Washio Folds
After four years of rapid growth and innovation
Since TechCrunch broke the story yesterday that Washio is shutting down operations, I have received Slack and Intercom messages, emails, texts, and phone calls asking, “What does this mean for Starchup?”
We founded Starchup more than two years ago with the same vision that we have today: Consumers want to order laundry and dry cleaning services through a mobile or web app, and the best way to meet that consumer demand is by leveraging the distributed operations and local brands of the thousands of experienced cleaners already in the market. Our work and the many relationships we have made in this industry since, along with these recent developments, have confirmed our original thinking.
Growth AND Profitability
As the Washio founders implicitly recognized in their farewell message, venture capital enables a startup to be “innovative and ventur[e] into uncharted territory” by allowing for a huge marketing spend, talent acquisition, and service coverage. If the underlying business model is solid, this strategy can change the world. See Google, Lyft, AirBnB, and the other 43% of public U.S. companies founded since 1979.
But the On Demand “Uber-for-X” model, which assumes that “rapid growth and expansion [is required] to make up the cost of laying down territory,” has yet to be proven outside of ridesharing. For Washio, funding came with a commitment to focus on rapid growth despite questionable unit economics, a scenario that is not uncommon in the On Demand space. Indeed, as funding in the On Demand space dries up, some on-demand apps — laundry and otherwise — have moved to the software-only platform model like Starchup’s.
While many startups have only recently emphasized profitability alongside growth, Starchup has recognized both as goals — for our company and for our customers — since day one. Our flexible software platform enables cleaners to maximize efficiency by providing scheduled delivery and traditional routing. And working with local brands and operations eliminates the cost of “laying down territory.”
Market Validation
Washio accomplished a great deal in four years, “generating millions in revenue and hundreds of thousands of orders . . . over one million items of clothing dry cleaned, and over 21,000 tons of laundry washed and folded!” It successfully proved the consumer demand for tech-enabled dry cleaning and laundry delivery, and in doing so raised industry awareness of digital technology.
For our part, Starchup continues to prove that existing cleaners who utilize our efficient routing technology and mobile and web ordering services are best positioned to meet that consumer demand. Trusted cleaners across the country are using Starchup to provide a digital delivery experience to their customers. We are excited to extend that experience to former Washio users.
The first movers in any space are never guaranteed success. But just as with railroads and internet cables, they can often lay the groundwork for further innovation. We at Starchup salute Washio for their many accomplishments and for helping to lay that groundwork in our industry.
