2017 Labdoor State of the Startup
From product to platform.
Labdoor turned five years old in May. We celebrated with 22 team members in three countries and told startup ghost stories — reminiscing about old offices and failed products and toasting to the 10+ million people who have used our data and rankings to research the best supplements.
Mistakes? We’ve made more than a few. Assorted examples:
- Remember Labdoor Premium, our ‘Consumer Reports’-style subscription? It turns out it’s hard to get people to pay for information on the internet.
- We tested the idea of a Labdoor Hotline, inspired by the Turkey Talk-Line, where you could call a Labdoor expert to talk about supplements.
- In a moment of desperation, we even tested banner ads on Labdoor.com for a week. I took a screenshot before we removed them as a reminder to never do that again.
Strikeouts are a big part of this game (I lead the team in this statistic). It can be hard to maintain the confidence to keep swinging big. I’m excited by our team’s effort here and know that we have a couple big hits launching now.
We also learned from a few of these mistakes, and took pieces of others and integrated them into our core product. For example, all Labdoor Premium reports are now available for free on Labdoor.com. We even removed the free sign-up step to access the data. Meanwhile, answering questions on the Labdoor Hotline turned out to be a great way for us to learn what was broken and/or confusing on our site. Through it all, we pushed ourselves towards a goal to improve 1% per day, knowing that consistent growth like this scales to over 20x per year.
When you play for 1st place, especially in the big leagues, there will be big scary defending champions in your way. The only sure path to 1st place is to be different, not better:
My two biggest business lessons from the past five years:
- It’s really hard to make money selling information. I love paying for good information. I donate regularly to groups like ProPublica, subscribe to sites like Stratechery, and even own a print National Geographic subscription. I’ve also learned that there aren’t that many people like me, and that Labdoor’s data doesn’t fit well behind a paywall. Increasingly, we’ve come to see our data and rankings as the platform that powers many related services.
- It’s really hard to start a platform from scratch. We spent a lot of time and effort fighting a chicken and egg problem where we couldn’t recruit customers without data and we couldn’t afford the testing needed to get the data without existing customers. The classic Silicon Valley advice here is to raise a bunch of money (“the fat startup”), build it, and then expect customers to show up, but we struggled to raise any money without either the customers or the data upfront.
Our solution was to start with a really small chicken and a really small egg. While Amazon has 50+ million products on its site, we started with just 50 products on Labdoor.com in 2013 (and they were all protein powders). Our one advantage was that we had real, unique data on which protein powders had less protein than claimed, which led to the first big Reddit post about Labdoor, which drove enough traffic for us to test affiliate links, which helped fund the testing of our second category, fish oil, which earned us our first NYTimes feature. That story broadened our audience and the momentum gave us confidence that this model would scale, which led us to raise more seed funding and develop a consistent monthly testing schedule. We used many small milestones to raise angel funding to fuel our testing. Now at 30+ categories and 900+ products tested, we’re able to provide a complete research and shopping experience for most supplement users.
It’s time to level up.
Labdoor closed a $3.4M Series A round in October 2016. After 4+ years surviving from seed check to seed check (we raised money from a total of 40 angel investors), we finally have the ability to plan ahead and invest in ourselves. In March, we got the keys to our first laboratory space. After testing just under 1,000 products in our five-year history, we’re excited to show that our new laboratory will soon be able to test over 1,000 products per year. This testing capacity means that we’ll soon be able to expand beyond supplements. Our first experiments into food testing include Labdoor rankings for milk chocolate and dark chocolate, and an analysis of caffeine content in Starbucks, 7-Eleven, etc. for Buzzfeed. Stay tuned for more testing expansion driven by customer demand (FYI — the #1 most popular request right now is for us to test dog food.)
We’re not out of the woods yet. Here’s what we worry about most:
- The #1 risk remains the same as ever — running out of money. In our first five years, we nearly ran out of money at least three separate times, entering our final month of runway without the guarantee of another investment coming (never save anything for the swim back). Our financial situation is much stronger now, but we still operate with less than a year’s worth of cash reserves in the bank. Operational efficiency has put us on a long-term path to profitability; now we’re pushing hard on revenue growth to minimize the future fundraising rounds needed to keep Labdoor going.
- We continue to receive legal threats from companies with poorly-rated products. Here, I ask my team to be comfortable being uncomfortable. We have kept ourselves out of court and will continue to do everything in our power to work constructively with companies and share our data and methods with them. In a few cases this past year, this has even led to these companies pressuring their suppliers to improve ingredient quality, using Labdoor’s data to back their assertions. Every one of these wins strengthens trust, quality, and transparency in the marketplace, and reinforces the fact that Labdoor helps both consumers and suppliers.
We’re still in survive and advance mode, and expect to be here for a while while we work towards our first championship. There’s a lot of raw talent here that’s quickly maturing into a team of professionals and we’re now building on top of this foundation to launch new products and services every month.
What’s next for Labdoor?
Last month, we launched Labdoor Testing Services (LTS). LTS allows companies to use the same rapid quality assurance system we built for Labdoor.com for their own QA/QC programs. LTS will also be the home of our certification programs, starting with our Tested for Sport seal for products that pass Labdoor’s banned substance testing program.
Labdoor Testing Services will not be limited to testing supplements — our analytical scope covers practically any product that you might find in a Walgreens or CVS. This flexibility will allow us to experiment in new product categories before adding them to Labdoor.com. LTS will be an accelerant for our platform development and help fund laboratory expansion.
We’re also working on our most ambitious ecommerce experiment yet — a new service, Labdoor&Me, that offers product recommendations based on our chemical analyses and your personalization tests.