Ten weeks ago, Tyler Cobb and I (Tristan Tarpley) launched Market(r). Six weeks ago, COVID-19's reign of terror on the world's population, healthcare systems, and economy went into full throttle with the beginning of mass lockdowns and quarantines. This was the perfect storm for our fledgling little startup. Startups are, of course, never easy. They're especially difficult amidst the worst 6-week economic span in modern history.
In 2017, I left the music industry and started marketing consulting. For years I had wanted a tech company, but I chose marketing consulting because:
Well, 2 of those made sense. The third didn't go so well. The day after my last day at my day job, she and I had a falling out and I was left with no money, no clients, no partner, and not even a logo or a company name (that was the easy part).
The thinking was that I could build clients, revenue, brand, and experience to leverage for market research, customer development, and learnings that I could parlay into a powerful SaaS app.
I built a clientele, had some success, boosted my personal income to 6-figures, had some employees, and was feeling pretty good about myself. Over that time, I met my soon-to-be business partner, Tyler. We hit it off from day one and quickly began meeting up weekly just to talk startups, tech, books, marketing, and video games. He was the only person I had ever met who had listened to as many startup books, listened to as many podcasts, and read as many case studies as I had. Ultimately, he was the only person I had ever met who wanted this life as badly as I did (and still do).
After a while, he left his job to pursue a startup with a friend of his. After 7 months, it became evident that his company was not a good long-term investment. I saw my opportunity. I snatched him up and convinced him to partner up with me on Market(r). We were off to the races.
We began building product, testing, doing market research, and got a product to market (above). Over a few weeks we reached $6,000 in monthly recurring revenue (all of this is without investor dollars), had some happy customers, had some verbal commitments on investor dollars, and were riding high.
Over the 6 weeks since COVID's expansion, our $6,000/month was whittled down to just $1,200/month, with a lot of uncertainty around the remaining revenue continuing. Tyler and I made the immensely painful decision to deactivate all of our users' accounts, get jobs, assess what went wrong, and give it another shot over nights and weekends-- going back down to $0.
The pandemic didn't kill us. It exposed us to the wilderness and we weren't prepared to survive in the elements.
There are loads of better companies that are thriving right now, or at least holding strong. We were not one.
There's no doubt in my mind that if times were good we could have continued the growth, built a decent company, and survived until the next crisis. But it wasn't recession-proof. At that rate, it would never be a once in a lifetime company. It would never be great. It would always be a grind.
Why? We didn't have true product/market fit. We thought we did, but that was just because the unscalable things we were doing to satisfy users and my direct sales were masking our fundamental issues. All of this might have been fine, except that we made the early decision to charge an absurdly low rate ($85/month/campaign -- which is another issue entirely...this pricing model sucks) to force us to drive down our costs and drive up our efficiency.
In Rand Fishkin's "Lost & Founder," he says-- in my brutal paraphrase-- that there are 3 reasons consulting businesses don't typically transition well into product businesses (Rand did exactly that when we was building Moz).
Well, check, check, and check. I even read the book before we launched.
I'm not going to write a line of code until we have the entire app in a clickable wireframe and user-tested. We're going to ship a seriously good product. We're not going to cut corners and do unscalable things on product. Yes, I will always believe in doing unscalable things with marketing and customer acquisition, but not anymore do I believe that for product.
We're going to actually launch to an audience, instead of waiting until the product is ready. My whole background was in marketing for companies who had a product to sell. That's fundamentally different than bringing a product to market.
Fundraising can be a massive time-suck. It's all about your momentum. I took 6 weeks early on to spend 80% of my time on fundraising. Doing that, though, delayed our momentum with our go to market. This was a mistake. Investors are all about signaling. Has the founder done this before? Who are the other investors? Traction? I should have spent this time focusing on the business. Investors will follow a growing business.
Native integrations are worth it. Market(r) has a lot of API integrations (ad platforms, data feeds, CRM data, etc.). We decided to use a third-party ETL (extract, transform, load) provider to act as our middle man to load this data into data warehouse. As new users came in, we would hookup their account in the ETL dashboard, select the tables we wanted to transfer, then it would sync over 24-48 hours and then every 24 hours after that. I'll write another blog about the engineering challenges here, but this saved us hoursssss of development. It also severely reduced the possibilities for features. We're going to spend the time actually writing native data integrations on this go.
Offshore labor is awesome, but hard. We had a writer and designer in the Philippines-- both of whom we had to lay off. I cried when I had to do that. A huge value prop of offshore labor is being able to leverage asynchronous communication. You send a message and then get back to work until they can answer it (Philippines is +13 hours of Houston, where we live). This also requires an immense learning curve in management.
Even if you think you're developing a desktop app, build for mobile first. We felt pretty dumb when our first 3 signups came in on mobile and complained about the UI.
Gather >=3 datapoints on every suggestion before you implement it. Everyone has an opinion, and most suck. As you get suggestions, wait until you hear it >=3 times before you actually implement them-- even if it seems obvious. I spent a lot of time implementing features based on 1 datapoint that nobody else ended up using.
Onboarding seriously matters. You need to give the user value all along the way, not just once they're 6 weeks into their experience. Again, I'll write more about my engineering lessons on developing a great onboarding flow, but most of them circle around leveraging your features infrastructure to give breadcrumbs of value that entice the user to keep on going. This is your first impression with the user. Make it a delightful experience, not just a means to an end.
Top talent is not looking for you. They have their own things going on. The CEO is always recruiting.
Don't be so addicted to shipping features that you forget to polish. We shipped a lot of really dirty features under the Lean Startup mindset. You know what? These features weren't used. Because they were minimally viable, not truly viable.
But, don't be so addicted to polish that you forget to ship features. It's a really difficult balance.
Over-communicate with your investors and customers. If you're out of sight, you're out of mind. People really don't think about you as much as you think they do ;)
Square pegs in round holes rarely fit. Tyler and I both hate services. We're product guys at heart. We thought we could fake it with services long enough to afford to finish the transition. It didn't work that way. Know your weaknesses but optimize for your strengths.
Users don’t just want the high-level info. Good entrepreneurs are highly-engaged in their business. They want the control and intelligence. They want to know how metrics are calculated.
Analytics shouldn't be a 1-way conversation. Let the user run simulations, model our scenarios, and experiment.
Why users sign up is not why they stay. Users sign up for Stripe because they want to take payments. They stay for analytics, API ease-of-use, invoicing, and customer data management. We thought we had ours. They would come because it felt like TurboTax for marketing, then stay because we would tell them exactly how much they should be spending on various marketing activities and how to spend those dollars. That just wasn't enough.
We'll use our extensive experience on the consulting services side where we learned what problems keep people up at night, our incredible learnings from (basically) failing on the first pass, and new clarity on our vision ahead to do the following:
The decision to go this way was one of the most difficult of my life. Multiple times over last week, I would break down crying. It was devastating to lay off our 2 employees. It's terrifying to enter the job market (I've been self-employed my whole life).
But, we have the unique opportunity to use information gathered from real customers and a real product to do things right this time. We will level up personally as founders. We will take our discipline to the next level. Great companies are built during recessions. We fully intend on being one of the success stories coming out of the COVID-19 crisis.
Stay up to date with us! We'll be sending updates as we rebuild stronger and make a lasting impact on the marketing tech space.