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Startup Report

To Get Profitable, Shyp Is Shrinking

The shipping service is reducing head count by 8%, and says that companies that avoid painful decisions are acting recklessly.

[Photo: JunAh via Shutterstock]

The last time I talked to Kevin Gibbon, CEO of Shyp—the shipping-on-demand startup I profiled for our Most Innovative Companies issue—he told me that the shipping service's big priority for 2016 was to reach profitability. That was in Janauary, when the company announced that it was suspending operations in Miami and introducing packing fees for larger, more delicate items that require more TLC and materials.

Kevin GibbonPhoto: courtesy of Shyp

Today, Shyp is disclosing that it's going through a further belt tightening of the sort no startup sets out to do: It's laying off about 8% of its staff in cuts that hit across the organization, rather than in specific departments or markets.

In a blog post about the cuts, Gibbon is saying that they aren't a sign that Shyp is in trouble. (The company raised $50 million in funding in a round led by Kleiner Perkins Caufield Byers less than a year ago.) Rather, they're part of a sweeping initiative to run the service in a more efficient manner so that it can turn a profit on each delivery sooner rather than later. Besides the cutbacks and additional fees, Shyp is refining its technology and processes and catering more to volume shippers; it says that these moves have allowed it to reduce its cost of operations in its home market of San Francisco by more than 50%.

In his post, Gibbon takes a swipe at unspecified on-demand startups that, he says, aren't creating businesses that can survive for the long haul:

When I think about the technology climate, I can't help but be surprised by what we're seeing from other on-demand services. This obsession with flashy growth figures has led to reckless, irresponsible decisions at the expense of a company's long-term sustainability. My fellow entrepreneurs and I are—or at least should be— here to build long-lasting businesses that are both revenue positive and provide real-world value. That has and always will be our greatest goal.

There does seem to be a great reckoning going on with some of the companies that promise to let us get practically anything with a few taps on our smartphones. Last fall, my colleague Christina Farr chronicled the demise of home-cleaning startup Homejoy. Zirx, one of several valet-parking apps, is refocusing on corporate customers. And just last week, SpoonRocket—among a gazillion ways to get food delivered— gave up and turned its customers over to competitor Sprig. Here's hoping that Shyp, which has worked like a charm when I've used it myself, figures out how to stay magical while also making money.

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