8 ms·

A cautionary tale about subscription services and how not to shut down a startup

171 points by mikeleeorg 12y ago

vijucat 12y ago
A friend of mine has recommended https://www.entropay.com/ https://www.entropay.com/ for these kinds of online purchases : since it's a pre-paid virtual credit card, you cannot get charged beyond the pre-paid amount, if I understood it correctly. The initial loading fees of 4.95% seems quite high, but my immediate next thought was : I would personally still pay it for the security! Warning : I have yet to try it out myself; this is just word-of-mouth, not a personal recommendation. I intend to try it out soon with taobao.com, to which I have taken an immense liking recently, despite getting the wrong colour for my mechanical keyboard which I ordered from there :-)
- thematt 12y ago
  Bank of America has this too for their cards, it's called ShopSafe.
- UnoriginalGuy 12y ago
  You cannot be charged but you can be sent to collections and have your credit ruined. So be careful, people think closing a payment account is akin to a cancellation, it is not.
  - toomuchtodo 12y ago
    Collections? Good luck. Its going to go through 1-3 collection agencies, who are then going to have to prove its a legitimate debt (no, your photocopied spreadsheet listing just creditor names and amounts is not proof). The FCRA has some real teeth when it comes to that. http://en.wikipedia.org/wiki/Fair_Credit_Reporting_Act http://en.wikipedia.org/wiki/Fair_Credit_Reporting_Act
  - vijucat 12y ago
    Are you sure about this? That sounds like a fairly basic flaw in the product.
  - Karunamon 12y ago
    Collections for what? Unless you pre-committed to a certain term and stop paying for it, payment gets declined, services stop, and that's that. You don't get to send someone to collections just because they stopped paying you without asking nicely first.
  - username223 12y ago
    So what's the least-bad way for plebes who care about credit ratings to deal with Comcast-levels of "customer retention," or just plain dishonesty and stonewalling like in this case? Never set up a recurring payment? That's been my approach for awhile, but it demands a bit of vigilance. EDIT: After dealing with customer "service" utterly failed, I had to disconnect from Verizon after my 2-year contract by refusing to pay them. It worked, but probably only because I had unchecked the "auto-pay" box every month for two years.
    - Silhouette 12y ago
      So what's the least-bad way for plebes who care about credit ratings to deal with Comcast-levels of "customer retention," or just plain dishonesty and stonewalling like in this case? I no longer have much patience for big companies that mess me around, but it's important to always be reasonable if you want a good result, and particularly if you might wind up taking real legal action. So, this is my general plan: First, assuming I'm properly entitled to cancel whatever agreement we have, they always get one attempt to play nice and give reasonable notice to cancel by their preferred mechanism. I make a clear record of what happens at this stage, e.g., if I called them then I note the time of the call, who I spoke to, and what was said. Recording the call can be a useful alternative here, but be careful to check what is legal in your jurisdiction before you do this. Second, if cancelling their way fails or proves to be unreasonably difficult, I skip right to sending a recorded letter to their registered address or the equivalent. I explain briefly what happened before, and I state clearly that I am terminating the agreement and that I do not agree to further charges. Always be polite and fair. Third, depending on the amounts of money and timescales involved, I also contact whatever payment services are involved preemptively to make clear that I have not authorised any further payments. Again, keep good records. Alternatively, if I get charged again then at this point I would formally dispute the charge, if necessary providing the payment service with the records to show that I have given proper notice to cancel. If we get this far and working with the payment service(s) doesn't get things fixed reasonably quickly, it's a case of whether the time and money involved justify proper legal action, and following whatever process is required. Opinions differ on whether to include a threat that further trouble will lead to legal action at the letter stage. Any allusion to a legal action might get bounced directly to their legal department, which is probably better or worse depending on whether you know what you're doing and whether they know you know. If they call your bluff and you don't know what you're doing, you could wind up spending far more time and money chasing even a simple small claims action than it's worth, or more likely giving up and then they know they've won. On the other hand, if you know a friendly lawyer who can spend a few minutes explaining the process and the really important things you need to do without charging you the earth for it, go right ahead. That might include adding certain required information to the letter itself along with a statement that it's the first formal step in your legal action, for example. A less dramatic alternative that I've seen work several times is just to add a statement to the letter that you will charge them a reasonable "administration fee" to cover your time and trouble if you have to contact them again due to their failure to comply within a reasonable period. It's surprising how many places automatically change their behaviour as soon as something might actually cost them real money, even if it's only a nominal amount, and there's a good chance that whatever front line grunt first opens your letter won't be authorised to deal with that situation so you'll get escalated to someone more effective. As always it's worth knowing what the law says in your area before trying this one, because you don't want to do something dumb that will let them settle for peanuts later if you do wind up spending a significant amount on real legal action that you might otherwise have been entitled to recover. So I guess it comes down to the usual things: Always keep records, always be transparently fair and reasonable, try your payment service's dispute process if it's a sensible option, and then if things still aren't working out, make sure you've taken at least some basic legal advice about your particular situation before you go charging in with something heavier and act accordingly.
  - nkozyra 12y ago
    Extremely unlikely for these types of services. "Credit" is often different than a subscription service - typically in the TOS of the latter, there's a cancellation of services for nonpayment. You don't "owe" anything unless you got something and didn't pay for it. Very few of these things will send the product without a completed transaction, and even if they did (one time), the odds of a company selling a $40 debt are insanely low. When consumers need an extra layer of protection against bad actors, this is a great way to go about it, and the risk to your credit is actually very low.
- gst 12y ago
  Just get a Citi credit card that includes virtual account numbers (see https://en.wikipedia.org/wiki/Controlled_payment_number https://en.wikipedia.org/wiki/Controlled_payment_number). There's no fee to sign up, with the DoubleCash card you get 2% cashback, and you can easily create a new virtual credit card number for each online purchase. Also allows you to set a Dollar limit for virtual numbers and to close numbers.
function_seven 12y ago
How is their site still up and running, accepting new members and payments, if they can't afford to continue on as a going concern? Is this out-and-out fraud? EDIT: Looks like they're no longer accepting payment, but if this article is right, they still were for a very long time after ceasing shipments.
logn 12y ago
Maybe this post got their attention? (edit: doubtful as it was posted 4 minutes ago) We're Sorry Whimseybox is no longer taking new subscriptions, gifts, or shop orders at this time. https://whimseybox.com/subscription/new https://whimseybox.com/subscription/new
- bobbles 12y ago
  The home and signup pages have no mention of this at all
astrocat 12y ago
Saying things like "Now Techstars has lost complete credibility in my mind" is taking things too far and just being petty. Techstars doesn't market itself as some bastion of credibility to consumers. Yes, this a great example of what not to do when you know your company is doomed, and the founders are killing their long-term prospects of future ventures with all this bad karma, but there's no need to drag Techstars into it.
- tptacek 12y ago
  Not to mention: there's not a whole lot Techstars can even do about this. They're a minority investor and their involvement is limited to the first few months of company operation. This comes up every once in awhile with YC, too.
  - nedwin 12y ago
    Legally not a whole lot they can do, and not sure about any other kind of obligation, but hopefully they're reaching out to the founder to make sure she's OK and help get this mess sorted out.
  - hawkice 12y ago
    I initially completely agreed, but now I'm less sure. I used to mentor someone, and if he was found using skills I taught him to act fraudulently, I would accept partial responsibility. Obviously Techstars can't force people to stop shenanigans, but I hope for a society where we expect more of each other, where behaving ethically is not more or less important that profits but simply completely necessary. I'm not sure I can, in good conscience, condemn someone for expecting more of a renowned institution, however minor that renown is. I also think that the author of this post is in a place to understand what is possible and expected of investors, given she is an Operating Partner at Khosla Ventures.
- djtidau 12y ago
  I think the basic idea behind the assertion is that someone coming out of Techstars should know better, either due to the fact they have smart/savvy enough to be accepted in the first place or that they have been provided with enough information to make decent decisions like shutting a site down when the business has folded. Techstars may not market themselves as a measure of credibility, but i'm sure it is something they care deeply about. If an incubator constantly spat out startups making deeply questionable decisions like this one they would have far less startups knocking on their door.
johnvschmitt 12y ago
For those with integrity, it's not worth the read. Yes, stop taking money from new customers when you've shut down the company. For those without integrity, it's a recommendation: There are trusting people who will signup & pay even if you don't deliver. The world is still wild, and I like that. Nothing to recommend than to be skeptical and ethical please.
FunCaptcha_Jim 12y ago
Great article, shame it happened. I'm really curious as to how this idea didn't really succeed - seemed like a slam dunk service. Anyone know more?
- jqm 12y ago
  Funny, I was thinking exactly the opposite about the idea...
  - username223 12y ago
    Same here. It's like Ikea sending you a random box of do-it-yourself furniture every month. The "maker" mumbo-jumbo is about building things you actually want, not assembling stuff someone throws at you.
- sgarman 12y ago
  If anything these X box a month services pop up so frequently I'm surprised there is not a startup to help people make their own x box a month companies.
  - jeremymcanally 12y ago
    There is actually, and it's nice! http://cratejoy.com http://cratejoy.com
    - username223 12y ago
      Hook that into http://bride.ru http://bride.ru and you've got a winner! More seriously, automating the process of harvesting credit card numbers and signing them up for monthly billing, then taking a cut, is evil genius. Even more seriously, the sex-trade people were way ahead on this, by happily offering canceling customers refund checks with mind-blowingly dirty names on them to discourage deposit.
  - nols 12y ago
    You shouldn't be surprised, it does exist. http://www.subbly.co/ http://www.subbly.co/
billychasen 12y ago
I literally just tried to sign up for this as a gift for someone this past weekend. I tried to buy a year gift subscription and got an error message. It showed me a silly error message which included Ryan Gosling promising a foot massage for me to keep my calm. I mistakingly tried 2 more times and now see 3 charges on my credit card. For what it’s worth, they use Stripe. I saw the $1 pending transaction they tried. Hopefully Stripe can shut them down.
- mintplant 12y ago
  Did you file chargebacks?
  - billychasen 12y ago
    I did this on Saturday and will give WhimseyBox the benefit of the doubt to fix this by Mon/Tues before disputing with Amex. It's always a slow road when Amex investigates.
lmg643 12y ago
Interesting. Is there a market for shut-down services? Clearly they had "something" if people are still signing up. Might not be a $100mm exit but I'm sure someone would enjoy running this for a few million in cash each year?
- infinitone 12y ago
  If i understand you correctly, you just valuated this business at 'a few million'? What makes you think its worth more than 5k?
- nols 12y ago
  They didn't shut down if they were making a few million a year. They probably didn't scale nearly as well as they thought and never broke into a profit/subscriber number.
- jlarocco 12y ago
  The saying, “We lose money on every sale, but make it up on volume,” comes to mind. I'm not sure "someone would enjoy running this" makes much of a difference if it can't pay the bills.
grandconj 12y ago
A great warning for founders considering a subscription-based freemium model.
patio11 12y ago
It isn't necessary to dream up scenarios of unethical action on the part of anyone for this to happen. Startups fail. Fact of life. We talk about "burn rate" and "runway" because it is easier to say than "The number of days you have to find a working business model or secure additional investment, after which you have to fire all of your employees because you cannot make payroll." When startups know they're going to fail to make payroll, they fire all employees. Fact of life. Fired employees are the worst affected people when a startup collapses, by a factor of lots. They don't get to call up their credit card company and chargeback forgone wages for the last three years. When you're the non-technical CEO of a subscription commerce company, and you find yourself in an empty office without employees, if you're hypothetically aware that subscriptions are still active -- which you very well might not be aware of -- you have very limited options for actually fixing it. You might as well ask my dad to do an orderly shutdown of Appointment Reminder given I get hit with a bus tomorrow. Could this have been handled better? Yeah. There's a reason that when startups ask for advice on what to do in their remaining hours of life we always say the words "Prepare and execute on a plan to effect an orderly wind-down of the business." It's not exactly something people are born knowing and might not be at top-of-mind while they're going through an enormously stressful event.
- chasing 12y ago
  Taking money with no intention of delivering a product is unethical. I think I was born knowing that. Or, at least, I learned it pretty early on. Being too lazy to shut off the site is not an excuse.
  - tcarey83 12y ago
    It's not only unethical, it is fraud.
  - deleted 12y ago
    [deleted]
- pdonis 12y ago
  > When you're the non-technical CEO of a subscription commerce company, and you find yourself in an empty office without employees, if you're hypothetically aware that subscriptions are still active -- which you very well might not be aware of -- you have very limited options for actually fixing it. You also have very limited options for avoiding liability for fraud. I don't think using the excuse that you were a non-technical CEO is one of them.
Animats 12y ago
Well, they seem to be in violation of the FTC's Mail Order Rule. First, who are they? Their street address is 2409 20TH ST BOULDER CO 80304 US which is a house. A Colorado corporation search gives a second address: 1738 Pearl St., Suite 2A, Boulder, CO 80302, United States which looks like office space above a restaurant in Google Street View. Their landlord is Pearl Street Properties (http://www.pearlstreetmallproperties.com http://www.pearlstreetmallproperties.com) and calling them during working hours might be helpful. They're incorporated in Delaware, but are delinquent in filing with Colorado. Delaware corporation search only works on weekdays, so not much is available from there tonight. The founder is Alicia DiRago. Not only is the company not communicating, her rather busy personal online life has stopped. Here's her Twitter feed, which stopped on September 3, 2014: https://twitter.com/aliciadirago https://twitter.com/aliciadirago Here's her other startup, Dismount Creative, which was last updated on August 3, 2014: http://www.dismountcreative.com/ http://www.dismountcreative.com/ Her personal Facebook account, last updated in January 2014: https://www.facebook.com/alicia.dirago https://www.facebook.com/alicia.dirago Definitely the right person; she's wearing a Whimseybox T-shirt in her profile picture. She's married and lives in Boulder, CO. The address is a matter of public record, but I won't list it here. Her husband, Joseph DiRago, is an attorney in Boulder. No news items or obituaries for either of them. This is a very tiny operation and there's probably a personal problem. This isn't a big enough business to be a scam.
- spacefight 12y ago
  Shutting down the website of a bancrupt company is not hard.
- kjs3 12y ago
  "Her husband...is an attorney..." probably explains why she thinks she can keep up the shill longer than any sane, ethical person would.
iopq 12y ago
This is why I want to just pay for everything with Bitcoin. I gave my credit card to a site (not a subscription site) and they charged me and never delivered. I contacted them and they said they refunded the charge and put in a new order (???). So now I had TWO charges. Why didn't they just ship me the stuff without charging me again? I disputed one charge with the credit card company and the company refunded me after they saw the chargeback. Then a month later they ordered again for me. I had to charge back a second time (and I got a refund back again). Are you kidding me? The model of "I have your credit card number and the code on the back and I can charge you as many times as I want" is clearly broken.
- ams6110 12y ago
  virtual/single-use credit card numbers are a potential solution.
- PinguTS 12y ago
  But bitcoin will not help you at all, when there is no delivery. Bitcoin has no charge back. Bitcoin is in this sense mor like Western Union. The credit card system gives much better consumer protection most of the time.
  - iopq 12y ago
    No, the point is they DID deliver, but they tried to keep charging me for new deliveries.
- quanticle 12y ago
  If anything Bitcoin would be much, much worse. If I pay for something with Bitcoin, and it doesn't arrive, I'm left without any recourse whatsoever (just as if I'd mailed an envelope full of currency). At least with a credit card, I can file a chargeback claim.
Sami_Lehtinen 12y ago
Unfortunately what you experienced is really common. One company deliver "led lights" does everything, except deliver the goods. Web site is up, customer support answers to messages (as long as you're going to order something) and they'll accept payments. But that's where it ends. My dad got a new cellphone and it got the number which is still being shown on that web page. It's nice to receive more and less angry calls all day long from people getting scammed all the time. Unfortunately this seems to be quite common problem. Isn't it the business focus? Do the things which make money, don't mind about the rest. Web site, credit card handling, and customer support, all generate revenue. Delivering goods is bad business, it generates substantial expences. One famous entrepreneur in finland said that invoicing is the thing that runs the business, rest is irrelevant.
annnnd 12y ago
I think Hanlon's razor applies here ("Never attribute to malice that which is adequately explained by stupidity.") - when startups fail it is difficult to fail gracefully. It leaves you with lots of stuff to do, all the time knowing that you will get nothing in return. Frustrating and tiring as hell. (I don't condone the founder's actions, I just say I can understand what has lead to this situation) That said, I hope they make it right as soon as possible.

171 points by mikeleeorg 12y ago

A friend of mine has recommended https://www.entropay.com/ https://www.entropay.com/ for these kinds of online purchases : since it's a pre-paid virtual credit card, you cannot get charged beyond the pre-paid amount, if I understood it correctly. The initial loading fees of 4.95% seems quite high, but my immediate next thought was : I would personally still pay it for the security! Warning : I have yet to try it out myself; this is just word-of-mouth, not a personal recommendation. I intend to try it out soon with taobao.com, to which I have taken an immense liking recently, despite getting the wrong colour for my mechanical keyboard which I ordered from there :-)

thematt 12y ago
Bank of America has this too for their cards, it's called ShopSafe.
UnoriginalGuy 12y ago
You cannot be charged but you can be sent to collections and have your credit ruined. So be careful, people think closing a payment account is akin to a cancellation, it is not.
- toomuchtodo 12y ago
  Collections? Good luck. Its going to go through 1-3 collection agencies, who are then going to have to prove its a legitimate debt (no, your photocopied spreadsheet listing just creditor names and amounts is not proof). The FCRA has some real teeth when it comes to that. http://en.wikipedia.org/wiki/Fair_Credit_Reporting_Act http://en.wikipedia.org/wiki/Fair_Credit_Reporting_Act
- vijucat 12y ago
  Are you sure about this? That sounds like a fairly basic flaw in the product.
- Karunamon 12y ago
  Collections for what? Unless you pre-committed to a certain term and stop paying for it, payment gets declined, services stop, and that's that. You don't get to send someone to collections just because they stopped paying you without asking nicely first.
- username223 12y ago
  So what's the least-bad way for plebes who care about credit ratings to deal with Comcast-levels of "customer retention," or just plain dishonesty and stonewalling like in this case? Never set up a recurring payment? That's been my approach for awhile, but it demands a bit of vigilance. EDIT: After dealing with customer "service" utterly failed, I had to disconnect from Verizon after my 2-year contract by refusing to pay them. It worked, but probably only because I had unchecked the "auto-pay" box every month for two years.
  - Silhouette 12y ago
    So what's the least-bad way for plebes who care about credit ratings to deal with Comcast-levels of "customer retention," or just plain dishonesty and stonewalling like in this case? I no longer have much patience for big companies that mess me around, but it's important to always be reasonable if you want a good result, and particularly if you might wind up taking real legal action. So, this is my general plan: First, assuming I'm properly entitled to cancel whatever agreement we have, they always get one attempt to play nice and give reasonable notice to cancel by their preferred mechanism. I make a clear record of what happens at this stage, e.g., if I called them then I note the time of the call, who I spoke to, and what was said. Recording the call can be a useful alternative here, but be careful to check what is legal in your jurisdiction before you do this. Second, if cancelling their way fails or proves to be unreasonably difficult, I skip right to sending a recorded letter to their registered address or the equivalent. I explain briefly what happened before, and I state clearly that I am terminating the agreement and that I do not agree to further charges. Always be polite and fair. Third, depending on the amounts of money and timescales involved, I also contact whatever payment services are involved preemptively to make clear that I have not authorised any further payments. Again, keep good records. Alternatively, if I get charged again then at this point I would formally dispute the charge, if necessary providing the payment service with the records to show that I have given proper notice to cancel. If we get this far and working with the payment service(s) doesn't get things fixed reasonably quickly, it's a case of whether the time and money involved justify proper legal action, and following whatever process is required. Opinions differ on whether to include a threat that further trouble will lead to legal action at the letter stage. Any allusion to a legal action might get bounced directly to their legal department, which is probably better or worse depending on whether you know what you're doing and whether they know you know. If they call your bluff and you don't know what you're doing, you could wind up spending far more time and money chasing even a simple small claims action than it's worth, or more likely giving up and then they know they've won. On the other hand, if you know a friendly lawyer who can spend a few minutes explaining the process and the really important things you need to do without charging you the earth for it, go right ahead. That might include adding certain required information to the letter itself along with a statement that it's the first formal step in your legal action, for example. A less dramatic alternative that I've seen work several times is just to add a statement to the letter that you will charge them a reasonable "administration fee" to cover your time and trouble if you have to contact them again due to their failure to comply within a reasonable period. It's surprising how many places automatically change their behaviour as soon as something might actually cost them real money, even if it's only a nominal amount, and there's a good chance that whatever front line grunt first opens your letter won't be authorised to deal with that situation so you'll get escalated to someone more effective. As always it's worth knowing what the law says in your area before trying this one, because you don't want to do something dumb that will let them settle for peanuts later if you do wind up spending a significant amount on real legal action that you might otherwise have been entitled to recover. So I guess it comes down to the usual things: Always keep records, always be transparently fair and reasonable, try your payment service's dispute process if it's a sensible option, and then if things still aren't working out, make sure you've taken at least some basic legal advice about your particular situation before you go charging in with something heavier and act accordingly.
- nkozyra 12y ago
  Extremely unlikely for these types of services. "Credit" is often different than a subscription service - typically in the TOS of the latter, there's a cancellation of services for nonpayment. You don't "owe" anything unless you got something and didn't pay for it. Very few of these things will send the product without a completed transaction, and even if they did (one time), the odds of a company selling a $40 debt are insanely low. When consumers need an extra layer of protection against bad actors, this is a great way to go about it, and the risk to your credit is actually very low.
gst 12y ago
Just get a Citi credit card that includes virtual account numbers (see https://en.wikipedia.org/wiki/Controlled_payment_number https://en.wikipedia.org/wiki/Controlled_payment_number). There's no fee to sign up, with the DoubleCash card you get 2% cashback, and you can easily create a new virtual credit card number for each online purchase. Also allows you to set a Dollar limit for virtual numbers and to close numbers.

function_seven 12y ago

How is their site still up and running, accepting new members and payments, if they can't afford to continue on as a going concern? Is this out-and-out fraud? EDIT: Looks like they're no longer accepting payment, but if this article is right, they still were for a very long time after ceasing shipments.

logn 12y ago

Maybe this post got their attention? (edit: doubtful as it was posted 4 minutes ago) We're Sorry Whimseybox is no longer taking new subscriptions, gifts, or shop orders at this time. https://whimseybox.com/subscription/new https://whimseybox.com/subscription/new

bobbles 12y ago
The home and signup pages have no mention of this at all

astrocat 12y ago

Saying things like "Now Techstars has lost complete credibility in my mind" is taking things too far and just being petty. Techstars doesn't market itself as some bastion of credibility to consumers. Yes, this a great example of what not to do when you know your company is doomed, and the founders are killing their long-term prospects of future ventures with all this bad karma, but there's no need to drag Techstars into it.

tptacek 12y ago
Not to mention: there's not a whole lot Techstars can even do about this. They're a minority investor and their involvement is limited to the first few months of company operation. This comes up every once in awhile with YC, too.
- nedwin 12y ago
  Legally not a whole lot they can do, and not sure about any other kind of obligation, but hopefully they're reaching out to the founder to make sure she's OK and help get this mess sorted out.
- hawkice 12y ago
  I initially completely agreed, but now I'm less sure. I used to mentor someone, and if he was found using skills I taught him to act fraudulently, I would accept partial responsibility. Obviously Techstars can't force people to stop shenanigans, but I hope for a society where we expect more of each other, where behaving ethically is not more or less important that profits but simply completely necessary. I'm not sure I can, in good conscience, condemn someone for expecting more of a renowned institution, however minor that renown is. I also think that the author of this post is in a place to understand what is possible and expected of investors, given she is an Operating Partner at Khosla Ventures.
djtidau 12y ago
I think the basic idea behind the assertion is that someone coming out of Techstars should know better, either due to the fact they have smart/savvy enough to be accepted in the first place or that they have been provided with enough information to make decent decisions like shutting a site down when the business has folded. Techstars may not market themselves as a measure of credibility, but i'm sure it is something they care deeply about. If an incubator constantly spat out startups making deeply questionable decisions like this one they would have far less startups knocking on their door.

johnvschmitt 12y ago

For those with integrity, it's not worth the read. Yes, stop taking money from new customers when you've shut down the company. For those without integrity, it's a recommendation: There are trusting people who will signup & pay even if you don't deliver. The world is still wild, and I like that. Nothing to recommend than to be skeptical and ethical please.

FunCaptcha_Jim 12y ago

Great article, shame it happened. I'm really curious as to how this idea didn't really succeed - seemed like a slam dunk service. Anyone know more?

jqm 12y ago
Funny, I was thinking exactly the opposite about the idea...
- username223 12y ago
  Same here. It's like Ikea sending you a random box of do-it-yourself furniture every month. The "maker" mumbo-jumbo is about building things you actually want, not assembling stuff someone throws at you.
sgarman 12y ago
If anything these X box a month services pop up so frequently I'm surprised there is not a startup to help people make their own x box a month companies.
- jeremymcanally 12y ago
  There is actually, and it's nice! http://cratejoy.com http://cratejoy.com
  - username223 12y ago
    Hook that into http://bride.ru http://bride.ru and you've got a winner! More seriously, automating the process of harvesting credit card numbers and signing them up for monthly billing, then taking a cut, is evil genius. Even more seriously, the sex-trade people were way ahead on this, by happily offering canceling customers refund checks with mind-blowingly dirty names on them to discourage deposit.
- nols 12y ago
  You shouldn't be surprised, it does exist. http://www.subbly.co/ http://www.subbly.co/

billychasen 12y ago

I literally just tried to sign up for this as a gift for someone this past weekend. I tried to buy a year gift subscription and got an error message. It showed me a silly error message which included Ryan Gosling promising a foot massage for me to keep my calm. I mistakingly tried 2 more times and now see 3 charges on my credit card. For what it’s worth, they use Stripe. I saw the $1 pending transaction they tried. Hopefully Stripe can shut them down.

mintplant 12y ago
Did you file chargebacks?
- billychasen 12y ago
  I did this on Saturday and will give WhimseyBox the benefit of the doubt to fix this by Mon/Tues before disputing with Amex. It's always a slow road when Amex investigates.

lmg643 12y ago

Interesting. Is there a market for shut-down services? Clearly they had "something" if people are still signing up. Might not be a $100mm exit but I'm sure someone would enjoy running this for a few million in cash each year?

infinitone 12y ago
If i understand you correctly, you just valuated this business at 'a few million'? What makes you think its worth more than 5k?
nols 12y ago
They didn't shut down if they were making a few million a year. They probably didn't scale nearly as well as they thought and never broke into a profit/subscriber number.
jlarocco 12y ago
The saying, “We lose money on every sale, but make it up on volume,” comes to mind. I'm not sure "someone would enjoy running this" makes much of a difference if it can't pay the bills.

grandconj 12y ago

A great warning for founders considering a subscription-based freemium model.

patio11 12y ago

It isn't necessary to dream up scenarios of unethical action on the part of anyone for this to happen. Startups fail. Fact of life. We talk about "burn rate" and "runway" because it is easier to say than "The number of days you have to find a working business model or secure additional investment, after which you have to fire all of your employees because you cannot make payroll." When startups know they're going to fail to make payroll, they fire all employees. Fact of life. Fired employees are the worst affected people when a startup collapses, by a factor of lots. They don't get to call up their credit card company and chargeback forgone wages for the last three years. When you're the non-technical CEO of a subscription commerce company, and you find yourself in an empty office without employees, if you're hypothetically aware that subscriptions are still active -- which you very well might not be aware of -- you have very limited options for actually fixing it. You might as well ask my dad to do an orderly shutdown of Appointment Reminder given I get hit with a bus tomorrow. Could this have been handled better? Yeah. There's a reason that when startups ask for advice on what to do in their remaining hours of life we always say the words "Prepare and execute on a plan to effect an orderly wind-down of the business." It's not exactly something people are born knowing and might not be at top-of-mind while they're going through an enormously stressful event.

chasing 12y ago
Taking money with no intention of delivering a product is unethical. I think I was born knowing that. Or, at least, I learned it pretty early on. Being too lazy to shut off the site is not an excuse.
- tcarey83 12y ago
  It's not only unethical, it is fraud.
- deleted 12y ago
  [deleted]
pdonis 12y ago
> When you're the non-technical CEO of a subscription commerce company, and you find yourself in an empty office without employees, if you're hypothetically aware that subscriptions are still active -- which you very well might not be aware of -- you have very limited options for actually fixing it. You also have very limited options for avoiding liability for fraud. I don't think using the excuse that you were a non-technical CEO is one of them.

Animats 12y ago

Well, they seem to be in violation of the FTC's Mail Order Rule. First, who are they? Their street address is 2409 20TH ST BOULDER CO 80304 US which is a house. A Colorado corporation search gives a second address: 1738 Pearl St., Suite 2A, Boulder, CO 80302, United States which looks like office space above a restaurant in Google Street View. Their landlord is Pearl Street Properties (http://www.pearlstreetmallproperties.com http://www.pearlstreetmallproperties.com) and calling them during working hours might be helpful. They're incorporated in Delaware, but are delinquent in filing with Colorado. Delaware corporation search only works on weekdays, so not much is available from there tonight. The founder is Alicia DiRago. Not only is the company not communicating, her rather busy personal online life has stopped. Here's her Twitter feed, which stopped on September 3, 2014: https://twitter.com/aliciadirago https://twitter.com/aliciadirago Here's her other startup, Dismount Creative, which was last updated on August 3, 2014: http://www.dismountcreative.com/ http://www.dismountcreative.com/ Her personal Facebook account, last updated in January 2014: https://www.facebook.com/alicia.dirago https://www.facebook.com/alicia.dirago Definitely the right person; she's wearing a Whimseybox T-shirt in her profile picture. She's married and lives in Boulder, CO. The address is a matter of public record, but I won't list it here. Her husband, Joseph DiRago, is an attorney in Boulder. No news items or obituaries for either of them. This is a very tiny operation and there's probably a personal problem. This isn't a big enough business to be a scam.

spacefight 12y ago
Shutting down the website of a bancrupt company is not hard.
kjs3 12y ago
"Her husband...is an attorney..." probably explains why she thinks she can keep up the shill longer than any sane, ethical person would.

iopq 12y ago

This is why I want to just pay for everything with Bitcoin. I gave my credit card to a site (not a subscription site) and they charged me and never delivered. I contacted them and they said they refunded the charge and put in a new order (???). So now I had TWO charges. Why didn't they just ship me the stuff without charging me again? I disputed one charge with the credit card company and the company refunded me after they saw the chargeback. Then a month later they ordered again for me. I had to charge back a second time (and I got a refund back again). Are you kidding me? The model of "I have your credit card number and the code on the back and I can charge you as many times as I want" is clearly broken.

ams6110 12y ago
virtual/single-use credit card numbers are a potential solution.
PinguTS 12y ago
But bitcoin will not help you at all, when there is no delivery. Bitcoin has no charge back. Bitcoin is in this sense mor like Western Union. The credit card system gives much better consumer protection most of the time.
- iopq 12y ago
  No, the point is they DID deliver, but they tried to keep charging me for new deliveries.
quanticle 12y ago
If anything Bitcoin would be much, much worse. If I pay for something with Bitcoin, and it doesn't arrive, I'm left without any recourse whatsoever (just as if I'd mailed an envelope full of currency). At least with a credit card, I can file a chargeback claim.

Sami_Lehtinen 12y ago

Unfortunately what you experienced is really common. One company deliver "led lights" does everything, except deliver the goods. Web site is up, customer support answers to messages (as long as you're going to order something) and they'll accept payments. But that's where it ends. My dad got a new cellphone and it got the number which is still being shown on that web page. It's nice to receive more and less angry calls all day long from people getting scammed all the time. Unfortunately this seems to be quite common problem. Isn't it the business focus? Do the things which make money, don't mind about the rest. Web site, credit card handling, and customer support, all generate revenue. Delivering goods is bad business, it generates substantial expences. One famous entrepreneur in finland said that invoicing is the thing that runs the business, rest is irrelevant.

annnnd 12y ago

I think Hanlon's razor applies here ("Never attribute to malice that which is adequately explained by stupidity.") - when startups fail it is difficult to fail gracefully. It leaves you with lots of stuff to do, all the time knowing that you will get nothing in return. Frustrating and tiring as hell. (I don't condone the founder's actions, I just say I can understand what has lead to this situation) That said, I hope they make it right as soon as possible.