Happy day after Thanksgiving! Hoping all the Americans had a wonderful day full of turkey, stuffing, cranberry sauce, and pumpkin and apple pies, and are looking forward to a week of turkey soup and sandwiches. And what better to wash down your Thanksgiving leftovers with than news of the latest instant delivery collapse?
Voly was founded in Sydney, Australia, in 2020, with the aim of “revolutionising the grocery game” by delivering groceries and alcohol in minutes, according to its still-functional website. Voly wanted customers to “ditch the trolley,” until it ran out of money and had to ditch them instead. The company abruptly shut down its app and social media accounts last week, telling users it was “closed until further notice,” before confirming by email a few days later that it was shuttering for good.
Voly was founded by Uber and Cloud Kitchens alum Mark Heath and co-founder Thibault Henry. It raised a tiny seed round in April 2021 followed by a larger seed deal of 18 million AUD ($12.2 million at current exchange rates) led by Sequoia Capital India that December. Voly’s pitch should by now sound familiar: thousands of convenience goods available in 15 minutes or less, for low fees, at a time when consumers globally were getting acquainted with home delivery thanks to the covid-19 pandemic. Like other instant delivery players, Voly also said it would hire workers as employees with wages and benefits, not independent contractors like its gig predecessors.
Voly charged a flat A$2.99 on its instant deliveries. Lest this sound impossibly low, Henry told TechCrunch last December that he believed the typical Voly user would order several times a week (low fees, high frequency!). TechCrunch also reported that Voly was growing at a rate of “100% each month,” which sounds impressive but please remember that it’s not that hard to grow 100% per month when you are going from nothing to something. This newsletter also enjoyed 100% growth or greater in its first few months, and I guarantee you it was losing less money.
While a few other companies were taking a stab at instant delivery in Australia, the market wasn’t nearly as saturated as the U.S. or Europe, which made it all the more attractive to investors. The biggest local competitor, Milkrun, was founded in 2021 and also operated in the Sydney metro area. Milkrun raised A$75 million led by Tiger Global Management in January, bringing its total financing to A$86 million ($58 million). Rapid delivery startups Send, which operated in Melbourne, and Quicko, also in Sydney, were founded in 2021 as well.
Despite this relatively uncrowded market, Australia’s instant delivery startups quickly—one might even say instantly—ran into trouble. Both Send and Quicko collapsed earlier this year. Send had reportedly burned through A$1.5 million a month and was seeking additional funds to stay afloat, but had no luck with investors and also failed to find a buyer. Send founder Rob Adams blamed the company’s shutdown on the war in Ukraine, the tech selloff, and “widespread scrutiny among investors regarding the levels of capital intensity associated with the business model.” Quicko was also reportedly attempting to raise money before closing down in March.
Meanwhile over at Milkrun, things weren’t going much better. Despite having a bigger funding cushion, Milkrun in June dropped its promise to deliver in 10 minutes or less and cut spending on worker pay after the Sydney Morning Herald reported that the company was losing $10 per order. Founder and CEO Dany Milham tried to brand this an “improvement” from an initial loss of $40 per order. Milkrun also reportedly bragged in its investor pitch dek that it would one day make more revenue per customer than Amazon does in the U.S. (I’m sorry but this is exactly the kind of insane bravado that gets male tech founders funded and female tech founders laughed out of the room.)
Which brings us back to Voly. Around the same time that Milkrun dropped its 10-minute guarantee, Voly also nixed its rapid delivery promise, closed half its dark-store delivery centers, and laid off more than half of its office staff. The co-founders reportedly blamed the layoffs on the tight funding environment, despite previously telling staff that Voly had enough cash to last until February 2023. Voly laid off more staff at the start of this month before officially going out of business last week.
In notes shared on LinkedIn, co-founders Heath and Henry each cited the “macro environment,” geopolitics, and difficulty raising money as reasons why Voly failed. “Despite achieving profitability at a per-store level, we did not have the runway to achieve profitability at an all-of-company level,” Heath wrote (everyone is some kind of profitable).
As I said the other week about Bird: the problem with the venture subsidy model is it allows companies to build unprofitable businesses that, if and when the VC funding floor falls out, often aren’t prepared to support themselves. It struck me in reading about Voly, Milkrun, Send, and Quicko that none of these companies seemed to feel it was imperative that they build a sustainable business from the outset; rather, the assumption was they would lose money until it was one day somehow time to make money. This isn’t to say that all startups need to be profitable on day one—obviously that’s unrealistic—but I wonder how differently the founder who has no expectation of continued financial support operates from the founder who envisions an endless stream of investor cash, and what it will take for the former to become the norm after a decade of low interest rates and loose VC pockets.
"This newsletter also enjoyed 100% growth or greater in its first few months, and I guarantee you it was losing less money." Lololol
Sorry if you explained this previously, but why the 🥑 avocado icon for an acquisition?