Things are not great at one-click checkout startup Fast, with reports of paltry revenue, talks of layoffs, and now a possible sale.
The three-year-old company has been struggling to raise more financing and may now be looking for a buyer.
Once a Silicon Valley darling, Fast is swiftly running into problems — which have been chronicled in a damning series of recent articles by The Information. Citing unnamed sources, the publication reported that Fast generated only $600,000 in revenue last year, far below expectations and only a tiny fraction of the $40 million one of its competitors Bolt raked in over the same period. The company has also missed targets for signing up new merchants.
After burning through $10 million a month recently, mostly on payroll, the San Francisco-based company is now planning hundreds of layoffs to reduce expenses, and make itself more appealing to potential investors or a buyer.
All of this news unfolded over the course of just three days. It’s a big shift from the company’s unicorn valuation of $1 billion in November 2020, and an impression that helped Fast raise $124 million from investors, including the $102 million Series B round led by the payments giant Stripe on Jan. 26, 2021.
However, data shows Fast’s growth was already slowing earlier this year, and red flags were starting to appear.
Early warning signs
According to data tracked by our parent company Thinknum Alternative Data, job listings started to fall in early January, and were at a 13-month low on Feb. 17.
Prior to that, Fast had been hiring aggressively, more than doubling its workforce between October and March last year. Data from LinkedIn tracked by Thinknum shows the company’s headcount spiked from 337 to 480 just on November 13, 2021, a 42% increase.
Fast is in a competitive area of e-commerce aiming to reduce online payment hassles and increase sales by storing and confirming the customer's payment credentials and shipping information. Besides Bolt, other competitors in the space include Paypal and Shopify.
Part of a Silicon Valley “Mafia?”
Schadenfreude is also likely coming into play as Fast starts to falter. Bolt, now a heavy-hitter in the one-click payments space, initially struggled to gain traction with investors. In an explosive tweet thread in January, Bolt founder Ryan Breslow blamed his company’s initial hurdles on favoritism by elite tech industry insiders.
Breslow called influential startup incubator Y Combinator and one of its most well-known projects, payments giant Stripe, of being “mob bosses of Silicon Valley.” Breslow’s tweet thread detailed seven years of challenges after being rejected by the incubator and attracting only lukewarm interest from venture capital firms. “Meetings would go phenomenally well,” he tweeted. “VCs would get excited, and many even commit to term sheets. Then, mysteriously, they would back away.”
Fast, on the other hand, is closely aligned with Stripe. Stripe was a lead investor in Fast’s Series B funding round. Jordan Angelos, Stripe’s then head of M&A and Investing was the funding partner. He is now a general partner at Ribbit Capital.
Y Combinator, founded in 2005, has launched more than 3,000 companies besides Stripe, including other major names such as Airbnb, DoorDash, Coinbase, Instacart, Dropbox, Twitch and Reddit. Stripe, now valued at $95 billion, is considered one of the incubator’s most successful projects.
“Stripe is the next Google,” Y Combinator co-founder Paul Graham tweeted in October 2020.
Stripe’ founders, John and Patrick Collison, also have deep ties to the incubator. They built their first company Auctomatic at YC’s accelerator in 2007, an experience that led them to strongly recommend other entrepreneurs apply to Y Combinator over other business accelerators.
A founder with a messy past
This isn’t the first time Fast co-founder and CEO Domm Holland has experienced turbulence at a startup. Holland’s bio on Fast’s website notes he “previously founded and served as CEO of Tow, an on-demand vehicle towing platform in Australia.”
During his tenure there, he received the top spot on the Deloitte Tech Fast 50 and was recognized as Brisbane Young Entrepreneur of the Year.
However, one tow truck owner told NPR that Tow also had a multimillion-dollar billing dispute with the Australian state government, resulting in Holland suing over towing and impounding fees. Holland also told the Australian Broadcasting Corporation he had planned to sell the personal data of more than 21,000 people Tow had collected through its app, like bank accounts and drivers' licenses, in order to raise funds. He was eventually forced to surrender it through an order from Australia’s Supreme Court. Tow ended up owing $5.7 million Australian dollars, or about $4.1 million in U.S. dollars, mostly to small towing companies.
Fast may have aspired to revolutionize online transactions with its speedy checkout and password management services, but the way things are looking now, it could end in another high-profile black eye for Holland.