This is a 3-iteration case study about a small animation widget, hopefully showing a business model in motion.
1. The destination site
We started with a site featuring a “viral” widget plus user-generated content. This was right when the Facebook platform was about to launch.
What we learned:
- Terrible sharing rates and traffic growth
- Fantastic engagement and interaction rates
- Brands keep calling us wanting to license the tech
- 3 months of site/widget/app analytics
- About a dozen conversations with big brands
- Lots of failed pitches to industry experts (ie investors)
2. The accidental agency
Our revenue plan (ads) depended on scale and our distribution channel wasn’t working. Brands had money and existing online audiences and we had a fun social experience with strong engagement metrics (learned from phase 1). Unfortunately, they wouldn’t buy the tech without full-service creative & support, which forced us into doing much more agency-style work (e.g. art & campaign management) than we intended.
What we learned:
- We are terrible at sales
- We can’t scale a full-service model
- Brand safety (moderation & curation of content) is a big deal
- About $100k in sales to entertainment/lifestyle brands
- One complete disaster with a nightmare customer
- Dozens of failed sales
3. The technology provider
We had run into a case of founder-model misfit, where we were neither able nor willing to deliver a quality full-service experience.
At this point, we could either re-focus on our users (trying to boost growth & monetization) or double down on the brands and find a way to make that work. We liked the idea of prioritizing users, and we wasted a ton of time on a technically & creatively remarkable product that nobody wanted. The sound of crickets from our users coincided with the closing of a licensing deal we’d been working on for nine (!) months and nudged us back toward the brand option.
We needed to change the channel (sales) and relationship (full-service), so we started partnering with creative agencies. They could win more pitches and save money by having us in their toolbox, and we wouldn’t have to directly sell to or support the brands. This is when we moved from San Francisco to London surround ourselves with the world’s best creative agencies.
What we learned:
- We found a good solution to a real problem
- Minivid is niche — we need more products to scale
- Agency partnerships are slow
- About $150k in sales via creative agencies
- Hundreds of discovery meetings with everyone imaginable
4, 5, 6 and beyond!
At this point a small-scale version of the model was basically validated and we needed to scale it by going broader than just Minivid. We went through about 3 more major iterations, which mostly involved changing the product & value prop while leaving the rest of the model the same.
In terms of timing, we spent roughly a year and a half on the Minivid models described above, and another 18 months on the subsequent set of models. That works out to about an interation every 6 months, which seems slow until you consider that our customer validation was constrained by a 3-6 month sales cycle.
Apart from the debacle mentioned at the beginning of section 3, we were pretty good about getting in front of customers. In retrospect, I can see that the biggest mistakes happened when we thought we knew what we were doing. When we clearly knew nothing about the market and customers, it was really obvious that we needed to go outside and start talking to people (ages before we’d heard of customer development). But once we thought we were experts, it got a lot easier to justify hiding indoors.