Frankly my dear, the product doesn’t fit the market
After the first 3 rides, I decided to check whether Uber actually pays the money it says you earned. I checked in the partner app, and it only showed my earnings and trip history. Uber deducts 20% of every ride as commission plus 21.5% service tax. I don’t know why the service tax is higher than the usual 15%, and I plan to find out why. Where did the money go? I had to login to my driver account on my computer and read the FAQs. Once I entered my bank account details, Uber pays out a net amount every week to my bank account. Seems simple enough!
Kudos to Uber for making it very self-service based and intuitive to an educated, English speaking, computer literate driver. But it still may not work for an average driver in the Indian context. What customisations has Uber made to its operating model to adapt to Indian conditions, I wonder.
Day 4
Today’s passenger on my commute to work is an Android app developer. He has just moved to Bangalore from Delhi and joined Daily Hunt. “Where did you work before?”, I ask. “I was an app developer at Frankly.me”, he replies. “Isn’t that the firm that made reverse dubsmash videos? Some of them were quite funny!”, I recall.
“Yes, that was their last avatar before they shut down. They pivoted a couple of times and tried different things. It was fun while it lasted”, he reminisces. Here’s a great example of a startup searching for product-market fit. Frankly.me started off as a video blogging (or vlogging) platform. He observes, “While on paper it seems like a great idea, getting people to engage and create content is hard. While most people type a lot on Facebook or WhatsApp, try asking them to take a velfie (video selfie) and they get extremely uncomfortable.”
Frankly.me was founded in 2014 by Nikunj Jain and Abhishek Gupta. They raised $600K in seed funding from Matrix Partners and were also part of the Google Launchpad Accelerator. They raised pre-series A funding in January 2016 and then shut down operations within a month, citing lack of product-market fit as the reason.
“So what did you guys do?”, I’m intrigued. “We added a celebrity engagement platform, where stars could post videos and interact with their fans. We signed up a lot of celebrities like Arvind Kejriwal (politician), RDB (music band) and Sunil Pal (comedian) to name a few. They were expensive to sign up and manage. They would come to promote their new releases and campaigns, but then wouldn’t engage consistently. We burnt a lot of money trying. The founders had to layoff quite a few employees when they moved away from the celebrity vlog model.”
Upon further research, I found that they also released a B2B video platform for brands to engage with customers. “We tried a lot of things that didn’t work, and the founders took a hard call to shut down even though they had money in the bank.” That takes some guts, to come back from the Google Accelerator, take a hard look at the business metrics, and shut down when you know things aren’t working.
Achieving product-market fit is the most critical part of being a startup before thinking about scale. Marc Andreesen wrote (and I paraphrase), “The life of any startup can be divided into two parts: before product-market fit and after product-market fit. When you are BPMF, focus obsessively on getting to product-market fit. Do whatever is required to get to product-market fit. Including changing out people, rewriting your product, moving into a different market, telling customers no when you don’t want to, telling customers yes when you don’t want to, raising that fourth round of highly dilutive venture capital - whatever is required.”
A “pivot” or a change in business model is often accompanied with significant organisational changes, and it can happen to companies at any stage. While the media only highlights the job losses, companies have to shift business strategy in response to the market or competition more often than ever these days.
Zomato pivoted from its manpower-intensive sales model to a transaction business and laid off 300 employees last year. At Momoe, we tried multiple approaches to get traction with consumers, some of which worked well (like NICE Road toll payments) and some that didn’t work well and we dropped (like auto-fare payments). You never know what works until you try!
