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SpoonRocket shuts down

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Re: SpoonRocket shuts down

#121

Post by JoeAltmaier »

ruddct wrote: post #119
tptacek wrote: post #2

The company had actually reached contribution margin positive — it was selling meals for more than it cost to cook them. But due to other costs and the frosty fundraising climate, wasn’t able to get the money it needed to continue operating. Am I reading this correctly, and the business metric this company managed to achieve is simply "selling food above cost", like every deli and diner in the country does? Or is the…

Reminds me of recent Instacart news. http://www.bloomberg.com/news/articles/2016-03-11/instacart-... Here's the money quote: "[Instacart] said 40% of the company's volume is profitable - meaning most orders still lose money. It also said that it will be profitable globally by summer. However, its calculation for profitability doesn't include the cost of office space, the cost of acquiring shopper workers, or the sala…

That sounds taken out of context, or misquoted. Its reasonable to talk about the marginal profitability of an activity. E.g. Given employee base (shopper workers already hired), current app and backend (no marginal cost for developers/executives) then the sales price minus cost-of-sale was positive. Very important number! Means the company would be profitable after scaling that part of the business enough to cover fixed costs.

Most startups are actually looking for that magic formula. They spend spend spend until they find it, then scale scale scale to become a profitable business as a whole.

Re: SpoonRocket shuts down

#122

Post by patio11 »

tptacek wrote: post #2

The company had actually reached contribution margin positive — it was selling meals for more than it cost to cook them. But due to other costs and the frosty fundraising climate, wasn’t able to get the money it needed to continue operating. Am I reading this correctly, and the business metric this company managed to achieve is simply "selling food above cost", like every deli and diner in the country does? Or is the…

"Positive unit economics; couldn't cover engineering salaries, marketing, or G&A" is how I'd read that.

This is notable because some of the on-demand companies are engaged in a bidding war out of perceived land-grab economics, either on the supply or demand side (or both), so they price the customer-side service or the supply-side cut in such a way that the company loses money on most or all orders.

Think like: We'll deliver you a $8.50 sandwich for $10.25 and a $1 delivery fee, with a guaranteed payment to the driver of $5.00 per order.

If that's a little gobsmacking, suffice it to say that there are a lot of people with Uber envy, and that this is part of the playbook in expansion phase for them, too. (They are presently engaged in a bidding war against an Uber-for-China which is transferring billions of dollars from investors of both firms to drivers/riders.)

Re: SpoonRocket shuts down

#123

Post by azinman2 »

autotune wrote: post #80
azinman2 wrote: post #58

Earlier quoted context omitted.

Sprig's food is way better than spoonrocket, so at least their cost is justified. For SF, it's pretty normal pricing. Bento is meh, but munchery probably is the highest quality (and most expensive) of all. Hadn't heard of healthyout or thistle until now, but they don't seem to be on-demand food services?

I'll have to try Munchery, looks like they have a pretty decent selection of healthy and tasty meals. My problem with Sprig beyond price point is much of the food doesn't seem appetizing enough for the price to be worth paying, not that I can't actually pay it. Thistle is more in the category of "healthy food delivery" than on-demand ordering, which is another downside, but I'd still say at least that one category ov…

Munchery has before so maybe it wasn't successful for them.

Re: SpoonRocket shuts down

#124

Post by JoeAltmaier »

stult wrote: post #16
EwanToo wrote: post #4

Earlier quoted context omitted.

I'm pretty sure you are, that's serious bubble talk "But due to other costs" < aka paying for people, the website, the delivery, marketing, etc?

Reminds me of that famous Marion Berry quote, "If you take out the killings, Washington [DC] actually has a very very low crime rate."

Maybe its criminals being killed?!

Re: SpoonRocket shuts down

#125

Post by bazqux2 »

bdcravens wrote: post #107
jedrek wrote: post #67

Earlier quoted context omitted.

In fairness, that's because VC culture is a parasite on normal society.

Are they really? The high failure, high return model has allowed many programmers (and others within VC-backed companies) to have employment that wouldn't otherwise exist. I'm happy to be outside of SV, doing well in a 100% bootstrapped company, but I think VC culture has had the opposite effect of a parasite (or at worst, I'd call it a symbiote)

Yes, in many many ways.

They are money losers. It only looks like they are not because of a temporary bubble. This bubble is popping and their losses are becoming clearer. There are many that will personally make money despite running a fund that loses money.

Their culture is steeped in groupthink. Which by definition results in malinvestment and destruction of wealth. This wealth comes from pensioners who can't get sufficient returns from lower risk investments.

At some point pension funds and pensioners are going to run out of money which will be bad.

Specifically for bootstrapped companies. VCs increase the input cost; labor and rent etc. And they subsidies competitors. E.g. Customers who would normally pay you for services get it free from a VC funded startup. Then VCs run out of money and competitor goes bust. This induces boom and bust cycles that mask steady improvements with hype. This hurts the market.

Programmers would be much better of with a steady market where there is a discoverable market value for their work.

Re: SpoonRocket shuts down

#126

Post by mangeletti »

treehau5 wrote: post #118
Fomite wrote: post #116

Earlier quoted context omitted.

I happened to pick two fast food chains because I know they're on polar ends of the "How nice is it to be a franchise" spectrum. The core of the point is that not all franchises are created equal.

But it matters which franchises you are talking about. A restaurant like Maggiano's, or Bonefish Grill is as far removed from Subway as Subway is as far removed from a 7-Eleven.

It's worth noting that Bonefish Grill operates a "managing partner" system, vs an ordinary franchise. The corporation owns 85% of the business, while a location's managing partner (who invests some money to get started) owns 10% (a regional manager owns the other 5%).

IOW, they're not, strictly speaking, a franchise.

Re: SpoonRocket shuts down

#127

Post by [deleted] »

patio11 wrote: post #122
tptacek wrote: post #2

The company had actually reached contribution margin positive — it was selling meals for more than it cost to cook them. But due to other costs and the frosty fundraising climate, wasn’t able to get the money it needed to continue operating. Am I reading this correctly, and the business metric this company managed to achieve is simply "selling food above cost", like every deli and diner in the country does? Or is the…

"Positive unit economics; couldn't cover engineering salaries, marketing, or G&A" is how I'd read that. This is notable because some of the on-demand companies are engaged in a bidding war out of perceived land-grab economics, either on the supply or demand side (or both), so they price the customer-side service or the supply-side cut in such a way that the company loses money on most or all orders. Think like: We'll…

[deleted]

Re: SpoonRocket shuts down

#128

Post by doktrin »

Larrikin wrote: post #114
willchen wrote: post #17

As someone who's ordered from spoon rocket dozens of times over the past two years, I'm definitely sad to see it go. A quick timeline (from what I can remember): - Initially started out in Berkeley / Emeryville area by a couple of Berkeley alumni who had previously launched a food delivery startup focused on midnight munchies (aka, unhealthy food for college-type students). Each meal was initially only $6, tasted qui…

>Lastly, what I'm hoping for is the "Airbnb" of food, where regular people could cook meals and sell them to neighbors on a marketplace with reviews, pictures, etc. I really don't want to buy food from random strangers that are not regularly being inspected for the cleanliness of their operations. A dirty room or a car is an inconvenience. A meal prepared in an unsanitary way could potentially kill you.

> A dirty room or a car is an inconvenience.

I too have no desire to buy food from strangers, but I also feel like the potential risks of room-sharing or ride-sharing aren't limited to cleanliness. In both cases you're implicitly trusting a stranger with your physical safety.

Speaking for myself, I think I'm more comfortable with the notion of ride & room sharing because I can maintain a greater (and quite possibly illusory) sense of control. Drunk or unreliable driver? I can get out. Sketchy apartment? I can leave, or prop a chair against the door. etc.

Re: SpoonRocket shuts down

#129

Post by S_A_P »

Why would a business like this get funding and ultimately be viewed differently than any other restaurant? It looks like the pizza delivery model to me, so why is the funding so much higher?(serious question)

Re: SpoonRocket shuts down

#130

Post by refurb »

goodJobWalrus wrote: post #99
pbreit wrote: post #97

Earlier quoted context omitted.

"So, positive contribution margin should imply they covered all the fixed and variable costs, the way I read it." That's not what the passage you included says. It says it only covers variable costs.

Passage no, but TC report says they were contribution margin "positive", which, they way I understood it, implies it should cover fixed costs, otherwise it is still contribution margin-negative (vis-a-vis fixed costs) So, the passage explains what contribution margin is, but TC is talking about being "contribution margin positive". How would you understand the second term?

The reason it's called contribution margin is because it contributes to the other costs of the company.

I've only ever heard contribution used in the sense of COGS, not foxed costs.

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