E-Scooter Company 'Unicorn' Goes Bust After Spending Big On Facebook Ads (bbc.com) 65
Electric scooter start-up Unicorn is shutting down after spending too much money on Facebook ads. The BBC reports: Customers received an email from founder Nick Evans, saying he was "very sorry" and was trying to sell Unicorn's assets to offer partial refunds. The Texas-based company sold just 350 of its $699 commuter scooters, according to The Verge. They have a top speed of 15mph and a range of 15 miles. And start-up tracker Crunchbase said Unicorn had raised just $150,000.
"It saddens me to write this letter but we have run out of funding and are shutting down operations immediately," the email says. "We unfortunately do not have the resources to deliver your Unicorns nor are we able to provide refunds, as we are completely out of funding." 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. "Unfortunately the cost of the ads were just too expensive to build a sustainable business."
"It saddens me to write this letter but we have run out of funding and are shutting down operations immediately," the email says. "We unfortunately do not have the resources to deliver your Unicorns nor are we able to provide refunds, as we are completely out of funding." 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. "Unfortunately the cost of the ads were just too expensive to build a sustainable business."
Easy solution (Score:5, Insightful)
Call your credit card and reverse the payment.
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Not sure about the US but in the UK if you use your credit card to pay for a product or service that is not delivered, you can claim a refund.
If the seller can't cover the cost, the credit card issuer must.
The cost to the issuer of providing this protection is covered by their interest rates and other charges.
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On platforms like Kickstarter, they make it very clear that you aren't buying anything. You're investing with the potential return in that investment being a finished good/reward. This has been abused enough that it may not stand up in court, but the teens were at least presented and agreed to.
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Except I don't think it was kickstarter. The money raised was via Y Combinator which means it was done the traditional way. (Y Combinator is a combination VC/"incubator" - they do angel funding but also provide resour
Why is this even a thing? (Score:3)
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It's also symptom of a startup mentality that values having a cool idea much more highly than it values knowing how to run a business and get stuff done. So many of these stories sound like a what the C- students submit for their high school level intro-to-business class. It's step zero in any business: make a business plan.
Re:Why is this even a thing? (Score:4, Informative)
Considering the company was named Unicorn -- which means a billion dollar startup -- it's likely this was just another scam. If you want free money, all you have to do is incorporate a startup, get some investors, pay yourself a salary for a bit, go bust, rinse and repeat. Nobody can prove it was a scam and nobody can sue you for the salary you made as CEO of a failed company, so it's the perfect crime.
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...an often, having a few failures behind you actually can count for you next time around.
In this case though, whilst I'm no investor/VC, I look at this as being terrible cost control. It sounds like they kept hammering away at the FB nut until all their money was gone. They could have budgeted an amount of money, measured results, etc and then budgeted more money if appropriate. They could have found some other way to gain "brand awareness", or they could have just tried to deliver the things they'd promis
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Talking of scams though... I wonder if any of this was FB funded (indirectly, of course)? I mean, if you can find suitable CEO suckers, you throw them a bit of money and hugely promote the idea of FB ads to get their business moving. They then go on to find further investors, and then spend all that collective money on FB ads. FB cashes in, and gets to talk about their huge sales numbers.
Yes, it's touters, all the way down.
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Product does exist (Score:4, Informative)
This is even worse:
The product DOES exist:
Open aliexpress (or ebay, or amazon) and there are dozens of similar products produced by chinese factories (and not all of them will spontaneously bust into flames courtesy of crappy BMS, as long as you pay some attention).
What this company attempt is to generate *a brand* to sell *their own branded* (i.e.: rebadged, from one of the numerous chinese producers) e-scooter.
And that's a quite stupid idea, given that there are cheap alernative (suach as from asian brands).
And the company blew all their money while concentrating on this useless task of generating brand awareness.
Meanwhile, instead of blowing up their money on crappy startup ideas, interested customer are better off reading some review and get a cheap e-scooter from china.
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Xaomi electric scooters are affordable, reliable, faster and go further. Even when these guys started their scooter was crappy. It's no wonder they sold so few.
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I feel bad for the folks who won't be getting their scooters though.
I don't, they were fools. Anyway, 15mph and a 15 mile range? I can do far better than that on a pedal bike.
Lololololol lololololololol (filter breaker filler (Score:5, Insightful)
Re:Lololololol lololololololol (filter breaker fil (Score:5, Insightful)
I'd love to see the economics.
Like how many did they need to order to fulfill at that rate?
How much did they spend of their 150k on ads?
how much of the 200k or so they got for their 350 sales went to ads?
Considering they sell for under $500 one off on Amazon, I'd think they could have had 500 delivered painted white (Segway ES2) and gone from there.
Re: Lololololol lololololololol (filter breaker fi (Score:2)
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Yeah, this story reeks of business naivety and/or reckless incompetence.
Advertising is never a guarantee but there have never been better feedback loops available to understand its effectiveness and value. Throwing a large proportion of the company assets into an untested campaign is an insane amount of business risk.
Of course, we may both be wrong. They could have managed their existing sales through a very successful small scale advertising campaign on Facebook, which they then broadened out to a wider ma
Re: Lololololol lololololololol (filter breaker f (Score:2)
Could have been chicanery too.
Advertise to look relevant while trying to get more investment money.
The price seemed really steep. I followed a link on the ad and was interested, but at $800 I could practically get a bike that's superior in every way.
Re: Lololololol lololololololol (filter breaker f (Score:2)
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In fairness, Facebook promised he could target specific scooter enthusiasts....
Although Facebook also believes that people should be able to lie their asses off.
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Or Reddit, or anywhere that people that *use* scooters congregate.
I doubt that grandma is really going to get a Scooter requiring balance or standing.
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Also, the Unicorn looks like pretty much a generic Chinese electric scooter, which I see all the time for sale at a lot less than $US699.
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* I may be assuming too much there.
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co-founded Tile, which sells those little bluetooth things that are supposed to stop you losing your stuff.
...which are ALSO some cheap crap that you can find from dozen of providers thereof on aliexpress.
He had some success (though very relative: I've absolutely never heard of them, and I did buy a couple of such gizmos - so I was in the target consumer audience) in selling rebadged crap from China,
and though it would be a big idea to replicate the "rebadged product scam" scheme but move to a more expensive product and try to get bigger margins.
Fail.
Also, the Unicorn looks like pretty much a generic Chinese electric scooter, which I see all the time for sale at a lot less than $US699.
The thing is, for something that costs a couple of bucks in Ch
Re: Lololololol lololololololol (filter breaker fi (Score:1)
Business model fails... (Score:2)
Brilliant plan (Score:5, Insightful)
"A large proportion of the revenue went toward paying for Facebook ads to bring traffic to the site," the email says. "Unfortunately the cost of the ads were just too expensive to build a sustainable business."
They literally advertised themselves to death, with enthusiastic help from Facebook.
Between Unicorn and Facebook, I know which one came out ahead.
Unicorn goes Extinct (Score:5, Funny)
A far better title: "Unicorn goes Extinct"
Unicorn? (Score:5, Insightful)
Their name sounds like wishful thinking. I read this 3 times trying to figure out how the writer thought this startup was a 'Unicorn' [wikipedia.org] and finally realized that this was just a bad name.
Thing is, the guy is co-founder of Tile and had to rely on $150,000 in startup money while not being able to provide any refunds. He might not be worth much, considering he was sued by Tile and settled out of court. Still - who would give this guy money?
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Re: Unicorn? (Score:2)
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Probably suing him because he was running a thinly veiled Ponzi scheme and managed to get out with money before the thing collapsed.
There's this tidbit from the article (Score:5, Informative)
So, seemingly Unicorn engaged in very wishful thinking that they would get a bunch of orders in time to pay their creditors. It's kind of a Ponzi scheme in the end.
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That's why you put the adults in charge, even if the kids think they have a nifty idea that will make billions.
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I guess they didn't get it (Score:5, Informative)
Why would anyone pay $699? (Score:3)
The established Xiaomi sells for $299 and has slightly better range and speed. Cheaper Walmart scooters can be had for $199 for similar specs.
What were its selling points such that people would pay $699? Even at the pre-order price of $499, it is still too steep at current rates. All I saw was it has a bluetooth proximity unlock and a Tile for location tracking, neither of which explain the steep markup. That justifies maybe a $50 markup at most over other unproven brands.
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Oh, and the said Walmart scooter is currently on sale for $148. Yeesh!
https://www.walmart.com/ip/MPH... [walmart.com]
Obviously, for a different target demographic, but still.
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Exactly this, they were effectively competing with the Segway scooters at this price point which are a premium product with a well known brand name behind them!
As a former Segway employee... (Score:4, Insightful)
I'm honestly somewhat amazed at the stunning rise of electric scooters. Doesn't mean it's easy to break even or -- God forbid -- go cash positive, something Segway never did in my time there. RIP Unicorn.
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I'm honestly somewhat amazed at the stunning rise of electric scooters.
Low total cost of ownership. Cuts through traffic jams in the centre of a big city. Stylish. Often no helmet required (or no enforcement of laws that do so). Range enough for short commutes / shopping / visiting friends / a night out in town etc. May take a passenger on the back. No gasoline smell that goes where you don't want it to go. No parking tariffs unlike a car. Not working up a sweat like in hot summers on a bicycle. Door-to-door transport. Quiet. Much faster than walking.
In short: electric scoo
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Yeah, they have a lot going for them. Like cunts running them on the bicycle-pedestrian trail and making it more dangerous than walking down the middle of the street.
huh, (Score:2)
guess the name was a bit presumptuous.
Spending money on Fb ads is dumb AF (Score:5, Insightful)
When you sponsor an ad and thereby shove it into people's feeds with a shoehorn, it pisses them off. Whenever I use Fb on mobile (via the "Metal" app, because fuck any app made by Fb, and also fuck not being able to send and receive messages) I spend probably half the time I'm there posting the [SPAM INTENSIFIES] GIF on all the ads I see, followed immediately by blocking all ads from that advertiser. And also, it makes me despise their brand. Meanwhile, for less money you could hire some college kid to astroturf Facebook by searching for relevant groups and sharing some kind of content to them. You would actually be doing targeted advertising, unlike what happens when you pay Fb to allegedly target some group.
It's only dumbshits trying to take the easy way out by simply paying Fb to target people that are having this problem. I'm in groups whose purpose explicitly includes targeted advertising, and you know what? Those ads usually don't piss me off. I just scroll by most of them.
does this all seem familiar? (Score:4, Interesting)
I've been around for a while, and this reminds me when companies would bank on a super bowl ad. Just seems a bit weird.
Well, this is why we have startup money and then we have investment into established break even players. Let's see WeWork is flying down the road to zero I believe, I understand that both big named internet cab companies are going down that same road... who else has a huge burn rate that might not recover???
Doubt it (Score:2)
Make money on FB (Score:2)
The only people making money with ads on facebook are the shysters selling courses on how to make money with ads on facebook.
Everyone else is either pissing money against the wall or using an ad budget for "brand awareness"
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Well, 'using an ad budget for "brand awareness"' is all advertising does anyway, create brand awareness. Anyone who tells you otherwise is lying through their teeth..
Facebook Ads? (Score:2)
Scooter Company 'Unicorn' Goes Bust After Spending Big On Magic Beans
how? (Score:2)
how did this happen?
they didn't know the costs up front for all those ads and 'other expenses'?
Not a good investment idea (Score:2)
Unicorn's problem was that their scooter was not significantly different from all the others. Now if they had come up with the first waterproof scooter, especially one with a "Find My Scooter" signaling feature, this could have been a winner.
A failed startup named "Unicorn"? (Score:2)
Who even clicks on Facebook ads? (Score:1)
I'd like to know who even clicks on Facebook ads? For that matter, is there a single person out there in the land of the Internet that is not running an ad-blocker?
For-real.. online ads have zero value at all.
Makes perfect sense (Score:1)