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How Shyp Is Shaking Up Shipping

With this intrepid startup's service, everything you ever hated about shipping stuff—from rustling up a box to waiting in line—is history.

How Shyp Is Shaking Up Shipping

[Illustrations: Heads of State]

A Hulk Hogan costume. An oxygen tank. A couple of packages of Ghirardelli chocolate. A Comcast cable box, a table lamp, and a pile of laundry.

I’m lurking in a Shyp warehouse—a powder-blue structure on an industrial stretch in San Francisco’s Bayview neighborhood—surveying just a few of the items that the startup has picked up from customers today. Soon they’ll be weighed, measured, and packed into custom boxes produced on the spot by a towering cardboard-cutting machine. Then each package will be handed off to a carrier such as FedEx or UPS—whatever is most economical for its particular shipping needs—for delivery, whether across town or halfway around the world.

It’s a complex, labor-intensive process, but from the customer’s point of view, all it demands is a few taps on a smartphone. Anyone who wants to ship something simply snaps a photo of it with Shyp’s app. In 20 minutes—that’s the goal, which the company sometimes beats—a courier arrives and whisks the item away. The traditional annoyances of shipping, from rustling up a suitable box to surviving the line at the post office, are eliminated. Hence Shyp’s tagline: "We’ll take it from here." The pickup price? A mere $5.

Though Shyp is often described, inevitably, as "Uber for packages," that undersells its ambition. As with many other so-called on-demand startups, a lot of unseen innovation goes into the simple-seeming service. And in the shipping industry, it’s tough to think of a truly disruptive entrant since 1973, when FedEx (née Federal Express) introduced the mind-blowing concept of overnight delivery.

Kevin GibbonPhoto: courtesy of Shyp

Shyp is not FedEx yet—it has just 245 employees and is available in only four cities—but the company is already beginning to blow some minds. As one iPhone App Store reviewer exulted, "It rewires your thinking about how to be generous with people you care about who live far away." Largely on the strength of word of mouth, the company has been growing by 20% month over month and now handles 600% more shipments than a year ago.

Over the course of 2015 and early 2016, I kept close tabs on the company as it explored fresh ideas, developed a new labor model for its workers (Shyp is one of the first on-demand companies to move away from relying on contractors), and honed a model that makes this novel consumer action feel like second nature. "We’re here for a much bigger vision than just being a startup in San Francisco," says Shyp CEO and cofounder Kevin Gibbon, a spiky-haired 31-year-old whose low-key manner doesn’t instantly suggest that he’s out to change the world.

The idea behind Shyp dates back to 2002, when Gibbon was a Vancouver high school student selling items on eBay. At the time, mixed martial arts fans were willing to pay up to $150 for shirts from clothing maker Affliction. When Gibbon found a supplier offering them at cut-rate prices, they became one of his main product lines. "I was able to make a lot of money," he recalls. "That’s all this business was, arbitrage." There was only one thing about the enterprise he found irksome: shipping stuff out.

After paying his way through college with his eBay business, Gibbon did everything from develop software for Boeing to create ShopAround, an iPhone app that helped people find deals at local retailers. When ShopAround failed, it inspired him to relocate from British Columbia to the entrepreneurial Shangri-La of San Francisco and, as a stopgap, took the first startup job he came across. While brainstorming startup ideas over breakfast with his coworker and friend Joshua Scott, he brought up his simmering dislike of shipping. The two decided to turn it into a company—which, in true startup fashion, they initially operated out of a garage they found on Airbnb.

Like Gibbon’s eBay business, the Shyp vision was based, in part, on arbitrage. As a volume shipper, it could negotiate deep discounts from major carriers, allowing it to pocket the difference between the fees it pays and the prices it charges consumers. But the concept wasn’t just about Shyp casually inserting itself as a middleman and extracting a profit. To make it work, the company would also have to establish a network of couriers and trucks. It would need warehouses where goods could be packed. And it would have to write plenty of software—for consumers, couriers, and packers—to assure that the whole process happened efficiently.

Still, the potential was enormous. Shyp "solves an issue that’s as big as the problem eBay solved when it made it easy to sell things on the Internet or the problem PayPal solved when it made online payment processing accessible to the masses," says Scott. "It saves people time and money, it allows businesses to sell more, it opens up new markets to shipping carriers."

At first, Gibbon and Scott (who left the company on friendly terms in early 2015) had almost no money. So they borrowed $2,000 to purchase the domain name and had a shoestring version of the service up and running by July 2013. Initially available in a single San Francisco zip code, its infrastructure consisted of a Google spreadsheet, which customers could use to enter the particulars of a shipment, and Zipcars, which the founders—neither of whom owned a car—rented to make pickups. Angel investors such as Tim Ferriss, author of The 4-Hour Work Week, saw enough promise to put up $2.1 million—sufficient to start the hiring that would turn Shyp into a real business.

Photo: courtesy of Shyp

One thing Shyp’s game plan didn’t involve was staffing up with people who knew a lot about shipping. "It allows you to be naive," Gibbon explains. If you were to [hire] someone who has 20 years in this industry, it’s like, ‘You can’t do this, this, this, and this.’ For us, it’s, ‘Why can’t you?’"

Dan Rummel, who cofounded a service to help politicians engage with voters then worked at event manager Live Nation, was smitten with Gibbon’s scrappy, obsessive dedication to eradicating the drudgery of shipping and came aboard as CTO. Gibbon, Rummel marvels, is the kind of guy whose dinner conversation involves such scintillating topics as the $6 billion that the U.S. Postal Service plans to spend replacing its rickety fleet of trucks. "It’s just like, ‘Kevin, how do you know all these little details about this?’ " he says.

Rummel’s former colleague Wes Donohoe joined on as well, as Shyp’s head of product. "People come here because they want to solve this," Donohoe says. "They have these crazy aspirations." At the same time, he adds, "We get people who are extremely humble, because they know that it's really hard."

Then there are the couriers, such as cyclist Juanita Usquiano, who discovered Shyp when she happened to bring food to its headquarters while working for a meal-delivery startup. The wiry young woman, dressed in a Shyp shirt and bike shorts, tells me that she does what she does mostly because pedaling around San Francisco is "incredibly cathartic" and "you just completely familiarize yourself with the city." But she too sees a bigger picture. "I feel like the main priority is customer experience. When everyone shares that motivation, it just makes it all the more fun."

Shyp extended its service to New York and Miami in 2014 and Los Angeles and Chicago in 2015. (It suspended service in Miami, which proved to be a weak market, in early 2016.) Even if it picks up the pace, it’s years away from rivaling the ubiquity of Uber, which is currently available in over 350 cities in 67 countries. Even food-delivery service DoorDash, which launched at around the same time as Shyp, is already in 22 markets.

Still, its immediate goals are less about unbridled expansion than nailing the logistics it’s in the process of inventing. "For every city that we launch in, we learn something new, and we’re able to add that to future city launches," Gibbon says. "What we also learned, and why we haven't been launching in a new city every month, is that we really want to go deep."

That involves observing how people use the service and tweaking it accordingly. For instance, when Shyp noticed that customers were using Shyp to send products back to e-commerce companies—even ones which had carefully-orchestrated return logistics of their own—it introduced Shyp Returns, a feature that expedites the process for Amazon, Target, Bonobos, and other major merchants. It's worth the effort to acquire new customers, Gibbon says, even though Shyp may collects only its $5 pickup fee, since shipping costs are often pre-paid by the merchant.

Shyp is able to move at a thoughtful cadence because it’s become an impressively well-funded startup. In April 2015, the company announced a $50 million round of investment led by venture-capital giant Kleiner Perkins Caufield & Byers, bringing legendary investor John Doerr onto its board. Doerr says that Shyp’s focus on pickup makes it different from the countless startups trying to reinvent the delivery of food and other goods. "It’s the leader in reimagining the first mile, not the last mile," Doerr says. "Shyp is the first to make it effortless and friction-free to ship your goods, in a way that’s almost magical."

No part of that magic is more crucial than the couriers who pick up items from customers. Shyp’s gutsiest move of 2015 was its decision, announced in July, to bring them on board as salaried employees—complete with benefits such as health coverage—rather than continuing to treat them as independent contractors. (Drivers still use their own vehicles; the company pays them a mileage fee to cover fuel and other costs.) The switch allows Shyp to sidestep the controversy that has dogged Uber, Lyft, DoorDash, and other startups dependent upon vast numbers of contractors and helps it get ahead of any legislation that could make it harder to use them.

The primary motivation, though, is to "build a company that is a great place to work for all of our couriers, all of our warehouse employees, all of our drivers," says VP of operations James Queen, who came to Shyp by way of Spotify and once worked for producer Scott Rudin on movies such as No Country for Old Men. "If you think about culture and you think about companies that have grown really fast, that’s something that is the hardest thing to maintain."

Couriers now get copious amounts of formal training—forbidden by law for contractors—and are part of a real team, in sharp contrast to services such as Uber, whose pitch to prospective contractors stresses that they’ll be their own bosses. "When we switched over, it was like the curtain was lifted up," says Octavio Genera, a musician and former substitute teacher who drives for Shyp. "I’ve seen the whole process, which, to me, adds to the service."

Photo: courtesy of Shyp

The move dramatically increased Shyp’s headcount and associated costs: Of the 245 people it now employs, nearly a hundred are couriers. But Gibbon tells me that he’s less concerned with the extra expense than the opportunity to improve the service and thereby increase the volume of pickups. "If someone has a better experience, they’re much more likely to tell someone else about it."

The company completed the courier transition in the fall of 2015, ahead of schedule. With the pieces in place to offer a more polished, professional version of Shyp, it figured, the time was right to revise its image to match.

Shyp’s original branding followed the San Francisco-startup template closely. The company gave itself a quirky moniker, stuck a tiny wing on the "h" in its logo, and insisted on calling its couriers "Heroes." It was all "friendly and cute, and the wing was very approachable," says CMO Lauren Sherman, the company’s fifth hire and a veteran of on-demand help-around-the house startup Taskrabbit. And she hated it from the start.

"Listen, you've got a real brand problem here," she remembers warning Gibbon, her voice taking on an ominous tone as she recreates the conversation. "For what you're talking about building, this product, the brand does not at all represent what we’re doing."

Spearheaded by Sherman, the updated branding features an all-new logo that is wingless, spare, and straightforward rather than willfully eccentric—more in line with FedEx and UPS than Lyft and Instacart, and intended to resonate no matter how big and well-established the company gets. The logo will appear on gear for couriers—no longer known as Heroes, which Sherman says was too undignified a term for a position which should command respect—including triple-layer fleece sweater jackets for those in chilly climes.

For the first time, Shyp is also investing serious money in marketing, Starting last November, a New York City campaign plastered buildings and subways with ads featuring an intriguing photograph of a person and an item that needs shipping: a businesswoman with a tuba, a swimmer with a still-life painting, a Hassidic Jew with a boogie board. It's a bold statement for a startup whose self-promotional efforts, just a few months earlier, didn’t consist of anything much more ambitious than setting up tables at venues where there might be people who wanted to ship stuff, such as library book sales.

Illustration: Heads of State

When I talk to Gibbon in late 2015, we meet at the company’s new headquarters—a major upgrade from the drab, cramped office I’d first visited the previous March. The place is rife with the funky touches you expect to find at a startup, such as an elaborately-framed portrait in our conference room of a man in thick black glasses and a woman with an imposing bouffant hairdo. (An urban legend within Shyp has it that they’re the founder of FedEx and his wife, but it’s really just some random couple in a piece of found art.)

Gibbon pauses to savor some of Shyp’s achievements to date, such as all the software it’s engineered and deployed. Mostly, though, we discuss the challenges that will occupy the company in 2016 and beyond.

Ironically, Shyp’s initial focus on serving consumers who typically send no more than a few items at a time means that Gibbon, if he were still shipping out scads of shirts to UFC fans, would not find it perfectly tailored to his needs. "Would I have used the current version of what we have? Maybe," he shrugs.

A first step toward catering to merchants came in December, when Shyp announced a partnership with eBay, which will let sellers easily request Shyp pickups, with the $5 fee waived. (The move doubled shipment volume almost instantly.) Adding more tools for businesses that might want to ship 50 or 100 items at a pop—including the ability to schedule pickups in advance—is high on the company’s to-do list for 2016, and will put it in more direct competition with ShipBob and Shipster, two newer startups that already cater to corporate customers.

Serving business clients who ship in bulk should help Shyp inch towards profitability, a key Shyp goal for 2016. Making money from ongoing operations will let the company spend the money it has in the bank carefully, and prepare it for a period when it might not be a cakewalk to secure additional venture funds. Gibbon tells me that the steep discounts it gets from carriers mean that turning an overall profit isn't an impossible dream: Already, it's not that far from doing so in San Francisco, its largest market.

The bigger Shyp dream, however, is about the entire shipping journey, not just ramping up the quantity of pickups it can handle. A new feature called "address-free shipping" is the first thing the company has offered to appeal to package recipients, regardless of whether they live in a city it serves. You can create a unique handle—such as @sparky—and associate it with your own mailing address. Friends who want to send you something can use this handle rather than memorizing your street number and zip code. And if you move, you can simply update your address and keep the same handle.

Photo: courtesy of Shyp

For Shyp, address-free shipping’s significance runs deeper than the convenience it offers to package senders and recipients. Long-term, the company is interested not just in the first and last miles of shipping, but also all the miles in between—the ones that it currently outsources to major carriers. "It’s a stepping stone to actually starting to do the delivery," Gibbon says. "We absolutely want to start chipping away at a lot of the other pieces in this entire process that we can improve."

The notion of Shyp taking on the behemoths of shipping at their own game may sound like a stretch. (It might also complicate the company’s relationship with the carriers whose volume discounts make its current business model viable.) But Shyp’s lofty mission statement—to be "the new global standard in shipping"—sets that up as the ultimate goal. And before you dismiss it as an impossibility, consider this: Once upon a time, two Seattle teenagers with one bike and a $100 loan between them also started a business involving local pickups. That was back in 1907. And now their little startup—which eventually decided to call itself UPS—delivers 18 million items a day.

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A version of this article appeared in the March 2016 issue of Fast Company magazine.

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