3 Lessons to Learn From Shyp's Shut Down
By: Carli Evilsizer | April 16, 2018
Shyp launched in 2014 with an ambitious mission: “make shipping items anywhere around the world as easy as two taps on a smartphone” Kevin Gibbon, CEO and Co-Founder of Shyp explained in a LinkedIn post.
After running for 5 years with $62 million in funding, Shyp announced late March, 2018 they would be shutting down all operations effective immediately. Shyp allowed users to ship anything anywhere with just a few steps on your smartphone, then send a courier to your location, pick up, package and ship your items, all for $5.
Shyp had been called the “Uber of shipping,” saw initial explosive growth and raised millions in funding… so why would they need to shut down? Kevin Gibbons said on LinkedIn, “Unfortunately, our earlier mistakes had left us with too little runway and insufficient resources to continue pursuing the new direction. This brings us to where we are now: out of time.”
So what can you learn from Shyp’s mistakes? We’ve rounded up 3 key things you can learn from Shyp’s rise and fall below.
3 Lessons From Shyp's CEO
CEO & Co-Founder of Shyp
1. Focus on The Right Things From the Start
In the beginning, Shyp focused on the consumers and while they experienced initial huge growth, they were wanted that this might not be best segment to focus on.
On LinkedIn he shared, “Consumer growth slowed. People close to me and the business began to warn that chasing consumers was the wrong strategy. After all, how often do consumers ship things? I didn’t listen.”
Eventually, Shyp pivoted to focus on small businesses. Gibbon said, “About two years ago, we reallocated resources and shifted our focus to a more profitable customer cohort: small businesses. But, we decided to keep the popular-but-unprofitable parts of our business running, with small teams of their own behind them. This was a mistake—my mistake.”
So would he do things the same from the start? In an interview with Fast Company he said, “I’m not quite sure, if I were to do this again, that I would go after the consumer.” He also shared, “I blame myself for this, picking the right things to work on at the right time was our biggest failure.”
2. Build a Sustainable Business Model & Wait to Scale
It’s not uncommon for startups to accept large amounts of funding to enable them to scale and grow as quickly as possible but this can be a mistake. “It’s quite crazy, in my opinion, how a lot of these companies, they don’t really make money. And they’re able to raises gobs of venture-capital money, to fund these businesses that may not work out in the long term” Gibbons said to Fast Company.
In the Fast Company interview he shared why scaling too soon was a mistake saying, “the investment we took, everything we got, wasn’t warranted for where the business was at. And I think that really hurt us. The expectations were way too high. We had a lot of capital. We had to deploy it. And I don’t think we were ready to do that. We prematurely scaled.”
While Gibbons is confident Shyp is a great idea saying “This business should exist, It absolutely should. Consumers loved it. Small businesses loved it,” he did admit to Fast Company that they didn’t do one key thing, “what we didn’t do is focus on having a sustainable business from day one.”
3. Don’t Buy Into Hype
Shyp has been called the “the Uber of shipping,” but Gibbons shared those unicorn expectations and buying into the hype ended up hurting the business.
“Along with the initial explosive growth came the comparisons to Uber—from investors, customers, the media, even random people on the Internet. From a growth standpoint, who wouldn’t want to be compared to Uber?” he shared on LinkedIn.
“In a handful of years, Uber had transformed the way consumers thought about transportation. We could do the same, I was told. And I believed it. The numbers told a story and I became fixated on that story.”
But according to Gibbons, this comparison could be setting you up to fail. “There’s similar hype for cryptocurrencies,” Gibbon said to Fast Company, “That’s the ‘Uber-of’ of the moment. And to anyone who has anything there, I’d say, ‘I’ve been through it, and before you raise capital, know what you’re going to do with it. The expectations are really, really high, and you need to live up to that, or the chance that you’re going to fail is very, very high.'”