Nearing Bankruptcy, Fruugo Burned Through €40 Million to Generate €100K(arcticstartup.com)
arcticstartup.com
Nearing Bankruptcy, Fruugo Burned Through €40 Million to Generate €100K
http://www.arcticstartup.com/2012/04/16/fruugo-financials-bankruptcy
56 comments
Every time I see something like this, I wonder- who made out with that money? Forget the commentary about why the startup idea was bust, why the website UX sucks, etc. Who made out like a bandit with $40MM in return for nothing? Whoever that is, this was a GREAT deal from their point of view.
P.S. Not surprising that government involvement plays a part in this. Sounds akin to Solyndra et al. here in the states.
P.S. Not surprising that government involvement plays a part in this. Sounds akin to Solyndra et al. here in the states.
Much of this comes from two unfortunate facts: Finland is far from any real markets (becoming less important thanks to the net), and there isn't much capital in the country outside of the public sector.
The latter means that the government has to be involved. Bringing in their heavy processes, risk (and therefore, succeess) aversion, and the old boys' network.
The latter means that the government has to be involved. Bringing in their heavy processes, risk (and therefore, succeess) aversion, and the old boys' network.
What do you think is the best solution to the lack of capital? More Europe-wide VC funding (and networking) perhaps, so we're not so reliant on local funding?
I would stay stop dancing with Tekes (state R&D funding org), and take a flight to Stockholm, Frankfurt, Paris, or London. Capitalize on successes like Rovio and emphasize that in Finland there is lots of mobile dev talent available thanks to MeeGo and Symbian getting ramped down.
I live in Frankfurt, it's hard to get venture capital here, fly to Berlin instead.
I went there for a job interview in 2008. They had a vague idea of what they should do, which was more or less "revolutionize global e-commerce by facilitating cross-border trade", I guess fueled by the realization that gee, stuff is cheaper in some countries than others. They had ideas of solutions for things like shipping, price consolidation, translation and customer relations. They were also planning to take what I thought to be an insane commission per trade. I'd worked with European SMEs a lot in the past with the world's biggest search ads product, so I thought I knew what they were ready for and what they needed, and the three chats I had at Fruugo didn't really reflect this at all.
Most alarmingly, while they were in really early startup mode, they had a very front-heavy team of 'top talent' and loads of telco-pedigreed 'old boys' in the helm. I dropped off the interview process when I was told that to continue, they'll do a psychological profiling by an external consultant and that they do that for all candidates. Really. First, wow, that's expensive. Second, in a startup, the recruiting process should be all about the team and the product, not a standardized test. I told them this.
Now, I almost regret not going in for a bit more, maybe even to work with them for a while, to have a better idea of what all went wrong and if there would've been a way to save the company. Will make for a great case study, no doubt.
Most alarmingly, while they were in really early startup mode, they had a very front-heavy team of 'top talent' and loads of telco-pedigreed 'old boys' in the helm. I dropped off the interview process when I was told that to continue, they'll do a psychological profiling by an external consultant and that they do that for all candidates. Really. First, wow, that's expensive. Second, in a startup, the recruiting process should be all about the team and the product, not a standardized test. I told them this.
Now, I almost regret not going in for a bit more, maybe even to work with them for a while, to have a better idea of what all went wrong and if there would've been a way to save the company. Will make for a great case study, no doubt.
I'd suggest that you were very, very lucky that you didn't continue with the company. There is nothing more soul destroying than to try to fight your case in an organization of people who believe they know better than you do, even when it's clear they are running the organization into the ground.
There is nothing you could have done to save this company. It seems to have shaky foundations to start with, so the best you probably could have done was to put off the inevitable for a short amount of time.
There is nothing you could have done to save this company. It seems to have shaky foundations to start with, so the best you probably could have done was to put off the inevitable for a short amount of time.
I couldn't help but look at the Fruugo website - and I can't say I'm very impressed by the web design!
I have a list of issues:
1. When I went to the Australian website, even though I'd started in the U.S. website (which uses pretty much the same layout), it was a slow load time.
2. Massive image in the centre, but my first immediate thought was "that's a large ad in the middle of this site!". then I realised it was meant to be there...
3. The fonts are strange choices. There are three different fonts I can see here (Times New Roman?!?) I can see over 5 font colours here, one of which is lime green on a white background.
4. Massive amounts of non-minified inline javascript... what were they thinking?
5. They seem to have done a lot of work on a global marketplace, but their tag line is "Europe's marketplace".
6. They use Java sessions, even when I go to the main page for the very first time!
7. Half the international links don't work! For instance, I try to go to Fruugo Luxemberg, and I got the following URL:
http://www.fruugo.lu;jsessionid=jghldhzrqq2mbw0vvnwo.webshop...
For €40 Million, could they not have done some basic link checking?
I have to say, this is not very good :(
I have a list of issues:
1. When I went to the Australian website, even though I'd started in the U.S. website (which uses pretty much the same layout), it was a slow load time.
2. Massive image in the centre, but my first immediate thought was "that's a large ad in the middle of this site!". then I realised it was meant to be there...
3. The fonts are strange choices. There are three different fonts I can see here (Times New Roman?!?) I can see over 5 font colours here, one of which is lime green on a white background.
4. Massive amounts of non-minified inline javascript... what were they thinking?
5. They seem to have done a lot of work on a global marketplace, but their tag line is "Europe's marketplace".
6. They use Java sessions, even when I go to the main page for the very first time!
7. Half the international links don't work! For instance, I try to go to Fruugo Luxemberg, and I got the following URL:
http://www.fruugo.lu;jsessionid=jghldhzrqq2mbw0vvnwo.webshop...
For €40 Million, could they not have done some basic link checking?
I have to say, this is not very good :(
You say all of that, but imagine how much money they saved by not hiring expensive top-talent.
Some other usability observations: the hover menu system on the left has what http://uxmovement.com/navigation/why-hover-menus-do-users-mo... calls a 'hover tunnel.' "Hover tunnels are passages that users have to tunnel their mouse through to click a menu item." The Mac did this correctly in the 1980s.
I thought that the massive image in the center was be like a shelf, where you could see things they were promoting, and click on them. But if you click on an item you get an entire category (which was entirely missing for one thing I clicked on), and have to search again for the thing which caught your eye.
I thought that the massive image in the center was be like a shelf, where you could see things they were promoting, and click on them. But if you click on an item you get an entire category (which was entirely missing for one thing I clicked on), and have to search again for the thing which caught your eye.
Oh dear... in other words, not optimized for tablets. I looked at this on my iPad, and when I pressed the menu, it expanded it, but then immediately navigated to that page.
The way you and the article describe it, it sounds a bit like the boo.com fiasco:
http://en.wikipedia.org/wiki/Boo.com
http://en.wikipedia.org/wiki/Boo.com
Oh, hold on a second. If you try to join on the US website, they are using a fruugo.com site certificate, but the domain I'm navigating in is fruugo.us
https://www.fruugo.us/auth/register.htm
Gives me a nice big Firefox webpage telling me that I'm viewing an untrusted connection.
https://www.fruugo.us/auth/register.htm
Gives me a nice big Firefox webpage telling me that I'm viewing an untrusted connection.
There's some weird HTML in the page...
<script type="text/html" id="template_pulseItem">
<
The idea of competing with Amazon which seems to underlay Fruugo, justifies the scale of investment. To me the execution failed because it did not draw the correct lessons for Amazon's success.
Bezos's grounding in finance played a key role in Amazon's success over the long term. But more critical was that he was taking responsibility for hauling packages to UPS himself - is there any better example of a founder so focused on shipping?
http://www.achievement.org/autodoc/page/bez0int-4
It's hard to see a former chairman of Nokia doing that.
Bezos's grounding in finance played a key role in Amazon's success over the long term. But more critical was that he was taking responsibility for hauling packages to UPS himself - is there any better example of a founder so focused on shipping?
http://www.achievement.org/autodoc/page/bez0int-4
It's hard to see a former chairman of Nokia doing that.
It's also worth remembering that Amazon had accumulated something like $1 BILLION in losses by the time it started turning profits. €40M sounds like a huge number, but in that space, it's not all that much.
I already told this to vilpponen directly, but it's wonderful to see that this particular company is being discussed out in the public finally. Finland has (had) this weird culture where you can't publicly criticize a person who's achieved a certain "position" in the minds of masses - Mr. Ollila being one of them. I think not only is this a great lesson about funding "air" but also how the Finnish society is changing.
Happy to be a part of the change through Startup Sauna. Hopefully we can "fix" this sinking boat during the coming years.
Happy to be a part of the change through Startup Sauna. Hopefully we can "fix" this sinking boat during the coming years.
Forty million euros? That's complete insanity.
The idea is like going backwards from Amazon's model. While Amazon goes right to the supplier, Fruugo accesses various shops that sell a certain product from the supplier. And the design looks like someone created it with a free site generator, the whole thing just feels cheap all around.
The idea is like going backwards from Amazon's model. While Amazon goes right to the supplier, Fruugo accesses various shops that sell a certain product from the supplier. And the design looks like someone created it with a free site generator, the whole thing just feels cheap all around.
Maybe having a board full of large company execs having their hands full off saving Nokia was not the best idea...
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Just how were they applying this idea? how did they get around the regional strategies of the retailers?
How did they manage to ship to countries like the BRIC and others in the developing world which have overzealous custom policies regarding imports?
How did they manage to ship to countries like the BRIC and others in the developing world which have overzealous custom policies regarding imports?
40 million, wth. why would launch in so many countries at the same time
Oh, that's an easy one to answer.
Because they were so obviously going to succeed that there was no need to test things with users or do a gradual rollout. And they had a great plan with a big pretty chart showing the multi-country rollout, and of course you're going to follow the plan, right? I mean, it's the plan.
Because they were so obviously going to succeed that there was no need to test things with users or do a gradual rollout. And they had a great plan with a big pretty chart showing the multi-country rollout, and of course you're going to follow the plan, right? I mean, it's the plan.
See here for example:
http://www.arcticstartup.com/2011/03/03/making-growth-entrep...
http://www.arcticstartup.com/2012/04/03/the-best-april-fools...
Who do we have ? Jorma Ollila (again) - the arrogant twit who drove Nokia into the ground long before Elop took over. Siilasmaa, another face from Nokia. The same people involved in the Fruugo fiasco. Taxpayer money funneled through Tekes to support no-hope startups run by people who know the right people. Silly little committees - again taxpayer funded - to discuss the "future of IT in Finland" with nary a nod toward the genuinely successful startups.
The tech scene here is anemic, incestuous and poorly managed, propped up by taxpayer money through layers of government bureaucracy. Which is a shame because the tech talent is excellent. What's really needed is a more startup-friendly environment - a reduction in bureacracy, taxation reform, and a more small-business-friendly culture - but these are "hard" problems. Let's just have yet another worthless "steering group" and appoint the same guys we drink beer with in the sauna.