This week's feature story, "Wired for Sound," tells the tale of Next Big Sound, a Boulder tech company that's found a new way to look for rock and roll's future and is poised to become the next big thing in Boulder's red-hot startup scene. But could Next Big Sound fail before it hits the big time? Just look at what happened to a similar company, EventVue.
A company that designed web tools and online communities for conferences, EventVue had everything going for it. In 2007, its co-founders scored admission to TechStars, the exclusive Boulder-based tech accelerator, just as Next Big Sound did two years later -- and three months later, they graduated with significant funding. The company seemed destined to be one more Boulder-based tech success story.
Instead, it shut down this past February.
"We were not seeing enough customers or growth to justify our market or product," co-founder Rob Johnson says bluntly. "We were serving the event industry, which by nature is a once-a-year, twice-a-year type of customer. It's really hard to stay engaged and provide ongoing value to such customers."
The takeaway from EventVue's story? As Johnson puts it, "What I tell other TechStars companies is, fundamentally the most important thing it to figure out is how many people want to buy your product and how to reach them. Spend less time trying to figure out how to build your product and more time trying to figure out how to get people to pay for it if it existed."
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Johnson's landed on his feet. He's now working at Gnip, a social-media data aggregator company that just happens to share office space with Next Big Sound -- a company Johnson is confident isn't likely to face the same fate as EventVue. "Their first product they went to market with can compare the value of music artists, and that in and of itself was enough to get major customers."
Still, to help Next Big Sound and other companies learn from EventVue's mistakes, Johnson and his co-founder, Josh Fraser, posted a detailed post-mortem on their blog when their company shut down. It's a thoughtful yet sobering read:
Unfortunately, we have decided to shut down EventVue...
We're very thankful for all the support that EventVue has received. Many people have helped us, cheered for us, and challenged us.
We also deeply believe in the power of failure to teach and help us learn. In fact, we understand with even more clarity now why there is so much advice for entrepreneurs -- no one who has failed wants their mistakes repeated. In that spirit, we're sharing publicly our EventVue post-mortem.
EventVue -- a look backwards
Over the past 3 years, we have tried various products and markets in the event industry and have not made a business with growth.
The product that we used to raise our first round of funding was private social networks for events. During Techstars, we had an early non-paying customer who deployed an eventvue social network for his conference of early adopter tech guys. We saw strong usage at this event and used those numbers to tell an investor story that led to our first angel round. At the time, we did not think about or understand the challenges of getting a lot of conference organizers to use EventVue. Internally, we had begun to think that we needed a stronger value prop for our customers than "we help your attendees meet more people" and so we pitched EventVue as a way to drive more attendees to events.
After our funding, instead of investing in the product features to deliver on EventVue directly driving people to events (hindsight: mistake), we immediately went out and tried to sell the social network tool to conference organizers. We had one-off victories by landing a few customers this way over the next 9 months that kept us going. We had to invest product resources in rebuilding the site to handle the load from 1 or 2 high attendee events. However, because we were basically calling on friends of friends who ran events to be our customers, we didn't learn what event organizers in general wanted or how to acquire them as customers in a scalable way with the "private social network product".
We then realized the combination of a small price point (side effect of a nice-to-have value prop) and a long sales cycle (event organizers start planning their events 6 months or more beforehand), meant that if we were to continue to do a direct enterprise sales model, we'd need to go after the big boys in the event industry -- major tech publishers with hundreds of events. We hoped that with one signature we could get dozens of events. We made progress here and while we signed on some large customers, we never got the "enterprise-wide deal" that we hoped for. However, our strategy of "get big accounts" and some last-min tenacity somehow got us to close our double-down round last Christmas, in the midst of the "RIP Good Times" chaos.
As the deals for the enterprise accounts began to drag on and on, we finally decided to do what we should have done much earlier. We decided to make our first major product pivot. At the VCIR conference last winter, we laid out a plan to build a product that would hopefully help deliver more attendees to conferences. At the time, we summarized our goals as 1) prove conference organizers will pay an affiliate fee for new attendees, 2) prove that our widget will drive new attendees, & 3) prove that we can get 100 event organizers to install widget. Through the early summer we accomplished 1, built the widget (EventVue Discover), hit a giant brick wall on 2 (Discover actually ended up losing money for our alpha customers), and never got to 3.
We never fully committed to Discover or the product pivot (hindsight: another mistake) and continued to sell our EventVue Community product for revenue to buy us more time. We began to notice that users of the community product actually enjoyed using our "chatter" feature that had somewhat real-time tweets about the conference. Since Discover was not working, we decided to simplify and focus EventVue on realtime conversation for events. Since November we have built a widget version of a real-time event stream along with our hosted version. This was major product pivot no. 3.
We relaunched EventVue to be "best way to discuss events in real time" last week, focusing only on the chatter functionality that was popular in our social network. This was really a hail-mary pass because we were out of capital and doing consulting work to buy time to get the relaunch out the door. Unfortunately, we have not seen enough traction to make us want to keep working on this. It really is too little, too late.
Our Deadly Strategic Mistakes:
- tried to build a sales effort too early, with too weak of a product after initial financing
- waited too long to address the "nice to have" problem
- went after enterprise sales model with a non-recurring, small price
- didn't make eventvue self-serve to let anyone come and get it
Our Deadly Cultural Mistakes:
- didn't focus on learning & failing fast until it was too late
- didn't care/focus enough about discovering how to market eventvue
- made compromises in early hiring decisions - choose expediency over talent/competency
There are many more, but those are the ones that are forefront on my mind now. Many of you have told me that failure is the most effective instructor and i definitely think that has been the case with EventVue.
EventVue has been a fun journey. Thanks again to everyone who has supported us over the last few years. You should follow us (Rob, Josh) to see what's next.