Vetting a New Business Idea in Public: WeShip
by Jason -- April 3, 2014
I’ve been thinking about this business idea for a couple years now. Reading a recent interview with Marc Andreessen spurred me to start looking into it further (more on that below).
For my first step I’ve decided to share my thought process and get your feedback.
What is WeShip?
WeShip is a technology company that helps you ship packages & letters. We use the extra space in people’s cars to pick-up and ship the items to their final destination.
What’s the problem we’d solve for our customers?
I want to ship a package for less.
You can’t help but notice all of the extra space in people’s cars. What if we put packages in there?
How I would start
In a very simple example, if you’re shipping a package from San Francisco to LA, there are 3 steps in the process –
- The package goes from your home/business to a sorting facility in SF (First mile)
- Next it travels from the sorting facility in SF to a sorting facility in LA (Middle miles)
- Finally, from a sorting facility in LA to the final destination (Last mile)
Forget the first mile or last mile — that’s really difficult. I would start with the “middle miles”.
Specific Use Case
You’re driving from San Francisco to LA. WeShip will cover your gas.
On the way out of San Francisco, you pull into a gas station near the freeway. You fill-up on gas and packages, then you continue your already planned drive to LA.
As you enter LA, there’s another WeShip gas station that you pull into. You drop off the packages, fill up on gas again and you’re on your way.
The two big questions here are how do the packages get to that initial gas station (first-mile)? And how do they get delivered to their final destination (last mile)?
Other startups in this space
The Lean Startup Approach
The Lean Startup approach says to come up with assumptions around the most challenging parts of your business and then determine fast, efficient ways to test them. Here are the three I plan on testing.
Assumption #1 – We can find packages to ship.
Finding packages that need to be shipped shouldn’t be too much of a challenge. However, if I’m starting with the “middle miles” I need to either do the first and last miles myself, pay someone to take care of them, or find a partner that can help.
Assumption #2 – We can find drivers to move the packages around during the middle miles.
The place I plan on starting is Craigslist Rideshare. Folks are looking to fill up their car in exchange for a bit of cash. We’ll see if they’re willing to fill it up with packages instead and how much cash we would need to give.
Assumption #3 – We can charge less than USPS & FedEx, pay the drivers a reasonable wage and have enough margin left over for this to be a business.
This is the biggie. Basically, is this a viable business?
Validation from Marc Andreessen
I recently read an interview with Marc Andreessen (famous entrepreneur & VC) where he mentions this exact business. Here’s what he had to say:
Speaking of cars, you’ve talked about a shared economy where people will share cars. They won’t own cars. You see a little bit of that today, but is that really the way the world’s going?
So this is when I get really excited. This is another example of the impact of information transparency on markets. We are 90 years or so into cars. And we drive our cars around. And we own our cars. And then when we’re not in our cars they sit parked. So the average car is utilized maybe two hours out of the day. It sits idle for 90% of the time. The typical occupancy rate in the U.S. is about 1.2 passengers per car ride. And so even when the car is in motion, three-quarters of the seats are unfilled.
And so you start to run this interesting kind of thought experiment, which is what if access to cars was just automatic? What if, whenever you needed a car, there it was? And what if other people who needed that same ride at that same time could just participate in that same ride? What if you could perfectly match supply and demand for transportation?
Taken a step further, what if you could bring delivery into it? Two people were going to drive between towns, and there was also a package that needed to go. Let’s also put that in there so we can fill a seat with a package. Just run the thought experiment and say, “What if we could fully allocate all the cars, and then what if we could have the cars on the road all the time?”
And of course the answer is a whole bunch of things fall out of it. You’d need far fewer cars. The number of cars on the road would plummet by 75% to 90%. You’d instantly solve problems like congestion. You’d instantly solve a huge part of the emissions problem. And you’d cause a huge reduction in the need for gas. And then you’d have this interesting other side effect where you wouldn’t need parking lots, at least not anywhere near the extent that you do now. And so you could turn a lot of parking lots into parks.
Questions for you
- What do you think of WeShip?
- Are there potential challenges I’m missing?
- Is there someone you recommend I speak with?
- Have a better name for the business? I don’t like WeShip!
My Next Steps
- Send this blog post to smart people to get their feedback.
- Talk with people more familiar with the shipping industry.
- Do research into potential partners for the first & last mile.
- Begin testing each assumption.
I’ll post updates as I make progress.
Be awesome and help us share: