
Postmates Secures $141M in a ‘Super, Super Difficult’ Fundraising Effort - scapecast
https://www.bloomberg.com/news/articles/2016-10-31/postmates-secures-141-million-in-a-super-super-difficult-fundraising-effort
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gumby
Really hard to see the defensible "moat" in the business models of these
delivery companies. As the article says, Uber uses its balance sheet as its
weapon, but the flip side of that is it will be hard for any new investor to
get much of a return in any future round -- its hard to see its defence
against a disrupting competitor. Even Lyft, which looks weaker, easily scoops
up the same drivers as Uber.

All of which means it's not clear if this is a difficult fundraising market or
not. It certainly is for these undifferentiated delivery companies, but for
tech startups? Not seeing it yet.

~~~
lgieron
> Really hard to see the defensible "moat" in the business models of these
> delivery companies.

Couldn't the same be said about a lot of the "unicorns"? For example Dropbox
or AirB'n'B don't have significant network effects and anyone with some cash
can copy their software and directly compete with them (the same way Lyft is
competing with Uber). The likes of Facebook and Twitter are an exception.

~~~
pjc50
Dropbox has a mild network effect, as soon as people use it to share files
with their friends and colleagues. Once Dropbox gets established inside a
business (often because it's easier to use than internal IT), they're probably
quite secure.

~~~
chrischen
I'd say quite mild, since if Dropbox prevented me from sharing files to anyone
over the web, half its utility is gone.

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HalfwayToDice
_" It has said it intends to be profitable, without tax-related expenses, by
the end of next year."_

That's a bizarre interpretation of "profitable".

~~~
qwrusz
I agree, very bizarre way to claim profitable.

As for the other comments mentioning EBITDA. The Tax in EBITDA is income tax.

 _You cannot be taxed out of being profitable_.

The tax rate is not >100% so if you are profitable before taxes you are
profitable after taxes. Just less so.

I have no idea what postmates means here by "profitable, w/o tax-related
expenses". Maybe something like sales tax they collected that must be
remitted? (that's not technically an expense either but they don't seem to
know what they are doing or saying at the moment).

~~~
JumpCrisscross
> _The tax rate is not >100%_

Lol welcome to New York. Even ignoring the cost of preparing reams and reams
of paperwork, a flat $4 tax on, say, bagels could very well flip margins
negative.

~~~
jdavis703
There can't really be a $4 bagel tax. And if there were wouldn't shops just
pass the cost on to consumers (similar to the "Obamacare surcharge" many
restaurants seem to be tacking onto bills currently)?

~~~
dopamean
There isn't a $4 tax on bagels in New York, and yes, if there were it would
just be transferred to consumers. Much like the local cigarette tax.

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orthoganol
I can't conceive of mainstream success for Postmates outside of bubbles like
SF and NYC - because it's just too expensive: Delivery fee (with very frequent
'surge pricing'), service fee, and prompts for tip. I've never placed an order
under $30 for a meal just for me.

And that's fine if you make 6 figures and don't cook very often, why not be a
regular Postmates person, but I just don't see how that works outside of
certain neighborhoods in certain cities.

~~~
madeofpalk
Loads of people use alternatives here in Sydney and Melbourne (including Uber
Eats). Doesn't hurt that Uber Eats doesn't charge a delivery fee and has no
minimum (for now).

Not really sure if we count as 'the bubble', but people have shifted from
calling restaurants (or Dominos) directly to using these services to 'upscale'
and discover more restaurants.

~~~
product50
Who are these people who have shifted? Are you living in a bubble yourself? I
certainly haven't seen this shift happening among my group of friends.

I feel this is more of a he said she said kind of argument. Would love to see
some data here (in terms of whether these deliveries are net additions vs.
replacements of existing chains that deliver) but unfortunately, Postmates
hasn't published anything yet.

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sargun
I find Postmates competing primarily on food delivery quite odd. When I
originally started using Postmates, it was for pretty much for everything but
food. When I ordered food from it, it was for the likes of food trucks, where
I just needed to dispatch a courier and make a free form order. Unfortunately,
Postmates discontinued support for these features.

The kinds of things I ordered before the modernization of Postmates were USB-
to-Ethernet adapters, Macs, soldering irons, and more. These were typically
high priced goods that I needed in a short period of time to keep up some
service.

~~~
perryh2
My team of ~5 people orders from Postmates every weekday for lunch and our
order is missing items about a third of the time. It's not uncommon for one of
us to reorder via Caviar's Fastbite service, where the food is on-hand and
delivered within 5 mins in SoMa. When we tried Caviar's non-Fastbite service,
we noticed the same problem with missing items. Does this happen to anyone
else? We've been having this problem for months and I'd think that one of
these companies have got it figured out by now.

~~~
Ntrails
I find it bizarre that you're consistently using a service which is bad 33% of
the time. I feel like I'd have given up after a couple of weeks - because
honestly convenience is what you're paying for and only getting some of what
you order is the opposite of convenient.

~~~
perryh2
It only happens to 1/5 of us 1/3 of the time. :) Plus Postmates at least
reimburses us for the missing items.

~~~
Ntrails
If it's me I'm annoyed and hungry, if it's someone else I'm annoyed and
guilty.

1/3 of the time lunch is wrong and there is absolutely no excuse for it. If
you went to a restaurant and they could only get your food served correctly a
third of the time you'd stop going back pretty fast I reckon

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danm07
It's going to be interesting to see where they allocate the money. They're in
a very tough market: competing with Uber for drivers and Amazon for drone
deliveries. Literally, the most inauspicious position to be in, second to
competing with Google or Elon Musk.

It's funny that selling the company was their priority, and that they had to
hire an investment bank to look for funders.

~~~
danvayn
It'd probably more accurate to say Postmates is competing with Prime Now, not
Amazon Air lol

~~~
jdavis703
I didn't downvote you, but the blasé and pedantic tone to this comment is
probably why you're getting downvoted.

~~~
dopamean
It's funny how the "lol" can change anything. I didn't think there was
anything particularly wrong with the tone until I reached the very end.

~~~
tkxxx7
Even then it sounds more like "lol this is ridiculous" and not "lol you're a
lil incorrect"

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noahmbarr
Overcoming less-than-favorable unit economics when a business is at scale is
never fun.

That said, I appreciate this startup's continued hustle.

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gaukes
Here in Berkeley, we're getting indefinite free delivery from Uber Eats. The
war of attrition has definitely started.

~~~
rkho
In SF, UberEATS has a rolling $5 off per delivery for the month of November.
Last I checked, deliveries were a flat $5 so this counteracts it. It's been
that way for ~2/3 weeks now.

~~~
ehnto
All orders were $20 off including free delivery for the last week here. Still
free delivery now that it's over.

Previous to that were free uber rides, free uber helicopter rides and all
while still paying the drivers the same amount.

It is a shame to me, because we are a small city in a relatively remote
location that had been incubating it's own smaller scale food delivery
services. Some really cool platforms that could compete with Uber in all
metrics but one: the ability to spend big to create incredible brand presence.

Everyone is now super excited about UberEats because it is cheaper and makes
us feel like we're just like the cool kids in San Fran. Meanwhile these
smaller companies will likely fizzle out, as our city just doesn't have the
capital to invest and compete.

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nodesocket
Honestly, I am shocked they were able to raise at all. I've used Postmates and
Cavier a few times, but as soon as Uber Eats released, I haven't used either
since. I exclusively use Uber Eats now and use it more frequently than I ever
used Postmates or Cavier.

I have to guess the investors (Founders Fund - Thiel) know something I don't,
because seems like a lost battle from my porch.

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majani
This is all following an eerily similar script to kozmo.

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rjvir
> Postmates raised $141 million in a financing round led by Founders Fund. The
> San Francisco VC firm, co-founded by billionaire Peter Thiel

So much for the Silicon Valley boycott of Peter Thiel.

I wonder if they would have raised from Thiel if they were in a position of
strength, and had other options.

~~~
CN7R
I honestly don't think the 'boycott' was reflective the majority's opinion.
Unless someone can compile a list of people who've said they outright weren't
going to do business with Thiel.

~~~
tyre
We are a YC S16 company and will not take money from Peter Thiel. May not be
the majority's opinion, but that seems irrelevant.

~~~
potatosoup
That's an unusual stance for someone who is a CEO of a company for "rekindling
passion for public service in millions of local government employees" and is
worrisome.

You wouldn't support people like these government employees to have freedom of
political opinion?

~~~
tyre
It's not about political opinion or because he supports the Republican
nominee. He has a plethora of public comments revealing a shocking lack of
empathy or caring about the greater good.

This isn't about politics. We're specifically apolitical
([https://octopoedi.gitbooks.io/employee-
handbook/content/Comp...](https://octopoedi.gitbooks.io/employee-
handbook/content/Company%20Policies/politics.html)).

As I choose investors, it's very important that they are aligned with the
impact we want to have on the world. Thiel is, to be generous, no where
fucking close.

~~~
potatosoup
That's fair and respectable. E.g. Martin Shkreli would probably not be a
suitable investor for you.

However: "He has a plethora of public comments revealing a shocking lack of
empathy or caring about the greater good." Very much "citation needed." If
anything, I've seen Thiel genuinely want to improve our world.

~~~
pjc50
Peter Thiel is on record _on his own blog_ as describing votes for women as a
bad thing.

[https://www.cato-unbound.org/2009/04/13/peter-
thiel/educatio...](https://www.cato-unbound.org/2009/04/13/peter-
thiel/education-libertarian)

~~~
dsp1234
and starting in just the second paragraph:

"Most importantly, I no longer believe that freedom and democracy are
compatible."

~~~
toomuchtodo
This idea is nothing new.

"The best argument against democracy is a five-minute conversation with the
average voter." \-- Winston Churchill

~~~
notfromhere
From his own blog: "Since 1920, the vast increase in welfare beneficiaries and
the extension of the franchise to women — two constituencies that are
notoriously tough for libertarians — have rendered the notion of “capitalist
democracy” into an oxymoron."

He's mad that women can vote because they don't vote libertarian.

~~~
toomuchtodo
> He's mad that women can vote because they don't vote libertarian.

I don't see the problem with this unless he's proposing a constitutional
amendment to have their right to vote removed.

~~~
notfromhere
It's a problem when he influences the political process with his money and
holds totalitarian political beliefs.

~~~
toomuchtodo
Anyone with money can influence the political process with money, regardless
of their beliefs.

Are you going to limit speech to that with which you agree with? You either
trust democracy or you don't, and quite honestly I don't. People are
disinterested, apathetic, and uneducated on the issues.

