American E-scooter Startup, Unicorn Shuts Down And Becomes Bankrupt As It Had Spend All Its Money On Facebook Ads!
The electric scooter startup from the co-creator of gadget tracker Tile, Unicorn is shutting down operations after blowing all its cash on Facebook ads but only receiving 350 orders for its glossy white e-scooters, it claims. In an email to customers, the company says it lacks the resources to deliver any of its $699 two-wheelers, and won’t be issuing refunds “as we are completely out of funding.”
Unicorn CEO Nick Evans in a remorseful phone interview with Thailand Startup
News said the company had “totally failed as a business” and has also “spread the cost of this failure to you, the early customers that believed in us.”
The startup Unicorn emerged six months ago as part of a new crop of scooter startups hoping to capitalize on the popularity of dockless rental services like Bird and Lime, while also pitching itself as an affordable alternative to shared scooters. In addition to having a striking profile the all-white look was really something the scooter was loaded with a lot of high-tech bells and whistles, like GPS tracking and smartphone-enabled locking. Naturally it included integration with Tile, Evans’ other company, which uses Bluetooth to track lost items, like a wallet, keys, or phone.
Six later, Unicorn is no more. The company claims it sunk all its money into advertising and marketing, as well as loan repayments and other expenses, with little leftover for production and deliveries.
Unicorn said that they could have continued moving forward and taking more orders and that would continue to fund the business, and if they did that might have been able to deliver the product, but they also may have not been able to sell enough Unicorns, so by doing that they would be risking more people’s orders. So they made the very, very difficult decision to stop.
According to the startup, A huge portion of the revenue went toward paying for Facebook ads to bring traffic to the site. A portion also went to our manufacturer in the form of a down payment to build the scooters, but unfortunately that down payment cannot be redeemed for a portion of the scooters that we were planning to order. (Sorry but Thailand Startup News was giggling away at this…anyone hoping to generate business through facebook must be bloody stupid, facebook users are crap and facebook as a platform is simply extorting money with their filthy tricks and their conversion are simply low and too overpriced.)
According to Unicorn, the cost of the ads were just too expensive to build a sustainable business. And as the weather continued to get colder throughout the US and more scooters from other companies came on to the market, it became harder and harder to sell Unicorns, leading to a higher cost for ads and fewer customers.
The startup is working on selling its remaining assets in order to give partial refunds, but Evans warns that even this is “looking unlikely.”
Purchasers, as you can imagine, are pissed. “I am upset he basically robbed everyone of his customers and is closing without delivering any scooters,” Rebecca Buchholtz wrote in an email “This was my daughters Christmas gift and now I cannot get her any gift.”
“Personally, I find it shocking that someone like Nick Evans who has name recognition and clout in the tech community due to Tile, would operate in such a fraudulent way,” wrote Matt Furhman. Another customer, who said he is now out $998 after ordering two Unicorn scooters, called Evans “a thief.”
All customers have been advised to contact their credit card companies and dispute the charges from Unicorn.
Evans said the company had received only around 350 orders. “I feel horribly guilty that we left people with no scooters and no refunds,” he said. “We are working on something, but, yes, this seems unlikely.”
The startup Unicorn isn’t the only electric mobility startup to fall on hard times. Inboard Technology, an electric skateboard startup from Santa Cruz, California, is currently liquidating its intellectual property and assets after attempting to pivot to electric scooters. All 24 employees have been laid off.They too claimed that hey lost money on online advertising.
appear to have found some success through a more old-fashioned method of marketing: celebrity endorsements. Unagi’s e-scooter apparently is a hit with musicians like Kendrick Lamar, Chance the Rapper, Halsey, Steve Aoki and teen pop megastar Billie Eilish which has helped it raise $3.5 million in venture capital.
The electric scooter boom has been uneven for many startups. Big companies like Bird and Lime were able to stay afloat despite an unprofitable business model thanks to large infusions of capital from investors. But terrible unit economics, and the seasonal nature of the business, has made it difficult for smaller startups to gain a foothold. Companies like Unicorn, which sought to partner with China’s Segway/Ninebot on manufacturing (and whose Segway ES2 the scooter closely resembles), find themselves facing enormous upfront costs that are difficult to recoup without a swell of customer preorders. It’s also an example of how difficult it is for scooter companies who just take Chinese-made vehicles, paint them and give them a new badge, and some fancier add-ons, and then try to sell it in the US at a markup.
But important on all, people have to be wary of online marketing agencies who ask you to blow budgets on facebook ads etc. Its really not worth it these days, and sometimes old fashioned conventional marketing traits combined with some digital strategies might be more effective in scaling up a business.