A year can make a big difference to how the world sees a business model.
A year ago it seemed every entrepreneur was looking to be the “Uber of” something, and every VC with a checkbook and a functioning pen seemed willing and at the ready to throw a couple million dollars, $10 million or in some extreme cases $100 million at any idea that looked like it could be the next Uber.
But the problem with all those “Ubers of,” as Karen Webster recently pointed out, is that often what they were was the Uber of Nothing business that didn’t really have a concept much past being an Uberlike business for some other good or service people might feasibly want on on-demand. And while a sharp concept is a workable strategy when investment money is flowing like water in a rainstorm, a concept is a long and far cry from a business that is scalable, sustainable and ultimately going to be profitable.
Many have fallen already, and many more on-demand startups are forecast for failure by year’s end.
And while that is a gloomy speculation that seems well on the path to becoming a grim reality, it seems worth noting that overblown pessimism can be every bit as infectious as overblown optimism – if significantly less enjoyable. Because there are parts of the Uberized economy that are still alive, well and netting funding – albeit in less heroic amounts than we were covering a year ago.
Interestingly though, those companies that by description might sound like something most easily categorized as “Uberized” or “on-demand,” the entrepreneurs that run them themselves are seemingly beginning to shy away from that title some. It is almost as if the sea change is such that there is a growing awareness that leading a sales pitch off with a comparison to Uber has become more of a liability than a salable feature at this juncture.
Case in point is Rinse, which this week announced it has secured $6 million in Series A funding for its laundry pick-up and drop-off service — a service that its CEO Ajay Prakash is pretty adamant is not the Uber of laundry.
“We never wanted to be Uber for laundry, and don’t consider ourselves an on-demand business,” Prikash noted in an interview with TechCrunch.
And Prikash isn’t just putting distance between himself and the business model that everyone is nervous about these days. Rinse isn’t about getting consumer laundry to them “on-demand” or even with a surpassing amount of immediacy. Orders are set up in advance and take a few days process.
And while Rinse does have its own army of valets tasked with picking up the laundry, they are not out roaming highways and byways at all times — they work shifts between 8 p.m. and 10 p.m. and drive set routes maximized for efficiency. That pick-up window was chosen because most consumers are home, and most prefer to personally hand off and receive their laundry, though “personless” options also exist.
Customers can have items washed, pressed and folded — as well as dry cleaned, or hung dry. There are some options for specialty fabrics and repairs, though Rinse stays away from high-end items like wedding or formalwear, but they do do bedding. The firm actually does not do the laundering themselves; they outsource to a series of vendors at a wholesale rate and generate revenue in the upcharge they hand along to their customers (retail laundry services + delivery fees).
Pricing is by the garment or pound and orders must be a minimum of $22.50. QR codes mark customer bags, which is how the company sorts so much laundry all at once.
Rinse is not alone in its segment. FlyCleaners offers an on-demand version of its service in New York and Wash.io in San Francisco is already a competitor. But Rinse, with its focus on efficiency over speed has the winning recipe here, given that few people actually need turnaround times of a few hours with laundry.
And so the service is going on the road, with plans to use its new funding to move beyond its current confines in L.A. and San Francisco. It is also hoping to expand its offerings list, particularly to include shoe care and repair.
As for the long term, Rinse isn’t hoping to get to lightening fast on-demand speeds — instead it is hoping to grow its client base to include business partners who buy the service to offer it as a perk to employees.
Rinse has seen the future it seems — and it doesn’t want to be the Uber of anything. It just wants to be the go-to laundry service of everyone.
April 20 Investment Tracker
It’s been said that April is a promise that May is bound to keep. In the investment space, let’s hope that aphorism is true.
Investment activity picked up nicely in the week that ended April 15. A total tally of $262 million (and change) marked an abrupt reversal, and a strong one, from the anemic double digits seen in the recent past, just registering as a faint pulse on the private investment corpus. FinTech was responsible for as much as 86 percent of the week’s activity.
This time around, the biggest deal was $100 million, which went to Affirm, through Series D financing in an effort to boost direct-to-consumer presence and also M&A activity in the sector. The Peter Thiel-backed Founders Fund led the financing and also led the pack with a sort of mini PayPal reunion (Affirm’s head is Cofounder Max Levchin).
Following the Affirm deal, on a dollar basis, investments slipped, to the $50 million level, as Shanghai Information Technology garnered Series C funding, with lead financing from Morningside Ventures. Close on those heels came the $40 million for Ticket Monster, based in South Korea, which got the investment from NHN Entertainment, an entertainment and gaming conglomerate.
Thus far into the month, with a total of roughly $335 million in fund flows, April seems to be shaping up to be a two-horse race, with the United States and Asia dominating. The bent here is technology, of course, as is so often the case, with at least some innovation and startup activity coming, however gingerly, into those locales. Europe barely budged.