Fast
From Invertopedia, the encyclopedia of how things fail
Fast was a San Francisco startup that sold a one-click checkout button for online stores[2]. It raised about $124 million, including a $102 million round led by Stripe[3][2], and grew to nearly 400 employees[2]. In 2021 it brought in about $600,000 in revenue[1], while its burn was reported at up to $10 million a month[3]. It announced it was closing on April 5, 2022[1][3].
Contents
The bet
One button that remembered a shopper's details would let people buy on any site without a password, and it would spread across online shopping the way a payments network does. Domm Holland said the idea came after his wife's grandmother could not order groceries online because she could not remember or reset her password[5].
Hire ahead of the merchants and the volume would follow. When the money ran short, Fast was trying to raise a new round at a valuation above $1 billion[1].
What happened
| 2019 | Domm Holland, former Uber executive Allison Barr Allen and Joshua Abulafia found Fast. About a year later Holland and Abulafia fall into a dispute, and Abulafia is pushed out, according to former employees.[1] |
|---|---|
| Mar 2020 | Stripe leads a $20 million round.[2] |
| Jan 2021 | Stripe leads a $102 million round. Index Ventures, Susa Ventures and Global Founders Capital are also backers.[3][2] |
| 2021 | Fast brings in about $600,000 of revenue for the year, according to The Information. Its burn is reported at up to $10 million a month.[1][3] |
| Jan 2022 | Holland says Fast has nearly 400 employees and is on about 1,000 e-commerce sites.[2] |
| Early 2022 | Fast seeks money at a valuation above $1 billion. The Information reports it plans to lay off hundreds of staff and is exploring a sale.[1][2] |
| Mar 28, 2022 | Fast is still signing merchants, announcing a deal with The Honest Company.[3][2] |
| Apr 5, 2022 | Fast announces it will close. Affirm offers jobs to most of its engineers.[1][3][4] |
| Apr 15, 2022 | Fast Checkout is switched off for good.[2][5] |
The kill shot
Fast built a company sized for the revenue it hoped to have. It spent like a large payments network while making about $600,000 a year, and when the next round did not come there was nothing to fall back on.
The numbers never met. Fast's 2021 revenue was about $600,000[1], while its burn was reported at up to $10 million a month[3], so one month of spending was many times a full year of sales. TechCrunch named the causes as modest revenue growth, high cash burn and limited fundraising options[3].
The product was also used less than the headcount suggested. NPR found the checkout button was spotty and was not used across all products even at merchants Fast named as major partners[1]. At the end, Holland blamed a lack of financial resources[4].
Red flags ignored
- Headcount far ahead of revenue. Nearly 400 employees[2] against about $600,000 of revenue the year before[1].
- Celebrity spending before customers. Fast agreed to pay the Chainsmokers $1 million to perform at a New York retail conference, and former employees questioned its sports marketing deals.[1]
- Partners in name only. Merchants Fast called major partners were not using the button across all their products.[1]
- A valuation chasing the next round. Fast sought more than $1 billion[1] after a last valuation of about $580 million, according to PitchBook.[3]
- A crowded field. It was up against PayPal, Apple, Bolt and Shopify.[1]
The cost
About $124 million of venture money raised since 2019[3][2], most of it in the $102 million round of January 2021[3][2]. Employees holding stock options were left with options worth nothing[3]. One employee said staff would be paid through that Friday and had already lost access to work systems[2].
Merchants had ten days: the shutdown was announced on April 5 and Fast Checkout stopped on April 15[2][5].
The inversion
Hire for the revenue you have, not the revenue in the pitch deck. Until merchants use the product every day, every new hire and sponsorship is a bet that the next round arrives on time.
What survived
The engineers. Affirm offered roles to the vast majority of Fast's engineers[2][4]. It said it had no plans to enter one-click checkout; it wanted the people, not the product, and the deal involved removing all of Fast's services and its brand[4].
References
- ^ “Fast, the easy checkout startup, shuts down after burning through investors' money”. NPR (Bobby Allyn) via Michigan Public, April 5, 2022. Founding in 2019 and the three founders, the $102 million Stripe-led round, about $600,000 of 2021 revenue (from The Information), the above-$1 billion fundraising attempt, the Chainsmokers deal and sports marketing, spotty use at named partners, competitors, and the shutdown.
- ^ “Startup Fast abruptly shuts down”. Payments Dive (Caitlin Mullen), April 6, 2022. San Francisco base, $124 million total, the $20 million Stripe-led round of March 2020 and the January 2021 round, nearly 400 employees and about 1,000 sites in January 2022 (per Holland), The Information's layoff and sale reports, the April 15 end of service, staff pay and system access, Affirm's offers.
- ^ “Fast shuts doors after slow growth, high burn precluded fundraising options”. TechCrunch (Alex Wilhelm, Mary Ann Azevedo), April 5, 2022. Burn reportedly up to $10 million a month, $124.5 million raised (Crunchbase), the $102 million Stripe-led Series B and other backers, the about-$580 million PitchBook valuation, The Honest Company deal, worthless options, and the causes of the shutdown.
- ^ “Affirm is giving job offers to the 'vast majority' of Fast engineers”. TechCrunch (Natasha Mascarenhas), April 5, 2022. Holland blaming a lack of financial resources, Affirm's offers to most engineers, and Affirm wanting the talent but not the product, with Fast's services and brand removed.
- ^ “Checkout Solution Startup Fast Closes Its Doors”. PYMNTS, April 5, 2022. Holland's account of the password story behind the idea, and Fast Checkout ending on April 15.