
JustFab Raises Another $40M Led By Hong Kong’s Shining Capital - webhat
http://techcrunch.com/2013/09/26/justfab-has-raised-another-40m-led-by-hong-kongs-shining-capital-to-take-its-fashion-subscription-commerce-model-to-asia/
======
throwaway_yy2Di
Previous discussion, with an ethical backbone:

 _" Why can a scam company raise $40 Million Series C + $76 Million Series
B?"_

 _1021 points by wenxun 3 days ago | flag | 456 comments_

[https://news.ycombinator.com/item?id=6455391](https://news.ycombinator.com/item?id=6455391)

Here's a particularly good subthread. It would be at the top, but the root
comment was controversial:

[https://news.ycombinator.com/item?id=6455575](https://news.ycombinator.com/item?id=6455575)

~~~
jval
Love how the investor who authored that subthread was a founder of Betfair,
and is trying to defend how ethical the JustFab business model is.

... his credibility level on this topic is over 9000.

~~~
gadders
How is Betfair unethical?

~~~
phpnode
it's a company that promotes gambling, it's obvious why some people would
think that's unethical

~~~
gadders
No more so than, say, day trading.

~~~
001sky
Gambling (for clients) is a negative-sum game. Market indices (that are not
rigged) random walk but with an underlying drift. The claim that day-traders
cannot beat the market (index) does not mean they need to mathematically be
negative in returns (on average).

So, this is patently false assertion.

------
chadwickthebold
It's a little disappointing that Techcrunch doesn't mention any of the
controversy / dark pattern-ness of their subscription model, except in
passing.

~~~
seiji
Let's stop calling it a "dark pattern" (as if that's a thing) and call it what
it is: knowingly deceiving people into subsequent financial transactions they
didn't agree upon. It's morally abhorrent and not very legal.

~~~
ChuckMcM
Well is it a 'pattern of deception' right? Calling it a 'Decepitcon pattern'
would be trademark infringement :-). But I find the phrase 'dark pattern'
reasonably resonant with 'design pattern' which was a useful way to organize
my thinking about software construction. Because of that 'dark pattern' works
for me a way to organize business practices that are deceptive.

~~~
potatolicious
I find dark pattern doesn't lend it the gravity it deserves - when you say
"dark pattern" I think of sneaky ways to sign you up for mailing lists, or
sneaky ways to get you to click on more ads.

Which is to say, relatively low-damage varieties of evil.

It's a whole different ball game when you're using said patterns to directly
extract money from people's bank accounts.

It's a little like calling a bank robbery "shoplifting". I feel like extremely
egregious violations of basic morals and ethics shouldn't be described with
the same word we use to describe garden variety sketchy practices.

~~~
busterarm
This website is like a Web 2.0 version of Columbia House. It's called
"negative option billing" and they've never been stopped from doing it either.
Heck, it was only in 2011 that they actually lost a class action suit.

Companies are going to continue to do it because they aren't likely to lose.
Best we can do is name and shame everyone involved.

------
Ellipsis753
I've got to say I was hoping this would be about chip manufacturing...

------
alisnic
How many millions someone would need to sell some shoes online?

~~~
SwellJoe
If it needs a constant supply of bigger idiots to keep growing...well, one
needs a lot of capital coming in to provide the illusion of success. Investors
are piling on because they see these amazing numbers from a _shoe store_ and
believe this company has found a new way to sucker people out of their money.
And, they have...but, only new people who don't realize it's a scam. So, they
need a ton of money to keep reaching new people.

Their investor, in a comment in a prior thread here at HN, claimed JustFab
could offer such amazing deals(!) by foregoing advertising and new customer
acquisition costs. But, I bet that's a tremendous lie. I bet they have to
spend vastly more on marketing than most shoe stores, because they have to
trick an ever growing pool of people into signing on for their bullshit VIP
service or their growth will halt. Much like Groupon has _tremendous_ customer
acquisition costs, and a very high touch sales channel, JustFab is gonna have
to figure out how to keep the funnel working, because old customers aren't
going to be a thing they get to have.

I would give good odds on the following:

1\. Their customer retention numbers are misrepresented. Probably not
blatantly false, but certainly misleading by omission. Their funnel is so
misleading as to make it _impossible_ they are actually making people happy
with their subscription service.

2\. Their profit numbers required juggling of expenses to make it look good.
As with Groupon, they're probably trying to pass off ongoing marketing
expenses as one-time expenses. This would be a lie. But, it would not be the
first time a venture-backed company lied.

3\. Their investors are expecting a bigger fool to come along to relieve them
of their stake long before the house of cards comes crashing down. They are
probably right. It will probably be big, dumb, and slow money that is trying
to look smart and agile. Unfortunately, big, dumb, and slow money is often
money that most effects less wealthy folks.

Needless to say, I am not impressed with this company, its tactics, or its
investors. It is a toxic culture that accepts this kind of shady dealings as
"business as usual". This kind of thing shouldn't keep popping up every few
months...investors should be ashamed of themselves for taking part in this. If
the world were sane and just, they'd all lose their money, and a bit of their
credibility. But, the world is not always sane or just. They'll probably make
out like the bandits they are, just as the early investors in and founders of
Groupon made a killing (while the last round of investors lost a fortune).
Dishonesty pays off if the lie is big enough, it seems.

------
dandare
Just yesterday I've learned that my wife ordered something from JustFab
(luckily I saw the previous article on HN). Obviously she was shocked to find
out about the real nature of the subscription and she immediately deleted her
account.

TL;DR JustFab is scam

------
NemesorZandrak
This might be the end of startup bubble. Not that I'm a prophet but vc
starting to take part in openly scam sites and dodgy business means something.
From business point of view founder is a genius he made a business that is
dodgy got ~80 million and dispersed responsibility. So he will never get into
trouble.

------
drakaal
Should Time Life be a company? Are they the "Scum of the earth" that people
seem to thing JustFab is?

JustFab took Time Life's business model and applied it to shoes.

Yes people complain.
[http://www.consumeraffairs.com/misc/timelife.html](http://www.consumeraffairs.com/misc/timelife.html)

Yes there is a life lesson in there about reading the Terms of Service.

No, I don't think they are illegal.

No, I don't think they are the scum of the earth.

What do you want VC's to do? Not invest in profitable companies that operate
with in the law?

At the same time most of Hacker News cheers on Uber which operated illegally,
and was losing money.

What kinds of companies do you expect VC's to throw Millions at? Cause it
seems like the ones that are legal, profitable, and "scummy" are good
investments for a while.. Zynga springs to mind. Google... Quite a few people
don't like PayPal, put them on the list...

Mostly though the more you talk about JustFab the more press they will get.
How do you think TechCrunch picks stories? Based on what gets read. So the
more you vote them up the more they will write about them, the more they write
about them the more money they will raise.

Maybe I should piss off the HackerNews crowd so my company will get more
press....

~~~
abalone
This practice is _actually illegal_ in Germany.

~~~
pbreit
That is more a reflection on Germany than the practice.

~~~
brazzy
Both actually - that the practice is a scam and unethical, and that consumer
protection actually counts for something in Germany.

