Nimbl Makes My Head Hurt

A friend recently posted an article about a startup that provides an on-demand ATM service called Nimbl.

Now for those of you who know me, you know that I am deeply pessimistic about most startups, but Nimbl stuck out because it struck me as particularly unviable.

Here's the pitch: ATMs are annoying, because sometimes you need cash, but you don't have it on you.

What if there was a service that could make that cash appear, immediately? Enter Nimbl, a solution for a problem that uses magical cash-delivering unicorns that are both free and instant. But without the unicorns. So mostly just people on bikes who deliver cash with relatively high latency and decently high cost.

Rules of the Game

In general, Nimbl and ATMs are competing as consumers attempt to minimize the cost of accessing cash. In my model, I've used a simple world where the cost of an ATM is equal to the ATM Fee plus a variable opportunity cost that is unique for every consumer and represents the value of his or her time. Nimbl's value proposition is that in exchange for a higher fee ($5), it will reduce the opportunity cost that I have to pay to get cash.

With opportunity cost modeled as a multiplicative function of lost time and the amount I value my time, Nimbl can either reduce the time I need to spend getting money or make that time more pleasant. A great Nimbl, the one that has instantaneous cash delivery machines, delivers cash immediately, such that the opportunity cost goes to zero (no waiting).

There are two main scenarios where one might imagine Nimbl to be particularly useful:

• You need cash in the future, and you want to get it delivered to you without having to spend time getting it (an asynchronous cash request). 
• You need cash immediately, and Nimbl can provide it faster than you can walk to an ATM and back.

The Playing Field

It's pretty clear that Nimbl would struggle to work outside a large metropolitan area (the delivery time would be high, drivers would have higher transit costs, and request density would be low). As such, I've constrained my rudimentary analysis to the two markets where Nimbl exists currently, San Francisco and New York. 

Let's run through these two settings. There are about 370,000 ATMs nationally, or 1 ATM per 300 people. In Manhattan, with a population density of more than 70,000 per square mile, that means that there are more than 200 ATMs per square mile. Distributed evenly, that means that there should be less than 400 feet between you and the closest ATM at any given point in the city.For San Francisco, with just 18,000 people per square mile, there are only 60 ATMs per square mile.

As an aside, I'd be surprised if these Fermi calculations weren't slightly low given the fact that urban areas probably have more ATMs per capita than rural areas.

In any case, you'd probably only have to walk a couple of blocks to find the closest ATM (while you may have to walk further to find one that is in network and doesn't charge a fee, if you're worrying about fees, you shouldn't be paying $5 to get cash delivered to you).

Scenario 1: Future Cash

Let's say that this walk takes 15 minutes (worst case). In both SF and NYC, the median hourly wage is around $30, which means that the cost of this ATM trip is something like a $2 fee and $7.50 in lost time. And Nimbl charges $5, which means that in this scenario, it could compete reasonably well with an ATM. Go Nimbl!

If I value my time at $100 per hour, all of the sudden Nimbl is worth $27, which is starting to be some real value, and could offer a wedge into the market for ATM withdrawals.

Scenario 2: Immediate Cash

In the case where you need cash immediately, Nimbl is strictly less valuable. In this scenario, you are blocked from doing an activity until you obtain cash. Your opportunity cost accumulates linearly with time, so you want to minimize the time spent waiting. In this case, you pick the faster choice, which is almost certainly going to be the closest ATM (I don't think that it's reasonable to imagine Nimbl delivering cash more quickly than this).

The Catch

Unfortunately, in the case where you can plan ahead to get cash, you aren't constrained to choosing Nimbl. Instead, you can be more efficient and schedule an ATM stop while you're on the way to somewhere you have to go anyway. You can batch this with other errands or just stop by an ATM on your way home from work. By doing this, you can reduce the total ATM cost to something that asymptotically approaches the ATM fee, and you can do this on a sliding scale. Because of the high ATM density in a typical city, actually locating and using an ATM is relatively low-cost as long as you don't make a trip specifically for that purpose. 

Building a Business in the Real World

Finally, there are real world constraints that will hamper Nimbl's ability to grow sustainably. Firstly, all of their employees are going to be cash-rich targets, ripe for theft. Nimbl couriers are walking into each delivery with hundreds of dollars in cash based on a request from an iPhone app. It seems like Nimbl has forgotten about basic employee security in their rush to market.

In addition, Nimbl is fighting against a significant macro trend as consumers utilize credit cards more heavily and begin embracing new POS technologies like Square and Apple Pay. Both of these options eliminate the need for cash at all, and as they gain market adoption, Nimbl will lose its value. While they may factor heavily in Nimbl's overall worldview, the fact is that cash-only merchants represent a very tiny segment of the overall retail industry. 

Pivot!

If I haven't been clear yet, I think that Nimbl is predicated on a bad idea. I don't think it will be successful, and I wouldn't work there or invest in it. That being said, I also think that it could be made into something more interesting with a little bit of pivoting.

Switching from a centralized system with couriers employed by Nimbl to a decentralized system where users could choose to be either an ATM or a client would be a relatively innovative decision. In this system, cash-rich individuals could charge fees to other people who wanted to get cash quickly. Of course, security might be harder in this case, but I think there's at least something interesting here.

Overall, though, I really can't believe that this is a thing.