Lessons from a failed startup.

Why did Modabound fail?

The easy answer (for almost every company) is “we ran out of money” or “the investors backed out and we couldn’t raise the money” or something related to money and how it wasn’t really the founder(s)’ fault. While this can certainly be the case for a few companies, I’m willing to bet that for the overwhelming majority of them (say 95% of those 90% of startups that fail), this isn’t the case. That’s not to say that I didn’t use the same excuse when we first shut down Modabound, because on the surface it’s true. We couldn’t close our Series A round and decided to wind down.

  1. We focused our efforts on acquiring new users and didn’t strive to understand why users weren’t sticking around until it was too late

Mistake #1: Build it and they will come—don’t focus on making money now…or ever

You should always prioritize which aspects of your company to focus on first. We decided to start by focusing on acquiring users and optimizing the in-App user experience during the early stages. I’d say that it was the right decision to make back in 2013 because we needed to launch an MVP that would prove that college students wanted to use our platform. Three months after launching our MVP, 30% of the target audience at our pilot university signed up to Modabound and 25% were returning week-over-week. We were able to raise a Seed Round, got accepted to TechStars, and in Fall of 2013 we pivoted to become a Mobile-only platform.

App design for payment system which never went live.

Mistake #2: Focus on acquisition, then worry about retention

You might be thinking “Rookie mistake. We all know that you have to focus on both at the same time.” And I agree. Theoretically, I was focusing on both; my business partner and I both knew our retention numbers front and back. We knew that the retention wasn’t great, but we also knew that we needed more users. So I kept focusing on making the App grow while spending very little money, but I failed to act upon the fact that the majority of our users were leaving the App and not coming back.

Student guide to organize a Modabound Pop Up Shop.

    Carolina Garcia Tanjeloff

    Written by

    Columbia University; Business Dev & Growth Lead @tigglykids; Startup Founder

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