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

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

#161

Post by wp381640 »

blunte wrote: post #105
MarketingJason wrote: post #53

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

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…

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

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

#162

Post by aabbcc1241 »

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?

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

#163

Post by mrandish »

djshelleyshell wrote: post #151
alistairSH wrote: post #107

Earlier quoted context omitted.

You don't really "sell" products on kickstarter, The link doesn't mention Kickstarter at all - I assumed Unicorn was selling through their own website?

Correct. This was not a Kickstarter or anything like it. They represented like they had product at the time that I ordered.

Then you have a legitimate claim. Unfortunately, it sounds like you are an unsecured creditor, thus you can get in line at the bankruptcy hearing (metaphorically speaking) but you are going to be second to last in line after the secured creditors, employee wages, taxes, etc thus are not likely to see anything.

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

#164

Post by mrandish »

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).

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

#165

Post by amirhirsch »

habosa wrote: post #127

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…

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.

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

#166

Post by SubuSS »

wp381640 wrote: post #160
SubuSS wrote: post #91

Earlier quoted context omitted.

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…

> who is scraping together their life on one hand and buying $800 gifts? Having grown up poor I know it's not uncommon for parents to save during the year for that one big annual gift. This customer of Unicorn is one example: > “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 gi…

I was 50-50 on the victim blaming comment to show up since this was HN and not reddit, lost that bet :)

As much as blaming is wrong, I do believe in personal responsibility as well. I do not agree with the broad brush that's being used widely around victim blaming being 100% bad. I think it is a spectrum and in this case it definitely tilts towards the buyer.

And no - pre-order from this site is not the same as PS4 pre order. There is a huge difference between a big company that has something to lose and will stand behind its product Vs a random company that goes bust after a facebook spend - that's what makes it a gamble.

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

#167

Post by imtringued »

SubuSS wrote: post #91
shaneprrlt wrote: post #66

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. :(

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…

>- who is scraping together their life on one hand and buying $800 gifts?

You're lacking reading comprehension. Nobody is scraping together their life.

People are scraping together money for a Christmas gift. If you have $300 left over every month you still have have to scrape together 3 months worth of savings.

Also Christmas will be ruined regardless of how much money you spend on the gift if it never arrives.

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

#168

Post by kjs3 »

filmgirlcw wrote: post #68
dmix wrote: post #54

Earlier quoted context omitted.

A misguided marketing strategy isn't fraud. That doesn't sound like deceiving people for personal gain by itself. Unless the whole plan was to sell preorders and feigning failure in order to take the funds. But that's a serious claim and it could be grounds for an investigation if law enforcement was pressured. But it would take more than complaining about FB ads.

>A misguided marketing strategy isn't fraud. That doesn't sound like deceiving people for personal gain by itself. Quite right. It's potentially an dereliction of duty and could be seen as being dumb enough that shareholders in a company could force an officer out (of course, here it doesn't matter b/c the company is bankrupt), but unless you can prove malice or untoward gains (like, the person making the Facebook bu…

All completely correct but I'm unclear who the shareholders are here (other than the CEO/douchebro). Certainly not the people who are out $700. Not fraud, just "My bad. Screwed you. Maybe next time.".

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

#169

Post by kjs3 »

paulddraper wrote: post #137
richardwhiuk wrote: post #21

Earlier quoted context omitted.

If you could prove deliberate fraud, which seems unlikely, then you could probably pierce the limited liability shield. Seems unlikely though.

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.

Indeed. Sadly, stupid isn't (usually) criminal.

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

#170

Post by thenickevans »

habosa wrote: post #127

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…

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.

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