Like Shyp, Airhouse exists to take the pain out of shipping. But its customers are direct-to-consumer brands, and it aims to avoid some of Shyp’s missteps.
By the time on-demand delivery startup Shyp collapsed in March 2018, its cofounder and CEO, Kevin Gibbon, was already thinking about his next company. As he told me at the time, he planned to decompress for a couple of weeks and then get to work on it.
More than two years later, Gibbon is unveiling his new startup, cofounded with former Shyp marketing chief Sarah Siwak and with several other Shyp alumni on board. Based (like Shyp) in San Francisco, it’s called Airhouse and in an odd way, it feels like both a continuation of Gibbon’s earlier company and its polar opposite.
When Shyp started out in 2013, it catered to consumers who wanted to avoid schlepping to the post office. Instead, they could snap a photo of items they needed to be shipped with their smartphone, whereupon a Shyp courier would pick up the goods and take them to a Shyp warehouse for packing and handoff to UPS, FedEx, or the USPS. Over time, however, the company increasingly shifted its emphasis to small businesses, which ship in vastly greater, more dependable volume than individuals.
As Shyp dealt more with business customers, Gibbon noticed something: For growing digital-first, direct-to-consumer brands, its pickups didn’t remove that much complexity. “You’d have to arrange your 50 items that were going out that day,” he says. “You’d have to employ somebody to do that, or do it yourself as an entrepreneur when you don’t really have a lot of time. We saw people that were hacking the system that we built at Shyp to do that, but it still really wasn’t a great fit.”
With Airhouse, merchants can outsource their shipping in a more sweeping, scalable fashion. Instead of handing off items in small batches, its customers store them at warehouses that handle individual fulfillment-existing warehouses that Airhouse has struck deals with to create a nationwide network. (Six are now up and running, with three more coming soon.) Airhouse’s platform serves as an interface between merchant, warehouse, and shipping companies; it also hooks into e-commerce shopping-cart behemoth Shopify, with support for other services such as BigCommerce on the way.
According to Gibbon, Airhouse quietly began operations last November and already has dozens of direct-to-consumer customers. He adds that it’s targeting up-and-comers rather than established brands such as Casper. (The company does, however, have Casper cofounder Neil Parikh as an investor.) Among the companies that have been using the service in its preannouncement phase: Revolution Robotics (educational robots), Not Pot (CBD gummies), and Caldo (kitchen goods such as aprons).
Over the years, many services have emerged to simplify the bootstrapping of consumer-goods companies, from manufacturing to sales. Airhouse aspires to complete the process. “If you’re building a brand, it comes down to your product and your marketing,” says Gibbon. “We’ll basically do everything else outside of that, on the operations and logistics side of things.”
FEWER PEOPLE, LESS SPENDING
Like Shyp, Airhouse tackles the heavy lifting of shipping. What it’s ditching is the physical aspect of that labor, which proved part of Shyp’s undoing. That company hired couriers and packers (rather than making them contractors) and built warehouses full of accoutrements such as box-cutting machinery. Covering those costs while scaling up to a sustainable business proved impossible even after Shyp began charging for packing, which was originally included in a $5 pickup fee. (Shyp also negotiated deep discounts from the carriers it worked with, allowing it to keep part of the shipping charged that customers paid.)
Airhouse, by sharp contrast, is a purely cloud-based business; it doesn’t operate warehouses or employ people to wrangle products itself. Even so, its platform benefits from the experience Gibbon and his fellow Shyp alums gained creating that startup’s logistics platform, which was also built to track and ship massive quantities of items.
Because Airhouse is so much less resource-intensive, Gibbon and Siwak have gotten it up and running on $4.5 million in seed funding a modest budget compared to Shyp, which raised $60 million from investors and needed every penny. Along with Casper’s Parikh, Airhouse’s investors include Quiet Capital’s Lee Linden, AngelList’s Naval Ravikant, Product Hunt founder Ryan Hoover, and Warby Parker cofounder David Gilboa, among others. Some of them also backed Shyp; the fact that they didn’t hold its demise against Gibbon is proof that Silicon Valley really does see failure as a badge of honor.
Gibbon says that Airhouse will seek venture funding, but carefully. Even at Shyp, he eventually developed the view that startups should watch their pennies rather than chase growth. Today, he says, “a huge takeaway from Shyp is that constraints are great.. When you have too much capital, it’s easy to go and spend way too much time and money and just throw money at things. That’s not something we’ve done here, from the beginning.”
As for how Airhouse will make money, it serves as an intermediary between e-commerce companies and the warehouses it has under contract. (In some cases, Airhouse deals directly with shipping companies and can build a profit margin into the price it charges; in others, it piggybacks on warehouses’ existing carrier relationships.) Gibbon says that customers don’t pay any more for the basics of its service than they would if they went directly to warehouses themselves, and that some of Airhouse’s revenue will come from value-added services such as managing returns. That’s another place where Shyp’s lessons might prove helpful; it built a returns feature of its own after discovering that consumers were using the service to send unwanted items back to merchants.
Along with saving sellers from having to negotiate warehouse contracts themselves a process that can take months, Gibbon says - Airhouse aims to earn their business by shielding them from some of the mundane realities of warehousing products. As the weather has warmed up, for instance, it turned out that Not Pot’s CBD gummies had a tendency to melt while in storage. “We were able to just move all of their stuff, without them having to do anything, to one of our other partner facilities that had a temperature-controlled room,” Gibbon explains.
Gibbon says that he remains wistful about the Shyp experience: “I miss it every day.” As a one-time happy customer, I miss it, too, and would be tickled if someone else picked up the idea and made it work. (A year ago, an under-new-management version of Shyp announced that it was relaunching, but there have been no subsequent signs of life.)
When Shyp was still on the rise, it thought a lot about how consumers would perceive its brand. If success comes for Airhouse, it will be through serving as a reliable but invisible ingredient in other brands’ consumer experiences.
Still, even if Airhouse won’t ever be the household name that Shyp once hoped to become, its mission can encompass big, audacious dreams. “I’d love to see a $20 million brand be powered by a single entrepreneur,” Gibbon says. “And I think the last missing piece today is distribution, once you’ve got something manufactured and sold. That’s our goal here at Airhouse.”
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