Ripple-backed Omni is reportedly shutting down; sells engineering team to Coinbase

Physical rental startup Omni is set to shut down its operations by late 2019 following its unsuccessful attempt to profit off its equipment rentals and physical storage service, TechCrunch reported.

“We’ll be winding down operations at Omni and closing the platform by the end of this year,” an Omni spokesperson told TechCrunch. “We are proud of what we built and incredibly thankful for everyone who supported our vision over the past five and a half years.” The company has not made an official announcement regarding its closure.

Founded in 2015, Omni offers on-demand delivery and storage services at a cost of a few dollars a month. The company received $25 million from Ripple in 2018. Other major investors include Flybidge, Highland, Founders Fund and Allen & Company.

While attracting substantial interests from investors, the company struggled with scalability. In May, Omni sold its physical storage operations to Clutter to focus on providing rental services but was not able to turn the business around. By now, the company has reached an agreement with Coinbase to sell its engineer team to the latter, a Coinbase spokesperson told TechCrunch.

“The service was really great for the consumer but when they looked at what it would take to scale, that would be difficult and expensive,” said another source close to Omni. 

Omni is not the only company suffering from the assumption that companies can offer cheap services and eventually achieve profitability off of a loyal userbase. Uber’s valuation plunged by almost 50% this year and WeWork is wrestling with a malfunctioning business model as illustrated by its delayed IPO process and a recent massive layoff of 2,400 employees. Omni’s imminent shutdown further casts doubt on the sustainability of these startups’ business strategies.

This post has been updated to correct the number of employees laid off recently at WeWork. The number was 2,400, not 24,000.