So many organisations get excited about an app and believe creating an app ‘makes them digital’. Too often, all they are doing is taking an existing service online and not adjusting the business model to suit a new world. Paving the cow patch as we used to call it.
Below is a great article from Fortune that describes the failure of Washio, a laundry service start -up that raised $17m but did little to really change the business model.
Getting to the essence of customer needs and understanding how your business model addresses the needs is the most crucial elements in today’s world. Not easy but fundamental for success.
Turns out that demolishing laundry isn’t all that easy.
Earlier this week, on-demand laundry startup Washio told its customers that it was shutting down its service. Founded in 2013, the Los Angeles-based startup provided laundry and dry cleaning services to customers in six U.S. cities. At first, customers had to schedule the pickup and drop-off ahead of time, but in 2015, Washio added the option of a pickup within 30 minutes.
But all that “innovation” didn’t prove sufficient, despite the nearly $17 million Washio raised from investors like Sherpa Capital, Canaan Partners, and actor Ashton Kutcher.
Washio is far from the first startup in the so-called “on-demand” economy to call it quits. Last year, Homejoy, a service that dispatched house cleaners with the tap of an app shut down after it couldn’t raise additional funds, was slapped with a labor lawsuit, and generally failed to create a sustainable business, as Backchannel detailed in a lengthy report. Valet parking apps Caarbon and Vatler folded last year, and “Uber for kids” startup Shuddle shut down in April.
And we’re only going to see more of them die. Why?
Because despite their fancy mobile apps and funding from technology-focused investors, these startups are in the business of providing a consumer service. They must build complex operations that involve customer interactions and delivery staff while competing in low-margin, labor-intensive businesses.
Ask anyone in the service sector and they’ll surely tell you it’s no walk in the park. Even supposedly “mature” companies like Uber, which now offers rides and food delivery, still struggle with things like customer service, managing drivers, and providing consistent service to customers.
It doesn’t matter how shiny your app is, if you lose my laundry or burrito, make me pay a small fortune, and still can’t deliver it on time, it’s game over.