For those of you wondering what were they doing in the huge gap from S11 to two months before. Here are some info:
1) The startup they applied to YC is called Yardsale, and it's still alive: https://www.getyardsale.com. "Yardsale, a mobile app to help folks sell goods to local buyers."
2) FOBO is founded by Yardsale, Inc. FOBO received $1.6M in Seed funding. (10/18/13)
Have to call bullshit on this one. "Run rate" for a business with single-digit gross margins (marketplaces) are a pretty different animal than "run rate" for a pure software/SaaS company.
It's mostly irrelevant, honestly, except as good marketing. If I buy $1000 worth of candy and sell it for $1000 every month, do I have a "$12,000 run rate?"
I'm not poo-pooing FOBO, only saying that "$X run rate" is meaningless without understanding the underlying economics. It's a vanity metric.
So, it's awesome they got ink based on that story, but let's not kid ourselves that this says something about the business in and of itself. :)
> If I buy $1000 worth of candy and sell it for $1000 every month, do I have a "$12,000 run rate?"
Yes. As far as I know, "run rate" refers to taking data from a shorter time period and extrapolating it to a year, and the obvious implication is that revenue is the data point being extrapolated.
You're either being deliberately pedantic or missing my point, which was to illustrate how silly "run rate" can be as financial metric unless it's backed up by fundamentals. The $1000/month candy business is a bad business and in fact the more revenue it "makes" the more money the business actually loses.
No one is disputing that this one figure doesn't give a complete representation of the health or success of a company. That doesn't mean that run rate can't be a useful metric. You just asked if you were correct about the definition of run rate, and I just responded that you were.
The biggest question for me remains unanswered, having been bitten pretty hard by an eBay scammer who claimed the camera I shipped "wasn't as advertised". How will they verify that an exchange has taken place, and how will they solve disputes?
Hi, Ryan from FOBO here. There's actually an advantage inherent to local selling in that you're able to inspect the item before the seller is paid (when you confirm that you've received the item in the app, transferring payment to the seller).
Ryan, the question is about protecting the seller against buyer fraud. How this will happen with your service are the following:
1) Buyer does not acknowledge receipt
2) Buyer does a credit card chargeback
Does the seller bear risk in these cases? If yes, why? If not, then that's great, but I find it hard to believe that your company will eat these losses since nobody else is willing to.
If I had to guess this will ultimately turn into something where the seller gets the buyer to do it in app before they part ways. Buyer has a chance to verify the product works with the seller there and seller knows the buyer has validated the exchange before leaving.
Still leaves room for products that appear to work but have some subtle flaw but this issue is still present with craigslist with local sales.
> Still leaves room for products that appear to work but have some subtle flaw but this issue is still present with craigslist with local sales.
Exactly. This is inherent to any individual sale or exchange of used items. Unless explicitly stated otherwise, products are "as is" and sales are final.
I thought this was all local stuff. At the top of my FOBO screen it says "FOBO SF." so my assumption is they just handle the payments and you deal with picking up your stuff. Am I wrong?
Sure, but most credit card transactions have other methods of at least somewhat verifying the charge. Receipts, security camera footage, IP addresses, shipment records, established businesses unlikely to randomly pick people to screw, etc.
Does this mean their revenue was $1 Million / 12 ~$83k last month (the normal definition of run rate), or the sales they processed was $83k last month?
It is almost certainly the latter. Their fees are 15%, so the revenue run-rate would actually be closer to $150k.
That being said, my guess is the service partially operates as an eBay proxy, thus they are buying some of the stuff. If that is the case, then the revenue run-rate could be close to the processing amount, as they would be the merchant of record for anything sold on eBay.
For the purposes of TC (and most likely FOBO's PR), the run-rate does make this a "million dollar business in 2 months" - yes that's what most people will think after reading this.
For anyone curious about some of the terminology here:
1) A run-rate is typically determined by using some financial figure and extrapolating it over a year. Typically this is used in seasonal businesses, where a Q4 might be strong (take Apple for example) and you can thereby project what the revenues will be for the next 4 quarters. Trying to establish a run-rate after 2 months of business is not only extremely rare, it's deceptive and almost downright lying. No respected financial person would ever use this terminology in this context.
2) It's not clear (purposefully so) what figure is being measured to calculate a run-rate. Gross sales? Revenue? Profit? Most likely it's gross sales. Again, an extremely rare case for using the term run-rate, as it's mostly used for the annualized revenue amount.
Lastly, awesome job by FOBO and can't wait to see how a whole year pans out for them! Unfortunately this is a case of appalling journalism by TC (no surprise). Subsequently it means we'll have a whole lot less educated entrepreneurs who think they can fumble around with telling investors that their app that is doing $5,000 in revenue in it's first month, is now all of a sudden the next million dollar success. (EDIT - I'm not saying that FOBO is one of them, in fact quite the opposite)
I am unfortunately addicted to FOBO. It has made me use my iPad quite a bit more, but I wish they'd make an Android version too. I think they'll see more penetration once they add some social media sharing; I think they would do well with something like Twitter where feeds go by fast.
I have made 4 purchases on FOBO, all exceptionally good deals, and I picked up from the seller right away. Zero problems. I even ran into one of the guys running FOBO on my first pickup; nice guy.
By now you probably know that Craigslist sucks as a way to sell stuff.
Uh, no it doesn't. I never got a single spam, and I've sold about 10 things (mostly electronic) over the last year. Not one of hte people flaked on me or tried to haggle once I met them. Yeah, they haggled before (on the phone or via email), but once I met them, everyone was nice and kept to the agreed upon price.
I've had enough flakers and hagglers that I now post warnings in all ads:
1 - I refuse to hold anything (first person to show up with cash takes it)
2 - no haggling on the spot; I'll turn you down on principle
It's a fucking hassle. I buy a new macbook every 12-18 months and craigslist the old one (and the same with phones). I take good care of my hardware and carefully point out any scratches or nicks in the craigslist listing. People still try to knock you down 10% or 20% when they come.
The universe of unwanted, valuable consumer electronics is probably quite small. The universe of unwanted goods whose resale value is less than the cost of disposal is pretty huge.
Add to that the huge risk of tying up capital in worthless electronics and I see this one as pretty risky.
But it might just be how ebay will have to go - small seperate communities.
> The universe of unwanted, valuable consumer electronics is probably quite small.
Spend some time exploring Ebay and Craigslist and you'll see that it's bigger than you might assume. People are exchanging a lot of consumer electronics, and for nontrivial dollar amounts. And not only the newest stuff.
As for worrying about disposal costs, I think that's unrealistic for any device that isn't actually broken. Show my any working computer or phone and I can guarantee you there's a non-negative price at which somebody will take it off your hands.
This is a case of tech-world myopia. Lots of people either don't care about or can't afford the hottest tech. An 18-month-old smart phone or two-year-old laptop still affords quite a lot of value. Which is why you'll see hundreds of them changing hands in the various marketplaces.
As far as I can tell, the FOBO app and service is a rebranding and minor pivot from their original (and surviving) Yardsale app. I have used Yardsale a few times over the past 2 years, so I suspect that was their primary effort after going through YC.
Not good enough to switch from craigslist.
Craigslist is better exposure and this app does not really solve any real problems. A perfect example of starting a business for the sake of starting a business.
For any competitor to even make a dent in Craigslist they'd need to expand well beyond SF. Almost three years, and what markets is FOBO in? When you install the app, you get a modal that says "Available Only in San Francisco". It apparently uses geolocation: I can't even look at the app if I'm not in SF.
Also, they need to expand well beyond consumer electronics: on CL I've bought furniture, cars, found freelance work, searched for office space, searched for a home to lease, and more.
FOBO could "win" 100% of personal consumer electronics sales in SF and it's probably would have no effect on CL.
But driving in a thin wedge first is a great way to tackle a monster and they've started very smartly. They can either expand or others will follow suit in other categories.
It apparently uses geolocation: I can't even look at the app if I'm not in SF.
I tried it when I landed at SFO on my last trip to SF. It gave me the same message there, even after I quit and restarted the app. (Google Maps was reporting my correct location, so it wasn't my GPS being funny.)
I mean, it's time. Right?! I am tempted to lock myself in a room for 3 months and just invent a half decent UI for them as a gift to humanity. Their interface says F off humanity. I'm not even good at UI design, not even a little... but I could still do them a service. Or they could just keep suing people?! Why don't they just provide an API and charge for it? They'd make billions and I wouldn't have to feel like my eyeballs got raped every time I need to post/view something.
1) The startup they applied to YC is called Yardsale, and it's still alive: https://www.getyardsale.com. "Yardsale, a mobile app to help folks sell goods to local buyers."
2) FOBO is founded by Yardsale, Inc. FOBO received $1.6M in Seed funding. (10/18/13)
3) More stories here: http://josephwalla.com/how-to-hustle-and-launch-in-3-weeks-t...