I empathize completely with this team because my company was in a very similar situation in 2018. We had two very technical computer vision products, had found traction and a growing enterprise user base but revenues didn't grow fast enough and all of the major companies were entering the market.
We were lucky enough to find an acquisition off ramp last year but all of the feels are the same.
The big takeaway I learned is, if your differentiating product/service could be classified as a feature (which most ML or CV products are) inside a platform or application, you'll be run over by the major platforms who rebuild your product/services inside their platform.
Your only hope is that your team/data/IP is so far ahead and the acquiring company can't build what you're doing in-house more cheaply than what you're willing to sell for. Unfortunately it seems like there are fewer and fewer cases where major players can't rebuild your work more cheaply.
Second, it's excruciatingly difficult to prove the value of your product/service to a potential acquirer because you don't know their metrics, and if you do, you don't know their acquisition strategy. We did an intensive integration of our product with a Fortune 50 retailer, and based on their own numbers showed (using their own A/B tests) that our service provided a statistically significant lift in a core metric that they cared about, in this case paid conversions. Their CEO even talked about it at a public summit. However their acquisitions strategy didn't include small companies that aren't major strategic partners (Only >$200M+ acquisitions).
The worst part here is that, the founders (like I was) are absolutely in love with the technology and how amazing it is. The problem is, from a business perspective, that basically doesn't matter. You could be doing the most amazing work in NLP token inference, but if the product doesn't fit perfectly as an acquisition and it's not so compelling as to build a huge platform around, it's probably going to fail.
I wish it weren't the case, but it leaves me questioning what the value of doing really hard technology is as a startup. It seems clear that the most financially successful startups aren't solving fundamentally hard technology problems until they get to scaling something with broad product market fit.
> ... it leaves me questioning what the value of doing really hard technology is as a startup
Totally agree with this sentiment. I think this is why most "hard technology" problems are left to huge R&D departments or the government. Both of which aren't particularly nimble or profitable. There are a few notable exceptions (Oculus comes to mind), but most unicorns don't generally deal with solving tough problems. It's mostly about product-market fit and the balance sheets.
I completely agree with all of your points, having built a Face Recognition API in the past at Lambda. If it’s a feature, high willingness to pay customers will just build in house. Low willingness to pay customers will want to use it for free or not enough money to keep the lights on. It’s difficult to build an API business with pure CV/AI/ML for that reason.
I know this is unrelated, but I want to thank you for your work on Kessel Run. It’s inspiring to meet folks in the DOD working hard on making software work for our national defense. I ran into some of your colleagues and was very impressed and excited about that program.
Let me share another aspect, the Chicisimo and their company should go down. The whole idea is terrible, instead diversifying between people, they are streamlining wear and if they succeed everyone will look the same. As happened with pop music after ai generators were involved... some things shouldn't be touched by machine.
Would you say that building technology with the hope of being acquired is probably a bad strategy? It seems to me it should be safer to try to build some kind of product/service using that technology, that way you have at least your product as a revenue channel, and your product can make a business case for the technology you're developing as well (as well as server to increase awareness).
A takeaway seems to be: if you're going to use AI in product, let the AI power a whole new type of product, not use it as a feature in an existing one.
Looking at your own brand homepage, my impression is that it is too technical. I had expected to see many instagram-like pictures of people who demonstrate that they have managed to dress better by using your product. Isn't your value proposition that people can dress better?
Maybe I have overlooked it but I think you have the perfect software to run an online shop. Pay influencers to use your product and viewers who like the results will want to buy clothes from you. The profit margins of the sold products should be higher than anything that can be made from selling an app.
Thanks bumblebee4 - fashiontasteapi.com is a the b2b side of the company and the value prop is that we can help retailers automatically classify clothes and understand/classify people. It is for technical and business people, not the end consumer. This is a line of business we were just starting, and hopefully will continue.
FIRST build a successful business, THEN try to sell it.
You try so sell something that's essentially worthless, and even worse: you have zero negotiating power. So at best, you would accept an offer of ~10'000 USD. This is the cold hard truth in this case, and I don't mean it in any bad way.
This is a brave post. It takes a lot to share this with the world. I truly hope the right partner comes along and makes the best use of all the hard work you put into this. Respect
Looking at the technical bits, I can't help but feel that you've failed to communicate it well. Case in point, the caption for the edge detection image of the girl:
> “…providing interactive access over a worldwide computer network to the plural fashion images, together with access to the fashion data for the fashion items in each of the plural fashion images and the information linking to the vendors of the fashion items…”
This sentence (with ellipsis!) does not appear anywhere else in the article, so right off the bat it's hard to understand what you're trying to convey. Secondly, it's insanely verbose, the whole sentence can be boiled down to "hosting fashion images with relevant metadata". If it's an excerpt from one of your patents, then without context it only muddles the situation — it makes it seem like you either don't know how to communicate your tech or you're trying to mislead.
Yes you are right, it is an excerpt from one of our patents. I completely agree that it is very confusing as a caption, and I've taken it out. Doing it in a hurry didn't help. Thanks for the heads up.
What strikes me as odd is how unstylish everything in that post and on the fashion taste api website is.
Is that intentional? Because I would think with $3.5M in funding, you can hire professional photographers, models and stylists to make the photos and the videos. And a webdesigner to make the site.
The appstore pages look better. And you have good ratings from thousands of users. So why do you want to close it down? How many users do you have and what are your running costs?
You are right, the fashion taste api website does not intend to be stylish. It tries to convey a message to business and tech teams, and we know it could have a better design. Take a look at the consumer product https://www.youtube.com/watch?v=EMMmdCB1-Wg hopefully you like the design better :)
There are other ways to proceed when your running low - in my experience it depends heavily on how hungry a bulldog you have built (i think paul graham said this) which is often a function of when you raised cash. If you have to make payroll and can't proceed without all those people sat in their we-work seats with computers you need to buy them thats a difficult spot. We have tried to stay lean for as long as possible and avoided taking cash because we work in medtech and don't want investors that do not understand our roadmap and milestones. We have found partnerships with academia, government, and research institutions have helped drive our project forward without needing to play the VC game. We advance our product and havent given equity away.
(b) The Alexa interaction felt awkward. Probably a touch interface would've worked better.
(c) Ugh, (used?) boots on the TV stand.
(d) Many of the clothing items we own are Asian items without barcodes. Wonder how the import would work on those.
(e) The website (chicisimo) could use a lot, and I mean a lot of copywriting love. So many walls of text. Some fashion photos should be front and center. It is hard to understand what is going on in the animated iOS screen.
This stuck out to me too - maybe OP's using product as a catchall for "non-engineers", but with a ratio like that I'd be very curious what kind of bottlenecks the team's facing and what kind of daily work output's being generated.
Having been through this, merely contacting the potential acquirers, confidentially or not, gives the perception that the startup is or will be out of cash, anyway. Every remotely acquisitive company is getting several of these inbound missives every day and they always assume the startup is dying. I don't see much downside to a different tack at this point and, if anything, it may serve to jump-start the auction process.
As long as there are multiple acquirers, the auction may approximately-fairly-value the company.
They make the case that they have talent, domain-knowledge, and patented IP. The company may be out of cash, but it is not intrinsically out of the fight, so long as cash can be made to appear suddenly.
Furthermore, any acquirer would be able to see the company's books, removing any information-asymmetry on the free-cash point.
Engineers like to hire engineers (and designers/product people). I think its because the utility and scope tend to be pretty obvious and you can always see more and more to build. As a founder with an engineering past (although you never stop being an engineer!), I always find it a bit trickier to hire the non technical parts because you need to do their jobs first to really know what you need and generally, you need to navigate more ambiguity in an area of the business where you have less training and experience. That said, for the right products and business, you can probably get a way with borrowing resources from engineering for some marketing - I find that engineers with high EQ often make great digital marketers assuming they have some creative/content generation skills because they can really tune ads and think about the whole funnel in a very technical and numerical way. I have also found that it helps to have entirely nontechnical for the creative and advertising as well as there are a lot of places where engineers just can't always see past their engineering goggles.
1:1 engineer to product person ratio seems off to me, especially for a small company. Even if that person has to do product/sales/evangelism/marketing, you should really need 2 or 3 people max if you only have 4 engineers, especially when those engineers are building so much from nothing.
If the business model won't be acquired, then business folks won't count towards asset. Better to let them go or emphasize relevance to product development going forward.
As someone who is interested in one day starting my own business, I have nothing but respect for someone who has the guts to follow through with that and pursue their vision.
That being said... why did you (or if anyone else can chip in) decide to chase funding when you didn't have a business model? Maybe I'm being naïve here, but isn't it kind of crazy to raise 3.5M in funds for a business that has no plan but to be acquired by someone else?
I'm torn, because I believe that people should absolutely pursue passion projects, and that a passion project should absolutely be monetized... if you have developed a respectable business model and a potential product-market fit.
My first thought is that you could get some funding and use this as a platform for fashion retailers to exchange consumer profiles at the B2B level, or as part of the internals of the recommendation system.
> Maybe I'm being naïve here, but isn't it kind of crazy to raise 3.5M in funds for a business that has no plan but to be acquired by someone else?
That's pretty common, and is basically what seed funding is. The paradox behind markets and investment is that logically speaking, if a potential company has a profitable business model, that company should already exist. After all, with millions of potential entrepreneurs across the globe and trillions in funding chasing them, the chance that an obviously profitable business model hasn't already been dreamed up and implemented by an entrepreneur is basically nil.
So what investors and entrepreneurs do is they agree to take on risk with their capital, for the potential of great reward if it turns out they can come up with a better way of doing things that isn't already being done. The only way to do this is to explore virgin territory: do things that seem plausible but haven't currently been tried by existing companies, and then see if you can create a profitable business model with the results. There's a good chance that you can't, in which case okay, it was an experiment, you spent $3.5M to learn something that had the shot of being worth billions.
> Maybe I'm being naïve here, but isn't it kind of crazy to raise 3.5M in funds for a business that has no plan but to be acquired by someone else?
Not exactly. A lot of startups can function as R&D for larger tech companies: Big tech companies have lots of money but aren't great at innovation. They might spend 10s of millions of dollars just to get a lesser quality version of what they could own if they just bought the best startup in the space. This is why companies with $0.00 revenue get acquired all the time. It's a simple calculation: will it be cheaper to buy or build this tech? For many companies it's cheaper to buy.
That being said, Chicisimo is in a very tough situation. The problem with their strategy is:
1. They have to be acquired or they'll go out of business. This is a terrible negotiating position to start from. There is no walk away power. If I was an interested buyer, why wouldn't I offer an insultingly low price? How does $100k to cover legal costs and a nice signing bonus to your employees sound? Do you have a better option?
2. They need a buyer who needs their experimental technology. This is what's called a "strategic acquisition". And they are almost impossible to engineer from the startup's position. The chances of a finding company with a lot of cash with an exec who wants experimental tech enough to spend a decent amount of money on it are almost certainly zero. If they haven't attracted the attention of a buyer by now, it's unlikely that they'll become more attractive now that they're about to fail.
Having been in this situation myself, it is so helpful to have some revenue to fall back on. That way you can demonstrate that the business is worth something.
I wish them the best of luck. Hopefully they pull something out here but the chances are low.
From the startup's side: We don't actually know the business yet, so we need resources to fund our runway while we figure it out (ie. interact with the market enough to make smart pivots toward profitability).
The the funder's side: We basically don't give a shit what the business turns out to be, we want to fund talented teams that we believe can pull off profitability.
The real question is who invested, and why? Even though being an investor doesn't mean being smart at it, it's still a signal that those guys are/were onto something and needed the cash to accelerate/deploy. $3.5M for such a small remote team though... I'm not running the numbers but they were cash burning big time, for a long time.
I’m no fan of the startup and HN definition of success being valuation, revenue, or market cap while ignoring (the lack of) profitability.
But from a cynical standpoint, why not take VC money if you can get it? It seems like you should take VC money if you don’t have a business model that would lead to being a profitable ongoing concern.
If I can see profitability, why would I give up equity?
You let other people take the downside risk. Why use your own money instead of other people’s money.
My first thought: It's could be very difficult to build a product to a stage where product-market fit can be assessed without external financial assistance. I think most products can be brought to this point in a year or two with a team of 2 or 3 people, but that's a pretty sizable chunk of living expenses and possibly salary that needs to get paid.
If the only people who can start companies are the ones that have at least a few hundred thousand dollars in the bank, that really limits the field. I think VC probably plays a beneficial role here, opening it up to people who otherwise would have no freedom to spend a year or two pursuing an idea that may or may not convert into a profitable business.
>That being said... why did you (or if anyone else can chip in) decide to chase funding when you didn't have a business model? Maybe I'm being naïve here, but isn't it kind of crazy to raise 3.5M in funds for a business that has no plan but to be acquired by someone else?
If you can raise them why would it be crazy? It's only crazy for those that give the money (and for them they could be spare change)
Google didn't have a business model when they started but they were sure they were building something useful. I don't know much about fashion and I don't know if what they have is truly useful, but I respect them a lot and will see if I have contacts I could introduce them to.
That’s an interesting article. To me, that company should have been really valuable and done really well especially in the retail clothing industry. I wonder if it’s more luck and connections than anything that has to do with product when forming a company
Who you know, luck, being in the right place at the right time are MAJOR components of success in life. Infinite number of equally talented people in this world, without the right path.
Don't confuse a software product with a business model. Their own words state they've "solved" the previous human problem of fashion without figuring out a viable way to capitalize. That means they don't yet have the right product. I think they've solved an intermediate problem on the path to the actual underlying pain that people would pay for.
This process needs some work. It replaced the girl with an entirely different girl, and swapped her Metallica tee for H&M, effectively removing her taste.
Assuming this can recommend clothes that someone is going to immediately love based on previous purchases, this seems incredibly valuable for all the fashion e-commerce sites starting from Amazon, and could in fact turn any large site with this technology into a monopoly at least until someone replicates it.
Of course it needs to actually work though, which is not clear from the article (categories like "comfy" aren't going to cut it, you probably need a sophisticated deep learning approach on product images plus brand identity data and maybe Instagram posts with a lot of training data).
Obviously you can also run a store or an affiliate-based site yourself with it, but the problem is that you are going to be missing data on customer's taste; maybe you could exclusively cater to people who love posting their photos on Instagram, connect to their Instagram account and understand their fashion taste from their posted photos - or you could even support imitating someone else fashion's taste by looking at their Instagram profile.
Yeah, this is sort of confusing to me. I know that B2B/SAAS is a preferred model for VC these days, but I'm sort of baffled that you wouldn't just take the tech that's been developed (assuming it works) and just integrate it with your own e-comm platform. Like, couldn't something be bootstrapped here? Maybe add a subscription/service model to create revenue?
I agree with you, the product looks pretty cool and promising, and seems it could be a good fit within Amazon or something with a vast array of clothes.
> We finally found the right path 36 months ago, but we haven’t found a relevant business model.
The best use case for such technology is a B2C fashion app targeting 16-36 women with an extremely well-designed UX, that doesn't force to signup or enter any payment details.
Look at the Fashion Finder[1] by Daily Mail, and how it was successfully monetized via affiliate networks[2].
I could easily see such an app being acquired by one of the latest unicorn fashion startups, such as TheRealReal[3], Poshmark[4], thredUP[5], or Vinted[6].
If there is a smaller part of your business that can generate $, it can be a good way to help you stick around/simmer until the timing is right for the demand to increase.
Products are about as much as deciding what part of your solution you're building that lines up with what the market is ready to actually do and growing from there incrementally.
A neat example of this I read about was how the iPad was designed for many years before the iPhone came out, but the iPhone in a way was a starter/training device for a larger touch computing experience.
Move on. It's a bitter pill to swallow but that's the reality. It's game over. You might be able to scrape some cash together and you will be in the same place 6 months later.
For the patent section, I don't understand how any of the 3 are worthy of a patent or were able to be patented. I'm not sure of timelines, but for the 3rd[1], isn't that what Instagram integrated ages ago with circles linked directly to a checkout - prior art?
[1] system to automatically match an item in an image, against its equivalent in a database with ecommerce links to purchase that same product.
I haven't read these claims, but I have been involved with patents here and there and: aren't almost all granted software and business model patent claims bogus in one way or another, usually either obviousness or prior art?
The most important factor of product success is probably timing. If you have had a problem for years, you are not likely to adapt a solution. But if you've only had the problem for a short time, like from one day up to a month, then you are much more likely to adapt the solution. So you basically have to be lucky, or go to market fast (within one month).
Wow, thank you for this. I admire your team's dedication and bravery. I found the details of all the assets of your company fascinating, since I myself know very little about classification or fashion. This is a bit of a business review type article, and I hope you write more about this and things go well for you all.
We were in the same situation 4 years ago for our computer vision company, same team size. We targeted the wrong industry (beauty) and that was a mistake. Lessons to be learned and plenty of contacts for you as we went through the process of an acquisition. PM me, I am easy to find.
“Blogger” started like this, according to the interview in “Founders at Work”, an interesting book.
The guy of blogger had to fire pretty much everyone, and it was on bay still running, and everyone angry at the former employer. A few months pass and Blogger took off.
The product seems good but I can't help but think it would have been a much better strategy to try and look for an acquisition as soon as the patents were filed.
Also would have preferred a browser extension and website for the reverse image searching.
reading the blog post I learned everything I needed to know to understand why they haven't been successful commercially. I wish them good luck but their business skills seem to be awfully lacking.
I have some criticism of the idea, actually. As someone who doesn't think they have good taste in clothes, I would not use this. I would want to upgrade my wardrobe and improve my style.
It seems like this idea could also achieve that by providing some kind of union of two taste-graphs. I'll input my wardrobe, then select from a set of pre-uploaded designers, and the algorithms can recommend clothes for me to purchase that are inspired by both my taste and the designer's.
What would be neat is if this system could automatically mine the taste graph from historical photographs pulled from social networks and the like, without effort on the user's part. (For example, everything you've uploaded to common social networks, or everything in your phone - if you choose to provide them)
seems like tech that boutiques would say they’re interested in, but don’t bother because ‘what we’re doing now seems to work, so why change’. the one shop/brand who does understand and utilize the tech will take off
"If you read all the way until the end, I appreciate it. In return, I want you to discover a song in a language you’ve probably never heard before: Basque."
I've heard of Basque, off of Northern Spain. Also isn't there a bit of France involved?
Those arguments for acquiring patents are as weak as the patents themselves. I'll admit that I only skimmed and read parts of them but nothing seems patentable or particularly innovative to me. It just looks like standard software engineering.
> as a startup we need to create value and this method has proven successful in the past
This means nothing to me. You did something I'm not a fan of in the past (patenting software) so that makes it okay to do now?
> we’ve never thought of using patents against others
It doesn't matter that you've never "thought of using patents against others". Things change. And the way that business is going it seems inevitable that these patents are going to end up in the hands of patent trolls. Patent trolls don't usually come up with their own patents. They buy companies that aren't doing well just for the patents.
> And now, our number one driver for building IP: companies sometimes need leverage to negotiate or deal with the big tech players
I don't understand this one at all. What negotiations are you having where patents help?
AndrewKemendo|6 years ago
We were lucky enough to find an acquisition off ramp last year but all of the feels are the same.
The big takeaway I learned is, if your differentiating product/service could be classified as a feature (which most ML or CV products are) inside a platform or application, you'll be run over by the major platforms who rebuild your product/services inside their platform.
Your only hope is that your team/data/IP is so far ahead and the acquiring company can't build what you're doing in-house more cheaply than what you're willing to sell for. Unfortunately it seems like there are fewer and fewer cases where major players can't rebuild your work more cheaply.
Second, it's excruciatingly difficult to prove the value of your product/service to a potential acquirer because you don't know their metrics, and if you do, you don't know their acquisition strategy. We did an intensive integration of our product with a Fortune 50 retailer, and based on their own numbers showed (using their own A/B tests) that our service provided a statistically significant lift in a core metric that they cared about, in this case paid conversions. Their CEO even talked about it at a public summit. However their acquisitions strategy didn't include small companies that aren't major strategic partners (Only >$200M+ acquisitions).
The worst part here is that, the founders (like I was) are absolutely in love with the technology and how amazing it is. The problem is, from a business perspective, that basically doesn't matter. You could be doing the most amazing work in NLP token inference, but if the product doesn't fit perfectly as an acquisition and it's not so compelling as to build a huge platform around, it's probably going to fail.
I wish it weren't the case, but it leaves me questioning what the value of doing really hard technology is as a startup. It seems clear that the most financially successful startups aren't solving fundamentally hard technology problems until they get to scaling something with broad product market fit.
dvt|6 years ago
Totally agree with this sentiment. I think this is why most "hard technology" problems are left to huge R&D departments or the government. Both of which aren't particularly nimble or profitable. There are a few notable exceptions (Oculus comes to mind), but most unicorns don't generally deal with solving tough problems. It's mostly about product-market fit and the balance sheets.
sabalaba|6 years ago
I know this is unrelated, but I want to thank you for your work on Kessel Run. It’s inspiring to meet folks in the DOD working hard on making software work for our national defense. I ran into some of your colleagues and was very impressed and excited about that program.
asah|6 years ago
Microsoft DOS started as a feature of IBM PCs, and Google started as a feature of Yahoo.
Like "tech in search of a problem" IMHO "feature vs product vs company" needs to be applied case by case.
hgjbhujxgjbv|6 years ago
tachyonbeam|6 years ago
aldamiz|6 years ago
slowenough|6 years ago
pg_is_a_butt|6 years ago
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bumblebee4|6 years ago
Maybe I have overlooked it but I think you have the perfect software to run an online shop. Pay influencers to use your product and viewers who like the results will want to buy clothes from you. The profit margins of the sold products should be higher than anything that can be made from selling an app.
aldamiz|6 years ago
The consumer website is chicisimo.com :)
jakobmi|6 years ago
sofiaqt|6 years ago
aldamiz|6 years ago
Etheryte|6 years ago
> “…providing interactive access over a worldwide computer network to the plural fashion images, together with access to the fashion data for the fashion items in each of the plural fashion images and the information linking to the vendors of the fashion items…”
This sentence (with ellipsis!) does not appear anywhere else in the article, so right off the bat it's hard to understand what you're trying to convey. Secondly, it's insanely verbose, the whole sentence can be boiled down to "hosting fashion images with relevant metadata". If it's an excerpt from one of your patents, then without context it only muddles the situation — it makes it seem like you either don't know how to communicate your tech or you're trying to mislead.
aldamiz|6 years ago
TekMol|6 years ago
Is that intentional? Because I would think with $3.5M in funding, you can hire professional photographers, models and stylists to make the photos and the videos. And a webdesigner to make the site.
The appstore pages look better. And you have good ratings from thousands of users. So why do you want to close it down? How many users do you have and what are your running costs?
aldamiz|6 years ago
You are right, the fashion taste api website does not intend to be stylish. It tries to convey a message to business and tech teams, and we know it could have a better design. Take a look at the consumer product https://www.youtube.com/watch?v=EMMmdCB1-Wg hopefully you like the design better :)
1_over_n|6 years ago
tomrod|6 years ago
weiming|6 years ago
(a) That's a messy, unappealing closet.
(b) The Alexa interaction felt awkward. Probably a touch interface would've worked better.
(c) Ugh, (used?) boots on the TV stand.
(d) Many of the clothing items we own are Asian items without barcodes. Wonder how the import would work on those.
(e) The website (chicisimo) could use a lot, and I mean a lot of copywriting love. So many walls of text. Some fashion photos should be front and center. It is hard to understand what is going on in the animated iOS screen.
TallGuyShort|6 years ago
What were the 4 product people doing day to day?
adrianpike|6 years ago
sdnlafkjh34rw|6 years ago
The non-engineers are the: CEO Head of Ontology Head of Product Design & User Research User Research
klinskyc|6 years ago
ranvir|6 years ago
ISL|6 years ago
They make the case that they have talent, domain-knowledge, and patented IP. The company may be out of cash, but it is not intrinsically out of the fight, so long as cash can be made to appear suddenly.
Furthermore, any acquirer would be able to see the company's books, removing any information-asymmetry on the free-cash point.
aldamiz|6 years ago
duxup|6 years ago
Could the state of the business be hidden that you could take a big offer, get the money, and then they would discover the business is stalled?
Even if you could do that I wonder about legal issues / the relationship with whomever bought in.
unknown|6 years ago
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HenriNext|6 years ago
And that leaves 0 for business + marketing + sales.
Maybe you didn't find the right business model during 5.5 years because you had nobody working on finding the right business model?
danimal88|6 years ago
paxys|6 years ago
thehappypm|6 years ago
evrydayhustling|6 years ago
dwrodri|6 years ago
That being said... why did you (or if anyone else can chip in) decide to chase funding when you didn't have a business model? Maybe I'm being naïve here, but isn't it kind of crazy to raise 3.5M in funds for a business that has no plan but to be acquired by someone else?
I'm torn, because I believe that people should absolutely pursue passion projects, and that a passion project should absolutely be monetized... if you have developed a respectable business model and a potential product-market fit.
My first thought is that you could get some funding and use this as a platform for fashion retailers to exchange consumer profiles at the B2B level, or as part of the internals of the recommendation system.
AchieveLife|6 years ago
That's a sane question. IMO it's the current financial environment that encourages such "leap without looking" strategies.
Fear of missing out is huge right now.
I know of a startup that received a multi-million valuation and many more million in funding. They don't even have a prototype!
nostrademons|6 years ago
That's pretty common, and is basically what seed funding is. The paradox behind markets and investment is that logically speaking, if a potential company has a profitable business model, that company should already exist. After all, with millions of potential entrepreneurs across the globe and trillions in funding chasing them, the chance that an obviously profitable business model hasn't already been dreamed up and implemented by an entrepreneur is basically nil.
So what investors and entrepreneurs do is they agree to take on risk with their capital, for the potential of great reward if it turns out they can come up with a better way of doing things that isn't already being done. The only way to do this is to explore virgin territory: do things that seem plausible but haven't currently been tried by existing companies, and then see if you can create a profitable business model with the results. There's a good chance that you can't, in which case okay, it was an experiment, you spent $3.5M to learn something that had the shot of being worth billions.
a_band|6 years ago
Not exactly. A lot of startups can function as R&D for larger tech companies: Big tech companies have lots of money but aren't great at innovation. They might spend 10s of millions of dollars just to get a lesser quality version of what they could own if they just bought the best startup in the space. This is why companies with $0.00 revenue get acquired all the time. It's a simple calculation: will it be cheaper to buy or build this tech? For many companies it's cheaper to buy.
That being said, Chicisimo is in a very tough situation. The problem with their strategy is:
1. They have to be acquired or they'll go out of business. This is a terrible negotiating position to start from. There is no walk away power. If I was an interested buyer, why wouldn't I offer an insultingly low price? How does $100k to cover legal costs and a nice signing bonus to your employees sound? Do you have a better option?
2. They need a buyer who needs their experimental technology. This is what's called a "strategic acquisition". And they are almost impossible to engineer from the startup's position. The chances of a finding company with a lot of cash with an exec who wants experimental tech enough to spend a decent amount of money on it are almost certainly zero. If they haven't attracted the attention of a buyer by now, it's unlikely that they'll become more attractive now that they're about to fail.
Having been in this situation myself, it is so helpful to have some revenue to fall back on. That way you can demonstrate that the business is worth something.
I wish them the best of luck. Hopefully they pull something out here but the chances are low.
pmichaud|6 years ago
From the startup's side: We don't actually know the business yet, so we need resources to fund our runway while we figure it out (ie. interact with the market enough to make smart pivots toward profitability).
The the funder's side: We basically don't give a shit what the business turns out to be, we want to fund talented teams that we believe can pull off profitability.
vassilyk|6 years ago
scarface74|6 years ago
But from a cynical standpoint, why not take VC money if you can get it? It seems like you should take VC money if you don’t have a business model that would lead to being a profitable ongoing concern.
If I can see profitability, why would I give up equity?
You let other people take the downside risk. Why use your own money instead of other people’s money.
dwild|6 years ago
I offer you 3.5M to start a business, without needing a business model, why wouldn't you take it?
The real question is, how did they were able to raise 3.5M and why haven't they made sure that they had a strong business model.
tomlagier|6 years ago
If the only people who can start companies are the ones that have at least a few hundred thousand dollars in the bank, that really limits the field. I think VC probably plays a beneficial role here, opening it up to people who otherwise would have no freedom to spend a year or two pursuing an idea that may or may not convert into a profitable business.
coldtea|6 years ago
If you can raise them why would it be crazy? It's only crazy for those that give the money (and for them they could be spare change)
jkuria|6 years ago
t222|6 years ago
> That being said... why did you (or if anyone else can chip in) decide to chase funding when you didn't have a business model?
Biggest mistake IMHO. But is quite common these days. Everybody is chasing the unicorn dream.
rolltiide|6 years ago
Tapping into the sentiment steered by macroeconomic trends is wise. Limiting that to the consumer product model is unwise.
proxybop|6 years ago
solumos|6 years ago
> we haven’t found a relevant business model
> We are a team of 8. We are 2 full-stack, 1 iOS, 1 Android and 4 product people.
It's a bad sign if your company is 50% product people and you can't establish product-market fit, especially with a "whale" for a competitor.
I guess it wouldn't be unheard of for a conglomerate like LVMH to acquire, but I'm not sure there's enough traction to justify a scenario like that.
overcast|6 years ago
fhbdukfrh|6 years ago
excalibur|6 years ago
This process needs some work. It replaced the girl with an entirely different girl, and swapped her Metallica tee for H&M, effectively removing her taste.
williamstein|6 years ago
Animats|6 years ago
Is there anybody who really wants that? People with too much money and no fashion sense? Is that a market?
[1] https://www.youtube.com/watch?v=XNDubWJU0aU
devit|6 years ago
Of course it needs to actually work though, which is not clear from the article (categories like "comfy" aren't going to cut it, you probably need a sophisticated deep learning approach on product images plus brand identity data and maybe Instagram posts with a lot of training data).
Obviously you can also run a store or an affiliate-based site yourself with it, but the problem is that you are going to be missing data on customer's taste; maybe you could exclusively cater to people who love posting their photos on Instagram, connect to their Instagram account and understand their fashion taste from their posted photos - or you could even support imitating someone else fashion's taste by looking at their Instagram profile.
ezzzzz|6 years ago
josephjrobison|6 years ago
zuhayeer|6 years ago
sombremesa|6 years ago
dazhbog|6 years ago
We will go ahead, eat ramen, and pursuit this, and its a HW product. Wish us luck.
[1]: https://www.kickstarter.com/projects/pycno/pulse-building-sm...
koverda|6 years ago
hrydgard|6 years ago
krn|6 years ago
The best use case for such technology is a B2C fashion app targeting 16-36 women with an extremely well-designed UX, that doesn't force to signup or enter any payment details.
Look at the Fashion Finder[1] by Daily Mail, and how it was successfully monetized via affiliate networks[2].
I could easily see such an app being acquired by one of the latest unicorn fashion startups, such as TheRealReal[3], Poshmark[4], thredUP[5], or Vinted[6].
[1] https://www.dailymail.co.uk/femail/fashionfinder/index.html
[2] https://skimlinks.com/resources/case-studies/case-study-the-...
[3] https://techcrunch.com/2019/04/23/luxury-consignment-e-taile...
[4] https://www.forbes.com/sites/bizcarson/2018/12/14/next-billi...
[5] https://www.forbes.com/sites/glendatoma/2019/08/21/thredup-r...
[6] https://techcrunch.com/2019/11/27/vinted-the-second-hand-clo...
j45|6 years ago
Products are about as much as deciding what part of your solution you're building that lines up with what the market is ready to actually do and growing from there incrementally.
A neat example of this I read about was how the iPad was designed for many years before the iPhone came out, but the iPhone in a way was a starter/training device for a larger touch computing experience.
paulie_a|6 years ago
thepratt|6 years ago
[1] system to automatically match an item in an image, against its equivalent in a database with ecommerce links to purchase that same product.
dboreham|6 years ago
z3t4|6 years ago
theicfire|6 years ago
aldamiz|6 years ago
jbduler|6 years ago
alexis_fr|6 years ago
The guy of blogger had to fire pretty much everyone, and it was on bay still running, and everyone angry at the former employer. A few months pass and Blogger took off.
zarriak|6 years ago
Also would have preferred a browser extension and website for the reverse image searching.
nikanj|6 years ago
We don't share stories of people who believed so hard, and then ended homeless and broke.
xkcd touches on the subject too ( https://xkcd.com/1827/ ), as they tend to do regardless of the topic.
luckydata|6 years ago
shamino|6 years ago
Pyxl101|6 years ago
What would be neat is if this system could automatically mine the taste graph from historical photographs pulled from social networks and the like, without effort on the user's part. (For example, everything you've uploaded to common social networks, or everything in your phone - if you choose to provide them)
Aeolun|6 years ago
I don’t mean to tear it down, but the idea as it stands apparently isn’t a business.
You must change the product if you still want to achieve market fit somehow.
ydnaclementine|6 years ago
gerdesj|6 years ago
I've heard of Basque, off of Northern Spain. Also isn't there a bit of France involved?
Good luck for the future.
thysultan|6 years ago
goatherders|6 years ago
sergesalager|6 years ago
aldamiz|6 years ago
grogenaut|6 years ago
dang|6 years ago
mtgx|6 years ago
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czxtm|6 years ago
look_lookatme|6 years ago
idorube|6 years ago
choward|6 years ago
> as a startup we need to create value and this method has proven successful in the past
This means nothing to me. You did something I'm not a fan of in the past (patenting software) so that makes it okay to do now?
> we’ve never thought of using patents against others
It doesn't matter that you've never "thought of using patents against others". Things change. And the way that business is going it seems inevitable that these patents are going to end up in the hands of patent trolls. Patent trolls don't usually come up with their own patents. They buy companies that aren't doing well just for the patents.
> And now, our number one driver for building IP: companies sometimes need leverage to negotiate or deal with the big tech players
I don't understand this one at all. What negotiations are you having where patents help?