The abbreviated version of why Ryze died
The summer of last year is when I had to finally accept that my startup that I had worked on for the past 2 years was finally dead. $0.00 in revenue after 2 years, no significant user base, and no foreseeable monetization strategy, and shockingly, I struggled to let go of our crappy startup.
The power of delusion
If there is 1 thing I’m good at, it’s delusions of grandeur. No matter how many users churned, how many dollars we didn’t get, or how many mentors / investors said no, I still thought what I was doing was going to be amazing.
An actual conversation:
Lucas: “Think about how much data is going to be flowing through our system when when we hit critical mass!”
Sane, logical, 3rd party observer Leon: “Yeah, you’ll have an interesting sub-set of data. And what is critical mass?”
Lucas: “No man… we’re going to have ALL the data.”
Leon: “I mean you may have a lot of data, but it’s not all of it.”
Lucas: “Leon, WE’RE GOING TO HAVE MORE DATA THAN GOOGLE.”
Leon: “HAHAHAHA. Okay”
[Leon leaves the room]
Leon still gives me shit for such a ridiculous statement. It was this delusion that let me avoid the hard things and the hard realities. I think I was probably right in the middle of the Utter Madness quadrant.
It didn’t help that we got to pitch in different competitions and even pitch to YC, but even when we were turned down, I thought, “Well if YC is interested, it must be good.” I failed to remember that 90% of even YC startups fail.
What would I have done differently?
Sell. Sell. Sell. Sell. Sell. Sell. Sell. Sell. Sell. Sell. Sell. Sell. Sell. Sell. Sell. Sell.
I wish I sold. I wish I sold all day. I wish I sold everyday. I wish I sold my product immediately. I wish I sold my product before I even wrote a single line of code or attempted to raise money or looked for another co-founder. Okay… that’s a bit extreme, but the value of selling can never be overstated.
Sales doesn’t fix all problems, but sales makes all problems easier to solve.
How would I do that?
I would have found people online looking for my product, called them up, and then asked them for their money to solve their problem.
Another conversation after 1 year of designing, coding, and headaches
User on day 1: This is awesome. I love this idea and I wished I had this earlier!
Lucas: That’s great to hear! What features do you like / dislike…
Same user on day 30: I really haven’t used it all that much because it’s hard to enter in data, don’t have time, and I don’t know how valuable this really is.
Lucas: Okay, but how much would you pay for this?
User: Maybe $1 / month…
I had this conversation so many times, that it’s painful to actually type out. I still couldn’t see that my startup was dead… I was dealing with people that self-selected to use my product, but wouldn’t keep using it and didn’t want to pay for it. It’s a good idea to ask yourself this question constantly:
Have I spent most of my TIME on MAKING MONEY or have I spent most of my MONEY on MAKING TIME (excuses to making money)?
So to answer the question in the title of this bad boy…When do you know if your startup is dead?
Some other good heuristics:
- Have you made any money in the past year? No? DEAD
- Has you money grown in the past year? No? DEAD
- Are customers leaving at the same rate they come? Yes? DEAD
- Are you borrowing money to pay off money you borrowed? Yes? DEAD
But these are numbers that will never register with the delusional brain. The best way to combat the delusional brain is to sell your shit. Because if you can only generate money from 1% of your consumers, or you can only charge $5 / month, you may have a great small business, but you don’t have a company that will have more data than google. And being realistic about the position of your startup is extremely important to prevent you from pounding your head against the wall all day.
Challenges with Personal CRMs
And Ryze as well
There were many challenges we faced along the way, but all of the “issues” we solved were all focused on the wrong thing. Again, I wished we spent more time selling and less time building. The goal is to create a business, not beat your head against a wall for 2 years.
List of Assumptions
- We are going after a B2C market.
- Our users are CEOs, Vice Presidents, Entrepreneurs, or people in relationship based selling positions: lawyers, financial advisors, real estate, etc…
- The market size is ~5% of LinkedIn users (~200MM).
- There isn’t a simple, effective tool to manage relationships.
- People are willing to put in the work to build, maintain, & grow relationships.
- This could be the next LinkedIn… (What a joke).
List of Personal CRM Challenges
- A CRM takes a lot of manual entry, and if you’re not using it directly for sales generating activities, the incentive to commit to entering data and following up with people is really low and the perceived “work” is too high.
- The feedback loop of recording data, following up, having a conversation, and then one-day realizing some vague benefit (new job, connection, etc..) is too long.
- There are very few use cases that merit a personal CRM that doesn’t just end up becoming a feature dump of requests that turns into just another CRM. We had over 5000 users, and over 5000 different feature requests from things like “I want to be able to save a link from my desktop and have it automatically send an email 3 days later” to “I just want to be able to sync all of contacts in one place”, both of which are non-trivial engineering tasks.
- The market isn’t large enough if you’re going to B2C. We thought our TAM was 5% of LinkedIn (~20MM) users… it’s more like 200,000 max.
- Price sensitivity is between $1–$10 / month.
- Everyone has a different work-flow. In order to make a new habit stick, it’s best to integrate the process into someone’s workflow. (Otherwise you have to have a phenomenal UI with equally intuitive UX.)
- The market ISN’T growing quickly. After about 6 months of SEO efforts, we are still ranked #1 for personal CRM on Google (at least where I am). Yet, our user growth never grew beyond ~20 users / day. No matter what we did, it just didn’t grow.
What does this mean?
All this means is that our initial assumptions were not entirely wrong, but the business viability, alongside my delusions of grandeur, was just not working.
A personal CRM is still a viable business. It’s just a small, niche business. The CRM market is still growing rapidly, but CRMs are not easy to build, require a lot of consistent input from the user, and ultimately require a true NEED to use one.
There is another personal CRM called upHabit.com out of Canada built by Neil Wainwright (great guy, spoken with him on many occasions), that I would also recommend checking out. I hope they can build & sell what I couldn’t… because I still want something to manage all my relationships… I just don’t want to put in the work. Hahaha