Escaping the Kozmos
About 12 years ago, on a cold, damp, New York City night, I had delivered to my apartment, free of charge, a few pints of ice cream and four music CDs for about $20. Did I need all these items? No, but they were so easy (and cheap) to obtain, I couldn’t resist. This order came courtesy of Kozmo, the infamous NYC-based delivery startup that unfortunately crumbled under its own weight.
Today, in the Bay Area, there are a handful of great startups that are trying to provide similar services. I’ll briefly recap some of these, though I’m bound to miss some. The most capitalized startups in this space are (1) Task Rabbit, where you can use a web or mobile app to hire someone for just about anything, and (2) Zaarly, a marketplace for just about anything. Task Rabbit exists in nine (9) U.S. geographies, thought I don’t have a sense of the density of activity in each one. Postmates (@getitnow) promises delivery under an hour, as does new YC-graduate Instacart. You can hire an Exec to help you do tasks for about $25 an hour.
The consumer “dream” here is, for example, to have a regular person initiate a task or demand from their phone to be fulfilled in the background by some aggregated, coordinated human service. (You know I wouldn’t write about this space without referencing Tacocopter, which gets around both human resources and traffic issues by simply just delivering goods via unmanned aerial drones.) But, seriously, these are awesome consumer experiences and they should happen. I’ve used Task Rabbit a few times, worked great. I see friends on Twitter using Postmates and Exec, among others. Every one of these companies is run by really smart, passionate folks. And, these are the ones you’ve heard about — after just six weeks of sitting on the other side of the table, I’ve seen about 20 other companies doing something analogous — bridging offline commerce and fulfillment — that’s doing quite well in the Bay Area, and a few are doing really well.
Now, here’s the rub. While folks at other web/mobile startups without this offline & human resource coordination element try to “hack growth” in order to have the chance to scale, these companies face a much higher threshold. To be fair, Uber’s growth has paved the way for others to learn, but it’s worth keeping in mind that Uber has now been around for a few years, has a specific playbook to launch in each city. And, given the nature of Uber’s work, they ruffled a few feathers. But, Uber is a big deal, and their success gives hope.
I do believe one of the startups listed above will eventually crack the nut on scaling geography in a meaningful way. But, it won’t be easy. Right now, the game is to get crazy traction in the Bay Area, where population density exists, where everyone is accustomed to using mobile devices to order things, and so forth. For the first team to cross the Bay Area Finish Line, then what? They may have to not only show a plan of attack for their next nine U.S. cities, but they may actually have to go out on their own and conquer a new geography, simply to prove that not only can they do it, but that they want to do it.
This is a long road. Groupon was able to grow so fast because it held lots of cash in its transactions and could hire armies of salespeople in different locations across the country. The market was so big that a big Number 2 emerged. But, selling to small businesses is one thing — finding, vetting, training, and coordinating delivery people is a whole other ballgame. E-commerce subscription works because we trust the delivery mechanism — UPS, FedEx, etc. UPS knows to deliver our Amazon Prime goods fast! But to get non-bike-messager-type human beings to deliver goods within an hour, let alone all day, could cause massive headaches at scale. Again, I do think this will happen — a distributed mobile-powered human delivery network — but I think everyone is greatly underestimating the problem by extrapolating the joy from having a burrito delivered at 2am in the Marina to national phenomenon.
I certainly don’t know the answers here. I do think Uber’s playbook will provide guidance. I do think Kozmo is a cautionary tale. Yes, “e-commerce” is more common now, and the economy is worse, so there should be more supply of delivery workers to harness. To win here, it will take a lot of time and serious venture capital. One of these teams has to convince an investor that they are worthy of the risk, that they have a city-by-city plan to seed both sides of their market (consumer demand and labor supply) to provide a quality experience and build a(n) (inter)national brand like FedEx or Uber. Is it possible? Absolutely. Are we anywhere close? I’m not so sure.