Her Highflying LA Startup Changed How Students Got to School. Then Came the Pandemic.

Ben Bergman

Ben Bergman is the newsroom's senior finance reporter. Previously he was a senior business reporter and host at KPCC, a senior producer at Gimlet Media, a producer at NPR's Morning Edition, and produced two investigative documentaries for KCET. He has been a frequent on-air contributor to business coverage on NPR and Marketplace and has written for The New York Times and Columbia Journalism Review. Ben was a 2017-2018 Knight-Bagehot Fellow in Economic and Business Journalism at Columbia Business School. In his free time, he enjoys skiing, playing poker, and cheering on The Seattle Seahawks.

Her Highflying LA Startup Changed How Students Got to School. Then Came the Pandemic.

When Joanna McFarland co-founded HopSkipDrive in 2014, she thought she had discovered the perfect low-risk business model – contracting with school districts to provide safe and reliable ridesharing for students.

"I always said this is the most recession-proof business there is because it's schools and schools don't close," McFarland recalls. "But apparently it's not pandemic proof."


With the raging coronavirus shuttering schools in most of the eight states it serves plus Washington D.C., McFarland says the company is bringing in "far less" than 20% of the revenue it did pre-pandemic. Though that's up from last Spring when revenue vanished practically overnight.

"2020 has been a year," McFarland said in a Zoom video interview last month. "I don't know what else to say."

McFarland attended The Wharton School for undergrad, and got an MBA at Stanford in 2005, before executive roles at OneWest Bank, AT&T Interactive and GM Consumer Finance. But nothing could prepare her for 2020.

"March, April and May was just crisis mode," McFarland remembers. "New information was coming in every single day. How do you possibly plan for next month or next quarter, let alone like tomorrow? How do you keep your team from freaking out?"

HopSkipDrive laid off 10% of its workforce in March, but thinking that schools would reopen by Fall, McFarland hoped to retain the bulk of her staff. The company received a $1.6 million Payroll Protection loan in April to retain 102 jobs – one of the largest given to an L.A. startup.

"That meant that we got to keep all of our operations team, our support team, our marketing team, our sales team," she said.

The funding ran out in August, and with most students still stuck at home, she laid off 60 people. Fewer than 50 employees remain.

"That was very, very difficult to do," McFarland said.

Joanna McFarland attended The Wharton School for undergrad, and got an MBA at Stanford in 2005, before executive roles at OneWest Bank, AT&T Interactive and GM Consumer Finance. But nothing could prepare her for 2020.

It was a major setback for the once fast-growing startup, which was started by McFarland and two other L.A.-area working moms desperate for a safe way to ferry their overscheduled kids to and from school, soccer games and violin lessons — activities that now seem like the relics of a bygone era.

"With eight children between us, we were constantly struggling with the need to be in multiple places at once," McFarland said soon after launching. "We designed HopSkipDrive to be safe enough for our own kids to use, and in doing so, have developed a scalable transportation solution that has been game changing for families."

Before COVID-19, HopSkipDrive had been on a significant hiring spree, relocating its offices to the trendy ROW DTLA in the Arts District, where Spotify has its L.A. headquarters.

HopSkipDrive raised $22 million in late-stage funding last February from two of L.A.'s most prominent venture firms, Greycroft and Upfront Ventures, to bring its total fundraising close to $45 million. (Upfront also got in on the 2015 seed round.)

"We're excited to invest in a L.A.-based company that's creating a whole new category and solving such a real problem for families," Upfront Ventures partner Greg Bettinelli said in 2015. "We see a real growth opportunity."

The timing of the most recent raise – a month before stay-at-home orders went into effect – proved fortunate in extending HopSkipDrive's runway when contracts dried up. Through it all, McFarland has given up trying to predict when students will be back in the classroom.

"In times like this, you look at what you can control and you look at what you can't control and obviously we cannot control when schools open or don't open," McFarland said.

What she can effect is HopSkipDrive's slimmed down operation, which she says will pay dividends when things return to normal.

"It gives you time to take a step back and look at every single process and every single thing that you're doing and figure out how we would do this a little bit faster, a little bit better, a little bit more efficiently," McFarland said. "Ultimately, we have a much faster path to profitability when sales do return than we had before."

And McFarland, who has had to navigate the crisis while her kids have been at home, too, takes a degree of solace in the fact schools will reopen at some point. When that happens she thinks they will need HopSkipDrive more than ever because of a nationwide bus driver shortage that has only gotten worse during the pandemic.

"They're going to need our help, and we're all gearing up for that," she said. "I'm excited for that day."

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How the 'Thrift Haul' Boosted Secondhand Ecommerce Platforms

Lon Harris
Lon Harris is a contributor to dot.LA. His work has also appeared on ScreenJunkies, RottenTomatoes and Inside Streaming.
How the 'Thrift Haul' Boosted Secondhand Ecommerce Platforms
Evan Xie

If you can believe it, it’s been more than a decade since rapper Macklemore extolled the virtues of thrift shopping in a viral music video. But while scouring the ranks of vintage clothing stores looking for the ultimate come-up may have waned in popularity since 2012, the online version of this activity is apparently thriving.

According to a new trend story from CNBC, interest in “reselling” platforms like Etsy-owned Depop and Poshmark has exploded in the years since the start of the COVID-19 pandemic and lockdown. In an article that spends a frankly surprising amount of time focused on sellers receiving death threats before concluding that they’re “not the norm,” the network cites the usual belt-tightening ecommerce suspects – housebound individuals doing more of their shopping online coupled with inflation woes and recession fears – as the causes behind the uptick.

As for data, there’s a survey from Depop themselves, finding that 53% of respondents in the UK are more inclined to shop secondhand as living costs continue to rise. Additional research from Advance Market Analytics confirms the trend, citing not just increased demand for cheap clothes but the pressing need for a sustainable alternative to recycling clothing materials at its core.

The major popularity of “thrift haul” videos across social media platforms like YouTube and TikTok has also boosted the visibility of vintage clothes shopping and hunting for buried treasures. Teenage TikToker Jacklyn Wells scores millions of views on her thrift haul videos, only to get routinely mass-accused of greed for ratching up the Depop resell prices for her coolest finds and discoveries. Nonetheless, viral clips like Wells’ have helped to embed secondhand shopping apps more generally within online fashion culture. Fashion and beauty magazine Hunger now features a regular list of the hottest items on the re-sale market, with a focus on how to use them to recreate hot runway looks.

As with a lot of consumer and technology trends, the sudden surge of interest in second-hand clothing retailers was only partly organic. According to The Drum, ecommerce apps Vinted, eBay, and Depop have collectively spent around $120 million on advertising throughout the last few years, promoting the recent vintage shopping boom and helping to normalize second-hand shopping. This includes conventional advertising, of course, but also deals with online influencers to post content like “thrift haul” videos, along with shoutouts for where to track down the best finds.

Reselling platforms have naturally responded to the increase in visibility with new features (as well as a predictable hike in transaction fees). Poshmark recently introduced livestreamed “Posh Shows” during which sellers can host auctions or provide deeper insight into their inventory. Depop, meanwhile, has introduced a “Make Offer” option to fully integrate the bartering and negotiation process into the app, rather than forcing buyers and sellers to text or Direct Message one another elsewhere. (The platform formerly had a comments section on product pages, but shut this option down after finding that it led to arguments, and wasn’t particularly helpful in making purchase decisions.)

Now that it’s clear there’s money to be made in online thrift stores, larger and more established brands and retailers are also pushing their way into the space. H&M and Target have both partnered with online thrift store ThredUp on featured collections of previously-worn clothing. A new “curated” resale collection from Tommy Hilfiger – featuring minorly damaged items that were returned to its retail stores – was developed and promoted through a partnership with Depop, which has also teamed with Kellogg’s on a line of Pop-Tarts-inspired wear. J.Crew is even bringing back its classic ‘80s Rollneck Sweater in a nod to the renewed interest in all things vintage.

Still, with any surge of popularity and visibility, there must also come an accompanying backlash. In a sharp editorial this week for Arizona University’s Daily Wildcat, thrift shopping enthusiast Luke Lawson makes the case that sites like Depop are “gentrifying fashion,” stripping communities of local thrift stores that provide a valuable public service, particularly for members of low-income communities. As well, UK tabloids are routinely filled with secondhand shopping horror stories these days, another evidence point as to their increased visibility among British consumers specifically, not to mention the general dangers of buying personal items from strangers you met over the internet.

How to Startup: Mission Acquisition

Spencer Rascoff

Spencer Rascoff serves as executive chairman of dot.LA. He is an entrepreneur and company leader who co-founded Zillow, Hotwire, dot.LA, Pacaso and Supernova, and who served as Zillow's CEO for a decade. During Spencer's time as CEO, Zillow won dozens of "best places to work" awards as it grew to over 4,500 employees, $3 billion in revenue, and $10 billion in market capitalization. Prior to Zillow, Spencer co-founded and was VP Corporate Development of Hotwire, which was sold to Expedia for $685 million in 2003. Through his startup studio and venture capital firm, 75 & Sunny, Spencer is an active angel investor in over 100 companies and is incubating several more.

How to Startup: Mission Acquisition

Numbers don’t lie, but often they don’t tell the whole story. If you look at the facts and figures alone, launching a startup seems like a daunting enterprise. It seems like a miracle anyone makes it out the other side.

  • 90% of startups around the world fail.
  • On average, it takes startups 2-3 years to turn a profit. (Venture funded startups take far longer.)
  • Post-seed round, fewer than 10% of startups go on to successfully raise a Series A investment.
  • Less than 1% of startups go public.
  • A startup only has a .00006% chance of becoming a unicorn.

Ouch.

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From The Vault: VC Legend Bill Gurley On Startups, Venture Capital and Scaling

Spencer Rascoff

Spencer Rascoff serves as executive chairman of dot.LA. He is an entrepreneur and company leader who co-founded Zillow, Hotwire, dot.LA, Pacaso and Supernova, and who served as Zillow's CEO for a decade. During Spencer's time as CEO, Zillow won dozens of "best places to work" awards as it grew to over 4,500 employees, $3 billion in revenue, and $10 billion in market capitalization. Prior to Zillow, Spencer co-founded and was VP Corporate Development of Hotwire, which was sold to Expedia for $685 million in 2003. Through his startup studio and venture capital firm, 75 & Sunny, Spencer is an active angel investor in over 100 companies and is incubating several more.

Bill Gurley in a blue suit
Bill Gurley

This interview was originally published on December of 2020, and was recorded at the inaugural dot.LA Summit held October 27th & 28th.

One of my longtime favorite episodes of Office Hours was a few years ago when famed venture capitalist Bill Gurley and I talked about marketplace-based companies, how work-from-home will continue to accelerate business opportunities and his thoughts on big tech and antitrust.

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