When To Walk Away

How we decided to kill our startup while following the Stage Gate Framework

Jake Hurwitz
Oct 15, 2019 · 6 min read

“Shoot for the moon. Even if you miss, you’ll land among the stars.” -Norman Vincent Peale

TL;DR:

  1. After working on Evryday TV for seven months, we decided to fold the project before launching it to the public.
  2. We approached Evryday with the Stage Gate Framework. After significant market research, validation, and building (and a $70k investment), it did not pass enough tests to move onto the next stage.

I learned about the Stage Gate Framework while I was the VP of Branding at Boulder Bits, a startup studio based out of Boulder, Colorado. Before taking a medical leave of absence, our CEO, Jesse Lawrence, taught us how to be “idea assassins”.

Jesse’s philosophy was simple; kill every startup idea unless you absolutely can’t. This allowed us to create a rigid process to better validate startup concepts while reducing the risk for everyone involved. Thus, following this framework allows founders and investors to realize a higher chance of success across their portfolio.

We broke down the Stage Gate Framework in the Startup Studio White Paper:

“The stage gate is a core process used by many startup studio studios. A stage gate is a hurdle that founders must overcome in order to continue.

For example, an entrepreneur should only found a company if they segment the market, identify customers excited to pay for a solution, test and observe an unfair advantage, and accomplish a hundred other similar tasks.

Each task may result in a “go” or “no-go scenario for a given project. When a team hits a “no-go,” it is likely time to kill the project.”

With Evryday, we eventually hit a “no-go” after month six.

The following is a recount of how the Stage Gate Framework played out for Evryday:

Stage 1; Days 1–45. Identify Problem:

First, I partnered with Penthera to validate the idea of launching a new consumer-facing startup concept using their Download2Go™ technology. We mapped out a myriad of tests and got to work using the Stage Gate Framework.

We conducted in-depth research and learned the following:

  • In New York City alone, eight million commuters ride the train and subway five days a week for 40–80 minutes per day.
  • According to eMarketer, nearly 90% of people watch videos on their smartphones, averaging 60 minutes of video per day — up from 22 minutes just four years ago — and according to Ericson Consumer Lab TV and Media, “on-the-go” and “while-commuting” viewing has grown 42.9% and 17.8% respectively between 2010 and 2016. “At-home” viewing grew less than 2% during the same period.
  • According to Penthera’s Q1 2019 US Mobile Streaming Behavior Survey, 88% of these commuters are frustrated with their video viewing experience during their commute because they don’t have any cell service.

We validated the problem even further by launching a series of targeted, low-cost Facebook/Instagram ads, LinkedIn posts, and a blog post that addressed the problem. All we cared about were clicks and email addresses. If New Yorkers were willing to click an ad and join a waitlist, that was enough validation for us to consider moving forward.

Then, we talked directly with 157 people who joined the beta list. This allowed us to refine the solution and start designing the product and the business model.

Stage 2; Days 30–90. Identify Solution:

Beta testers pointed us in the direction of an AI-based mobile app that creates a personalized playlist of daily news videos for every user, and automatically downloads these playlists to their devices so they can watch the news without any cell service or data costs.

Now it was time to create some wireframes and get them in front of the beta testers to see how they interacted with the product.

Beta testers were excited about it. The concept felt really cool.

Now it was time to figure out how to build the tech, how to get the content, and how to turn this into a company.

We decided to move forward to the next stage gate and build the MVP. This would allow us to Test the Solution and Attract Paying Customers.

Stage 3; Days 90–180. Venture Design, MVP Build, Business Development:

For the next 90 days, while we started to achieve significant initial milestones, we dreamt up visions of building the most reliable and trustworthy AI tool that the media industry has ever seen. Plus, it would be paired with the best daily content from today’s top media companies.

Evryday would become your go-to place for consuming ALL of your news content — reliable, affordable, and personalized in video format.

Yes, this was a moonshot, but it was a big enough concept that made it easy to pop out of bed every morning. Industry experts were either wildly skeptical or wildly excited about the concept. Polarization is a good sign.

Naturally, I got very idealistic as we achieved six initial milestones that helped us validate the concept even further:

  1. Secured initial content partnerships with Bloomberg, Cheddar, Real Vision and HyperChange to begin populating the app with content. We were in-talks with CNN, ATTN, CBS, The Recount, and Vox.
  2. Built a loyal list of 160 eager beta testers (not huge, but a big enough sample size to get early product feedback).
  3. Recruited the initial founding team and advisors.
  4. Iterated on a dozen wireframes for the MVP with our beta testers and finally landed on the UI/UX that would become the initial app.
  5. Built roughly 80% of the MVP.
  6. I moved from Denver to New York City to be closer to the customer (and to enjoy startup life back in the Big Apple!)

Our Final Stage; Days 180–210. Idealism to Pragmatism:

As we continued to validate Evryday by learning from our beta testers and content partners, we took a step back to analyze our learnings about the current state of the media industry, our competition, and our tech and capital requirements.

This was when our ideology started to get tempered with pragmatism, a transition that I’ve seen many startups make somewhere around month six. The excitement wears off and the reality starts to kick in.

The following learnings forced me to question if Evryday could make it past the next stage gate:

  1. Media is EXTREMELY saturated. Perhaps one of the most saturated markets right now. Competition is already brutal.
  2. Adoption of a new consumer mobile app would be extremely slow and difficult. Not to mention monetization.
  3. Building the tech necessary to achieve our vision would cost millions of dollars over the course of the next few years.
  4. Finally, even if we had the greatest tech the world has ever seen (and we’d still be decades behind companies like YouTube, Netflix, Apple, and Facebook), nobody would care to use the app if the content wasn’t stellar. Acquiring or creating stellar content is either extremely expensive, slow, or unreliable.

All in all, we were at a crossroads of either facing MASSIVE competition, MASSIVE costs, or an extremely long time to break-even.

The Final Conclusion:

The risk of launching Evryday was far too significant and the market timing was not aligned. Pushing forward on a ~$250k seed round was not worth the risk.

When all is said and done, our big, hairy goal to redefine how busy people consume their news was a moonshot.

However, with the amount that we learned and the network that we continued to build, we definitely landed somewhere amongst the stars.

That’s a win in my book.

**If you are interested in using the Stage Gate Framework to start your next venture, I suggest reading the Stage Gate section of Startup Studio White Paper, or reaching out directly.

Jake Hurwitz

Written by

Founder and Partner at Parallel [a venture studio consultancy]. Former Co-Founder at Global Startup Studio Network. Former VP of Branding at Boulder Bits.

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