My company did not take off, 6 lessons at the cost of 4 years of life and $ 150,000
A nice girl asked for a friend on Facebook and asked why we stopped the development of our project. And we did not suspend, on the contrary, things went uphill - we found working ways to get traffic, and revenue finally began to grow. But after a few months, I realized that she was right.
About how we worked 10 hours a day, seven days a week, received investments, went to FRIA, scored more than a hundred thousand users in the US, we wanted to buy Sports Illustrated, but in the end we closed the company.
At first we worked on another idea - we wanted to make an application for dating by interests. The user chooses his interests, for example, “web development”, “java”, “cosmonautics” and “DIY”. Then he chooses activities, for example, “walk”, “football”, “snowboard”, “drink beer”. And we show a list of users with similar interests ranged by distance. You can go with the developers to drink beer, you can play football with Internet entrepreneurs, and you can get to know the beautiful chan, who is also passionate about the problems of space exploration.
This idea provoked approval from all friends, we made a prototype, raised investments from Igor Ryabenky, made the first version. But it turned out that in reality almost no one dared to meet with strangers, even if the strangers had similar interests. The only two cases when it worked were team sports (it’s more comfortable to meet with a group of strangers than one-on-one) and dating (instincts override discomfort).
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We decided to focus on the application for sports enthusiasts. In order not to narrow the main use case, the feature with interests was postponed. We made a product so that you could find a platform for playing football, basketball, volleyball and other sports, create a game, call friends and throw together to pay for the site. We planned to earn on commissions from these payments.
We made the web version (see our first post on Habré), then the iOs application, then we reworked the web version, then the iOs application (see the second post on Habré). Fixed bugs, washed down the features that users requested, worked a lot. A typical month of our team of three people (net hours without breaks):
But there were very few new games, almost no one recorded in them. The main problem we encountered is the Chicken & egg problem. For the game to take place, you need an organizer For the organizer to create and lead games, users are needed. Users will not come until there are games, but they need organizers. Vicious circle.
To solve this problem, we tried to repeat the hacks that helped other companies with a similar problem, came up with new ones. This gave a short-term effect, but users were from different cities, the games were not going well, users were falling off.
They tried to grow locally, they themselves hired organizers in San Francisco and in Moscow, collecting games and users only in these cities. It worked, but as soon as we stopped paying the organizers, everything fell apart. At the same time, the commission on payments did not cover the remuneration of the organizers.
After the user played the first game, he often returned to play with the same team. In this case, both users and organizers are reluctant to make payments through us in order not to pay a commission. In Uber, you will not drive all the time with one driver - saving on commission will result in considerable waiting time for the user and additional costs for gasoline for the driver. In our case, the parties willingly left us without a commission.
Low user revenue made traffic purchase almost unreal. The only marketing channel left is SEO. We did a lot of work on SEO, here is the growth of our weekly traffic:
It looks good, but in fact it took several years, SEO is a very inert channel, only suitable if you have a lot of time left.
We were very lucky with the investor, no pressure or other difficulties, but we ourselves began to think about how we can change the business model in order to grow faster on paid traffic and at the same time earn money:
The most interesting option seemed to be selling leads to online sports equipment stores. We tried this model; cold SEO traffic on requests related to the search for sports grounds was converted poorly. But if you collect email subscribers from it, heat up and then sell equipment, the numbers looked much better than with the first business model.
Many registered users willingly added to their profile what equipment they had, noted which one they would like to purchase. These actions clearly met less friction than recording games. Buying equipment is easier than regular exercise. And SEO traffic associated with reviews about equipment, a lot.
We launched cards with the equipment of stars, finally began to earn money and went to the accelerator of IIDF.
But realizing that:
we decided to stop.
Just at this moment I was contacted from Sports Illustrated - the legendary sports publication, which is now owned by Time Warner. They made a similar product and there was a chance that they would buy the company. To whet their interest, I tried to find out who else might be interested in our work, talked to the CEO of Mindbody (also a billion-dollar company that makes software for yoga studios and fitness rooms). But in the end, both deals did not take place for various reasons.
1. Market and business model is most important
I used to think that ideas cost nothing, the main thing is to get involved in a fight, and on the way you can correct the idea and find the right business model. But in fact it turned out that it is not. You should always analyze well a niche, direct and indirect competitors, their business models. At high tide, even small boats rise very high, and in the desert no matter what your boat and crew are.
2. It is important to be sufficiently public and discuss the company's problems with competent people.
I talked a little with the market, other entrepreneurs (add as friends on Facebook, we will communicate) and investors. Not all feedback is useful, but now I understand that if I had consulted, I would not have made many mistakes. It is especially valuable to talk with entrepreneurs who work in a similar niche, have achieved significant success, but are not direct competitors. It’s good to talk to experienced investors who see many companies distinguish between successful and unsuccessful patterns. In addition, it will help in case you want to sell the company.
3. If the company does not take off within 18 months, you need to close
18 months is a typical term for which another round of investments is raised. If you don’t manage to reach enough indicators for the next round, it’s better to do something new.
4. It is important to focus not on prioritizing existing tasks, but to think about what can now move the company forward.
I always wrote down ideas, collected task lists from them on one topic, then prioritized based on the balance of potential effect and required resources. In fact, these lists often had the wrong tasks. We spent a lot of time on tasks that did not give a positive effect.
5. You can not raise a little money
It is known that it is risky to raise too much money, it kills companies. But you can not raise and a little money. Due to the fact that we had little money, we acted very slowly. And the fact that later we spent our money did not force us to take decisive actions.
6. Bruteforce is not suitable for startups.
No need to try to get traffic from as many marketing channels as possible in the hope that one of them will work. Similarly, do not try to sip as many features as possible, hire more people. Bruteforce does not work well, the success rate is very low, especially if you have few resources. It is better to see what others are doing, what works in other niches, analyze why it works and apply it in themselves.
I want to thank our users, Habr's readers, who after several past posts have given a lot of valuable feedback, and, of course, our investor.
We have not yet decided what to do with the site, it is a pity to leave, but there is no more strength to work on the project. Maybe you tell me?
About how we worked 10 hours a day, seven days a week, received investments, went to FRIA, scored more than a hundred thousand users in the US, we wanted to buy Sports Illustrated, but in the end we closed the company.
Prehistory
At first we worked on another idea - we wanted to make an application for dating by interests. The user chooses his interests, for example, “web development”, “java”, “cosmonautics” and “DIY”. Then he chooses activities, for example, “walk”, “football”, “snowboard”, “drink beer”. And we show a list of users with similar interests ranged by distance. You can go with the developers to drink beer, you can play football with Internet entrepreneurs, and you can get to know the beautiful chan, who is also passionate about the problems of space exploration.
This idea provoked approval from all friends, we made a prototype, raised investments from Igor Ryabenky, made the first version. But it turned out that in reality almost no one dared to meet with strangers, even if the strangers had similar interests. The only two cases when it worked were team sports (it’s more comfortable to meet with a group of strangers than one-on-one) and dating (instincts override discomfort).
')
We decided to focus on the application for sports enthusiasts. In order not to narrow the main use case, the feature with interests was postponed. We made a product so that you could find a platform for playing football, basketball, volleyball and other sports, create a game, call friends and throw together to pay for the site. We planned to earn on commissions from these payments.
Difficulties
We made the web version (see our first post on Habré), then the iOs application, then we reworked the web version, then the iOs application (see the second post on Habré). Fixed bugs, washed down the features that users requested, worked a lot. A typical month of our team of three people (net hours without breaks):
But there were very few new games, almost no one recorded in them. The main problem we encountered is the Chicken & egg problem. For the game to take place, you need an organizer For the organizer to create and lead games, users are needed. Users will not come until there are games, but they need organizers. Vicious circle.
To solve this problem, we tried to repeat the hacks that helped other companies with a similar problem, came up with new ones. This gave a short-term effect, but users were from different cities, the games were not going well, users were falling off.
They tried to grow locally, they themselves hired organizers in San Francisco and in Moscow, collecting games and users only in these cities. It worked, but as soon as we stopped paying the organizers, everything fell apart. At the same time, the commission on payments did not cover the remuneration of the organizers.
After the user played the first game, he often returned to play with the same team. In this case, both users and organizers are reluctant to make payments through us in order not to pay a commission. In Uber, you will not drive all the time with one driver - saving on commission will result in considerable waiting time for the user and additional costs for gasoline for the driver. In our case, the parties willingly left us without a commission.
Low user revenue made traffic purchase almost unreal. The only marketing channel left is SEO. We did a lot of work on SEO, here is the growth of our weekly traffic:
It looks good, but in fact it took several years, SEO is a very inert channel, only suitable if you have a lot of time left.
New business model
We were very lucky with the investor, no pressure or other difficulties, but we ourselves began to think about how we can change the business model in order to grow faster on paid traffic and at the same time earn money:
The most interesting option seemed to be selling leads to online sports equipment stores. We tried this model; cold SEO traffic on requests related to the search for sports grounds was converted poorly. But if you collect email subscribers from it, heat up and then sell equipment, the numbers looked much better than with the first business model.
Many registered users willingly added to their profile what equipment they had, noted which one they would like to purchase. These actions clearly met less friction than recording games. Buying equipment is easier than regular exercise. And SEO traffic associated with reviews about equipment, a lot.
We launched cards with the equipment of stars, finally began to earn money and went to the accelerator of IIDF.
But realizing that:
- For this model, you need to cross out everything we did before and re-build Tripadvisor for equipment,
- all channels except SEO and direct traffic do not fight again in terms of unit-economy,
- the investor’s money is long gone, and we have invested two more times our own,
we decided to stop.
Just at this moment I was contacted from Sports Illustrated - the legendary sports publication, which is now owned by Time Warner. They made a similar product and there was a chance that they would buy the company. To whet their interest, I tried to find out who else might be interested in our work, talked to the CEO of Mindbody (also a billion-dollar company that makes software for yoga studios and fitness rooms). But in the end, both deals did not take place for various reasons.
Lessons
1. Market and business model is most important
I used to think that ideas cost nothing, the main thing is to get involved in a fight, and on the way you can correct the idea and find the right business model. But in fact it turned out that it is not. You should always analyze well a niche, direct and indirect competitors, their business models. At high tide, even small boats rise very high, and in the desert no matter what your boat and crew are.
2. It is important to be sufficiently public and discuss the company's problems with competent people.
I talked a little with the market, other entrepreneurs (add as friends on Facebook, we will communicate) and investors. Not all feedback is useful, but now I understand that if I had consulted, I would not have made many mistakes. It is especially valuable to talk with entrepreneurs who work in a similar niche, have achieved significant success, but are not direct competitors. It’s good to talk to experienced investors who see many companies distinguish between successful and unsuccessful patterns. In addition, it will help in case you want to sell the company.
3. If the company does not take off within 18 months, you need to close
18 months is a typical term for which another round of investments is raised. If you don’t manage to reach enough indicators for the next round, it’s better to do something new.
4. It is important to focus not on prioritizing existing tasks, but to think about what can now move the company forward.
I always wrote down ideas, collected task lists from them on one topic, then prioritized based on the balance of potential effect and required resources. In fact, these lists often had the wrong tasks. We spent a lot of time on tasks that did not give a positive effect.
5. You can not raise a little money
It is known that it is risky to raise too much money, it kills companies. But you can not raise and a little money. Due to the fact that we had little money, we acted very slowly. And the fact that later we spent our money did not force us to take decisive actions.
6. Bruteforce is not suitable for startups.
No need to try to get traffic from as many marketing channels as possible in the hope that one of them will work. Similarly, do not try to sip as many features as possible, hire more people. Bruteforce does not work well, the success rate is very low, especially if you have few resources. It is better to see what others are doing, what works in other niches, analyze why it works and apply it in themselves.
Conclusion
I want to thank our users, Habr's readers, who after several past posts have given a lot of valuable feedback, and, of course, our investor.
We have not yet decided what to do with the site, it is a pity to leave, but there is no more strength to work on the project. Maybe you tell me?
Source: https://habr.com/ru/post/343162/
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