E-scooter company goes bust after spending big on Facebook ads • Hacker News Board

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

#21

Post by richardwhiuk » Mon, Dec 09, 2019, 7:49 PM UTC

Someone1234 wrote: post #17

bransonf wrote: post #13

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 shou…

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."

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

Seems unlikely though.

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

#22

Post by toomuchtodo » Mon, Dec 09, 2019, 7:50 PM UTC

Someone1234 wrote: post #17

bransonf wrote: post #13

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 shou…

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."

You sue the corporate officers, and it's up to them to find someone to defend them in court.

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

#23

Post by cryptozeus » Mon, Dec 09, 2019, 7:50 PM UTC

dominotw wrote: post #3

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

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

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

#24

Post by EdwardDiego » Mon, Dec 09, 2019, 7:50 PM UTC

davidweatherall wrote: post #5

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 [1] - https://unicornrides.com/…

Ah, the good ol' default "all" Shopify collection.

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

#25

Post by bransonf » Mon, Dec 09, 2019, 7:50 PM UTC

Someone1234 wrote: post #17

bransonf wrote: post #13

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 shou…

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."

An LLC does not protect one in cases of fraud. IANAL, but I believe the practices of Unicorn may constitute fraud under a legal definition.

In such a case, Nick Evans would be personally liable for damages.

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

#26

Post by julienfr112 » Mon, Dec 09, 2019, 7:51 PM UTC

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

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

#27

Post by edw » Mon, Dec 09, 2019, 7:52 PM UTC

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!

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

#28

Post by flyGuyOnTheSly » Mon, Dec 09, 2019, 7:54 PM UTC

bransonf wrote: post #13

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 shou…

You're not wrong, you're an idealist, which typically are very closely intertwined when it comes to reality.

If you gave $700 to a company who promised to deliver you a scooter a few years down the line if all of the dominoes fell exactly as planned... I would argue that you got what you paid for even if it amounts to nothing tangible in the long run.

Which is to say, you paid for a pricey digital lottery ticket with a very low potential ROI.

It's a crying shame, absolutely.

But it's nothing to burden the court systems with.

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

#29

Post by smoe » Mon, Dec 09, 2019, 7:55 PM UTC

mherdeg wrote: post #12

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 or…

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

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

#30

Post by rpmcmurdo » Mon, Dec 09, 2019, 7:55 PM UTC

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.