Fast raised $124 million, and its sales the year before were about $600,000. The one-click checkout startup closed after three years

A company that raised $124 million had about $600,000 in sales the year before.

Fast, maker of a button that lets shoppers finish a purchase in one click, raised $124 million in the three years after its 2019 founding. In January 2021 it took $102 million in a round led by payments giant Stripe, and by January 2022 it had about 400 employees and about 1,000 sites using it. For its next round it was aiming for a valuation above $1 billion.

In the middle of that, on April 5, 2022, CEO Domm Holland announced it was closing. According to NPR, the tech publication The Information had first reported Fast’s 2021 sales at about $600,000. That is roughly one two-hundredth of what it raised.

Fast was a startup that took large sums of venture capital, which puts it outside this site’s criteria for cases, which record businesses that started small. Here, as a column, the reported numbers are lined up to read the ratios between sales, money and headcount.

Three years from founding to closing

NPR puts total funding at more than $120 million, Payments Dive at $124 million.

$200 raised for every $1 of sales

Set the roughly $600,000 in 2021 sales against the $124 million raised and the ratio is about 1 to 200. Divided by about 400 employees, annual sales per person come to only around $1,500.

Startups raising money ahead of sales is normal. The issue is the size of the ratio: a company whose sales were one two-hundredth of its funding was seeking a valuation above $1 billion in its next round. The gap between valuation and core business seen in the previous day’s Hopin column showed up at Fast even earlier, in the smallness of sales themselves.

According to Payments Dive, three months before the closure the CEO said the company had grown “over 650%.” The article does not say which number grew 650% from what. With $600,000 in annual sales, 650% growth would hold even if the prior year had been around $80,000. A growth rate says nothing about scale unless the base is given.

A $1 million performance and $600,000 in sales

NPR also reported how employees saw money being spent. For a retail conference in New York on January 16, 2022, Fast booked the electronic duo The Chainsmokers. According to an employee with direct knowledge, Fast agreed to pay $1 million for the performance. It was postponed because of the Omicron surge.

The $1 million promised for one performance was more than the previous year’s $600,000 in annual sales. NPR wrote that employees felt large sums were also going into buzz-generating deals such as sports team partnerships.

The desk sees the shape of this failure here. For a company with $600,000 in sales, a $1 million performance reads not as spending to grow sales but as spending to lift the valuation in the next round. The money was pointed at investors rather than customers. If the next round stopped with things in that shape, what would remain was $600,000 in sales and 400 salaries.

A button earns nothing if it is placed but not pressed

Fast aimed to bring Amazon’s one-click purchase to the rest of online retail. According to NPR, after Amazon’s one-click patent expired, companies rushed in to do the same, and big players such as PayPal and Apple were in the field.

One-click checkout turns into revenue only when a store places the button and a shopper entrusts their details to it. NPR’s February investigation reported that merchants Fast called its biggest partners were not using the button on all their products. The figure of about 1,000 sites counted buttons placed, not buttons pressed.

What follows is inference: sales stayed at $600,000 because adding stores that place the button and adding shoppers who press it were separate jobs. Stores can be added through sales. Shoppers only grow if they see Fast’s button at other stores too and know their details are already there. With no answer to which came first, only headcount and spending grew ahead.

Words on the day it closed

In the statement announcing the closure, Holland thanked employees and investors and wrote: “Sometimes trailblazers don’t make it all the way to the mountain top. But even in those situations, they pave a way that all others will follow.” According to Payments Dive, he also said he takes responsibility for the decisions that led to this outcome.

Buy-now-pay-later company Affirm offered jobs to most of the engineers. According to NPR, Affirm said the aim was to advance its existing product. What remained were people, not the product.

A payments company waiting for its next money while losses far exceeded sales also existed in Japan. In the column on Origami, 2018 sales were ¥222 million against an operating loss of ¥2.544 billion. Origami found someone to take it over. Fast closed without one.

The extent of what could be confirmed

The limits need stating. The roughly $600,000 in 2021 sales is The Information’s reporting as cited by NPR, not an official company figure. The Information’s original article is paywalled and was not read. The roughly 400 employees and 1,000 sites are figures from a January 2022 interview reported by Payments Dive. The base for the 650% growth is not stated. The $1 million for the performance comes from an employee who spoke to NPR. Cash left at closing, monthly spending and exact headcount at closing are not in the sources read. NPR also reported on the founder’s past business and personal conduct, which this column does not cover.

The growth rate was told, the sales were not

In Fast’s three years, the numbers told to the outside world were large: $124 million raised, 400 employees, growth over 650%, a valuation target above $1 billion.

One number went untold: about $600,000 in annual sales. It first came out through reporting, just before the company closed. One two-hundredth of the money raised, smaller than the promise for a single performance, it was the most honest number of the company’s three years.