Deconstructing a Struggling Start-Up: MyCarpoolStation.com
My name is Philippe and I’m the co-founder and CEO of My Carpool Station International Corp. I believe it’s time to share the story of our struggling start-up with the blogosphere. You see, things are not going as planed. I’m not a millionaire lounging in my umpteenth apartment, downtown Bangkok. I’m not mingling with fellow captains of industry, preparing to launch my own venture fund on the side. Instead, I am quietly distancing myself from my pet project, my baby which I poured my heart and soul and mind into. Why would I do such a thing to something I hold (or held) so dear?
No more money (and none coming in).
We invested 30,000 US$ of our own capital, excluding an estimated 50,000 US$ of sweat equity. With that, we built a working prototype but did not manage to get a customer-ready product out the door. No customers equals no revenues, and since we have not yet secured additional funding, we are officially stuck. Clearly, we needed to present a better pitch deck to VCs, network our way into governmental grants, or come up with some creative financing strategy such as a tax shelter. Emailing 700 VCs our poorly written 12-page business plan was probably not a good idea.
Our market research was not convincing.
What are customers actually willing to pay for? How many customers are out there? What is the cost of customer acquisition and retention? It’s hard to raise capital when you can’t answer those 3 questions with confidence. “We’ll figure it out later once we get traction” is an answer, but a weak one, all things remaining equal. We did do market research, to a certain extent. We used secondary demographic data: 14 million people carpooled to work in 2004 in the U.S. We used primary data: about 33% of our survey of 50 people said they were willing to pay 1-5$ monthly for a carpooling service. We highlighted the trends of high gas prices, environmental sensitivity, web-based social networking, pop culture relevancy, etc. We thought we had done our homework until one of the partners at InnoCentre suggested to me that we would have no repeat customers. He said that when people find a carpool partner, they usually stick to the same person and call them directly, and in doing so they effectively bypass our website (unless they really want us to tabulate how much GHG they reduced). Of course, I argued that university students, part-timers, and random travellers change schedules often enough to qualify as repeat customers. But our research was not as comprehensive as it could have been; I was caught off guard by this plus other questions regarding security and legal liability. In the end, they offered to work with us but we turned them down because we thought a 25% equity stake + fees payable was a bit steep for consulting. Maybe we were wrong. The bigger problem though, is that we were (and are) still unsure whether our customers should be ad-supported end-users (students, travellers, etc) or organizations paying us a software licensing fee (governments, companies, etc), or both.
We did not find the perfect product/market fit.
My original vision, circa 2005, was “to supply web-based, community-run carpool stations to schools, workplaces, and regions in the U.S. and Canada” (i.e. to build a Facebook clone but for carpooling). We would make money off ads exclusively. By the time we finished building our Alpha in 2007, we ran out of resources and realized that we needed to build something different to execute my 2005 vision in 2007/2008: we needed to build a Facebook app, an OpenSocial app, a stand-alone website, and offer enterprise-branded carpool stations with an API. Of course, if you’re bootstrapping you’re going to have to build traction and release these one at a time. The business model would probably change as well. It would be ad-based for app users and membership-based (with no ads) for website users and enterprise users. There’s also the possibility of a token-based economy.
On the web, the product/market fit we were chasing is usually achieved through multiple, rapid Beta releases, but we never got there due to lack of skills and resources. Web products basically consists of features, user interface, and customer benefits. The features list we have is quite extensive: carpooler search, carpooler ratings, MapQuest maps, carpool fare calculator, green house gas (GHG) calculator, savings calculator, privacy controls.., upload text, pics, songs, videos, invite friends, create groups, create organization-branded carpool stations with news feeds, etc. The user interface however, did not win rave reviews from the Montreal tech community. And unfortunately, there are still a few outstanding bugs in our PHP code which makes the website difficult to use at the web 2.0 consumer level.
The other way a product/market fit is achieved is when you talk to customers during the development process. Customers will tell you what benefits they are looking for (eg. reliability, privacy, etc).
Marketing to early adopters is easier than selling to big organizations.
We didn’t meet with big account customers, big organizations to which we could sell software licenses too, and we failed to develop a product and business model around their needs. That was a mistake. You see, big organizations have money to pay for memberships. They have an environmental reputation to uphold. They have a community of users which travel to the same place on a regular basis. Their users are usually accustomed to using web apps. They are the perfect customer. Since launching our Alpha, over 40 organizations have requested carpool stations, including The University of South Florida, University of Waterloo, CGI, Wachovia, GMTMA, kindergartens, hospitals and more. Our next step should have been to get these organizations to sign letters of intent to purchase memberships from us for our upcoming Beta product, built around their needs. Evidently, it’s easier to approach VCs with a few orders on hand. Our lack of a sales strategy didn’t help our capital raising efforts.
On the other hand, it’s our belief that general marketing and buzz building in North America is nothing more than signing a check. The only exception is opportunity-based PR stunts, such as promoting carpooling to all local radio stations and newspapers during a public transportation strike. Otherwise, ads can be outsourced to Google, Federated Media, Spot Runner, etc. Direct marketing can be outsourced to Campaign Monitor, Quantum Mail, etc. SEO can be outsourced to ACS SEO. PR can be outsourced to The Comotion Group, Social Poster, E*Releases, etc. Everything is measured these days, making it easier to determine the ROI. Plus, when you market to the web 2.0 early adopter crowd and you have a killer app, word spreads virally. So I don’t think we had a problem with our marketing strategy. We just didn’t get there because we lacked the skills and resources to build the killer app in the first place.
We were missing key business relationships with partners.
I’ve got friends and acquaintances in the Montreal web community. I’ve met with angels, incubators, and VCs. But we didn’t meet with big strategic partners like the gas companies, car companies, transportation authorities, car navigation companies, and map companies that we originally envisioned as our partners. This excludes an extremely awkward Q4 2006 phone call to MapQuest director Jeff Greenwald, when I stumbled while trying to convince him to give us an extension on our MapQuest API free trial and partner with us for the long term.
The competitive environment was, and still is, manageable.
Partners give you the competitive advantage you’re looking for, but competition itself did not kill MyCarpoolStation.com. I used Competitious to track over 80+ carpooling websites in the U.S. and Canada across a feature matrix of over 75 features. The competition is getting its act together (NuRide, Goloco, ZimRide, Amigo Express, etc) but it’s fair to say that the carpooling industry does not exist yet. No one has figured out the perfect combination of user interface, features, and business model to pierce through the market and gain significant traction. Yes, there is a low barrier to entry in building a web-based product. Generally though, you can say that we have been lucky since no major competitors are dominating the space with a killer app. The other way of looking at it is “the market sucks ‘cuz no one’s making sustainable money”.
Core team of outsourcees and part-timers were lead by an extremely driven, although inexperienced, non-tech-savvy CEO.
This project began as a “coup-de-coeur”; a project sparked by pure passion to build something great for people to use. We were also “driven to drive away pollution”, or so our slogan went. Me and my father thought we’d grow a business out of the transportation needs of Western students such as myself who travelled back home for the summer or holidays. Why use Greyhound, VIA Rail, or Air Canada when you can split the gas with a buddy and ride shotgun instead? So we began recruiting friends of mine who were “good with computers”. One was a software engineer and the other was a web designer, but neither could commit full-time or buy in 110% into the vision we had. So we decided to outsource our coding to India. In our subjective experience, Indian web design shops are intelligent and cost-effective, but are not creative nor are they on the leading edge of web 2.0. Most importantly though, they are contractors by nature and therefore build websites for their clients, not for the end-user. In hindsight, I realize the obvious: one must build a strong team of entrepreneurial web developers as co-founders before launching into a new web venture. We failed to follow Jim Collin’s Level 5 leadership tenet: “First Who [core team]… then What [product strategy]”, and as a result we have a Alpha website with outstanding bugs, boasting a features list and UI developed solely by me, the non-tech-savvy CEO and co-founder. This is not to say that our outsourcees didn’t go beyond the call of duty- they did. Or that because I was in charge of product strategy I knew how to manage a software project- I did not. At least on the positive side, I am now 3X more knowledgeable about business and technology than I used to be in 2005. I’d also like to thank TechCrunch and AskTheVC for their contribution.
Currently, we are 10 team members/shareholders. This includes myself, my father, my mother, my brother, an accountant, a software engineer, a electrical engineer, a web designer, an IT/business consultant, and a programmer. Currently, 3 are active (but not very active) and 7 are passive (read: hello?). We do not have any full-time web developer/software engineer staff. That’s a problem.
Our process was/is entrepreneurial, which is good. However, without any resources it is difficult to maintain operational momentum. When we were going through the most difficult stages, negotiating with our outsourcees over payment terms and source code ownership, I shed a tear. That was a learning experience. But there has been numerous setbacks (albeit less dramatic) which have contributed to our loss of strategic and sales momentum as well. At this moment, we’re tired and we need a breath of fresh air.
Growth strategy?
We’ll probably throw up a new landing page and re-brand ourselves while we try to figure things out. We’re currently facing the classic chicken-and-egg problem. What comes first: the financial and technical resources or the product and market traction? We score low on both at this stage, even though we’ve got an Alpha product stimulating demand, a decent amount of industry knowledge stored on our BaseCamp account, and local buzz. With resources, we could figure out exactly what our big customers want in a Beta product and are willing to pay for. With resources, we could launch an ad-supported Facebook app and OpenSocial app to generate buzz and learn about end-user habits. We’re always recruiting, even though we only offered stock-based compensation. If you’re extremely resourceful, note that the CEO post… is also open.
December 3rd, 2007 at 3:07 pm
[…] Chrun recently wrote an amazing blog post: Deconstructing a Struggling Startup: MyCarpoolStation.com. Everyone should read it. (Then come back, […]
December 3rd, 2007 at 7:31 pm
Thanks for sharing this. These are hard lessons and I think you’ve learned and improved a lot after all. We are often “blinded” when we work on our own project. I had to kick myself in the butt to come up with a business model other than “eeeh we’ll see later”. Intense financial planning IS essential.
Also, timing is very important. I don’t know if this is an urban legend, but apparently Bombardier first released their Sea-doo many years ago and it was a total flop. They re-tried a few years later (same product and all) and we know the story…
You might want to read my post regarding ideas (http://quebecvalley.com/2007/12/01/why-many-ideas-suck/).
Not that your idea sucks
I do think it’s great. But perhaps like the Sea-doo, a bit ahead of its time..?
I say it’s not over ’till the fat lady sings. Have you considered open sourcing your project or becoming a non profit? Sites like Wikipedia are not businesses per se, but I’d trade my seat with Jimmy Wales anytime.
You have to ask yourself: did you start this to make money or to change the world?
December 3rd, 2007 at 8:24 pm
Man, I started this to make money by changing the world. I wanted to create a product, create an industry. I dreamt big (and still do).
Open source is a good idea. But why do I feel like it’s taking my ashes and blowing them to the wind? haha.. Hmm.. I need to inform myself on how that would work, technically..
December 3rd, 2007 at 11:01 pm
Hey can I get some shares and be passive ;)?
Thanks for sharing man. As startupers, we try to give birth to “something” essentially out of “nothing” - not an easy thing to do and the odds are clearly against us (but who cares right? We’re different from the rest of em! ;)). How many times did you ask yourself “Am I a visionary that sees a truth that others don’t? Or am I completely delusional?” I think advisors, mentors, and luck are an important (read critical) part of the process. You can’t execute properly from within your own fishbowl.
Take some time off man, go into the silence. Start 2008 refreshed, you’ll be back, I know it.
December 4th, 2007 at 12:46 pm
Thanks Philippe, for being so candid about your startup experience - there’s a lot of great insight in your post.
What a great case study for an eventual Montreal StartUp Camp. You’d share new-found wisdom with a community that would learn a lot from your trials and tribulations. And at the same time, you’d show angels and VCs present that you’re ready to tackle your next project. I’d encourage you to share your story through an unconference - it would be to your credit and much appreciated.
UWO alumni, class of ‘93
December 6th, 2007 at 1:06 pm
Great post. Good idea Michelle, it would make a great presentation for Montreal Startup Camp (yeah, it’s happening, just had a great conversation this morning about that - more later).
December 6th, 2007 at 7:20 pm
[…] exercise in naiveté, which I’ll cover in a future post in response to Phil’s Deconstruction of a Struggling Start-Up […]
December 7th, 2007 at 9:30 am
[…] Editor’s Note: Once in a while you see a stranger experience something you’re afraid of experiencing yourself. Like failure. In such moments most of us chant a tired mantra: “There but for the grace of God…” I have a more practically-minded friend who says, out loud to herself for greater impact, “Thanks for doing the research.” She means it. This morning a friend of Found|READ directed us to Phil Chrun’s very candid and revealing post about his foundering startup. It’s good research for all of us. We’ve highlight Phil’s lessons-learned, but you should read the whole thing. […]
December 7th, 2007 at 9:57 am
I wish more people would be as open as you have been and share their experiences so that, as a group, entrepreneurs can learn and grow.
Thank you.
Jeremy Horn
The Product Guy
http://tpgblog.com
December 7th, 2007 at 12:16 pm
Philippe,
From your post it seems like you see in the present what you needed to do differently in the past. If that’s true, then isn’t is possible that all the work you’ve done was to get to this very point, where you can see clear solutions to the problems you’ve been grappling with for so long?
Is there a way? Find it!
December 7th, 2007 at 1:26 pm
” … Whatever you do, don’t start a Blog immediately after you fail.”
Unfortunately, talking about failure doesn’t make failure go away. Time might heal wounds but time does not remove scars. Only success can remove debilitating scars.
http://www.lovemytool.com/blog/2007/10/riding-a-bike.html
Good luck.
–Denny–
December 7th, 2007 at 2:56 pm
[…] read a self-study of a startup called My Carpool Station, which is trying to support car pooling. Currently the […]
December 7th, 2007 at 2:58 pm
[…] уж зашла речь о неудачах в плане стартапов, то вот анализ провала другого стартапа, MyCarpoolStation.com, который планировал предоставлять всем […]
December 7th, 2007 at 7:22 pm
Hi there, i am looking for info on online education but sometimes i am left wondering while online education has it\’s merits , nothing beats the traditional education in a brick and mortar building .
December 7th, 2007 at 7:40 pm
[…] Editor’s Note: Once in a while you see a stranger experience something you’re afraid of experiencing yourself. Like failure. In such moments most of us chant a tired mantra: “There but for the grace of God…” I have a more practically-minded friend who says, out loud to herself for greater impact, “Thanks for doing the research.” She means it. This morning a friend of Found|READ directed us to Phil Chrun’s very candid and revealing post about his foundering startup. It’s good research for all of us. We’ve highlight Phil’s lessons-learned, but you should read the whole thing. […]
December 8th, 2007 at 1:30 am
Great Post, Phillepe. While I am sorry that your efforts did not get you the desired results, I am sure you must have learnt from the exercise as much as readers of this blog post will learn in time to come.
All the best in your future ventures.
December 8th, 2007 at 5:34 pm
[…] PHL SKL » Blog Archive » Deconstructing a Struggling Start-Up: MyCarpoolStation.com […]
December 9th, 2007 at 1:41 pm
[…] The Mistakes Of A Startup This, honestly, is something everyone in the business of the innertubes should give a read. The owner of My CarpoolStation.com tells the story of the mistakes he made in […]
December 9th, 2007 at 1:52 pm
[…] ran across a very interesting post by Philippe Chrun, who writes with much detail and honesty about his failing startup, […]
December 9th, 2007 at 6:40 pm
Philippe -
Thank you for your wonderful post. If nothing else your self-reflective honesty is more mature and forward thinking than most of the entrepreneurs I’ve known, and you inspire me to do the same.
Best of luck in your moving forward, and I very very much hope you do.
Braydon
December 10th, 2007 at 8:42 am
A very detailed and impressive post indeed. I also tried to launch a startup but was unsuccessful. The lessons learned by me are quite similar in nature. You may want to have a look at it at http://www.precimark.com/lessons.php
December 11th, 2007 at 8:53 am
[…] not going the way you planned for your startup? I would advise you to read this great post on how a startup has struggled to gain traction, as it contains some great insight when things don’t go how you expect, even with the […]
December 11th, 2007 at 12:23 pm
Philippe - I’m sure you’ve learned more doing this than any MBA or traditional job experience. Chalk it up to having that first ‘failure’ under your belt.
I went through the same experience, managed to stay above it to assess the market and my chances objectively, and changed my course accordingly when it came to ‘decision’ time (I think all of us face that at some point, usually after we see how the market reacts to our offering). In my case, my business was a bit ahead of consumer habits and market structure to become a large-scale business. What I did was transform it into something manageable that can still exist - and decided to take a break and recharge! Now I look at it as ‘my first of many ventures to come’
Good luck..
December 12th, 2007 at 1:47 pm
Hot Now to Make Money Online: Don’t Sell Anything to Anyone…
Philippe Kiethun Chrun of MyCarpoolStation.com exhaustively describes why his business is failing in Deconstructing a Struggling Start-Up. Regardless whether or not they they hired the wrong people, or positioned themselves incorrectly, their biggest…
December 13th, 2007 at 11:42 am
I this this as a positive development in your entrepreneurial endeavors. A failure under the belt is possibly a critical success factor for many/most entrepreneurs. I’ve had a few failures, but kept them small (by design). Now I’m on to next projects, including http://www.buzpal.com, which you can read about on my MySpace page, http://www.myspace.com/buzzpal -chrisco
December 18th, 2007 at 10:41 am
I couldn’t understand some parts of this article Deconstructing a Struggling Start-Up: MyCarpoolStation.com, but I guess I just need to check some more resources regarding this, because it sounds interesting.
December 19th, 2007 at 7:15 am
Something like this should have just been placed on Craigslist: http://dallas.craigslist.org/rid/.
My issue with car pooling has always been accountability, with so many people working from home multiple days a week it is near impossible to car pool. Car pooling is a utopian fantasy conjured up by well meaning people. Personally I don’t see how anyone could stand my musical choices, politcal views or cursing in traffic enough to ride with me.
December 26th, 2007 at 11:04 pm
История неудачи канадского стартапа, рассказанная его основателем и CEO…
В этой статье я перевел очень познавательную историю неудачи канадского стартапа MyCarpoolStation.com, изложенную недавно его сооснователем и CEO в…
December 30th, 2007 at 6:42 am
Good comment. It brought light to an old idea I had.
January 4th, 2008 at 10:09 pm
Hello…Man i just love your blog, keep the cool posts comin..holy Friday
January 7th, 2008 at 3:13 am
very interesting.
i’m adding in RSS Reader
January 7th, 2008 at 7:40 am
Great post. I recently read a post, unfortunately I can’t remember where, that spoke about the fact that all companies go through simliar stages whether they admit itor not. The companies that survive are the ones that understand that you must bob and weave constantly to reach your end goal.
I agree with a Dropout, don’t look at this point as the end, but a place to reassess and refine your vision, you may find a goldmine nested inside your original idea. Don’t stop.
January 7th, 2008 at 6:08 pm
Hi there…Thanks for the nice read, keep up the interesting posts..what a nice Monday
January 7th, 2008 at 8:55 pm
[…] month ago, Phil Chrun deconstructed his struggling startup, MyCarpoolStation.com. As a (admittedly passive) member of his team, his post was sobering but […]
January 8th, 2008 at 3:37 pm
Ouch! Your post hurts my illusions
I had a proposal about starting a service like yours about 3 or 4 years ago and I didn’t go farther because “I had no time”. It was called covoituragequebec.com. Since then, I always think about how to revolutionize car pooling but I never seem to come with THE idea that could blow the market but still, I have some ideas (that are highly unproven to be successful). I hope that someday, I will be able to try them out (and if I do, I’ll tell you)!
Thank you for writing this post. I’ll try to learn from it to avoid the mistakes you made and to lead TimmyOnTime.com on the road to success.
January 9th, 2008 at 10:12 am
[…] 9, 2008 I recommend that every person who is considering a web startup read the following article. Phillipe had a pretty good idea, but spent a lot of time and money on the project before […]
January 10th, 2008 at 9:57 pm
Don’t forget there’s a lot of good things in how you set up the collaboration and how you approached would-be contributors.
Personally, I was glad to be involved, albeit near the end, and to meet with three of the best people to work with in Montreal.
January 12th, 2008 at 8:04 am
BrandQuote - January 8 -…
“A brand is not an icon, a slogan, or a mission statement. It is a promise — a promise your…
January 17th, 2008 at 12:57 am
Nice blog you have here
January 24th, 2008 at 12:12 am
Eric…
The most comprehensive info I have found on this subject on the net. Will be back soon to follow up….
January 27th, 2008 at 10:18 am
Hi there…Thanks for the nice read, keep up the interesting posts..what a nice Sunday
January 28th, 2008 at 9:08 am
[…] by Campus Entrepreneurship on January 28, 2008 Found this (h/t BusinessPundit.com) blog entry that tells of the trials and tribulation of a startup — mycarpoolstation.com — that is […]
January 29th, 2008 at 2:07 am
[…] about startups failures. Very refreshing post : http://phlskl.com/?p=4 […]
January 29th, 2008 at 10:16 am
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February 1st, 2008 at 10:10 pm
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June 16th, 2008 at 2:13 am
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