Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

SpoonRocket shuts down

techcrunch.com

Post reply on HN
Print view View original

161–170 of 194 posts

Re: SpoonRocket shuts down

#161

Post by hkmurakami »

drone wrote: post #151
ruddct wrote: post #119

Earlier quoted context omitted.

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…

I think part of the problem here is failing to use correct terminology. We might say, in GAAP terms: * For 40% of the orders, they achieve a positive gross margin * We anticipate reaching positive gross margin on 100% of orders by the end of year * Even after reaching positive gross margins, non-COGS operating costs are sufficiently high to result in a negative EBITDA

To expand: non-COGS operating costs would include SG&A costs (Selling, General, and Administrative), among others. It's how a company like Box might have healthy gross margins on its unit sales but be unprofitable due to considerable marketing expenses as it tries to capture market share in a growing market.

Re: SpoonRocket shuts down

#163

Post by Fomite »

Laforet wrote: post #142
Fomite wrote: post #110

Earlier quoted context omitted.

Those are "lifestyle businesses", this is a "startup". They're different, because reasons...

Most non-fastfood resturants actually price their food at or near cost after the overheads are factored in. Profit actually came from (overpriced) beverages and drinks. If a startup is to compete with them there is no way for them to make much money.

"If a startup is to compete with them there is no way for them to make much money." Selling overpriced drinks? If a startup is in an area where "there is no way for them to make much money" then what the hell are they doing there?

Re: SpoonRocket shuts down

#164

Post by Fomite »

mbesto wrote: post #145
Fomite wrote: post #104

Earlier quoted context omitted.

Chipotle, even after getting hammered in the recent past, has a market cap of 15.5 billion dollars. It's rare, but it's possible.

That's not the point. VCs are interested in quickly (5-7 years) getting to 15B in market cap, not 22 years.

Chipotle went public 13 years after it was founded at half a billion dollars in market cap. While not as flashy as some of the unicorns, that would still have been a pretty decent showing.

Re: SpoonRocket shuts down

#165

Post by JoeAltmaier »

timr wrote: post #143
JoeAltmaier wrote: post #121

Earlier quoted context omitted.

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 fi…

Doesn't look like a misquote to me. And while, yes, unit economics are a thing, there can be a huge gap between being unit profitable and profitable as an organization. A bunch of delivery companies flew into the ground during the first crash under the same circumstances (including a few grocery delivery companies). If you're running a company with 500 employees an a big office in San Francisco (where employees avera…

Yeah it was a pretty big stretch.

Re: SpoonRocket shuts down

#167

Post by true_religion »

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…

At traditional restaurants and cafes, not every item on the menu is a profitable one.

Often some items are actually loss-leaders, enticing you to come in more often, or to pair it with a more profitable item that makes up for its cost.

Sometimes it is, even more, obvious that something is a 'loss leader'; such as at fancy dinners where they'll simply give you bread for free while you wait for your meal or bars where they give you salty snacks like popcorn to encourage you to buy more beer and not leave to have a real meal somewhere else.

Re: SpoonRocket shuts down

#168

Post by Laforet »

Fomite wrote: post #163
Laforet wrote: post #142

Earlier quoted context omitted.

Most non-fastfood resturants actually price their food at or near cost after the overheads are factored in. Profit actually came from (overpriced) beverages and drinks. If a startup is to compete with them there is no way for them to make much money.

"If a startup is to compete with them there is no way for them to make much money." Selling overpriced drinks? If a startup is in an area where "there is no way for them to make much money" then what the hell are they doing there?

The line of thought was probably that they may reach a scale that can overcome these overheads since they don't have to pay rent or hire full time staff for every outlet.

It makes sense if you consider very early examples like Amazon which took more than 10 years to become profitable. Unicorns like Twitter and Dropbox are not profitable and are unlikely to become so in the near future, but they have reached a scale that their finances are relatively secure for now.

Re: SpoonRocket shuts down

#169

Post by jonesb6 »

free2rhyme214 wrote: post #95
nlh wrote: post #69

Sad to see any startup die, but this was not unexpected. I know I am but a tiny sample of the overall SF food market, but I'm squarely in the target demographic (work at home, don't like to go out to eat). I used SpoonRocket a few times, but entirely gave up on them after trying a few times. I love Sprig and order from the often. Here's why: * SpoonRocket's meals simply weren't healthy. A lot of the folks in this spa…

Excellent points. Honestly it's the founders fault why this happened. They ignored these obvious signs and shouldn't be surprised. It's easy to order unhealthy food. It's a pain to make healthy food. Ironically UberEATS launched officially today.

Founders are responsible for the business, you are right. You were probably down-voted by a "founder" who become unhappy at that thought.

Source: I'm a co-founder, if my business fails it's my fucking fault.

Re: SpoonRocket shuts down

#170

Post by Naritai »

choward wrote: post #159

They sound like these guys who I am afraid are going to end up the same way: https://foodjets.com/ They only operate in Sacramento. The main things I liked are that it takes usually under 10 minutes and there was no tipping or delivery fee. The price you saw is what you paid. However, they just added tipping to their app which isn't a good sign. On top of that, it asks you to tip before you even get your food and the…

Is the delivery person aware of whether you tipped before the delivery even occurs? If so, I will never use their app.
Post reply on HN