# Shyp (2013 – 2018)

- URL: https://girisimcikafasi.com/en/startup-graveyard/shyp/
- Sector: Logistics and delivery
- Country: United States
- Total funding: $62.1 million
- Cause of closure: Business model failed

## What did it do?

Shyp was a service through which users summoned a courier to their door via an app; the courier collected the item, packed it and sent it via USPS or another major carrier. Founded in San Francisco, the company also expanded to New York, Miami, Los Angeles, Chicago and Philadelphia. In 2015 it added Shyp Returns, a feature that made it easier to return online purchases.

## Why did it shut down?

As founder Kevin Gibbon later acknowledged, the service required serious investment to build physical operations in several cities. In 2015 the company moved its couriers from independent contractor status to full-time employment; it was one of the few on-demand service companies to do so. In July 2017, to reach profitability, it laid off most of its staff, withdrew from New York, Los Angeles and Chicago and focused on small businesses. When the hoped-for new investment and profitability did not arrive, CEO Kevin Gibbon shut the company in March 2018.

## The story

In July 2017 Shyp's customers received an email they had not expected: from now on the company would operate only in San Francisco, pulling out of New York, Chicago and Los Angeles. In a blog post published the same day, CEO Kevin Gibbon wrote that the venture capital market had changed and that the bar for profitability had risen. According to Business Insider, he also listed what he would do differently with what he knew now: “We would have built profitability into the business from the very beginning.”

Founded in San Francisco in 2013 by Kevin Gibbon, Joshua Scott and Jack Smith, Shyp promised to take the hassle out of shipping. The user summoned a courier through the app, and the courier collected the item from the door, packed it and sent it on its way via USPS or another major carrier. The company raised $2.1 million in September 2013. It expanded to New York in September 2014, Miami in November 2014, Los Angeles in May 2015 and Chicago in September 2015. In March 2015 it launched Shyp Returns, which made it easier to return purchases from shops such as Amazon, Target and Nordstrom. A further $50 million arrived in April 2015; with the Series B led by Kleiner Perkins, total investment reached $62.1 million.

Shyp also made a decision that set it apart among on-demand service companies: in 2015 it moved its couriers from independent contractor status to full-time employment. Chicago became the first city whose team consisted entirely of salaried employees. Before long the company was running courier, packing and shipping operations in six major US cities.

In the 2017 retrenchment the company laid off most of its staff and decided to focus on small businesses and high-volume shippers, relying in part on an eBay integration. Gibbon acknowledged that in a business whose physical operations were spread across several cities, they should first have succeeded in a single market. But the new plan did not deliver the expected results. In March 2018 Gibbon announced that the company would close and that all employees would be laid off.

Shyp's story shows that in on-demand logistics, growth is itself a cost. Every new city meant a new warehouse, new couriers and a new source of losses.

## Lessons

- In a service that needs physical operations, prove you make a profit per order in your first city before moving to a second.
- Answer early the question of whether you serve individual consumers or high-volume businesses; revenue density usually lies with businesses.
- Build decisions about worker status into your cost model from the start; switching later changes your unit economics overnight.

## Sources

- [Shyp](https://en.wikipedia.org/wiki/Shyp)
- [Shyp, a startup that wants to kill the post office, is scaling back operations and laying off employees](http://www.businessinsider.com/shyp-closes-new-york-los-angeles-chicago-layoffs-2017-7)
- [How Shyp Sunk: The Rise And Fall Of An On-Demand Startup](https://www.fastcompany.com/40549442/how-shyp-sunk-the-rise-and-fall-of-an-on-demand-startup)
- [https://www.wikidata.org/wiki/Q18157023](https://www.wikidata.org/wiki/Q18157023)