Dissecting Startups- Clutter
Jun 21, 2019
Do things that don’t scale
So goes the (new) age-old advice from VC Yoda, Paul Graham. After him, the deluge of startups transforming unsexy industries that, historically, don’t scale: Law; Container ships (and containers!—just kidding these definitely scale); Health Insurance (disclaimer: I used to work here); Home Buying; Oh—and also Home Buying; and, last but not least, Home Buying.
One unsexy industry that I want to focus on is personal storage, specifically one emerging front runner called Clutter.
Here are some basic facts about Clutter:
Clutter offers cheap storage units for stuff that doesn’t fit into your home
Clutter also offers free pickup and delivery when you want to put more stuff in or take it out
Clutter has raised nearly $300M, after their latest $200M Series D, led by SoftBank
Clutter has absorbed a couple of competitors in the space: Omni and Handy
Clutter operates in 10 locations (technically, 3 of them are relatively close: LA, Orange County, and Inland Empire; but they still break them out as separate regions on the website)
By most standards, Clutter is killing it, and the trades seem to agree.
Diving into the Clutter
There’s a book called Chaos Monkeys by Antonio García Martínez. It’s an entertaining enough book, but something that stuck with me was this passage:
When confronted with any startup idea, ask yourself one simple question: How many miracles have to happen for this to succeed?
If the answer is zero, you’re not looking at a startup, you’re just dealing with a regular business like a laundry or a trucking business.
To be a startup, miracles need to happen. But a precise number of miracles. Most successful startups depend on one miracle only.
The classic sign of a shitty startup idea is that it requires at least two (or more!) miracles to succeed.
I’m not saying that Clutter is a shitty startup idea. But, I do believe it will take more than one miracle to succeed. Some ideas just based off of a cursory dive into the business:
They need users to pay for long enough to pay off their CAC (Customer Acquisition Cost). This is a user retention miracle
They need users to take it easy on checking in and checking out items, because that incurs costs to the company (Cost of Revenue). This is a variable cost/user behavior miracle
They need to build an order/warehousing management system that can easily find everything a given customer has checked in. This is a technological miracle (one that Amazon is working on, as it happens)
They need deliveries and pickups to be as efficient as possible. This is a process miracle
They need their warehouses to not burn down, flood, or be hit by an earthquake. This is a literal miracle
I’d like to spend the next couple of weeks digging into this.