
Beepi Winding Down After Burning Through $150M - lsh123
https://www.wsj.com/articles/beepi-winding-down-after-burning-through-150-million-1487203816
======
dharmon
There's an instructive lesson here in how both valuation and annual run-rate
are meaningless numbers without a sound fundamental business underneath.

Beepi was valued at $500MM and had an almost $200MM annual run-rate, yet
evaporated and is now worth absolutely nothing.

Who else out there has 9, 10, or even 11-figure valuations and high revenues
but is actually a worthless business?

~~~
chriswilmer
Oh weird, this exact comment was also posted on reddit (r/business)

What's going on?

~~~
dharmon
Wasn't by me.

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rockarage
Learn from this. High Level Strategic planning & market research is often
underrated by the Investors & Founders, that is why so many fail. And I can
say this definitively because the reasons for failure can often be traced to
one of these two reasons:

1) We expanded too fast - the result of poor stragetic planning

2.) The market for our products was weak - the result of of limited or no
market research

In Beepi case it was reason (1) they expanded too fast. Can't imagine what
they were doing with 300 employees, technology should have been used to make
them more efficient.

Investors are more concerned with college pedigree yet that has not limited
failures. They don't know what they need to know until it is over.

~~~
mathattack
In many cases, you don't really know #2 when you start, and #1 is a matter of
timing and funding. I view this as a failure in the Venture funding process.
Companies do #1 before validating #2.

~~~
rockarage
Yes you do know #2 when you start. If I'm working on a cure for (name your
sickness) you know there is a market. You're doing it wrong if you don't know
#2 when you start. Don't be a solution looking for problem/market see: Is Your
Product a 'Vitamin' or 'Painkiller?'
[https://www.entrepreneur.com/article/230736](https://www.entrepreneur.com/article/230736)

~~~
mathattack
Many startups haven't figured out monetization at the beginning, that's why
they search for Product Market Fit. If you do MVPs properly, you won't have
burned much money on the way.

~~~
rockarage
Not figuring out monetization at the beginning is a problem, typically leads
to issues see "Inside Medium's meltdownMedium's meltdown", most smart founders
have figured it out they are just being coy. If one of your monetization
scheme involves selling your company you're not going to announce that to
everyone. Monetization is not hard to figure out if you're solving a problem,
having no strategic monetization plan early is poor strategic planning.

------
edoceo
I hate seeing things like this.

As an entrepreneur it's frustrating that I've built a business, in a growing
space, $300k ARR, consistent growth, a few employees, no debt and a well
defined path to 10x growth that's not built on any (bulshit) models that VC
seems to love. And for some reason it's very hard to find funding that's not
from Wall Street guys (who love models that earn).

Hey VCs! I can burn less of your money a little slower!! Hit me up!

~~~
boxcardavin
VCs invest in people they know and people who know people they know. Need-ta
fix that first, but those peeps might not be the type of peeps you wanna know.

"The game is the game."

~~~
dnautics
I think this is an underappreciated fact... SV (but not exclusively SV, it's
worse in academic science, for example) runs a pretty insidious narrative of
how the entrepreneurship game works, that I don't think is at all accurate.

------
dirtae
I bought a car on Beepi, and it was a great experience, much better than
buying a used car from a traditional dealership or a private party (e.g.,
Craigslist). One thing that struck me as particularly crazy, though, is that
they allowed you to charge your entire purchase to a credit card! That was
great for me, since I got a ton of credit card points out of it, but it didn't
seem very sustainable, and I guess it wasn't.

Shift (one of their competitors) also seemed quite nice, but they didn't allow
you to charge your car to a credit card, so that was one factor in my decision
to choose Beepi instead.

~~~
conchy
I also bought a car from Beepi, and it was also a wonderful experience for me.
I chose them because all of the local car dealers scoffed when I offered to
pay them in Bitcoin. So I went online, pressed a few bottons and bought a car
online from Beepi with Bitcoin, which completely eliminated one of the most
painful parts of buying a car (dealing with the bank).

Of course at the time I thought it was incredible that in 2015 I could
purchase AND PAY FOR a new car without leaving the comfort of my couch. But in
retrospect if I would have paid in dollars and kept the Bitcoin, or waited
until 2017, I could have bought a Lamborghini!

------
hkmurakami
Their "we will buy your car if it doesn't sell in X months" guarantee was the
most egregious unforced adverse selection I've seen.

~~~
dirtae
That's a good point. Beepi seemed like they were just way too generous, in
general. (See my comment elsewhere in this thread about them allowing you to
charge your entire car purchase to a credit card.)

------
nikanj
Founded in 2013, winding down in less than four years. There's a lesson about
burn rates here.

~~~
puranjay
How the hell do you burn through $37.5M a year? It's a used car marketplace?
How...?

~~~
btgeekboy
A ton of ads on FM radio would be my guess, based on on how often I heard
them.

~~~
meddlepal
Interesting... I never heard or saw a single ad for them. Literally the first
time I am ever hearing about Beepi.

~~~
bmm6o
The industry is pretty geographically fragmented. Beepi was apparently mainly
in California, though they didn't seem to have much of a presence here in
Socal. The competitors they mention in the article - Vroom and Shift - I've
never heard of, so I assume they are centered elsewhere. I know someone who
works for Carvana, so I know they are also regional and expanding (ATL and PHX
mostly, I think).

The industry is used cars, so it's a product buyers generally want to see in
person and it has to be delivered to them. So physical location is more
important than many tech startups.

------
rblatz
Sad to see them go, there are so many things wrong with the way Americans are
treated when buying and selling a car. Even though I work for a company in the
same space it was great to have a company like them around to keep us on our
toes.

~~~
vadym909
Most people understand that like trading in anything used, you get what you
bargain for. The quality varies, prices vary and you risk buying crap
sometimes. Don't like that? Pay a bit more and buy extended warranty or
precertified cars.

To sell your car, there's KBB, carmax, cars.com and any dealer you want to buy
a car from.

Beepi was just one of the many options (no hassle no haggle). However, instead
of being a marketplace like cars.com, it took ownership of the transaction
probably with hopes to take a bigger chunk of the transaction but effectively
became a dealer. Car dealer margins are like 2%. At a 5x multiple, it would be
worth 10% of Sales.

------
ww520
What is their business model? What's their monetization pipeline?

------
abrookewood
Was this just Ebay for cars?? Not really that clear. "The Mountain View,
Calif.-based startup, founded in 2013, was operating an online marketplace for
used cars."

~~~
LeoPanthera
The eBay of cars is eBay. eBay Motors is hugely popular.

------
cloudwalking
How's Shift doing?

~~~
praneshp
I hope they're doing well. We got a car from them few months ago, it was so
much better than going to the dealer.

~~~
blawson
Same, sold my car through them, and recommended a friend to the same. Great
experience all around.

The fact they were willing to deal with cars older than 6 years was the only
reason I looked at them over Beepi.

~~~
MITengineer
I heard they're burning 2-3M/month and on a lifeline at this point. SF is
"close" to breaking even.

------
beamatronic
That is too bad. I was strongly considering them for my next car purchase.

------
yueq
Beepi's business model is not scalable at all. I would be very surprised if
any experienced investor has a dime in it.

------
sjcsjc
Paywall workaround

[https://www.facebook.com/l.php?u=https://www.wsj.com/article...](https://www.facebook.com/l.php?u=https://www.wsj.com/articles/beepi-
winding-down-after-burning-through-150-million-1487203816)

~~~
Rainymood
Not sure why, but this paywall workaround goes through facebook. It does work,
but it goes through facebook.

~~~
ThrustVectoring
Because WSJ wants to have their articles shared on facebook viewable, but
throw a paywall on other attribution sources.

Like, I also do not have a WSJ subscription, but my email subscription to the
Volokh Conspiracy gets me links to readable articles.

------
downandout
Question: now that the Google workaround no longer works for WSJ links, are
they even allowed on HN? @dang has implied that paywalled articles without
workarounds aren't allowed.

~~~
maverick_iceman
Use this bookmarklet someone posted in HN a few days ago:

javascript:window.location="[https://m.facebook.com/l.php?u="+encodeURIComponent(window.l...](https://m.facebook.com/l.php?u="+encodeURIComponent\(window.location.href\);)

~~~
downandout
For those that read this, here [1] is a draggable bookmarklet that will
instantly unlock WSJ articles based on the above code:

[1] [http://salzeko.com/wsj](http://salzeko.com/wsj)

But 99% of HN users are not going to see this and the whole reason the "web"
link exists is to aid in the Google workaround, because that was the gold
standard until now. WSJ has now put itself into a special class of sites.
Unless I post my link on every single WSJ story submitted to HN, non-
subscribers (the vast majority of people seeing it here) won't be able to read
it, which means they can't discuss it etc. Therefore it would make sense to me
that WSJ links should be blocked here.

------
killbrad
Silicon valley mental bubble. I've never heard of this company (not a
problem), but there seems to be a SV problem I see constantly repeating:

\- Some people like this thing. There could be a market.

\- Investor cash gushes in; fast fellation or get no orgasm!

\- Startup uses up all of the money somehow on bullshit or self-payment of
execs.

\- turns out a good thing is now shit because VC's jizzed them full of
undeserved cash, the founders sucked up the money, and the staff no longer has
any incentive to deliver.

\- Hacker News article.

Venture capital is a major problem here. Rich idiots keep giving out money to
people that want money, hoping that one of them will become a unicorn. News
flash: the bubble is gonna pop again because venture capitalists are basically
all idiots. They gamble money they can lose. However, the average person can't
handle those fluctuations.

~~~
dang
> _VC 's jizzed them_

Please don't do this here. It's kind of gross. Also, please don't post
overheated rants to HN. It lowers the signal/noise ratio, which is what we're
hoping to optimize for.

Thoughtful critique is welcome. One method for turning overheated rants into
thoughtful critiques is to (a) edit out name-calling and pejoratives and (b)
add information, such as specific examples.

