After raising millions from some of the most influential investors in Silicon Valley, Shyp -- a startup that picks up your stuff and ships it for you -- told users yesterday that it's significantly downsizing its service, cancelling operations in three cities: New York, Los Angeles and Chicago. It's also laying off some of the people who work at its headquarters.
The change relegates Shyp to perhaps the only market that could possibly sustain its business model: The San Francisco Bay Area.
Shyp came to be in 2013, at the height of the Uber clone craze. Built around a sleek, eponymous app, the service indeed works a bit like Uber. It lets you request a courier, who drives or bikes to your doorstep, picks up whatever items you want to ship, packs them up into a box, and then hands your stuff off to a service such as FedEx.
But unlike Uber, which often manages to undercut the price of city taxi cabs, Shyp charges users significant fees for its service -- often doubling the cost of shipping products in the first place. A laptop, for instance, might normally cost $US17.30 ($22) to ship, but $US5.00 ($6) to pick up and $US15.00 ($19) to pack. Like overpriced food delivery, Shyp hawks the sort of deal that only a supremely lazy person would succumb to. And of course, for transparency's sake, that includes yours truly. My lazy arse has used it eight times.
So why is Shyp scaling back and aching for profitability now, four years after it launched? You know the answer: The money's gone. "The market for venture financing has changed and there is now a higher bar for profitability," wrote Shyp CEO Kevin Gibbon.
A blog post penned by Gibbon suggested that Shyp had not turned a profit in any of the cities it's launched in. Gibbon, however, believes that downsizing the company's staff and working with "business customers" in the Valley -- that is, packing and shipping products for other companies, instead of just normal people -- will turn things around.
Last year, Fast Company ranked Shyp among "the most innovative companies in the world". In an expansive profile, Gibbon revealed his ambition to not just hand over packages to the real shipping services -- FedEx, UPS and the like -- but to beat them. "We absolutely want to start chipping away at a lot of the other pieces in this entire process that we can improve," said Gibbon. "It's a stepping stone to actually starting to do the delivery."
Millions of dollars later, Shyp is now a local middleman. A packing and shipping service with a super sleek app. It turns out few people actually want to pay double-price to ship stuff. In fact, these days, who wants to pay for shipping at all?