6 Candid Lessons of a failed Startup in Latam

Cesar Hoshi
Jul 14, 2019 · 8 min read

From a Product Manager & co-founder perspective: Personal learnings, failures & mistakes

Photo source: Unplash, Dan Dimmock

Some weeks ago, my partner and I decided to shut-down Mi Media Manzana (“MMM” from now on), the biggest Online Dating Android App made in LATAM, our startup, product and enterprise in which we dedicated full-time for the last 6 years.

As a Product Manager & co-founder, what learnings could I share with the community? I could speak about some numbers and the traction we had, but they are just senseless numbers today (PS: I added some details and numbers of MMM at the end of the post for better context about us).

I could also write about our values, culture and what we wanted to achieve, but pedroneiraf, our CEO and my partner did a magnificent job posting his “good-bye Mi Media Manzana” thoughts on LinkedIn, so there’s not much more to add there (give it a read, it’s really inspiring).

So, I decided to candidly share some of my personal main learnings, failures & mistakes that made me grow as a person and sharpened my Product-driven mindset. I hope you can relate to some of them.

1.- If you’re going to Pivot, Pivot your Product / Features, but not your Purpose

Since our early days we were proud of our Build/Measure/Learn Lean Startup mindset and the speed in which we could pivot. We took seriously Eric Ries best practices:

“The fundamental activity of a startup is to turn ideas into products, measure how customers respond, and then learn whether to pivot or persevere. All successful startup processes should be geared to accelerate that feedback loop”.

Pivot or die… Everybody tells you to do it fast if you’re not getting results. But what I want to share with you is that if you’re going to pivot, decide what is NOT negotiable, and embrace constraints.

We built MMM with this purpose: “Create a Dating Site where you can find a Compatible Partner for a long-term relationship”, and the first version of the product responded directly to it. But in the way, as we lacked results, we made many decisions for changing the product… and without noticing it, our new versions didn’t respond anymore to the purpose!

At some point, when we reviewed the Product and the Features… it made absolutely NO match with the purpose! At one point we didn’t gave users Compatible Partners (we gave them random matches…), neither we focused on Long-term relationships (we were happy if users could have chats as early as possible).

I can remember at least 5 major product versions we had, but only 2 of them were consistent with our purpose. I’m not saying you should not change your purpose, but if you firmly believe in it (which we did), your product should always be consistent with it (which we didn’t). Embracing constraints will make you pivot in a much smarter way, instead of just pivoting for the sake of it.

2.- In moments of crisis… don’t forget the right questions

In our 6 year adventure, we almost broke several times. I remember that at those times of crisis (when we knew we only had money for a couple more months), we radically changed our mindset:

  • from something like “what should we build so customers love our Dating app?” to “crap, how will we increase our conversion rate so we make money to survive”.
  • …or from something like “wow, this new feature seems to be moving our OKRs, let’s explore some more” to “stop everything, what will be our next pivot? We’re about to die”.

…and so on, you get the point. We somehow always managed to survive, but always deviated from the important things.

Of course you have to run, of course you must change things if things are not working… but my takeaway here is that those moments of crisis are the BEST moments to ask the right questions (how to add value to your users), and are the WORST moments to ask the wrong questions (only focus on the shareholders pressure and cold metrics).

3.- In a marketplace you should worry about liquidity and density, not overall growth

There are tons of good posts about Marketplace Liquidity, in which it makes total sense to focus on density (“number of participants within a certain geographic area”) instead of overall growth, but we still made many mistakes here.

Our first version of the product was launched in our home-country Perú. We got traction fast, and said: “hey, we have good conversion and retention rates, and we also have just fundraised a new round of money… so let’s roll out to new countries, let’s grow big”.

We moved fast, we were ambitious, we did what made sense for us at that time: We launched our product in Colombia, Chile and Mexico, with strong online marketing budgets and PR campaigns almost all at once for “activating the country”. We were really proud and blinded by the vanity metrics (total registered users, gross sales, press releases)… but suddenly every metric flattened.

We learned the hard way about density. Months later we would figure out our “optimum number” of “critical mass per city” for our Dating App to work. For example purposes, let’s say we spent $25,000usd in online marketing budget for user acquisition per country (4 countries in total). By the time we noticed, we spent $100,000, and not a single country was self-sustainable.

Our approach was totally wrong, we were focusing on “countries”, when we should have focused on “cities” (in Dating is even more crucial, people wanna go out with someone close)… but well, as said before, we were blinded by the “our first million registered users”, instead of “hey, we totally nailed it in City X, let’s roll out to the next city”. We had to start all over again our acquisition strategy, almost from scratch.

4.- Apply known frameworks, but don’t try to do it alone.

One of my favorite Product books is “Hooked — How To Build Habit-Forming Products”, I read it back in 2016 and was amazed by the powerful insights about the “Trigger >> Action >> Variable Rewards >> Investment” framework, so I tried to include some of it to our development process, but not really hard enough. Around 2017 my partner read the book and was also amazed and suggested me to design the new features around those concepts. But at the time “the backlog was already full” or “we have other frameworks running”, and I didn’t really do anything with it. Another year later, I saw my Senior Android Developer reading that book and he said “hey, why haven’t we tried this stuff before?”. See how we lost a couple of years and lost tons of synergy?

From the opposite side of the example, around 2018 we got accepted at “Reforge — Retention Program” (one of the top best Growth materials out there). We expected a lot from it, so me, my partner and our CMO took the course at the same time, and scheduled activities for debating, adapting and trying to apply the framework with the rest of the team. It was time consuming, but was time really well used because of the synergy of doing it at the same time, and the effectiveness of transmitting it to the rest of the team.

The point is, if you’re trying to change some processes or apply some new frameworks within your team, take time to get the key players on the same baseline first, it is much easier to do it that way, that trying to do it directly by yourself.

5.- Discover early on what are the inputs for your “One metric that matters”?

After the initial results, pivots and findings, we decided that “Retention by Month 2” (how many users who registered in time X, were still active users in the next month) was our “one metric that matters”, if it went up, everything else went up.

We were obsessed in Retention, but took way too long to realize that we couldn’t control that metric. Because of the nature of our business (Dating App), Retention was an output, not an input that we could control. We thought we were doing good by focusing on one metric, but the mistake with that single focus is that you try to control things you can’t (how many users return to your app), and don’t take account of the inputs that you can somehow actually control (number of optimal profiles seen in a first session, time for the first match, chatting tools, ways to ice-break a conversation, display for notifying about new users in your area, etc).

I learned to ask myself if that metric that you’re trying to attack (conversion, DAU, monetization, time spent on your app…) is an output or an input. You can have a deeper reflection in this great Reforge’s article: Don’t let your north star metric deceive you.

6.- Have uncomfortable discussions early on, especially when defining the problem you are trying to solve

Whenever we find a problem to solve, we tend to start interviewing, draw mock-ups, recommend solutions, debate possible paths to explore… but it still amazes me how easy it is for a team to have different views for “the same problem”.

This quote is stuck in my head: “nothing is more certain to cause a project to fail than a misunderstanding of the problem you are solving” (Three step framework for solving problems).

As a Product Manager, it requires a lot of discipline and awareness that you should NEVER start building something unless all of your key players have the same understanding of the problem, even if it demands more pre-planning time, or it implies uncomfortable (and long) discussions with other stakeholders (CEO, investors, or team-members). These uncomfortable discussions will make everything easier later.

  • #1: Pivoted the product… without consistency with our purpose
  • #2: Too much focus in “the company” instead of “the users” in crisis moments
  • #3: Focused on overall growth, instead of market density
  • #4: Underestimated power of synergy, tried to do things alone
  • #5: We took too long to realize that we couldn’t control our “one metric that matters”
  • #6: Avoided uncomfortable discussions for defining the problems we were trying to solve

Did you found value or feel identified in some of these points? Have you faced similar mistakes? I’d love to hear your thoughts in the comments below.

PS: Here are some details and numbers of Mi Media Manzana, for better context of what our product was about:

  • Dating Site (Web & App) focused in Long-term relationships.
  • +2.5 Million registered users across Spanish-speaking Latin American countries
  • Android app with +4.2 Ratings and 100K MAU (monthly active users)
  • Achieved #1 app in Android’s Free “Dating Category” in countries like Colombia, Perú and Chile
  • One of the first peruvian startups to fundraise more than +$2Million usd from local & international Ventures.
  • Dozens of relevant press releases of Dating Business and Happy Couples across Latin America.
  • …but without a profitable business model. Product & company shut-down June 2019.

Cesar Hoshi

Written by

Product Manager. Peruvian, ex co-founder of a Dating App in Latam, currently in Colombia working in a hyper-growth tech company.

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