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Why we’re closing Walnut

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Re: Why we’re closing Walnut

#81

Post by nunez »

This was a beautiful post-mortem. Thank you for writing it.

They said it beautifully: when people want to spend money, they'll spend more than they should. But when people need to spend money, they'll spend as little of it as possible. Some have more forgiving tolerances on how little they'll be willing to spend. The airlines and, I think, retail companies call this metric "willingness to pay" (WTP) and spend A LOT of money trying to figure this out. The goal is to make prices as segmented as possible, since you "can't" give everyone a different price for a thing.

If Walnut took VC, they would be doing the same because, according to this armchair CEO, that's where the margins are in businesses like these (service industries).

Many people will do crazy-ass things to save lots of money (driving two hours or more to or from an airport with significantly cheaper flights, even if basic economy). And people say they care about the well-being of the workers providing services for them, but when put to the test (increasing prices), the truth comes out.

Case in point: ultra-low-cost carriers (like Ryanair) pay their crews jack shit to be the jack of all trades. The pilots will do light maintenance (heavy maintenance is contracted out). The flight attendants will check you in at the gate and clean the plane. If people really cared about this state of affairs, then they would fly with a legacy carrier that treats people in these positions better. Instead, ULCCs are beating legacies in profit hand over fist.

Re: Why we’re closing Walnut

#82

Post by nunez »

rcarrigan87 wrote: post #12

Very few people understand just how difficult it is to operate in the moving industry. Having worked with a lot of moving companies, here are just a few reasons: -In terms of stress, moving ranks just under death and divorce. Movers joke that half their job is carrying furniture, the other half is therapist. -1 in 5 moves involves some kind of claim. This isn't because movers are careless, it's just the nature of mov…

15-20% margin is a lot better than I thought it would be given the incredible amount of competition.

Re: Why we’re closing Walnut

#83

Post by nunez »

manyxcxi wrote: post #60
kgwgk wrote: post #2

In short: “What we found was that while many people complain about their moving companies, even the highest income consumers would not pay for a better service. Our mistake was conflating desire for a better product with desire to pay more for a better product”

I’ve moved three times since I had enough money and not enough time to justify paying for the help. The first time was pretty “meh”. We moved 15 miles, from 1500sqft to about 2000sqft. We did all the packing, they did the moving. They were an hour late, got lost and separated from us for another hour. But all said they were nice, didn’t break anything, and didn’t change prices on us. The second time, about five years…

Yeah, agreed.

When we moved to Dallas from NYC (about a 1400 mile move), we did it with our car and a my then-new pick up truck. I bought the truck in Dallas then drove it up to NYC, loaded it and drove it back. She loaded the rest of the stuff into the car and drove it down. I could have stuffed way more stuff into the truck bed had I bought a Leer cover, but I learned that buying truck accessories in NYC is FUCKING IMPOSSIBLE unless done online. (I also didn't want to spend $800 on it. I bought a soft Tonneau cover from Amazon for $200. Still works great!)

We spent about $3000 doing the move, much of it being spent on new furniture. That same move would have cost us >$8000 with a moving company, and then you need to hope that the moving company isn't shit.

Re: Why we’re closing Walnut

#84

Post by jimmywanger »

jblow wrote: post #46
jimmywanger wrote: post #39

Earlier quoted context omitted.

He mentions that in the article. I'll quote the relavant section at the end, but my when money is no object, you usually go by recommendation of friends. At that high of a premium, would you go to a team with good marketing copy, or somebody who has already moved your equally rich friend with superlative service? FTA: We considered our second option more seriously. High-end customers understood our value proposition,…

Hahahaha So they wanted to claim to offer a high-quality product, but don't think they can actually do that. Startup culture is so terrible.

Well, as another poster already said, there's high-end, and then there's luxury.

Take a look at this article: https://www.nytimes.com/2017/06/03/business/economy/high-end...

So high-end medical care is like a really good health plan that covers a lot of procedures. It's good enough for most people, not like the US's public safety net. You pay a little more but the market is there.

The article above is an example of a LUXURY health care service. The consumers really don't care how much they spend, but every time they got the sniffles, they get tended to by the top specialists in the field.

Kudos to the Walnut founders to realize so quickly that they'd have to pivot into the luxury segment of moving, not just the high-end one, as the luxury segment is lucrative, and the high-end non-existent.

Re: Why we’re closing Walnut

#85

Post by jimmywanger »

notyourday wrote: post #75
Illniyar wrote: post #59

Earlier quoted context omitted.

As I understand it, they wanted to offer a high-quality product at high-quality product prices, however if they moved to service the very rich they'll need to offer a luxury product, which would obviously require luxury product price. Consider it the difference between an iPhone and a 24 caret gold plated iPhone elite (which apparently exists)

No, what they wanted to do is use a sharpie to fix the the defect on a Louis Vuitton bag from Canal St and offer it to an NYU student from Taiwan as a real thing without realizing that the said NYU student's family has hundreds of real bags.

No, to continue your analogy, they wanted to be the Nordstrom of the moving world, not the Saks Fifth Avenue, not knowing that not enough people would use the high-end but not quite luxury service to make it worth their while.

Re: Why we’re closing Walnut

#86

Post by notyourday »

jimmywanger wrote: post #85
notyourday wrote: post #75

Earlier quoted context omitted.

No, what they wanted to do is use a sharpie to fix the the defect on a Louis Vuitton bag from Canal St and offer it to an NYU student from Taiwan as a real thing without realizing that the said NYU student's family has hundreds of real bags.

No, to continue your analogy, they wanted to be the Nordstrom of the moving world, not the Saks Fifth Avenue, not knowing that not enough people would use the high-end but not quite luxury service to make it worth their while.

That's the problem: Saks Fifth Ave and Nordstrom are in the exactly same market. The upmarket is Bergdorf Goodman.

Re: Why we’re closing Walnut

#87

Post by ensignavenger »

mcbits wrote: post #38
santoshalper wrote: post #34

Earlier quoted context omitted.

It's not grocery store thin, but it's not making out like a bandit either. It's pretty middle of the road.

That would be about 2x the average of margins across all industries, but I also doubt it's accurate for the moving business. http://www.aei.org/publication/the-public-thinks-the-average...

The OP did not state if that was gross profit margin or net profit margin, or operating margin, which makes a huge difference.

Re: Why we’re closing Walnut

#88

Post by burnte »

SkippyGuy wrote: post #19
thatswrong0 wrote: post #18

Earlier quoted context omitted.

A couple of pieces of legislation in the 1940s and 1950s had the effect of encouraging companies to offer health benefits in lieu of others forms of compensation. Seems to have just snowballed from there.

That doesn't make it right.

No one said it did, the question was why was it this way. This person explained.

Re: Why we’re closing Walnut

#89

Post by jimmywanger »

notyourday wrote: post #86
jimmywanger wrote: post #85

Earlier quoted context omitted.

No, to continue your analogy, they wanted to be the Nordstrom of the moving world, not the Saks Fifth Avenue, not knowing that not enough people would use the high-end but not quite luxury service to make it worth their while.

That's the problem: Saks Fifth Ave and Nordstrom are in the exactly same market. The upmarket is Bergdorf Goodman.

I suppose that's the problem, which he alludes to in his article. Basically we go shopping a lot (well a lot of people do) that's why there's so much market differentiation. JC Penny and Macy's and Nordstrom and Saks and Bergdorf Goodman all offer a slightly different experience tailored to different budgets, and the stratification is very clear.

A truly upmarket experience is a concierge who knows your tastes and scours the stores to bring you what he think you'd like to wear. Just like any sort of suit you can buy in a store is orders less luxurious than a bespoke suit you get made for you on Saville Row.

Re: Why we’re closing Walnut

#90

Post by dreamcompiler »

ggg9990 wrote: post #42
nihonde wrote: post #24

Earlier quoted context omitted.

I moved several times in Japan. Extreme care was taken in each case to correctly estimate the work, itemize the inventory and note existing damage, to secure the home, elevator, and common areas against new damage, and to obtain necessary approvals from building and local officials. The price was quite low — about USD$1,500 to move a four bedroom household to a two bedroom penthouse condo in a city three hours’ drive…

Japan is such an outlier in so many things, especially things involving care and precision, that I don't think it's reasonable to assume that things elsewhere can be similar. 6-year-olds take the subway alone in Japan, and it would be great if we could do that in the US, but most places, we can't.

That's true today in the US, but it was common as late as the 70s for 6-year-olds to walk to school alone here.
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