How to waste 250 million dollars in the transportation industry?!

In the startup environment, it is a habit to talk about successes to keep our hopes alive for the future, but it is a big mistake to forget the failures of the past and not benefit from the experiences of the past. For this purpose, the Ecomotive team has collected the experiences of a series of failed startups, so that reviewing their failed stories may be a basis for the success of new startups in Iran’s startup community. This collection will be published and made available to the audience in the form of the story of failure. We review the 13th part of this series, which deals with the failure of the Karhoo startup.

Carho was founded in London in 2014 with RCI investment; That is, through the same service that supported Renault Group brands in the world and Nissan Group brands in Europe. Karho was the first integrated booking platform for taxis and vans. In fact, unlike its competitors, instead of hiring individual taxis, Karho brought existing companies into its system and claimed that it offers a sustainable solution to the traffic problem, because unlike similar services, instead of increasing the number of cars on the street, it hires people. It reaches the destination in a more effective way and reduces the volume of cars. Of course, Karho had another implicit goal. He sought to provide essential data on economics, environment and transportation to the private and public sectors to help them build “smart cities”.

But all these slogans were not well received by the users and a total of 300,000 people downloaded the Karho application (between 50 and 100 thousand downloads of the Android version from Google Play). This fact puts Carho at number 86 among UK transport apps. The situation in America was much worse.

The Internet shipping market was highly competitive and companies paid heavy subsidies to customers to outpace their competitors in this market. Something that was not predicted by Karho and caused users to not welcome it.

In October 2016, there were rumors of the company closing down. Ishag announced Karho’s inability to pay the salaries of his 60 employees and traveled to Singapore to meet investors. This was despite the fact that the company had attracted 250 million dollars in capital and bought luxurious offices in London the previous year. On the other hand, the CEO of Karho announced the injection of 5 million dollars of capital to the company. But in the end, the promises did not materialize and as Carhu’s financial crisis deepened, employees who had worked for the company for six weeks without pay in various cities – from Singapore to Tel Aviv – asked themselves: “How did all this capital disappear so quickly?” Did he go? Of course, Ishag called the figure of 250 million dollars a misunderstanding and announced it as 52 million dollars.

On the other hand, October 28, 2016 customer service company Modsquad based in New York, sued Carho for failing to pay $600,000 owed for the company’s services between June and October.

Eventually, new accountants were brought in to salvage the company’s remaining assets and send the remaining 180 employees home, and the company closed for good.