Home / Tech News / Doughbies’ cookie crumbles in a cautionary tale of venture scale

Doughbies’ cookie crumbles in a cautionary tale of venture scale

Doughbies ought to have been a bakery, not a venture-backed startup. Based within the frothy days of 2013 and funded with $670,000 by traders, together with 500 Startups, Doughbies constructed a same-day cookie delivery service. But it surely was by no means destined to be able to delivering the returns required by the VC mannequin that will depend on large successes to cowl the vast majority of bets that fail. The startup turned the butt of jokes about how something might get funding.

This weekend, Doughbies introduced it was shutting down instantly. Surprisingly, it didn’t run out of cash. Doughbies was worthwhile, with 36 p.c gross margins and 12 p.c web revenue, co-founder and CEO Daniel Conway advised TechCrunch. “The explanation we had been capable of succeed, at this degree and to date, is as a result of we targeted on unit economics and buyer suggestions (NPS scoring). That’s it.”

Many different startups within the on-demand house missed that memo and vaporized. Shyp mailed stuff for you and Washio dry cleaned your garments, till they each died sudden deaths. Meals supply has turn out to be a very crowded cemetery, with Sprig, Maple, Juicero and extra biting the mud. Requested his recommendation for others within the house, Conway mentioned to “Ensure your small business is sensible — that you just’re earning money, and ensure your prospects are completely satisfied.”

Doughbies definitely did that latter. They made some of the constantly scrumptious chocolate chip cookies within the Bay Space. I had them cater our engagement occasion. At roughly $three per cookie plus $5 for supply, it was dear in comparison with baking at dwelling, however not outrageous given SF restaurant charges. From its launch at 500 Startups Demo Day with an “Oprah” second the place traders regarded beneath their seats to seek out Doughbies ready for them, it cared lots concerning the expertise.

However did it make sense for a bakery to have an app and ship on-demand? In all probability not. There was simply no method to preserve a wholesome Doughbies behavior. You had been both gunning for the graveyard your self by ordering each week, or like most individuals you simply purchased a number of for particular events. Startups like Uber succeed by getting individuals to routinely drop $30 per day, not twice a yr. And with the push for nutritious and environment friendly places of work, it was certainly arduous for enterprise prospects to justify holding cookies stocked.

Flanked by Instacart and Uber Eats, there weren’t many ripe adjoining markets for Doughbies to overcome. It was caught delivering baked items to prospects who had been deterred from rising their cart measurement by a way of gluttony.

With out stellar progress or large gross sales volumes, there aren’t a whole lot of thrilling challenges to face for individuals like Conway and his co-founder Mariam Khan. “Finally we shut down as a result of our group is able to transfer on to one thing new,” Conway says.