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E-scooter company goes bust after spending big on Facebook ads

187 points by Nemant 7y ago

xenospn 7y ago
I just can't understand how someone can be so irresponsible. They knew exactly what their ad spend was and how many pre-orders they had in the pipeline. Since they only had several hundred pre-orders, they could have easily set that money aside for refunds, but they didn't.
- chillacy 7y ago
  Moreso, they should know their conversion rate and cost per click, and could adjust their spend at any moment. Sounds like they're just trying to pass the blame.
- greenyoda 7y ago
  If they took customers' money knowing that they could neither deliver the product nor refund the money, wouldn't that be fraud?
  - deleted 7y ago
    [deleted]
  - danimal88 7y ago
    Hard to say. One way is that they say got 100K in sales on 10K in ads. Then they said, hm, lets take 50K from sales and put it into more ads so we can get 500K in sales and the remaining 40K went to tooling/production. When that 50K ad buy didn't really pan out, now they have 40K towards fulfilment which probably doesn't meet their suppliers MOQ if it even covered the NRE (non recurring engineering) and tooling. Its more or less the same problem that all companies encounter when they do preorders/crowdfunding/etc. There is a solution of course - you need to raise enough money (or commit, in the case of Tile founder who should have had enough personal capital to make this work) to never be in a financial position that you couldn't simply return all your customers money in the event that the product or business didn't make sense. As long as you can gaurentee that you hold onto enough money for the returns, you are operating responsibly. If you take 100% of the money you get from sales and commit it, you cant take back ad spend or tooling/engineering spend. Is it fraudulent - I'm not sure. Is it irresponsible - most definitely.
- mattlondon 7y ago
  As others have pointed out it is obvious at the outset what ads cost, and you can set budgets. None of this should have come as a surprise or a "opps we spend 150K in one day" kinda thing. I am assuming their line of thought was: 1 - make some sales 2 - spend income from step 1 on more ads to drive traffic to site 3 - go to 1 Kinda like they put themselves into their own recursive ad-pyramid-scheme or something. Condolences for the customers who go burnt by this.
  - braythwayt 7y ago
    Another possibility is that their reasoning was: 1. Raise some money. 2. Spend it on sales, even if their COS exceeds the margin on each scooter. 3. Rack up some "engagement" and "traction." 4. Raise another round. That's basically what WeWork was doing: Spend so much on commissions that they were losing money acquiring tenants, but raise money based on various BS "metrics."
  - nugget 7y ago
    Digital advertising can be as addictive (and dangerous) as heroin. You give FB some money and customers start to show up - it feels like you suddenly have a real business. If your analytics are off or you don’t even have the right KPIs to start with, you can kill a business very fast, even while the intoxication of traffic distracts an inexperienced team until the very end.
dominotw 7y ago
took me a second to realize company's name was unicorn.
- cryptozeus 7y ago
  Thanks for this, I was looking for the name in the article. They clearly had different idea about the company.
davidweatherall 7y ago
It seems they "only" had $150,000 in funding, but as they were basically white labelling the Segway ES2[1] I'm surprised they didn't just hold onto their sales revenue to purchase the product... Interestingly enough, about 2 clicks around their site and you realise they didn't even put the effort into setting up their Shopify site correctly... - https://unicornrides.com/collections/all https://unicornrides.com/collections/all [1] - https://unicornrides.com/pages/unicorn-shipping-update https://unicornrides.com/pages/unicorn-shipping-update
- Someone1234 7y ago
  Playing devil's advocate here but the Shopify issue is because they removed the only products they sold on Shopify (that's why it 404s at /products/unicorn-scooter-product), that results in the collection being empty and that page showing up. So their Shopify was likely fine until the business went under. Then they quite correctly stopped letting people make additional orders.
  - thenickevans 7y ago
    This is correct
- EdwardDiego 7y ago
  Ah, the good ol' default "all" Shopify collection.
- mikestew 7y ago
  I’d rather they white-label the Segway than build the monstrosity in the video. Though the Ninebot won’t let you tote your three year old on it like in the video. (WTF? I know people do it, but advertise it as a feature? I ride a Boosted Rev to work every day, and my advice is: no one under 13 admitted, at all.) Others in this thread are saying it was $700? Why not buy the Ninebot for $100 less? Or were the shipping models really going to have custom deck as in the video?
  - giarc 7y ago
playing_colours 7y ago
Hyped industry, sort of hyped name, wasting money on FB ads. It seems like they were “hacking” their way to quick success instead of focusing on delivering a proper product - exactly like Paul Graham described in his recent essay http://www.paulgraham.com/lesson.html http://www.paulgraham.com/lesson.html
- vkou 7y ago
  > It seems like they were “hacking” their way to quick success instead of focusing on delivering a proper product Generally - not specifically - speaking, in a world where your competitors can throw away millions of VC dollars into hacking their way to quick success and market share, this is a valid strategy. It may, in fact be the optimal strategy. Of course, if you don't have said millions of VC dollars to throw into that game, then you're not going to meet much success by trying to play it.
  - mtgx 7y ago
    It might be better using other advertising channels if your competitors are pissing away VC money drastically raising bids and making it virtually impossible for any "proper" business to do well in digital advertising utilizing the same channels. You can notice this even within sub-segments of Google Ads and Facebook Ads where there is a propensity for advertisers to just throw millions at the channel without expecting to be profitable right away (or ever). But the good news is that if some channels are over-saturated with "free money", then chances are there are other channels are that undersaturated.
    - manigandham 7y ago
      That's assuming those other channels aren't also saturated by the same companies. Organizations spending millions aren't going to leave a big opening in another medium that's able to reach the same consumers.
llamataboot 7y ago
Snarky comment about LLCs being able to shirk responsibility by just going bankrupt... But really this seems like a basic class-action fraud suit on what they hoped would be a bootstrapped ponzi-scheme. (Spend enough, fast enough to get enough customers to be able to actually deliver your product) but not keeping at least enough money in reserve to make minimum refunds is a major liability.
- qeternity 7y ago
  An LLC does not protect anyone from fraud...
  - aeternum 7y ago
    Would be very difficult to get this to qualify as fraud. Maybe if they used the funds for their uncle's advertising company. There have been many startups that have wasted money on things that make less sense than advertising before going under.
bransonf 7y ago
If you give $700 to a company that promises to deliver a scooter, and they spend that money on advertising, that’s fraud. They have no plausible argument that they didn’t know they couldn’t deliver or refund customers after they started spending pre-order funds. I hope customers get successful chargebacks and there’s a class action lawsuit. This wasn’t a crowdfunding campaign. Consumers were lied to, and the law should make clear that this is unacceptable business practice.
- Someone1234 7y ago
  A class action lawsuit against who? You cannot sue a company that no longer exists. It is unlikely consumers would be able to defeat limited liability, particularly with the argument that "the company should have allocated resources differently."
  - richardwhiuk 7y ago
    If you could prove deliberate fraud, which seems unlikely, then you could probably pierce the limited liability shield. Seems unlikely though.
    - Enginerrrd 7y ago
      It might not be that unlikely... For example, it's possible they don't have the advertising invoices to back up the claim that that's where the money went. It is, however, very unlikely that anyone ever gets their money back.
    - paulddraper 7y ago
      Yes, LLC don't protect from many criminal charges such as fraud. It would indeed be difficult to prove this was deceptive and not just really poor, even idiotic, business planning.
      - kjs3 7y ago
        Indeed. Sadly, stupid isn't (usually) criminal.
mherdeg 7y ago
I have read people say that a key difference in entrepreneurship in the US versus European countries is that European company founders are much more likely to be held responsible for their companies' debts and are therefore much less likely to experiment with new businesses at the rapid pace we see in the US. Would that have been true here? If a German startup had raised $150k in venture capital and taken $250k in orders from consumers and shut down without sending any products to any customers, what would happen to the founder? Would he end up paying someone $250k--$400k out of pocket for a long time?
- newfangle 7y ago
  The founders of this company likely broke the law in the US
- smoe 7y ago
  Don't know about Germany but in Switzerland the managers are not personally liable for the debts of a company. Except the damage to the company/employees/clients can be be proven to be intentionally or negligently caused by a manager. For this, the they can be held liable with their entire private assets
- JanSt 7y ago
  (not a legal expert, no guarantees ;)) There are different forms of companies in Germany (GbR, UG, GmbH,...) some of which require personal liability and some which don't (to some degree). E.g. a GmbH is a limited-liability (at least 25k €). BUT the CEO has to act with diligence. Otherwise (e.g. acting with negligence) they are liable with all of their personal assets. In my non-expert eyes, the CEO of this company would be liable even under the shield of a GmbH.
- briandear 7y ago
  There's a Germany company, called Relocatly that took money from hundreds of people shipping household goods from Europe to the US -- they went insolvent, our goods were held in port by the actual shipping company and now we have to pay the shipping company despite having already paid Relocately. They took money for shipments even after they already knew they were insolvent. Now our original payments are trapped inside the insolvency account and the managers of the company? No consequences at all even though they took money for a service they knew they wouldn't be able to provide. Small anecdote, but the claim that "European company founders are much more likely to be held responsible for their companies' debt" is not true in my experience. If anyone is interested in reading some of the customer stories of Relocately: https://www.international-movers-reviews.com/company/relocately/ https://www.international-movers-reviews.com/company/relocat... My point isn't to complain about that specific company, but to provide a counterexample that the idea that European corporate governance isn't necessarily "better" at all. They scam and fraud just as readily as anyone else.
ravenstine 7y ago
[deleted]
- hkmurakami 7y ago
  This is not an on demand company. They were selling physical goods to consumers
julienfr112 7y ago
Is "But Facebook ate all my money" the new "But a dog ate by homework" ?
edw 7y ago
Assuming for a moment that there's no fraud with this company, this is a great example of how you can quickly go broke selling a popular product. If the payment terms, product delivery logistics pipeline, etc. are more protracted than your suppliers', you will get strangled by your accounts payable before your receivables can save you. This was the genius of Dell's built-to-order system: they had (have?) a negative working capital position. Of course it's also a great example of how you can, if you're not careful, light a pile of money on fire with performance ads. Please, people, please, test your advertising!
rpmcmurdo 7y ago
Just wait until the scooter companies and operators get nailed with an injury class action lawsuit. A good friend was seriously injured on a rental scooter, going 2-3 mph, catapulted onto her face, ended up with brain damage and multiple facial fractures requiring reconstructive surgery. A high school physics student could work out that tiny wheels combined with a high center of gravity is a bad combination.
- dcolkitt 7y ago
  The problem is lack of helmet. If the injured party wasn't wearing a helmet, and the scooter clearly stated that a helmet should be warn, the case will get thrown out. Everybody knows that nobody wears a helmet while riding scooter company. The manufacturers know, the ride-sharing services know, and the riders know. But if a helmet warning is clearly displayed, that gives the scooter company virtual legal immunity from injury lawsuits. Even if the scooter's unsafe with a helmet, the situation prevents any serious legal damages. Only a small minority of riders will actually wear the helmet, and the company can just settle with on an individual basis. This pool is too tiny to attract high-powered class action attorneys. The vast majority of riders, and therefore injuries, will be helmet wearing riders. Proving the counterfactual that they would have sustained the same injuries even with a helmet is very difficult. Head injuries by far are the highest damages, so again the pool of non-head injuries is too small to attract serious class-action attorneys.
  - alistairSH 7y ago
    No, the problem is scooters with small wheels that are easy to crash. The Dutch do fine riding bicycles without helmets. If scooters are in fact more dangerous than bicycles, we should probably just reevaluate their use in the first place.
  - henryfjordan 7y ago
    Bird puts out a lot of promotional material without people wearing helmets. They lobbied the CA government to change the law so that helmets are not required. They tried the lobby Oregon to change the same law there but were basically laughed out of the state. A good lawyer could argue that riders do not know they need to wear helmets on the scooters.
1290cc 7y ago
Chamath Palihapitiya talked about this problem in an interview from 2018. Many tech startups spend 0.40c of every VC dollar with FB/Google/Amazon. Here is the original interview: https://www.youtube.com/watch?v=RwRZtZQoLtQ https://www.youtube.com/watch?v=RwRZtZQoLtQ
- xamuel 7y ago
  Ironic considering most tech startups' exit plan is essentially to be acquired by FB/Google/Amazon. They are de facto R&D branches for FB/Google/Amazon with all the attendant risk and none of the benefits.
deleted 7y ago
[deleted]
readhn 7y ago
I find it interesting that the CEO - Nick Evans co-founded successful (?) start up Tile. https://www.linkedin.com/in/thenickevans https://www.linkedin.com/in/thenickevans From tile to scooters to blowing money on FB ads - seems like a bizarre path for an experienced (?) developer.
glofish 7y ago
I just don't understand people that shell out 700 for a non-existing product. What's the rush? What would they be possibly missing out? it is one thing to jumpstart a novel product for $25 but a scooter ... really?
- sjs18 7y ago
  There was no indication of this not existing when I ordered.
paulpauper 7y ago
Facebook ads are way too expensive and tend to not convert that well. There are stories of fake likes and fake clicks. If your growth strategy involves buying click ads, find another strategy or business idea. Groupon is another company that overpaid on Facebook ads to build its email list. Disney and other multinationals are the only companies that should buying such ad.
- SamBam 7y ago
  Who is generating the fake likes and fake clicks (even if anecdotally)? Facebook itself?
- giarc 7y ago
  This may be tinfoil hat territory but I'm convinced Facebook (as I can't see what someone else gets from fake clicks) produces fake clicks/likes. I had a startup and ran very targeted ads (gender, city, occupation). We were running small dollar amounts ($200-300 campaigns) and would get likes on our ads. The use would have a modest profile set up, usually a visible minority (which wasn't out of the ordinary for our target) but often weren't in target city and would never respond to any communication. I would message them (usually very shortly after they clicked like) and would never hear anything back. Why 'like' a Saas product offering ad if you have no intention of engaging with the maker? I also couldn't understand why they were shown the ad in the first place.
- Kiro 7y ago
  Facebook ads work amazing for me but maybe it's just my product (haven't tried any other channels).
- habosa 7y ago
  I have heard both sides, I think it depends on your industry. I know people who are blown away with how much ROI they get from Facebook ads. Others have the experience you mentioned.
robbiemitchell 7y ago
> payments for loans Yeah... that smells bad. There must be more to this story.
tanilama 7y ago
The title is super misleading. They have only 150k in funding. I wouldn't attribute their bankruptcy to Google or FB.
- toby- 7y ago
  The company's founder did state this in an email however: >The cost of "Facebook and Google ads, payments for loans, and other expenses" ate through the company's funding quicker than Mr Evans anticipated. >"A large proportion of the revenue went toward paying for Facebook ads to bring traffic to the site," the email says.
  - tanilama 7y ago
    What I meant this level of funding is not adequate for the company's operation, regardless of the planned ad spending. Yes they shouldn't spend on ads, like not at all. They should instead focus on raising more money to be serious.
MarketingJason 7y ago
Ouch - 150K in a seed funding round from Y Combinator
- blunte 7y ago
  This makes me wonder about Y Combinator. What this scooter company so new and innovative that it warranted investment? Isn't it one of dozens? Or is it that there's must too much VC money without enough places to put it...? More pessimistically, it's plausible that a lot of VC money gets spent on expenses that directly or indirectly benefit those VCs, so it's less about the viability of the startup and more about the money flow.
  - MarketingJason 7y ago
    After some research, it looks like they were a part of Y Combinator's Winter 2019 graduating class so I believe that seed round is a part of the package you get when accepted.
  - alexpetralia 7y ago
    It's possible that the goal of VC is _not necessarily_ to make the highest performing investments, but rather _convince_ prospective and existing LPs that the VC is making the highest performing investments. After all, the LPs pay the management fees. In order to do this, you need to sell a good story, and a good one to sell is one that is already established by social proof: "Look at these scooters taking over cities - don't you want to be part of it?"
  - wp381640 7y ago
    The CEO would have had the red carpet rolled out for him at YC because of his past even though Tile is a non-working capital sink
thrillgore 7y ago
They were even called Unicorn. That's just great.
shaneprrlt 7y ago
I feel horrible for the people who had to scrape together the $700 for a Christmas present for their kids, who won't be getting their scooter (like the person in the article). For most middle class people, that's a lot of money. I second the comments about successful chargebacks, because this will probably be ruining some kids Christmases out there otherwise. :(
- foolfoolz 7y ago
  this is a fabricated scenario. you could have bought a xiaomi scooter on amazon for $300 - $400 anytime this year. who would ever buy into some maybe-scooter kickstarter if they were low on cash? and who low on cash is buying $700 christmas presents?
  - wp381640 7y ago
    > this is a fabricated scenario. Not sure why you would jump to such a dismissive conclusion without at least doing some reading - media reporting has first-hand accounts from customers[0]: > “I am upset he basically robbed everyone of his customers and is closing without delivering any scooters,” Rebecca Buchholtz wrote in an email to The Verge. “This was my daughters Christmas gift and now I cannot get her any gift.” [0] https://www.theverge.com/2019/12/7/21000094/unicorn-electric-scooter-shut-down-refund-tile https://www.theverge.com/2019/12/7/21000094/unicorn-electric...
  - sjs18 7y ago
    Pal, it wasn’t a Kickstarter. And I liked what was being offered. Stop victim blaming.
  - shaneprrlt 7y ago
    If you think that's a "fabricated scenario" I suggest you get out more and gain some perspective on how people actually live.
- SubuSS 7y ago
  I am probably missing something here - but, - who is scraping together their life on one hand and buying $800 gifts? - if you're really doing the above, why would you take a gamble instead of buying something currently available? IOW as much as it is painful to read this, it seems pretty designed for an article rather than real world (am talking averages I guess). If it is real, that's the learning I'd take away more than someone defrauding their customers - which happens everyday :)
sct202 7y ago
The CEO of this company was the co-founder to Tile. I'm sure he could have paid out refunds if he tried to plan this out more responsibly.
mirekrusin 7y ago
Not everybody has the privilege to burn trucks of money like ie. Uber.
rco8786 7y ago
The fact that the company's name is "Unicorn" makes this seem like a much bigger deal than it is. The company raised just $150k. And it sucks that they screwed over their customers who paid, someone should be accountable here. But it's not like someone went and blew millions on ads only to realize it wasn't sustainable.
outside1234 7y ago
Oh the compound irony of a company LITERALLY NAMING THEMSELVES UNICORN coupled with someone actually being dumb enough to invest in said company, coupled with it failing.
franze 7y ago
Only run Fb and Google Ads if you have a proven (not hypothetical CLV) positive business case. They deplete ressources so fast without building a lasting owned channel...
shergill 7y ago
This is relevant: https://www.youtube.com/watch?v=NVVsdlHslfI&feature=youtu.be https://www.youtube.com/watch?v=NVVsdlHslfI&feature=youtu.be Silicon valley Ponzi scheme
acd 7y ago
I count at least three scooter companies in the capital. They are all startups funded by quick venture capital. Their scooters litter the street for blind people. They pollute the sound space of the street with battery charging sos sounds. Questionable. There is not much difference from one brand to another. The scooters last about 6 weeks until they need replacement. I question how good is this for the environment?
- zachkatz 7y ago
  Now do cars.
Havoc 7y ago
What? Surely go fund me style cash raises should go mostly towards the product and maybe a bit to salary
tomaszs 7y ago
This is exactly the case. You should spend as little on Facebook and Google Ads as possible. And spend the money on anything else.
invalidusernam3 7y ago
I don't understand how companies like this think they are going to make money? Electric scooters are a solved problem. When there are too many companies in the same market it becomes a game of who has the biggest bank account to spend on marketing. Clearly they didn't, and they lost the game.
SystemOut 7y ago
Supposedly this company was profitable in March. From https://techcrunch.com/2019/03/18/here-are-the-85-startups-that-launched-today-at-y-combinators-w19-demo-day-1/ https://techcrunch.com/2019/03/18/here-are-the-85-startups-t... "Unicorn rents scooters by the week or month and is already profitable" So what happened?
walrus01 7y ago
reddit.com/r/shittykickstarters
cletus 7y ago
Here's my take: the company needed to raise $X to deliver their $700 scooters. They had raised $Y where $Y < $X. Since the only way for Unicorn to raise money is by preselling scooters They had to sell more scooters. Word of mouth wasn't doing it so they tried advertising for customer acquisition. Nothing unusual here. So when they say the as we expensive what they realty mean is customer acquisition was really expensive. To put it another way conversions were really low. So they likely completely understood these costs. They may have been unrealistic. They may have been sold a bill of goods (as agencies are notorious for unrealistically optimistic CPA costs). They may have simply not budgeted enough or expected more organic sales. So they may want to blame this on expensive ads butt what they realty mean is they screwed up and underestimated customer acquisition costs.
- thenickevans 7y ago
  This is accurate.
deleted 7y ago
[deleted]
manigandham 7y ago
There seems to be two companies named Unicorn in the scooter business: The failed one: https://unicornrides.com/ https://unicornrides.com/ The other one: https://www.unicornscooters.com/ https://www.unicornscooters.com/
lanewinfield 7y ago
What's more insane about this is that they went broke after whitelabeling an off-the-shelf Ninebot/Segway ES2, that retails on Amazon for $480, $220 less than what Unicorn was offering. All I can see that they offer on top of the scooter is "UnicornCare," basically insurance for $1/day on top of the $700 price.
schnable 7y ago
What a waste of a good startup name.
- OrgNet 7y ago
  the iScoot is next
arbuge 7y ago
I think the cost of Facebook and Google ads blindsides many founders who take them for granted as a distribution channel when planning their startups, particularly founders who have no experience with them, or (even worse) founders who used them several years ago when they far cheaper and are unaware of how the landscape has since changed. You should assume they will simply not be available to you for planning purposes. Occasionally you might stumble across an untapped niche where it is still possible to run ads at a cost permitting reasonable ROI but in my experience that is now the exception rather than the rule. If you do find such a niche it is more likely to be on Google, since their keyword-based model permits such niches to theoretically exist, whereas Facebook is an all-out competition by all advertisers for the same newsfeed slots.
habosa 7y ago
They sold 350 scooters at $700 each. So just under $250k in sales. They decided, right before Christmas, that they would tell all those people their $700 has been thrown right in the trash. The founder of this company is the founder of Tile, a VC-backed company worth $XXX million that has raised $104M+. If this person had any morals he would cash out $250k of his shares in Tile and pay back the people who ordered his scooters. Hell give them half back for $125k. That is chump change to a successful SV founder. I know that legally he has no obligation, but how can he sleep at night? This wasn't "oh making hardware is way harder than we thought and we couldn't afford it" this was "well I figured if I couldn't sell a million of these I'd rather just give up so I spent all the money on ads". What a jerk. Merry Christmas from Silicon Valley.
- tomglynch 7y ago
  Yeah you're not wrong. What a jerk.
- reustle 7y ago
  Tile was a company that always rubbed me in a weird way, too. They spent an incredible amount of money on marketing, yet I never heard of anyone using them. For years. Seems it didn't work out for him this time.
- amirhirsch 7y ago
  Legally he does have an obligation. All the commenters suggesting that this behavior does not pierce the corporate veil are wrong (on the internet!) and assuming incorrect legal knowledge may be dangerous for the next founder who reads this thread and thinks their liability is limited when engaging in similar behavior. Selling a product with inadequate capitalization is a common basis for piercing the corporate veil.
- thenickevans 7y ago
  How do I sleep at night? For the last three weeks I've been waking up at about 2AM every night with anxiety running through my body. My life absolutely sucks right now and it will for a while. I absolutely would pay people back personally if I could. I'm working on a way to get refunds back to people. Things were not going in the right direction and we started moving forward with a more graceful exit that would have gotten scooters to our current customers, but it fell through and then we reached the point of no return. Basically my only job right now is to find a way to get returns back to people.
simbakhadder 7y ago
Ironic name of the company, comes off as a Onion article, sad that it's true
- sevencolors 7y ago
  Onion articles seem to write themselves these days
quantumfoam 7y ago
Corporation gets taken advantage by another corporation.
ohiovr 7y ago
A rotten offer will never sell no matter how many ads you buy. This thread says that the scooter is a whitelabeled product. The margin priced it out of the market. Most people comparison shop. What is really new to learn here that isn't common sense?
paggle 7y ago
There is a strict set of conditions that a Kickstarter donation should meet: 1. The product should require relatively large upfront costs such as design or tooling. If I'm ordering a pair of hand-knitted gloves there isn't much fixed cost so it should not be a Kickstarter. 2. The excess value of the product to the donor should be more than the expected loss if the delivery fails. 3. The product should be on the "bubble" of being produced so that the donor's contribution makes a material difference towards the product actually being produced. 4. The team should be qualified to deliver the specified product with the funds raised. Qualified teams can fail but unqualified teams will certainly fail. 5. The money should not be significantly impactful to the lifestyle of the donor. 6. The product’s market should be small enough that it will likely be produced in one “batch” with no opportunity to buy it on the open market afterwards with the execution risk removed. An example of such a product for me would be a display platform for one bottle of Pilot Iroshizuku fountain pen ink, made out of Japanese cypress wood (hinoki). The ink bottle is beautiful and I've always thought it should have a hinoki stand (just a thin board of wood with a small depression routed out of it). The product would need some CAD and CNC design work, but not too much, there is not that big of a market for it, and I would be happy to pay $100 for such a thing even though it should only cost $5-10 to produce. Let's say it sells for $30, I'd be expecting $70 of excess value so I could accept even a 50% likelihood of failure.
choukri060 7y ago
Whatsapp
aabbcc1241 7y ago
Why 'unicorn' companies don't appreciate the 'organic, non-fast foot, non-money-burning' way to do marketing? (e.g. word of mouth) Why are them so keen on using investors' money to bump up 'sales' as further investment into 'cash flow'? Why are their primary goal be money-making?
mrandish 7y ago
As a startup entrepreneur myself, I've bought into a few Kickstarter projects and I haven't gotten hosed yet. However, I think this is because I'm pretty cautious. I look into the track records of the people, assess the viability/difficulty of completing the project based on my experience and I tend to buy in quite late in the process. There have been a lot I've passed on due to the fundamental uncertainty of manufacturing offshore hardware. I just bookmark them and buy it from Amazon when it's actually shipping for real. Often it's not much more than the Kickstarter price (and sometimes it's less).

187 points by Nemant 7y ago

I just can't understand how someone can be so irresponsible. They knew exactly what their ad spend was and how many pre-orders they had in the pipeline. Since they only had several hundred pre-orders, they could have easily set that money aside for refunds, but they didn't.

chillacy 7y ago
Moreso, they should know their conversion rate and cost per click, and could adjust their spend at any moment. Sounds like they're just trying to pass the blame.
greenyoda 7y ago
If they took customers' money knowing that they could neither deliver the product nor refund the money, wouldn't that be fraud?
- deleted 7y ago
  [deleted]
- danimal88 7y ago
  Hard to say. One way is that they say got 100K in sales on 10K in ads. Then they said, hm, lets take 50K from sales and put it into more ads so we can get 500K in sales and the remaining 40K went to tooling/production. When that 50K ad buy didn't really pan out, now they have 40K towards fulfilment which probably doesn't meet their suppliers MOQ if it even covered the NRE (non recurring engineering) and tooling. Its more or less the same problem that all companies encounter when they do preorders/crowdfunding/etc. There is a solution of course - you need to raise enough money (or commit, in the case of Tile founder who should have had enough personal capital to make this work) to never be in a financial position that you couldn't simply return all your customers money in the event that the product or business didn't make sense. As long as you can gaurentee that you hold onto enough money for the returns, you are operating responsibly. If you take 100% of the money you get from sales and commit it, you cant take back ad spend or tooling/engineering spend. Is it fraudulent - I'm not sure. Is it irresponsible - most definitely.
mattlondon 7y ago
As others have pointed out it is obvious at the outset what ads cost, and you can set budgets. None of this should have come as a surprise or a "opps we spend 150K in one day" kinda thing. I am assuming their line of thought was: 1 - make some sales 2 - spend income from step 1 on more ads to drive traffic to site 3 - go to 1 Kinda like they put themselves into their own recursive ad-pyramid-scheme or something. Condolences for the customers who go burnt by this.
- braythwayt 7y ago
  Another possibility is that their reasoning was: 1. Raise some money. 2. Spend it on sales, even if their COS exceeds the margin on each scooter. 3. Rack up some "engagement" and "traction." 4. Raise another round. That's basically what WeWork was doing: Spend so much on commissions that they were losing money acquiring tenants, but raise money based on various BS "metrics."
- nugget 7y ago
  Digital advertising can be as addictive (and dangerous) as heroin. You give FB some money and customers start to show up - it feels like you suddenly have a real business. If your analytics are off or you don’t even have the right KPIs to start with, you can kill a business very fast, even while the intoxication of traffic distracts an inexperienced team until the very end.

dominotw 7y ago

took me a second to realize company's name was unicorn.

cryptozeus 7y ago
Thanks for this, I was looking for the name in the article. They clearly had different idea about the company.

davidweatherall 7y ago

It seems they "only" had $150,000 in funding, but as they were basically white labelling the Segway ES2[1] I'm surprised they didn't just hold onto their sales revenue to purchase the product... Interestingly enough, about 2 clicks around their site and you realise they didn't even put the effort into setting up their Shopify site correctly... - https://unicornrides.com/collections/all https://unicornrides.com/collections/all [1] - https://unicornrides.com/pages/unicorn-shipping-update https://unicornrides.com/pages/unicorn-shipping-update

Someone1234 7y ago
Playing devil's advocate here but the Shopify issue is because they removed the only products they sold on Shopify (that's why it 404s at /products/unicorn-scooter-product), that results in the collection being empty and that page showing up. So their Shopify was likely fine until the business went under. Then they quite correctly stopped letting people make additional orders.
- thenickevans 7y ago
  This is correct
EdwardDiego 7y ago
Ah, the good ol' default "all" Shopify collection.
mikestew 7y ago
I’d rather they white-label the Segway than build the monstrosity in the video. Though the Ninebot won’t let you tote your three year old on it like in the video. (WTF? I know people do it, but advertise it as a feature? I ride a Boosted Rev to work every day, and my advice is: no one under 13 admitted, at all.) Others in this thread are saying it was $700? Why not buy the Ninebot for $100 less? Or were the shipping models really going to have custom deck as in the video?
- giarc 7y ago

playing_colours 7y ago

Hyped industry, sort of hyped name, wasting money on FB ads. It seems like they were “hacking” their way to quick success instead of focusing on delivering a proper product - exactly like Paul Graham described in his recent essay http://www.paulgraham.com/lesson.html http://www.paulgraham.com/lesson.html

vkou 7y ago
> It seems like they were “hacking” their way to quick success instead of focusing on delivering a proper product Generally - not specifically - speaking, in a world where your competitors can throw away millions of VC dollars into hacking their way to quick success and market share, this is a valid strategy. It may, in fact be the optimal strategy. Of course, if you don't have said millions of VC dollars to throw into that game, then you're not going to meet much success by trying to play it.
- mtgx 7y ago
  It might be better using other advertising channels if your competitors are pissing away VC money drastically raising bids and making it virtually impossible for any "proper" business to do well in digital advertising utilizing the same channels. You can notice this even within sub-segments of Google Ads and Facebook Ads where there is a propensity for advertisers to just throw millions at the channel without expecting to be profitable right away (or ever). But the good news is that if some channels are over-saturated with "free money", then chances are there are other channels are that undersaturated.
  - manigandham 7y ago
    That's assuming those other channels aren't also saturated by the same companies. Organizations spending millions aren't going to leave a big opening in another medium that's able to reach the same consumers.

llamataboot 7y ago

Snarky comment about LLCs being able to shirk responsibility by just going bankrupt... But really this seems like a basic class-action fraud suit on what they hoped would be a bootstrapped ponzi-scheme. (Spend enough, fast enough to get enough customers to be able to actually deliver your product) but not keeping at least enough money in reserve to make minimum refunds is a major liability.

qeternity 7y ago
An LLC does not protect anyone from fraud...
- aeternum 7y ago
  Would be very difficult to get this to qualify as fraud. Maybe if they used the funds for their uncle's advertising company. There have been many startups that have wasted money on things that make less sense than advertising before going under.

bransonf 7y ago

If you give $700 to a company that promises to deliver a scooter, and they spend that money on advertising, that’s fraud. They have no plausible argument that they didn’t know they couldn’t deliver or refund customers after they started spending pre-order funds. I hope customers get successful chargebacks and there’s a class action lawsuit. This wasn’t a crowdfunding campaign. Consumers were lied to, and the law should make clear that this is unacceptable business practice.

Someone1234 7y ago
A class action lawsuit against who? You cannot sue a company that no longer exists. It is unlikely consumers would be able to defeat limited liability, particularly with the argument that "the company should have allocated resources differently."
- richardwhiuk 7y ago
  If you could prove deliberate fraud, which seems unlikely, then you could probably pierce the limited liability shield. Seems unlikely though.
  - Enginerrrd 7y ago
    It might not be that unlikely... For example, it's possible they don't have the advertising invoices to back up the claim that that's where the money went. It is, however, very unlikely that anyone ever gets their money back.
  - paulddraper 7y ago
    Yes, LLC don't protect from many criminal charges such as fraud. It would indeed be difficult to prove this was deceptive and not just really poor, even idiotic, business planning.
    - kjs3 7y ago
      Indeed. Sadly, stupid isn't (usually) criminal.

mherdeg 7y ago

I have read people say that a key difference in entrepreneurship in the US versus European countries is that European company founders are much more likely to be held responsible for their companies' debts and are therefore much less likely to experiment with new businesses at the rapid pace we see in the US. Would that have been true here? If a German startup had raised $150k in venture capital and taken $250k in orders from consumers and shut down without sending any products to any customers, what would happen to the founder? Would he end up paying someone $250k--$400k out of pocket for a long time?

newfangle 7y ago
The founders of this company likely broke the law in the US
smoe 7y ago
Don't know about Germany but in Switzerland the managers are not personally liable for the debts of a company. Except the damage to the company/employees/clients can be be proven to be intentionally or negligently caused by a manager. For this, the they can be held liable with their entire private assets
JanSt 7y ago
(not a legal expert, no guarantees ;)) There are different forms of companies in Germany (GbR, UG, GmbH,...) some of which require personal liability and some which don't (to some degree). E.g. a GmbH is a limited-liability (at least 25k €). BUT the CEO has to act with diligence. Otherwise (e.g. acting with negligence) they are liable with all of their personal assets. In my non-expert eyes, the CEO of this company would be liable even under the shield of a GmbH.
briandear 7y ago
There's a Germany company, called Relocatly that took money from hundreds of people shipping household goods from Europe to the US -- they went insolvent, our goods were held in port by the actual shipping company and now we have to pay the shipping company despite having already paid Relocately. They took money for shipments even after they already knew they were insolvent. Now our original payments are trapped inside the insolvency account and the managers of the company? No consequences at all even though they took money for a service they knew they wouldn't be able to provide. Small anecdote, but the claim that "European company founders are much more likely to be held responsible for their companies' debt" is not true in my experience. If anyone is interested in reading some of the customer stories of Relocately: https://www.international-movers-reviews.com/company/relocately/ https://www.international-movers-reviews.com/company/relocat... My point isn't to complain about that specific company, but to provide a counterexample that the idea that European corporate governance isn't necessarily "better" at all. They scam and fraud just as readily as anyone else.

ravenstine 7y ago

[deleted]

hkmurakami 7y ago
This is not an on demand company. They were selling physical goods to consumers

julienfr112 7y ago

Is "But Facebook ate all my money" the new "But a dog ate by homework" ?

edw 7y ago

Assuming for a moment that there's no fraud with this company, this is a great example of how you can quickly go broke selling a popular product. If the payment terms, product delivery logistics pipeline, etc. are more protracted than your suppliers', you will get strangled by your accounts payable before your receivables can save you. This was the genius of Dell's built-to-order system: they had (have?) a negative working capital position. Of course it's also a great example of how you can, if you're not careful, light a pile of money on fire with performance ads. Please, people, please, test your advertising!

rpmcmurdo 7y ago

Just wait until the scooter companies and operators get nailed with an injury class action lawsuit. A good friend was seriously injured on a rental scooter, going 2-3 mph, catapulted onto her face, ended up with brain damage and multiple facial fractures requiring reconstructive surgery. A high school physics student could work out that tiny wheels combined with a high center of gravity is a bad combination.

dcolkitt 7y ago
The problem is lack of helmet. If the injured party wasn't wearing a helmet, and the scooter clearly stated that a helmet should be warn, the case will get thrown out. Everybody knows that nobody wears a helmet while riding scooter company. The manufacturers know, the ride-sharing services know, and the riders know. But if a helmet warning is clearly displayed, that gives the scooter company virtual legal immunity from injury lawsuits. Even if the scooter's unsafe with a helmet, the situation prevents any serious legal damages. Only a small minority of riders will actually wear the helmet, and the company can just settle with on an individual basis. This pool is too tiny to attract high-powered class action attorneys. The vast majority of riders, and therefore injuries, will be helmet wearing riders. Proving the counterfactual that they would have sustained the same injuries even with a helmet is very difficult. Head injuries by far are the highest damages, so again the pool of non-head injuries is too small to attract serious class-action attorneys.
- alistairSH 7y ago
  No, the problem is scooters with small wheels that are easy to crash. The Dutch do fine riding bicycles without helmets. If scooters are in fact more dangerous than bicycles, we should probably just reevaluate their use in the first place.
- henryfjordan 7y ago
  Bird puts out a lot of promotional material without people wearing helmets. They lobbied the CA government to change the law so that helmets are not required. They tried the lobby Oregon to change the same law there but were basically laughed out of the state. A good lawyer could argue that riders do not know they need to wear helmets on the scooters.

1290cc 7y ago

Chamath Palihapitiya talked about this problem in an interview from 2018. Many tech startups spend 0.40c of every VC dollar with FB/Google/Amazon. Here is the original interview: https://www.youtube.com/watch?v=RwRZtZQoLtQ https://www.youtube.com/watch?v=RwRZtZQoLtQ

xamuel 7y ago
Ironic considering most tech startups' exit plan is essentially to be acquired by FB/Google/Amazon. They are de facto R&D branches for FB/Google/Amazon with all the attendant risk and none of the benefits.

deleted 7y ago

[deleted]

readhn 7y ago

I find it interesting that the CEO - Nick Evans co-founded successful (?) start up Tile. https://www.linkedin.com/in/thenickevans https://www.linkedin.com/in/thenickevans From tile to scooters to blowing money on FB ads - seems like a bizarre path for an experienced (?) developer.

glofish 7y ago

I just don't understand people that shell out 700 for a non-existing product. What's the rush? What would they be possibly missing out? it is one thing to jumpstart a novel product for $25 but a scooter ... really?

sjs18 7y ago
There was no indication of this not existing when I ordered.

paulpauper 7y ago

Facebook ads are way too expensive and tend to not convert that well. There are stories of fake likes and fake clicks. If your growth strategy involves buying click ads, find another strategy or business idea. Groupon is another company that overpaid on Facebook ads to build its email list. Disney and other multinationals are the only companies that should buying such ad.

SamBam 7y ago
Who is generating the fake likes and fake clicks (even if anecdotally)? Facebook itself?
giarc 7y ago
This may be tinfoil hat territory but I'm convinced Facebook (as I can't see what someone else gets from fake clicks) produces fake clicks/likes. I had a startup and ran very targeted ads (gender, city, occupation). We were running small dollar amounts ($200-300 campaigns) and would get likes on our ads. The use would have a modest profile set up, usually a visible minority (which wasn't out of the ordinary for our target) but often weren't in target city and would never respond to any communication. I would message them (usually very shortly after they clicked like) and would never hear anything back. Why 'like' a Saas product offering ad if you have no intention of engaging with the maker? I also couldn't understand why they were shown the ad in the first place.
Kiro 7y ago
Facebook ads work amazing for me but maybe it's just my product (haven't tried any other channels).
habosa 7y ago
I have heard both sides, I think it depends on your industry. I know people who are blown away with how much ROI they get from Facebook ads. Others have the experience you mentioned.

robbiemitchell 7y ago

> payments for loans Yeah... that smells bad. There must be more to this story.

tanilama 7y ago

The title is super misleading. They have only 150k in funding. I wouldn't attribute their bankruptcy to Google or FB.

toby- 7y ago
The company's founder did state this in an email however: >The cost of "Facebook and Google ads, payments for loans, and other expenses" ate through the company's funding quicker than Mr Evans anticipated. >"A large proportion of the revenue went toward paying for Facebook ads to bring traffic to the site," the email says.
- tanilama 7y ago
  What I meant this level of funding is not adequate for the company's operation, regardless of the planned ad spending. Yes they shouldn't spend on ads, like not at all. They should instead focus on raising more money to be serious.

MarketingJason 7y ago

Ouch - 150K in a seed funding round from Y Combinator

blunte 7y ago
This makes me wonder about Y Combinator. What this scooter company so new and innovative that it warranted investment? Isn't it one of dozens? Or is it that there's must too much VC money without enough places to put it...? More pessimistically, it's plausible that a lot of VC money gets spent on expenses that directly or indirectly benefit those VCs, so it's less about the viability of the startup and more about the money flow.
- MarketingJason 7y ago
  After some research, it looks like they were a part of Y Combinator's Winter 2019 graduating class so I believe that seed round is a part of the package you get when accepted.
- alexpetralia 7y ago
  It's possible that the goal of VC is _not necessarily_ to make the highest performing investments, but rather _convince_ prospective and existing LPs that the VC is making the highest performing investments. After all, the LPs pay the management fees. In order to do this, you need to sell a good story, and a good one to sell is one that is already established by social proof: "Look at these scooters taking over cities - don't you want to be part of it?"
- wp381640 7y ago
  The CEO would have had the red carpet rolled out for him at YC because of his past even though Tile is a non-working capital sink

thrillgore 7y ago

They were even called Unicorn. That's just great.

shaneprrlt 7y ago

I feel horrible for the people who had to scrape together the $700 for a Christmas present for their kids, who won't be getting their scooter (like the person in the article). For most middle class people, that's a lot of money. I second the comments about successful chargebacks, because this will probably be ruining some kids Christmases out there otherwise. :(

foolfoolz 7y ago
this is a fabricated scenario. you could have bought a xiaomi scooter on amazon for $300 - $400 anytime this year. who would ever buy into some maybe-scooter kickstarter if they were low on cash? and who low on cash is buying $700 christmas presents?
- wp381640 7y ago
  > this is a fabricated scenario. Not sure why you would jump to such a dismissive conclusion without at least doing some reading - media reporting has first-hand accounts from customers[0]: > “I am upset he basically robbed everyone of his customers and is closing without delivering any scooters,” Rebecca Buchholtz wrote in an email to The Verge. “This was my daughters Christmas gift and now I cannot get her any gift.” [0] https://www.theverge.com/2019/12/7/21000094/unicorn-electric-scooter-shut-down-refund-tile https://www.theverge.com/2019/12/7/21000094/unicorn-electric...
- sjs18 7y ago
  Pal, it wasn’t a Kickstarter. And I liked what was being offered. Stop victim blaming.
- shaneprrlt 7y ago
  If you think that's a "fabricated scenario" I suggest you get out more and gain some perspective on how people actually live.
SubuSS 7y ago
I am probably missing something here - but, - who is scraping together their life on one hand and buying $800 gifts? - if you're really doing the above, why would you take a gamble instead of buying something currently available? IOW as much as it is painful to read this, it seems pretty designed for an article rather than real world (am talking averages I guess). If it is real, that's the learning I'd take away more than someone defrauding their customers - which happens everyday :)

sct202 7y ago

The CEO of this company was the co-founder to Tile. I'm sure he could have paid out refunds if he tried to plan this out more responsibly.

mirekrusin 7y ago

Not everybody has the privilege to burn trucks of money like ie. Uber.

rco8786 7y ago

The fact that the company's name is "Unicorn" makes this seem like a much bigger deal than it is. The company raised just $150k. And it sucks that they screwed over their customers who paid, someone should be accountable here. But it's not like someone went and blew millions on ads only to realize it wasn't sustainable.

outside1234 7y ago

Oh the compound irony of a company LITERALLY NAMING THEMSELVES UNICORN coupled with someone actually being dumb enough to invest in said company, coupled with it failing.

franze 7y ago

Only run Fb and Google Ads if you have a proven (not hypothetical CLV) positive business case. They deplete ressources so fast without building a lasting owned channel...

shergill 7y ago

This is relevant: https://www.youtube.com/watch?v=NVVsdlHslfI&feature=youtu.be https://www.youtube.com/watch?v=NVVsdlHslfI&feature=youtu.be Silicon valley Ponzi scheme

acd 7y ago

I count at least three scooter companies in the capital. They are all startups funded by quick venture capital. Their scooters litter the street for blind people. They pollute the sound space of the street with battery charging sos sounds. Questionable. There is not much difference from one brand to another. The scooters last about 6 weeks until they need replacement. I question how good is this for the environment?

zachkatz 7y ago
Now do cars.

Havoc 7y ago

What? Surely go fund me style cash raises should go mostly towards the product and maybe a bit to salary

tomaszs 7y ago

This is exactly the case. You should spend as little on Facebook and Google Ads as possible. And spend the money on anything else.

invalidusernam3 7y ago

I don't understand how companies like this think they are going to make money? Electric scooters are a solved problem. When there are too many companies in the same market it becomes a game of who has the biggest bank account to spend on marketing. Clearly they didn't, and they lost the game.

SystemOut 7y ago

Supposedly this company was profitable in March. From https://techcrunch.com/2019/03/18/here-are-the-85-startups-that-launched-today-at-y-combinators-w19-demo-day-1/ https://techcrunch.com/2019/03/18/here-are-the-85-startups-t... "Unicorn rents scooters by the week or month and is already profitable" So what happened?

walrus01 7y ago

reddit.com/r/shittykickstarters

cletus 7y ago

Here's my take: the company needed to raise $X to deliver their $700 scooters. They had raised $Y where $Y < $X. Since the only way for Unicorn to raise money is by preselling scooters They had to sell more scooters. Word of mouth wasn't doing it so they tried advertising for customer acquisition. Nothing unusual here. So when they say the as we expensive what they realty mean is customer acquisition was really expensive. To put it another way conversions were really low. So they likely completely understood these costs. They may have been unrealistic. They may have been sold a bill of goods (as agencies are notorious for unrealistically optimistic CPA costs). They may have simply not budgeted enough or expected more organic sales. So they may want to blame this on expensive ads butt what they realty mean is they screwed up and underestimated customer acquisition costs.

thenickevans 7y ago
This is accurate.

deleted 7y ago

[deleted]

manigandham 7y ago

There seems to be two companies named Unicorn in the scooter business: The failed one: https://unicornrides.com/ https://unicornrides.com/ The other one: https://www.unicornscooters.com/ https://www.unicornscooters.com/

lanewinfield 7y ago

What's more insane about this is that they went broke after whitelabeling an off-the-shelf Ninebot/Segway ES2, that retails on Amazon for $480, $220 less than what Unicorn was offering. All I can see that they offer on top of the scooter is "UnicornCare," basically insurance for $1/day on top of the $700 price.

schnable 7y ago

What a waste of a good startup name.

OrgNet 7y ago
the iScoot is next

arbuge 7y ago

I think the cost of Facebook and Google ads blindsides many founders who take them for granted as a distribution channel when planning their startups, particularly founders who have no experience with them, or (even worse) founders who used them several years ago when they far cheaper and are unaware of how the landscape has since changed. You should assume they will simply not be available to you for planning purposes. Occasionally you might stumble across an untapped niche where it is still possible to run ads at a cost permitting reasonable ROI but in my experience that is now the exception rather than the rule. If you do find such a niche it is more likely to be on Google, since their keyword-based model permits such niches to theoretically exist, whereas Facebook is an all-out competition by all advertisers for the same newsfeed slots.

habosa 7y ago

They sold 350 scooters at $700 each. So just under $250k in sales. They decided, right before Christmas, that they would tell all those people their $700 has been thrown right in the trash. The founder of this company is the founder of Tile, a VC-backed company worth $XXX million that has raised $104M+. If this person had any morals he would cash out $250k of his shares in Tile and pay back the people who ordered his scooters. Hell give them half back for $125k. That is chump change to a successful SV founder. I know that legally he has no obligation, but how can he sleep at night? This wasn't "oh making hardware is way harder than we thought and we couldn't afford it" this was "well I figured if I couldn't sell a million of these I'd rather just give up so I spent all the money on ads". What a jerk. Merry Christmas from Silicon Valley.

tomglynch 7y ago
Yeah you're not wrong. What a jerk.
reustle 7y ago
Tile was a company that always rubbed me in a weird way, too. They spent an incredible amount of money on marketing, yet I never heard of anyone using them. For years. Seems it didn't work out for him this time.
amirhirsch 7y ago
Legally he does have an obligation. All the commenters suggesting that this behavior does not pierce the corporate veil are wrong (on the internet!) and assuming incorrect legal knowledge may be dangerous for the next founder who reads this thread and thinks their liability is limited when engaging in similar behavior. Selling a product with inadequate capitalization is a common basis for piercing the corporate veil.
thenickevans 7y ago
How do I sleep at night? For the last three weeks I've been waking up at about 2AM every night with anxiety running through my body. My life absolutely sucks right now and it will for a while. I absolutely would pay people back personally if I could. I'm working on a way to get refunds back to people. Things were not going in the right direction and we started moving forward with a more graceful exit that would have gotten scooters to our current customers, but it fell through and then we reached the point of no return. Basically my only job right now is to find a way to get returns back to people.

simbakhadder 7y ago

Ironic name of the company, comes off as a Onion article, sad that it's true

sevencolors 7y ago
Onion articles seem to write themselves these days

quantumfoam 7y ago

Corporation gets taken advantage by another corporation.

ohiovr 7y ago

A rotten offer will never sell no matter how many ads you buy. This thread says that the scooter is a whitelabeled product. The margin priced it out of the market. Most people comparison shop. What is really new to learn here that isn't common sense?

paggle 7y ago

There is a strict set of conditions that a Kickstarter donation should meet: 1. The product should require relatively large upfront costs such as design or tooling. If I'm ordering a pair of hand-knitted gloves there isn't much fixed cost so it should not be a Kickstarter. 2. The excess value of the product to the donor should be more than the expected loss if the delivery fails. 3. The product should be on the "bubble" of being produced so that the donor's contribution makes a material difference towards the product actually being produced. 4. The team should be qualified to deliver the specified product with the funds raised. Qualified teams can fail but unqualified teams will certainly fail. 5. The money should not be significantly impactful to the lifestyle of the donor. 6. The product’s market should be small enough that it will likely be produced in one “batch” with no opportunity to buy it on the open market afterwards with the execution risk removed. An example of such a product for me would be a display platform for one bottle of Pilot Iroshizuku fountain pen ink, made out of Japanese cypress wood (hinoki). The ink bottle is beautiful and I've always thought it should have a hinoki stand (just a thin board of wood with a small depression routed out of it). The product would need some CAD and CNC design work, but not too much, there is not that big of a market for it, and I would be happy to pay $100 for such a thing even though it should only cost $5-10 to produce. Let's say it sells for $30, I'd be expecting $70 of excess value so I could accept even a 50% likelihood of failure.

choukri060 7y ago

aabbcc1241 7y ago

Why 'unicorn' companies don't appreciate the 'organic, non-fast foot, non-money-burning' way to do marketing? (e.g. word of mouth) Why are them so keen on using investors' money to bump up 'sales' as further investment into 'cash flow'? Why are their primary goal be money-making?

mrandish 7y ago

As a startup entrepreneur myself, I've bought into a few Kickstarter projects and I haven't gotten hosed yet. However, I think this is because I'm pretty cautious. I look into the track records of the people, assess the viability/difficulty of completing the project based on my experience and I tend to buy in quite late in the process. There have been a lot I've passed on due to the fundamental uncertainty of manufacturing offshore hardware. I just bookmark them and buy it from Amazon when it's actually shipping for real. Often it's not much more than the Kickstarter price (and sometimes it's less).