
Why we’re closing Walnut - Sujan
https://medium.com/@nickbkim/why-were-closing-walnut-a452225e7127
======
rcarrigan87
Very few people understand just how difficult it is to operate in the moving
industry. Having worked with a lot of moving companies, here are just a few
reasons:

-In terms of stress, moving ranks just under death and divorce. Movers joke that half their job is carrying furniture, the other half is therapist.

-1 in 5 moves involves some kind of claim. This isn't because movers are careless, it's just the nature of moving furniture. Damage is a part of moving. Considering customers are already stressed, layer on some damage and things get really fun.

-Margins are slim. Most people assume movers are "making out like bandits" charging hundreds or thousands of dollars. The reality is most well run moving companies operate on 15-20% profit margin.

-The industry is cut throat. Bait-and-switch has become the standard sales approach.[0] This is due to a number of factors including deregulation(debatable), uneducated consumers, and the internet (movers are on the cutting edge of fake review schemes. We track a few companies who change their name every Summer.)

-The industry is also trying to deal with millennials who tend to move more frequently but have much less stuff to move. These small moves are harder to turn a profit on. Also, household goods drivers are a dying breed putting further pressure on the long distance moving industry.

[0][https://www.movebuddha.com/blog/2017-summer-moving-
scams/](https://www.movebuddha.com/blog/2017-summer-moving-scams/)

~~~
nihonde
I moved several times in Japan. Extreme care was taken in each case to
correctly estimate the work, itemize the inventory and note existing damage,
to secure the home, elevator, and common areas against new damage, and to
obtain necessary approvals from building and local officials. The price was
quite low — about USD$1,500 to move a four bedroom household to a two bedroom
penthouse condo in a city three hours’ drive away, including removal,
transport, and installation of four AC units. No tips allowed. There are even
movers who specialize in overnight moves where great care is taken to be as
silent as possible. After seeing this in action as a customer, I think the
level of service elsewhere is quite low and providers have set very low
expectations for themselves.

~~~
ggg9990
Japan is such an outlier in so many things, especially things involving care
and precision, that I don't think it's reasonable to assume that things
elsewhere can be similar. 6-year-olds take the subway alone in Japan, and it
would be great if we could do that in the US, but most places, we can't.

~~~
TillE
It's fairly common to see small children out on their own in German cities
too. I'd suggest that the US is frequently the outlier in many things, and of
course it's easy to see them as normal if you've only ever lived there.

~~~
stevekemp
In Finland it's extremely common for 5 year olds to walking and cycling (on
the pavements) to school, and back.

(Both those things occur even in winter, where the temperatures might reach
-25 degrees for a couple of weeks of the year.)

------
kgwgk
In short: “What we found was that while many people complain about their
moving companies, even the highest income consumers would not pay for a better
service. Our mistake was conflating desire for a better product with desire to
pay more for a better product”

~~~
slackingoff2017
There's several companies dedicated to moving ultra high net worth
individuals. It's hard to believe there's no market between that and the
cheapest options.

Sounds like their marketing wasn't great or they ran out of runway.

~~~
underwoodley
The service they offer has existed for a long time. Rich people pay top dollar
to get good, professional movers who take care of their stuff and don't add to
the stress of moving. This company tried to provide this service, but at a
lower price, so low that they couldn't be profitable.

Unfortunately, they couldn't cover their labor costs this way. Movers who will
show up, take good care of the customer's stuff, are courteous and don't take
tips clearly cost more than typical movers who simply provide a pair of strong
arms to lift stuff up and down stairs and onto trucks, but don't give a shit
about your brand. Normal people use normal moving services who provide a so-so
service not because they are stupid but because they don't have the money to
spend on premium movers. Obviously customers who got a heavily discounted
service gave them five stars and said they would recommend them.

Presumably they tried to interest investors in subsidizing their customers'
moving to build a brand. However investors are more cautious now and have been
burned on laundry apps and similar. They understand that real-world services
don't scale or offer first-mover-advantage (npi) the same way search engines
and social networks do.

------
zdean
"In short, we found product-market fit."

"Despite our early successes, we’ve decided to close Walnut. Our tests
revealed that we could create an experience customers loved, but we doubted
our ability to be profitable long-term."

If people weren't willing to pay for a product you were offering at a price
that would sustain the business, then you did not in fact find a product-
market fit.

~~~
goatherders
I don't much care about the semantics of product market fit, but there are a
lot of companies - some with astronomical valuations - that sell things at
prices that won't sustain the business. These guys could have taken other
people's money and done the same thing. "We just need to buy market share
until the autonomous moving robots are available!"

I applaud them for not doing so. And FWIW I usually find these autopsies
annoying but this one is well written and insightful. Applause.

~~~
thisisit
This might sound cynical but given the way the conclusion has been phrased, it
is most likely they were on path to "autonomous robots" but no VC was
interested in their unit economics.

Sure, there are companies with astronomical valuations with unsustainable
business, but for whatever it is worth they seem to be good at
marketing/presenting to VCs too.

~~~
underwoodley
Moving awkwardly shaped pieces of furniture up and down stairs without
damaging them or the building is one of the jobs that is not likely to be
performed by robots for a long time to come. It is very difficult to automate,
and very easy for humans to do.

~~~
Mtinie
> It is very difficult to automate, and very easy for humans to do.

 _Easier_ , but if you’ve spent time attempting to do it, you’ll agree it is
not a trivial type of task by any means.

Judging the center of balance for awkwardly shaped furniture, while safely
navigating the interior of a multi-level residence is not on my short list of
“easy” tasks I’d sign up for on a regular basis.

In many ways, it’s a task that _should_ benefit from automation in the future.
Endurance, strength, precision, and the ability to precalculate the best
available three-dimensional routes required to move a piece of furniture are
all, individually, solved problems. Bringing them together with a form factor
that can adapt to different environments — flooring material, stairs, etc. —
and at a price point that encourages use is the challenge.

~~~
underwoodley
The price point is exactly the challenge. Robots to do this on the Moon, or
inside nuclear power stations after an accident, will make economic sense
quite soon. Robots to do this competing with a semi-skilled worker who may
have substance abuse problems, a criminal record, or be undocumented (all
factors which make them cheaper to employ) are not going to be seen for some
time. Most desk jobs will be made obsolete before this is an automation
priority.

------
yeukhon
I am a Chinese so my family usually have some Chinese contractor do the
moving. A couple years ago my family and I bought a home (finally!) and we
hired a contractor to come in, after my family and I had packed up everything
(since my dad is a jack-of-all-trade kind of a smart man).

The contractor paid two Hispanic workers to do most of the heavy-lifting work,
but we also helped anyway so we get the move done ASAP. The hardest thing to
move was the heavy massage chair so we let them moved the chair. They are
strong...

I don't know how much we paid the contractor in total, but I know it didn't go
above 1000. We tipped the contractor and also tipped the workers separately
($150 each). We are very generous when we work with nice and hardworking
people. They deserve the bonus, especially knowing the contractor wouldn't pay
them a lot. So tipping to us have to be personal, and shouldn't be part of a
system.

I mention this story because the hiring process may seem bizarre to the non-
Chinese immigrants. Contractors (construction or moving) usually hire workers
off the street. There is a place the contractors will find workers waiting to
get a job. So yes, these workers are literally picked that morning like 7AM
and the guy came around 11AM since the contractor had another job early that
morning. The contractor might find another pair the next day.

The truth is, every community has its own way to find people to do work for
them. In the Chinese immigrant community, we almost never hire an expensive
professional contractor. We (at least the people I know) believe Americans
charge us way more for the same, if not, less quality work. We "joke" about
how schools can save so much money if they'd pay a licensed Chinese
contractor.

My dad also doesn't use Uber because (1) he doesn't speak very good English,
and (2) he can call a driver for $25 going to JFK with just one call (plus
maybe $10, $20 tip). We can go anywhere in the tri-state area in range of
$20-$75 in a comfortable SUV. The Chinese community (Korean and Spanish
community also have this) also have a shuttle bus that goes from
Queens<->Chinatown, Flushing<->Chinatown, Brookyln 8 ave<->Chinatown for $2-$3
dollar. You call the call center, tell the operator which shuttle stop to pick
up from.

"If it ain't broken, don't change." For the same service quality, why go for
something more expensive?

~~~
rtpg
You've mentioned it yourself: Many of the people in these systems are likely
underpaid. Systemic exploitation is the name of the game for a lot of the base
infrastructure in our society.

I'm for communities helping each other, but in your moving example you think
those workers have health insurance? Why do you have to sneak the tips?

I bet the bus drivers make a good amount of money though.

~~~
sidegrid
Why in the US do you have to rely on the employer to provide health insurance?
So weird.

~~~
thatswrong0
A couple of pieces of legislation in the 1940s and 1950s had the effect of
encouraging companies to offer health benefits in lieu of others forms of
compensation. Seems to have just snowballed from there.

~~~
SkippyGuy
That doesn't make it right.

~~~
toomuchtodo
We're working on getting it fixed. Pardon our dust.

------
oldboyFX
How is this a startup? You can't scale it fast, it's not using an innovative
business model, it's not driven by tech at all.

It's just a normal company trying to offer a better service at higher prices —
which is okay — you don't need to slap a startup label on everything.

The medium piece was a great read. Kudos to everyone involved!

~~~
r0ze-at-hn
A startup is a company that is trying to find a sustainable business model.

startup != tech

~~~
oldboyFX
And which companies are trying to find an unsustainable business model?

------
ineedasername
This was an interesting postmortem, but nearly the first thought that struck
me as it proceeded into the closure reasons was that many of the factors (to
be fair, not all) seem to be industry knowledge easily gained through the
market research about the industry.

This gives the appearance that Walnut founders either didn't perform this
research (seems unlikely given the research-heavy approach they displayed) or
had a large blind spot when deciding to move forward, a bit of blind optimism
that somehow it might work out.

~~~
hodgesrm
It kind of sounded as if they didn't like being movers once they got to know
the business.

~~~
scandox
Yeah they turned up at the saloon with pearl handled revolvers and ordered a
mint julep.

------
FooHentai
>I will NEVER move again without Walnut.

Well, that guy's boned.

------
pfarnsworth
In SF I use Delancey Street movers. The experience has always been phenomenal.
And they hire ex-cons who are trying to change their lives so it's win-win.
Any tips that we give them is tax-deductible and goes towards programs for the
employees and their families for outings, etc. Everyone works so hard, and
they are extremely efficient, I have had no qualms giving 50% tips to these
guys and I've used them 4 times now.

~~~
codinghorror
yes Delancey Street is great. They also sell xmas trees!

------
0898
I wonder if the founders considered serving the B2B market, rather than B2C
audiences.

Corporates are more likely to appreciate the 'hospitality' service, and less
likely to be price sensitive.

(I've no doubt they did consider this – I just wonder why they didn't think it
viable.)

------
mathattack
It seems like they're also hurt by moving not being a repeat business. You
have to rewin your entire book of business every year.

~~~
goatherders
Agree and huge point to make. Having to constantly acquire new customers
instead of being able to grow existing Customers is very difficult.

~~~
speedplane
That's a challenge but they could have made it work. Casper is making it work
(I think). They could have also tied it to storage service and found their
recurring revenue.

------
seibelj
Amazing write up, thanks for this. Question though - I always thought hiring
movers was a higher-end service that targeted richer people? Most people I
know rent a truck or U-haul and get their friends to help move for a case of
beer...

~~~
ghostly_s
How old are you? I think most people find the pool of friends willing to break
their back all day for free beer gets pretty small once they're all starting
families etc. I hired movers for the first time this year and I'll never go
without again. I'm 29 and make a pretty modest professional salary, so it was
a big expense for me, but paying a few hundred bucks was well worth it for
getting something done in a couple hours that would have taken all days and
left me with a sore back for the better part of a week otherwise.

~~~
greggman
I've moved 25 times. only once have I hired movers and they stole a TV. Having
moved so many times I learned the key is to have absolutely everything packed
in boxes and or in a state that's ready to move on moving day. if it's all
packed it will take < 2 hrs to put it all on a truck and even less to unpack
from the truck. If it's not ready to go and any kind of packing had to happen
on the day it has always taken 3x to 5x the time.

------
nunez
This was a beautiful post-mortem. Thank you for writing it.

They said it beautifully: when people _want_ to spend money, they'll spend
more than they should. But when people _need_ to spend money, they'll spend as
little of it as possible. Some have more forgiving tolerances on how little
they'll be willing to spend. The airlines and, I think, retail companies call
this metric "willingness to pay" (WTP) and spend A LOT of money trying to
figure this out. The goal is to make prices as segmented as possible, since
you "can't" give everyone a different price for a thing.

If Walnut took VC, they would be doing the same because, according to this
armchair CEO, that's where the margins are in businesses like these (service
industries).

Many people will do crazy-ass things to save lots of money (driving two hours
or more to or from an airport with significantly cheaper flights, even if
basic economy). And people _say_ they care about the well-being of the workers
providing services for them, but when put to the test (increasing prices), the
truth comes out.

Case in point: ultra-low-cost carriers (like Ryanair) pay their crews jack
shit to be the jack of all trades. The pilots will do light maintenance (heavy
maintenance is contracted out). The flight attendants will check you in at the
gate and clean the plane. If people really cared about this state of affairs,
then they would fly with a legacy carrier that treats people in these
positions better. Instead, ULCCs are beating legacies in profit hand over
fist.

------
justboxing
Perhaps a digression, but how does something like compare with individual
movers like "Guy with a Van", "Girl with a Van", "Brothers with Van" type
single person operation?

Quite a few of them seem to be in business for many years and seemingly doing
well enough to not close shop. What are they doing different to stay
profitable?

Source:
[https://www.google.com/search?q=guy+with+a+van](https://www.google.com/search?q=guy+with+a+van)

~~~
5555624
Operating locally. I've made a couple of moves with these type of movers. They
were local moves and that was the first question when I called them. It was $X
an hour, for 2 people, with a minimum number of hours.

Typically, they don't pack your items, either. They load, drive, and unload
the truck. They may or may not disassemble furniture. For example, on several
local moves, my dining room table was never disassembled; but, on a recent
move of a couple of hundred miles, the legs were taken off.

~~~
underwoodley
IMO it's worth using these guys. Moving with even the best movers in the world
is still pretty stressful. Moving with basic movers is only slightly more
stressful, but a lot cheaper.

------
forapurpose
Moving is detail-oriented work. Ignoring the simple case and consider moving
to multiple locations and not all boxes being unpacked. That requires: 1) Many
moving pieces, 2) all labeled correctly, 3) all routed correctly, 4)
undamaged, and 5) multi-object units delivered together [0]

Pulling that off with a sizeable move takes a lot of process and discipline,
as anyone who has tried to execute a highly detailed IT project knows. Also,
people tend to not focus on details when they are exhausted. I doubt you can
get it done well at a price people are willing to pay.

[0] For example, a bookcase might include: A 'frame', removable shelves, pins
that support the shelves, and for some bookcases a removable back. All these
objects must come back together at the destination - 'what are those shelves
for?' 'Where are the pins?'

------
stefantheard
Incredibly valuable information in the article. I appreciate how transparent
you guys are and I'm genuinely thankful for you sharing the experience.

------
xolve
Confused it with: [http://www.getwalnut.com/](http://www.getwalnut.com/)

------
santoshalper
That had to be incredibly tough.

------
crwalker
This was a well written post mortem and I appreciate Nick's honesty, but it
left me with the impression that Walnut closed because the team ran out of
willpower.

There were a lot of challenges and concerns described, but rather than
attempting to surmount the challenge, the team decided to quit (of course,
sometimes that's the best choice given the circumstances).

------
pvaldes
What means 'walnut' in this context?

One of the problems IMHO is that everybody wants a cool and short name like
'apple', without noticing that apple has passed long away the state in what
people would identify their trademark name with a grocery. "Fruit means
computer" is not something that happens in a day in the mind of customers.

Why to choose a name that does not add clues about what the company is doing
(and expect that the customers will learn to fill the gap)? For each
sucessfull 'uber' there are decens of other brands that didn't stick.
Programmers love add a layer of mystery about what their programs do. Probably
to not give much hints to the competition. Graphic designers have also their
bible and will say that a name must measure this and be coloured like that,
but you as a company have literally a few seconds to grab the customer
attention. If the message is unclear or not complete you lost customers.

Starting with something like 'Walnut movers' could look old fashioned but
probably will be more efficient.

~~~
speedplane
I disagree, and further, I think it's dismissive to think the naming was done
by a bunch of programmers.

It's not an easy decision to choose a more obvious descriptive name, rather
than a less obvious mysterious one. Clearly, if it's descriptive, people know
what you do, but on the downside it weakens the brand.

A company like this is taking an old-school service, and wrapping it beautiful
branding and a more hassle free sign-up service. The actual product they
deliver (moving services) is almost secondary to this.

So the entire company's competitive advantage is based on their brand and
reputation... that's okay, many companies do this. For a company where
branding is not the only competitive advantage, it's not a bad idea to be a
bit more descriptive (e.g., General Motors, Showtime). But for companies where
branding is their entire company, it does make sense to be a bit less
descriptive and focus on building a strong brand identity.

