
After 2 Months, FOBO (YC S11) Has Hit a Million-Dollar Run Rate - ed
http://techcrunch.com/2014/03/16/fobo-video/
======
jw2013
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](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...](http://josephwalla.com/how-to-hustle-and-launch-in-3-weeks-
the-fobo-backstory)

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eldavido
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.

~~~
joelrunyon
That's a fair distinction - but that's something you deal with by filtering
through context - not calling "bullshit"

~~~
sinzone
dude, in just two months.. still amazing.

~~~
jfarmer
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. :)

~~~
baddox
> 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.

~~~
jfarmer
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.

~~~
baddox
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.

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jfarmer
Deliberately pedantic. Got it.

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baddox
No, not pedantic. It's the standard and widely-accepted definition of the term
"run rate."

~~~
jfarmer
Yes, I know what it means. Thanks for your help.

~~~
baddox
I feel the need to inform you what the word "pedantic" means, but that would
run the risk of again being accused of pedantry.

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yid
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?

~~~
andymoe
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?

~~~
yid
Looks like they still rely on the buyer "confirming" that the exchange
happened, which seems like a red flag to me.

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simonk
So when your giving it over to them to look at they see its all okay and then
pull out their phone and confirm it before you let them leave with it.

~~~
ceejayoz
Won't stop them from doing a chargeback with the bank.

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baddox
But that applies to literally every credit card transaction.

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ceejayoz
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.

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everettForth
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?

~~~
jcampbell1
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.

~~~
mbesto
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)

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pdx6
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.

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dkl
_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.

~~~
x0x0
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.

~~~
xdocommer
Use craigslist experience to become better at negotiating.

Problem with this app is there is a limited amount of users while cl has 90%
of the market. So you will probably still get a better deal on cl.

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lifeisstillgood
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.

~~~
ef4
> 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.

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3327
My math may be a little rusty but how is "2 months" equal to 3 years for YC
s11 company? Can someone please enlighten me.

~~~
baddox
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.

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manishsharan
Congratulations to FOBO ! I am curious about their pivots and paths taken so
far. Wasn't YCS11 a long while ago ?

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xdocommer
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.

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amscanne
YC S11... after two months? Huh?

~~~
jw2013
"It’s been just about two months since FOBO launched its local marketplace app
for consumer electronics."

So they were probably making the app before launching.

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djyaz1200
Die Craigslist, Die!

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bdcravens
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.

~~~
juliendorra
If I'm remembering well, craigslist started as very very local. And then
expanded city by city.

~~~
djyaz1200
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.

