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Startup Obituary : Shyp
The $5 Shipping Dream Dies. $250M Valued, Yet Doomed Ending Easy Shipping
Ram Gangisetty
April 28, 2025
We wanted to make shipping effortless, almost magical.
🚀 The Spark
It started in a tiny San Francisco apartment.
Kevin Gibbon, a frustrated eBay power seller, kept hitting the same wall:
Shipping sucked. Lines at the post office. Box hunting. Confusing prices.
He figured, there has to be a better way.
In 2013, alongside Jack Smith (co-founder of Vungle) and Joshua Scott (UX expert), Gibbon launched Shyp — the “Uber for shipping.”
Snap a photo. Courier picks it up. They pack it for you. Cheapest carrier chosen automatically.
All for $5. ✨
The best startups are painkillers, not vitamins.
Shyp promised to make shipping vanish into the background of life.
And for a while, it worked.
💸 The Funding Rush
The pitch was irresistible.
A trillion-dollar logistics market. A beautiful app. A broken experience begging for reinvention.
Investors piled in:
Seed: $2.1M (Homebrew, Shasta Ventures, @tferriss, @davidmarcus)
Series A: $10M (Sherpa Capital)
Series B: $50M (Kleiner Perkins, John Doerr @johndoerr)
$62.1M raised.
$250M valuation. 🚀
Friction-free shipping will change commerce.
Shyp expanded rapidly — New York, LA, Miami, Chicago, Philadelphia.
They partnered with eBay. They launched Shyp Returns for Amazon and Nordstrom.
Fast Company even named them one of the 50 Most Innovative Companies.
The tech press called them unstoppable.
Inside Shyp, it felt like history in the making.
🧱 The Cracks Appear
But magic tricks are expensive. Behind the scenes, trouble brewed:
💵 Unsustainable Pricing
$5 sounded great.
But when a courier had to pick up a 50-pound sofa and package it?
Margins evaporated.
Flat-rate pricing without understanding true costs is a death wish.
Dynamic pricing finally came… in 2016.
Too late. Customers balked at higher fees.
💤 Infrequent Users
Shipping wasn’t like hailing a ride or ordering pizza.
Most people shipped things once or twice a year.
🎈 Crushing Overhead
Full-time employees. Warehouses. Packaging materials.
Costs ballooned — while revenue sputtered.
🚩 Ignored Advice
Gibbon, an engineer at heart, trusted product over profit.
I approached everything as an engineer… my mistake was growth at all costs.
Investors warned. Advisors warned.
But Shyp kept expanding.
💥 The Collapse
By 2017, the dream was crumbling.
They pulled out of every city except San Francisco.
Mass layoffs followed. Investor interest dried up.
On March 27, 2018, Kevin Gibbon announced Shyp’s shutdown.
The site went dark. The couriers disappeared.
It was a hard, painful end. No exit. No acqui-hire.
Just silence.
🧠 Lessons for Founders and VCs
1. Price Like a Survivor
Sexy fees don’t matter if you bleed money every transaction.
2. Know Your User’s Rhythm
If usage isn’t daily or weekly, rethink your model.
3. Growth Isn’t a Goal
It’s an outcome.
Grow because your business works — not to hide that it doesn’t.
4. Listen Early, Not Late
Advisors can see the cliffs founders race toward.
Slow down. Look. Listen.
🌟 The Aftermath
Kevin Gibbon didn’t give up.
He founded Airhouse, a DTC fulfillment startup — learning from Shyp’s missteps.
Jack Smith’s Vungle exited for $750M.
Meanwhile, the problem Shyp tried to solve — easy returns — became a $500B industry.
Narvar, ShipBob, DoorDash all stepped into the space Shyp carved.
Shyp’s DNA lives on.
But the caution remains:
✨ Great vision needs gritty economics to survive.
Shyp Scorecard
Dimension | Score | Reasoning |
|---|---|---|
Product-Market Fit | 3/5 | People loved the idea—but infrequent need (shipping few times a year) made retention weak. |
USP | 5/5 | “Uber for shipping” was a crystal-clear, strong hook. No one else made it feel that effortless. |
Timing | 4/5 | Right time: post-Uber boom, early mobile-first logistics era. But maybe a few years too early for economics to catch up. |
Founder Fit | 4/5 | Kevin Gibbon lived the problem as a seller; deeply passionate and scrappy, though prone to growth-first blind spots. |
Team (Execution) | 3/5 | Beautiful product and strong early scaling—but operational discipline and cost control lagged. |
🕯️ Final Words
Shyp was beautiful.
It made shipping feel effortless.
It made investors dream.
But at the end of the day, startups don’t live on dreams.
They live — or die — by the numbers.
If you found it valuable, the best way to support us is by sharing it with fellow founders. 🚀
Cheers,
Ram
👉 My simple ask: It took hours to put together this post for you. I hope you forward this email to at least one founder friend or share on your social channels 🙏.
Startup Obituary is for educational purpose only not a business advice.
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