Spoonrocket failed because its founders were self-centered
Does Spoonrocket represent the coming apocalypse for on-demand startups? I don’t know.
But they had achieved unit-economic profitability. They shut down because they failed to raise a Series B.
And, I suspect, the reason they failed to raise that B round was because their traction looked bad. Because their product was designed for college students. And the market for on-demand meals is not college students (who already have plenty of low-price, easily accessible food options).
As an innovation consultant from 2010–2013, I did a lot research on innovation, including developing case studies and developing training materials for clients on innovation practices.
One of the major lessons we taught was that to innovate successfully, you need to understand your customers. As a result, you need to ‘get out of the building’ and go talk to them.
The contra example, perhaps the ‘exception that proves the rule’* is Steve Jobs and Apple. Folks can point that Apple never spoke to their customers, but since they were a lot like their customers and they were building a mass market product, they came out with an amazing product that fit what people want.
That works if you (the founding team, the early employees, Etc) are similar to your customers.
One of the big risks facing a startup, especially an on-demand services startup, is that you build the product for yourself or for your first customers, who may or may not be representative of the mass market you want to reach.
Spoonrocket was founded by Anson Tsui and Steve Hsiao based on a concept they developed as undergrads at Berkeley. They started in 2009 with a venture called Late Night Option, (tag line: ‘Your Late Night Delivery Food Court’) and pivoted to Spoonrocket in 2013.
I ordered Spoonrocket a couple times as a grad student at Berkeley. The pitch was ‘$6 meal in 15 minutes’. Sounded pretty compelling as a student rushing between classes, study groups, Etc.
I give Anson and Steve all the credit in the world for developing the concept and the business. They, I’m sure, have incredible careers ahead full many successes.
But the food was terrible. Cold, bland, unhealthy. I would have been as well off microwaving a burrito.
I can understand why that sort of works for college students. But the real market for on-demand food delivery is the office-worker.
From the perspective of innovation, Anson and Steve were ‘selfish’, meaning they locked-in to their own experience at the expense of the customer. Spoonrocket needed to pivot harder and faster to the larger, profitable customer base and market.
Compare Spoonrocket’s path to that of Sprig or Munchery. These companies were founded with a focus on office workers and designed their products to meet those customers’ demand for fast, fresh, and delicious — at a slightly higher price. For example, Sprig brings in celebrity chefs like Google’s executive chef, Nate Keller, or Stuart Brioza of the much-loved, and fairly high-end SF restaurant, State Bird Provision.
Their better product also, likely, boasts a better margin — Spoonrocket meals (last time I used it) were $6–9, Sprig meals are $10+. But I’ll pay $2–4 extra for food that doesn’t suck.
I had the same experience last night with Uber/Lyft. My colleague and I were leaving our client. Uber projected a 15 minute wait, so my colleague requested a Lyft. He joked about having to sit in the front seat.
The whole idea of sitting in the front seat is some vestigial oddity that comes from Lyft’s early days as a ride-sharing start up in San Francisco. I’m sympathetic to the concept of chatting with your driver and, you know, being a real person, but after a brutal 12 hour day and an hour ride home ahead, all I want to do is plunk down in the back seat and shut out the world.
Startup success comes down to so many factors that I wouldn’t pretend to — picking the right market and building a product that fits the needs of that market is near the top of that list.