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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

#81

Post by mikestew »

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/…

I’d rather they white-label the Segway than build the monstrosity in the video. Though the Ninebot won’t let you tote your three year old on it like in the video. (WTF? I know people do it, but advertise it as a feature? I ride a Boosted Rev to work every day, and my advice is: no one under 13 admitted, at all.)

Others in this thread are saying it was $700? Why not buy the Ninebot for $100 less? Or were the shipping models really going to have custom deck as in the video?

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

#82

Post by lsiebert »

bransonf wrote: post #59
Someone1234 wrote: post #36

Earlier quoted context omitted.

Sure, but nobody has given an example that would be considered fraud. "They spent too much on marketing and not enough fulfilling orders" isn't in itself fraud, just a badly run business that is now bankrupt as a direct result. If the bar for fraud was set that low, I bet half of failed startups would be considered "fraudulent." More than half if you look at restaurants. > Fraud is generally defined in the law as an…

On 11/13 they promised to be preparing to start deliveries on 12/15. If at this point they had not made an effort to reach this goal (placing an order with the manufacturer for example), that is a misrepresentation of fact. Fraud doesn’t imply malice. They could have jumped the gun on announcing they were preparing to deliver, but doing so would still constitute fraud, especially if this drove an increase in orders.

I'm not a lawyer, but I believe you could argue that such a statement was intended to keep people from doing charge backs or demanding refunds. In any case you probably have enough to begin discovery, and given the cost of a lawsuit and the embarrassment of what that might uncover, the people behind the company may decide it's easier to settle.

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

#83

Post by hodgesrm »

flyGuyOnTheSly wrote: post #28
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…

They were taking orders and spent the money on something other than delivery, hence could not deliver to creditors. In the UK (where my current company is incorporated) this would make the company insolvent under the Insolvency Act of 1986. It's against the law to operate in this state. [1]

We have to sign documents that assert our finances are in good order for this reason. Violating the law subjects you to various penalties. I'm not eager to find out what they are.

https://en.wikipedia.org/wiki/Insolvency#United_Kingdom

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

#86

Post by giarc »

paulpauper wrote: post #46

Facebook ads are way too expensive and tend to not convert that well. There are stories of fake likes and fake clicks. If your growth strategy involves buying click ads, find another strategy or business idea. Groupon is another company that overpaid on Facebook ads to build its email list. Disney and other multinationals are the only companies that should buying such ad.

This may be tinfoil hat territory but I'm convinced Facebook (as I can't see what someone else gets from fake clicks) produces fake clicks/likes.

I had a startup and ran very targeted ads (gender, city, occupation). We were running small dollar amounts ($200-300 campaigns) and would get likes on our ads. The use would have a modest profile set up, usually a visible minority (which wasn't out of the ordinary for our target) but often weren't in target city and would never respond to any communication. I would message them (usually very shortly after they clicked like) and would never hear anything back. Why 'like' a Saas product offering ad if you have no intention of engaging with the maker? I also couldn't understand why they were shown the ad in the first place.

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

#87

Post by Someone1234 »

bransonf wrote: post #59
Someone1234 wrote: post #36

Earlier quoted context omitted.

Sure, but nobody has given an example that would be considered fraud. "They spent too much on marketing and not enough fulfilling orders" isn't in itself fraud, just a badly run business that is now bankrupt as a direct result. If the bar for fraud was set that low, I bet half of failed startups would be considered "fraudulent." More than half if you look at restaurants. > Fraud is generally defined in the law as an…

On 11/13 they promised to be preparing to start deliveries on 12/15. If at this point they had not made an effort to reach this goal (placing an order with the manufacturer for example), that is a misrepresentation of fact. Fraud doesn’t imply malice. They could have jumped the gun on announcing they were preparing to deliver, but doing so would still constitute fraud, especially if this drove an increase in orders.

> Fraud doesn’t imply malice.

Legally it does. The discussion was about using lawsuits to break Limited Liability. In that context malice is absolutely required to stand a shot at winning.

> They could have jumped the gun on announcing they were preparing to deliver, but doing so would still constitute fraud, especially if this drove an increase in orders.

There's a large problem with this argument, by the time that delivery "promise" had occurred the exchange of money had already happened. Fraud occurs when someone receives something, through deception, that they wouldn't have otherwise received. By the point of this claim the exchange had already taken place, and therefore the claim didn't indice anyone (i.e. they didn't gain additionally from it).

I think it boils down to people conflating "right and wrong" with "fraud." Nobody is saying this business was run well or they didn't do wrong by their consumers. What we're discussing is the legal definition of the term "fraud" and if a hypothetical lawsuit would be winnable.

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

#89

Post by lotsofpulp »

sieabahlpark wrote: post #63
jberm123 wrote: post #47

Earlier quoted context omitted.

>what's to stop the same employees and founders from following that method ad infinitum? Informed consumers

I didn't realize scamming was a legal business venture.

Depends who you’re scamming. Quite a few powerful and rich people who I would classify as being “scammers”, but their victim is usually a group of people such as taxpayers.

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

#90

Post by giarc »

mikestew wrote: post #81
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/…

I’d rather they white-label the Segway than build the monstrosity in the video. Though the Ninebot won’t let you tote your three year old on it like in the video. (WTF? I know people do it, but advertise it as a feature? I ride a Boosted Rev to work every day, and my advice is: no one under 13 admitted, at all.) Others in this thread are saying it was $700? Why not buy the Ninebot for $100 less? Or were the shipping…

Perhaps their Unicorn Club (maintenance and repair program) was their selling feature?
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