github pages and the product.
If YC companies were such an obvious choice for an acceleration, there would be a lot more of YCs around.
I guess the top voted HN product/startup either don't choose YC or may be something like that. huh, can't say anything.
YC claim that they put money on founder rather then product,i am sure they have seen something certainly.
Here are two new ideas for the next round at ycombinator:
Wind me up - natural herbs and mushrooms for expanding your mind brought to you in an anonymous brown package at the confort of your home. Not sure where you are? Don't worry - our iPhone app is location aware.
Smackpack - having trouble with your neighbours? We send two guys to talk with them about the noise they made last night or collect any debt they may have incurred. Use our welldesigned iPhone app with in-app purchases and referral programmes.
And what about tax evasion? You still pay taxes on the items that are bought. The point is getting access to items not normally available in other countries for international shipping. Again, any proof of tax evasion? I don't think so.
Take your negative comments to Reddit or 4chan where you can mindlessly share mindless opinions with no merit. This isn't the place for that. If you want to have a productive discussion, offer some proof to back up your wild claims.
But don't be naive about the message industry - in the big tabloid newspapers which are by numbers the biggest newspapers - the section with message advertisement is huge. It takes a big industry with plenty of money to buy those ads. While you can probably get a kosher message at some of the places - sleeze is what creates the money.
For an electronic version of these tabloid ads to be profitable and have airbnb-style growth they would have to tap into that market regardless of them starting off with a more polished front.
They have also been criticized, sued, and investigated for anti-trust practices. In fairness, I don't think any of these challenges have been successful (though some have been settled and the terms are not public).
For bonus fireworks, do it for textbooks.