Washio

What did it do?

Washio was an on-demand service that picked up dirty laundry and dry cleaning from the door and brought it back clean. The company outsourced the washing and dry cleaning to third-party facilities and handled deliveries with couriers it called ninjas. The Los Angeles-based service expanded to cities including Boston, Chicago, San Francisco, New York and Washington.

Why did it shut down?

Laundry margins were thin, and the model depended on constant growth to cover its costs. Washio Now, launched in 2015 with a guaranteed pick-up within an hour, drove up logistics costs. Outsourcing the cleaning itself, a rigid delivery schedule and lawsuits over couriers being classed as independent contractors were also among the reasons cited. When sale talks with rivals came to nothing, the company halted the service on 30 August 2016; its assets were bought by its rival Rinse.

The story

In Washio's early days its signature was a cookie. A cookie from a local bakery went out with every order; as the company grew, the gesture gave way to a more scalable and healthier snack, flaxseed crostini. It was a small but telling detail: in a market crowded with competitors, Washio was trying to stand out through experience.

Jordan Metzner, Bob Wall and Juan Dulanto founded the company in Los Angeles in 2013 because they saw inefficiency and a lack of online presence in the laundry business. Washio was an intermediary: it outsourced the washing, folding and dry cleaning to third-party facilities and sent couriers it called ninjas to customers' doors. When TechCrunch first introduced the service it called it "the Uber for laundry"; in 2014 NPR described such start-ups as companies seeking solutions to first-world problems. The company raised USD 17 million in total across several rounds; its investors included Canaan Partners, AME Venture Partners, Ashton Kutcher and the rapper Nas.

The service expanded to Boston, Chicago, San Francisco, Oakland, New York and Washington. Washio Now, launched in 2015, guaranteed pick-up within an hour of ordering and return within 24 hours. According to the letter the founders wrote at closure, the company had generated millions of dollars in revenue and hundreds of thousands of orders, dry-cleaned more than 1 million items and washed more than 21,000 tonnes of laundry.

Yet that volume did not turn into profit. Laundry margins were thin, and the model depended on constant growth to cover its costs. Lawsuits over couriers being classed as independent contractors, and the outsourcing of the core of the work, were also among the reasons cited. Rivals such as Rinse, FlyCleaners and Cleanly were competing for the same customers. Washio tried to sell itself to rivals, but the talks came to nothing, and on 30 August 2016 the company halted the service with immediate effect. In October 2016 its assets were bought by Rinse. According to Rinse's chief executive, Ajay Prakash, what really strained Washio was the switch from scheduled pick-ups to an on-demand model.

Quartz read the closure as a symbol of the on-demand services bubble. Washio's lesson is that the unit economics have to be able to pay for the speed that impresses customers.

Lessons for founders

• If you outsource the service itself, you leave most of your margin with the supplier; you cannot make up for costs you do not control with marketing.
• Do not make expensive promises such as one-hour pick-up standard without testing whether customers will really pay more for them.
• Scheduled routes are far more efficient than on-demand calls; in logistics, optimise for density rather than speed.

Sources

1. Washio (company) (Wikipedia)
2. Washio on-demand laundry service shuts down operations (TechCrunch, 2016-08-30)
3. On-demand laundry startup Washio shuts down (Los Angeles Times, 2016-08-30)

This section is compiled from public sources (Wikidata, news archives and company announcements). Figures are given as they appear in those sources; unknown fields are left blank. If you spot a mistake in an entry, you can send us a correction.

Is something in this entry wrong? Request a correction → Method