Welcome

Dear Reader,

This month, we who follow such things marked the passing of Unicorn Rides, a scooter vendor that billed itself as "the magical electric scooter to get where you're going." Their slogan needed some work ("get where you're going" being both tautological and overused), but the concept had some promise. Unicorn didn't actually make the scooters but, instead, sold a modified version of the popular ES2 electric scooter made by Segway. The Unicorn scooters were intended for single-owner scenarios (as opposed to on-street rental), and they were modified to include special software features. The scooter was designed to recognize the user's cell phone and unlock itself automatically when the user was near. The Unicorn app also let you authorize other users to operate the scooter, and it provided integration with the Tile device tracker platform. (Tile founder Nick Evans was one of the founders of Unicorn.)

Unicorn apparently lined up $150,000 in funding, set up a website, and started selling scooters [1]. Unfortunately, behind the promotional videos and the carefully timed social media posts, these sales were actually pre-orders for scooters that hadn't been built yet. And it turned out that, despite the extra features and marketing pizzazz, scooter buyers might have had trouble justifying the $699 price for a Unicorn when a garden-variety ES2 only costs $589. The company managed to sell a total of 350 scooters, and, suddenly, one day they ran out of money. They never met the minimum order with Segway, so the scooters were never manufactured. According to a contrite letter sent to customers "the cost of Facebook and Google ads, payments for loans, and other expenses ate through our funding faster than new orders came in." [2]

In the end, the customers received neither a refund nor a scooter. The whole enterprise played out as a massive transfer of funds, with money flowing from investors and customers to Google and Facebook and no product reaching the light of day.

In the exhilarating days surrounding the June launch, Unicorn founder Nick Evans told The Verge, "Building a quality product and lasting brand takes a lot more work than placing an order on Alibaba and slapping your new hip logo and forgettable four letter company name on the side. It's about focusing on the customers' wants and needs and finding the best way to address them. How you get there should be incidental to that goal." [3]

A noble vision, but ultimately, such sentiments are never enough if you can't pass that first hurdle of making sure you deliver a product to the customer who paid for it.

It is easy to second guess now, but startups go out of business every day. In fact, more startups go out of business than stay in business. What is strange about this one is how far they could get just based on a dream without actually delivering anything.

The other thing to notice is that maybe all those social network ads aren't so powerful and effective after all. It is easy to believe there is this linear relationship between the money you pour into Facebook ads and the number of customers you get. Then, of course, there is also the assumption that whoever the ad platform brings to your doorstep will buy what you are selling – that whenever your marketing department says your product is revolutionary and irresistible that means it really is and your customers will recognize that it is.

I've watched a lot of startups crash and burn from my vantage point as a salty old dog in the technical publishing field. After all I've seen over the years, I can offer a couple useful rules to those who are ready to start their own high-tech business:

• Don't believe in your own hype.
• Don't believe in anyone else's hype.

Hold fast to these simple truths, then go and follow your star.

Joe Casad, Editor in Chief