Cabana founder on lessons learned from failed startup

In December 2023 I wound down my first startup, Cabana. I have always been “entrepreneurial,” but always in large organizations - a so-called “intrapreneur.” Cabana was the first time I took the plunge and started something on my own, with no safety net.

Cabana was envisioned as a mobile hotel room (actually a network of thousands of mobile hotel rooms) that could pop up wherever and whenever you wanted whether that was: cliffside in southern Utah, a destination wedding in a place with no lodging, or hundreds of units popping up at a music festival.

So superficially we looked like #vanlife, but aspirationally we were aiming for something much bigger. To achieve our vision we need to remove all friction from the rental experience, generate enormous demand, design vehicles usable by anyone - not just hobbyists - and build a back office for the “hosts” that would own and operate Cabanas. 

There are three questions that I think are fundamental to the Cabana story:

Was venture the right tool?

Money is a tool that you use to build something, and money comes in different flavors. You can bootstrap a company, take on debt or take in outside investment. The right flavor depends on what you are trying to build. 

If we were building a van rental company or an RV rental company, venture capital would not make sense. But we were trying to build something that was transformative and that transformation needed to happen quickly and at a big scale - so venture capital was the right tool. Whether it made sense as a venture investment is a different question.

What did we need to do to execute?

In the first board meeting, we identified three things we needed: extreme product market fit (aka lightning in a bottle), strong unit economics and an asset-lite model. In the summer of 2021 we had these nailed. We had just raised a Series A and lined up $24.5M in fleet financing that covered 100% of our vehicle cost. We had 300 vehicles on order and a manufacturer lined up to build them. We were poised to 8x our revenue in one year.

So what happened?

COVID created a huge tailwind from a public relations and brand standpoint but an even bigger headwind: supply chain disruption.

In the summer of 2021 we had 300 vans on order, a manufacturer lined up to build them and financing ready to pay for them. By the late fall of 2021 the situation had flipped. The global auto industry was in free fall due to a semiconductor shortage. Ford shrunk our order from 300 to 25.

You need to be able to cut ties with past practices or products as soon as it is clear they are creating drag on achieving your goals.

Scott Kubly

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In the face of smaller volumes, our manufacturer backed away due to lower volume Our lender could no longer underwrite the term sheet they offered due to declining auto sales. We spent 2022 revamping our supply chain and 2023 going all in on our “host” model. Over 800 people had applied to become Cabana “hosts.”

However, by the time we got those things lined up the credit climate had changed, we had debt that we could not restructure after the 2023 banking crisis, and our cash on hand didn’t give us the runway to wait out the macro economy.

Blaming macroeconomic events doesn’t offer much in the way of lessons, and I am not sure that perfect execution could have allowed us to weather the storm.

However, it is clear in hindsight that we had some execution errors that made us far from perfect:

• Didn’t find the right leader for our hardware team until it was too late

My technical co-founder quit after six months. He was wired for an early stage startup in many ways, except the most important - he decided it wasn’t for him. We tried four other people before we found the right leader. 

It took too long to find the right person: someone willing to move quickly, make decisions with incomplete information and operate with an “owner’s” mindset. And, when I realized we had the wrong person, I took too long to make a change.

• Too much software engineering on something that didn’t create long-term value

A core part of our vision was building a contactless rental experience and a booking system that connected into channel managers - making our vans findable by those searching for hotels.

We started with a white-label software solution from an RV rental marketplace. It was clunky, poorly supported, and it wasn’t built to integrate with other distribution channels, but it allowed us to get started. As we built our brand over 90% of our demand came directly to us.

In hindsight, we spend too many engineering resources integrating with a legacy van rental platform. It complicated engineering, created operational complexity and just took too long.

• The pivot to an asset-lite model came too late.

We planned for an asset-lite “host” model from the very beginning, but there were always reasons we held off. This was a complicated business, and we wanted to get the kinks out before involving external owner-operators.

We wanted to make sure that: we understood day-to-day operations, van production could scale, our software worked and demand was strong. We wanted to prove good unit economics. We spent too long “dogfooding” our product, spread ourselves too thin and burned cash on local operations that “hosts” could operate profitably. Our hosts ran leaner than us and produced stronger margins. This focus on optimizing operations we ultimately would not run was another opportunity cost.

The clear theme running through all of these is “opportunity cost.”

Every day counts and focusing on the wrong thing, even briefly, makes success less likely. That means having the fortitude to make personnel changes incredibly quickly, even if it feels unfair to the individual. You need to be able to cut ties with past practices or products as soon as it is clear they are creating drag on achieving your goals. Even more than money, the most precious resource we had was time. 

Lastly, I have some learnings specifically for the travel industry.

The outdoor industry is a sleeping giant. More than 60 million American households camp annually and more than 90 million consider themselves campers. Glamping, the fastest growing category in outdoor, is only growing that number. The industry is highly fragmented in the tech space and much of the inventory is dominated by archaic, small operators.

Consumers desperately want a metasearch engine that can come in and aggregate all the inventory in a single location. Maybe someday…