Very few people understand just how difficult it is to operate in the moving industry. Having worked with a lot of moving companies, here are just a few reasons:<p>-In terms of stress, moving ranks just under death and divorce. Movers joke that half their job is carrying furniture, the other half is therapist.<p>-1 in 5 moves involves some kind of claim. This isn't because movers are careless, it's just the nature of moving furniture. Damage is a part of moving. Considering customers are already stressed, layer on some damage and things get really fun.<p>-Margins are slim. Most people assume movers are "making out like bandits" charging hundreds or thousands of dollars. The reality is most well run moving companies operate on 15-20% profit margin.<p>-The industry is cut throat. Bait-and-switch has become the standard sales approach.[0] This is due to a number of factors including deregulation(debatable), uneducated consumers, and the internet (movers are on the cutting edge of fake review schemes. We track a few companies who change their name every Summer.)<p>-The industry is also trying to deal with millennials who tend to move more frequently but have much less stuff to move. These small moves are harder to turn a profit on. Also, household goods drivers are a dying breed putting further pressure on the long distance moving industry.<p>[0]<a href="https://www.movebuddha.com/blog/2017-summer-moving-scams/" rel="nofollow">https://www.movebuddha.com/blog/2017-summer-moving-scams/</a>
In short: “What we found was that while many people complain about their moving companies, even the highest income consumers would not pay for a better service. Our mistake was conflating desire for a better product with desire to pay more for a better product”
"In short, we found product-market fit."<p>"Despite our early successes, we’ve decided to close Walnut. Our tests revealed that we could create an experience customers loved, but we doubted our ability to be profitable long-term."<p>If people weren't willing to pay for a product you were offering at a price that would sustain the business, then you did not in fact find a product-market fit.
I am a Chinese so my family usually have some Chinese contractor do the moving. A couple years ago my family and I bought a home (finally!) and we hired a contractor to come in, after my family and I had packed up everything (since my dad is a jack-of-all-trade kind of a smart man).<p>The contractor paid two Hispanic workers to do most of the heavy-lifting work, but we also helped anyway so we get the move done ASAP. The hardest thing to move was the heavy massage chair so we let them moved the chair. They are strong...<p>I don't know how much we paid the contractor in total, but I know it didn't go above 1000. We tipped the contractor and also tipped the workers separately ($150 each). We are very generous when we work with nice and hardworking people. They deserve the bonus, especially knowing the contractor wouldn't pay them a lot. So tipping to us have to be personal, and shouldn't be part of a system.<p>I mention this story because the hiring process may seem bizarre to the non-Chinese immigrants. Contractors (construction or moving) usually hire workers off the street. There is a place the contractors will find workers waiting to get a job. So yes, these workers are literally picked that morning like 7AM and the guy came around 11AM since the contractor had another job early that morning. The contractor might find another pair the next day.<p>The truth is, every community has its own way to find people to do work for them. In the Chinese immigrant community, we almost never hire an expensive professional contractor. We (at least the people I know) believe Americans charge us way more for the same, if not, less quality work. We "joke" about how schools can save so much money if they'd pay a licensed Chinese contractor.<p>My dad also doesn't use Uber because (1) he doesn't speak very good English, and (2) he can call a driver for $25 going to JFK with just one call (plus maybe $10, $20 tip). We can go anywhere in the tri-state area in range of $20-$75 in a comfortable SUV. The Chinese community (Korean and Spanish community also have this) also have a shuttle bus that goes from Queens<->Chinatown, Flushing<->Chinatown, Brookyln 8 ave<->Chinatown for $2-$3 dollar. You call the call center, tell the operator which shuttle stop to pick up from.<p>"If it ain't broken, don't change." For the same service quality, why go for something more expensive?
How is this a startup? You can't scale it fast, it's not using an innovative business model, it's not driven by tech at all.<p>It's just a normal company trying to offer a better service at higher prices — which is okay — you don't need to slap a startup label on everything.<p>The medium piece was a great read. Kudos to everyone involved!
This was an interesting postmortem, but nearly the first thought that struck me as it proceeded into the closure reasons was that many of the factors (to be fair, not all) seem to be industry knowledge easily gained through the market research about the industry.<p>This gives the appearance that Walnut founders either didn't perform this research (seems unlikely given the research-heavy approach they displayed) or had a large blind spot when deciding to move forward, a bit of blind optimism that somehow it might work out.
In SF I use Delancey Street movers. The experience has always been phenomenal. And they hire ex-cons who are trying to change their lives so it's win-win. Any tips that we give them is tax-deductible and goes towards programs for the employees and their families for outings, etc. Everyone works so hard, and they are extremely efficient, I have had no qualms giving 50% tips to these guys and I've used them 4 times now.
I wonder if the founders considered serving the B2B market, rather than B2C audiences.<p>Corporates are more likely to appreciate the 'hospitality' service, and less likely to be price sensitive.<p>(I've no doubt they did consider this – I just wonder why they didn't think it viable.)
Amazing write up, thanks for this. Question though - I always thought hiring movers was a higher-end service that targeted richer people? Most people I know rent a truck or U-haul and get their friends to help move for a case of beer...
This was a beautiful post-mortem. Thank you for writing it.<p>They said it beautifully: when people <i>want</i> to spend money, they'll spend more than they should. But when people <i>need</i> to spend money, they'll spend as little of it as possible. Some have more forgiving tolerances on how little they'll be willing to spend. The airlines and, I think, retail companies call this metric "willingness to pay" (WTP) and spend A LOT of money trying to figure this out. The goal is to make prices as segmented as possible, since you "can't" give everyone a different price for a thing.<p>If Walnut took VC, they would be doing the same because, according to this armchair CEO, that's where the margins are in businesses like these (service industries).<p>Many people will do crazy-ass things to save lots of money (driving two hours or more to or from an airport with significantly cheaper flights, even if basic economy). And people <i>say</i> they care about the well-being of the workers providing services for them, but when put to the test (increasing prices), the truth comes out.<p>Case in point: ultra-low-cost carriers (like Ryanair) pay their crews jack shit to be the jack of all trades. The pilots will do light maintenance (heavy maintenance is contracted out). The flight attendants will check you in at the gate and clean the plane. If people really cared about this state of affairs, then they would fly with a legacy carrier that treats people in these positions better. Instead, ULCCs are beating legacies in profit hand over fist.
Perhaps a digression, but how does something like compare with individual movers like "Guy with a Van", "Girl with a Van", "Brothers with Van" type single person operation?<p>Quite a few of them seem to be in business for many years and seemingly doing well enough to not close shop. What are they doing different to stay profitable?<p>Source: <a href="https://www.google.com/search?q=guy+with+a+van" rel="nofollow">https://www.google.com/search?q=guy+with+a+van</a>
Moving is detail-oriented work. Ignoring the simple case and consider moving to multiple locations and not all boxes being unpacked. That requires: 1) Many moving pieces, 2) all labeled correctly, 3) all routed correctly, 4) undamaged, and 5) multi-object units delivered together [0]<p>Pulling that off with a sizeable move takes a lot of process and discipline, as anyone who has tried to execute a highly detailed IT project knows. Also, people tend to not focus on details when they are exhausted. I doubt you can get it done well at a price people are willing to pay.<p>[0] For example, a bookcase might include: A 'frame', removable shelves, pins that support the shelves, and for some bookcases a removable back. All these objects must come back together at the destination - 'what are those shelves for?' 'Where are the pins?'
Incredibly valuable information in the article. I appreciate how transparent you guys are and I'm genuinely thankful for you sharing the experience.
This was a well written post mortem and I appreciate Nick's honesty, but it left me with the impression that Walnut closed because the team ran out of willpower.<p>There were a lot of challenges and concerns described, but rather than attempting to surmount the challenge, the team decided to quit (of course, sometimes that's the best choice given the circumstances).
What means 'walnut' in this context?<p>One of the problems IMHO is that everybody wants a cool and short name like 'apple', without noticing that apple has passed long away the state in what people would identify their trademark name with a grocery. "Fruit means computer" is not something that happens in a day in the mind of customers.<p>Why to choose a name that does not add clues about what the company is doing (and expect that the customers will learn to fill the gap)? For each sucessfull 'uber' there are decens of other brands that didn't stick. Programmers love add a layer of mystery about what their programs do. Probably to not give much hints to the competition. Graphic designers have also their bible and will say that a name must measure this and be coloured like that, but you as a company have literally a few seconds to grab the customer attention. If the message is unclear or not complete you lost customers.<p>Starting with something like 'Walnut movers' could look old fashioned but probably will be more efficient.