On shutting down my first "startup"

Lessons learned from testing an idea + why I'm shutting it down.

Three days ago I shut down my first “startup”. Here’s the story of why.

From Oct 25-Nov 25, my co-founder and I tested an idea to help people find community in a new city.

We…

• identified a problem (making friends in a new city)

• chose an audience (expats),

• surveyed competitors (Meetup, Bumble BFF etc.),

• identified specific unmet needs (“finding ppl I click with”, “forming deep friendships with those ppl”),

• defined a high level solution (propose and attend small group gatherings around shared-interests), and

• set out to test that solution as cheaply and quickly as possible (a one month pilot in which we simulated the value prop ourselves via a Whatsapp group chat filled with a roughly representative group of people ie 20 international friends of mine who didn’t know each other).

We called it “Gather” because it seemed fitting: we were facilitating “gatherings”. 

We wanted to learn to what extent our solution could meet our users’ needs, eventually support a sustainable business, and how we felt about the work to make it happen. We would then use these as inputs into a make a go/no-go decision.

Spoiler: we chose no-go.

What happened in those four weeks in numbers:

• $160 collected at $10 per person from 16 people

• 18 participants (including me and my co-founder)

• 10 events (thrift shopping, rock climbing, padel, billiards, happy hour, the movies, chess night etc.) 

• 8 unique hosts

• 4 attendees per event on average

• $25 spent on Typeform

In a survey filled out by 12 of 16 participants:

• 8.5 out of 10 median satisfaction score in survey 

• Positive quotes: 

  • “Overall it’s been wonderful, and really enjoying meeting everyone and participating in the gatherings”  

  • “Great vibe and everyone so far has been open-minded”

  • “We need to keep this up for another month.”

  • “Go Gather!”

• Negative quotes:

  • “Things get lost easily in the WhatsApp group”

  • “constantly getting notifications from a wattsapp [sic] group”

What we learned

USER VALUE

With 18 pre-vetted people and me pouring energy into it, it kinda worked. We saw high median satisfaction scores (8.5 out of 10) and lots of folks said they’d pay for another month. Idk how much I trust my friends telling me something I created is valuable (see The Mom Test). Still, based on answers in the survey and my impression at the events–I attended all of them–people seemed to have a good time despite our very rough solution implementation (a noisy Whatsapp group chat).

This is no guarantee it would work at 100, 1000, or a million users. I actually think it would probably not work at scale. I think what made it sorta work at 18 people was I have amazing friends + me making it work. Technically, the 10 events were facilitated by 8 people. In reality, I planned or nudged friends to plan nearly all of them. I can’t do that at scale. What’s more, the user value challenges that began to appear like flirting, coordination, finding ppl with same interests, would also grow. Tech could help with some of these eg having all communications in an app such that we could have anti-harassment tools, bespoke coordinating tools would work better than Whatsapp poll functionality, and with more people we could have critical mass around for more niche interests. That being said, it’s also unclear how we could scale and maintain “quality” people. Without that element, we’d just be recreating Meetup.

Aside: During my research, I found some interesting examples of companies that faced the “reaching scale while maintaining exclusivity/quality” challenge like Intelligent Crazy People, Raya. Worth noting in both cases I didn’t try them so can’t personally vouch for how well they succeeded. It’s an interesting tension in consumer social projects with a value prop around exclusivity or “quality” users: how do you scale and maintain the vibes you want. Queue Facebook initially being available only to Harvard students anecdote.  

The most existential user problem I expect we would have faced would have been how few people propose activities. We had 10 events organized by 8 people but without me pushing constantly I think we would have had far fewer events. The last week I stopped actively pushing myself and others to propose events to see what would happen (and because I was exhausted). The result: A few events were proposed; none happened. I think people only consistently host events if one of the following conditions is met:

• EITHER it’s something they really wanna do / are already doing (eg “hey I’m going climbing who wants to join”)

• OR for money (eg professional event organizers)

• OR true passion for an activity (eg “I love table top board games and will make it happen”).

Sure there are the exceptional altruistic / community-minded individuals. But imo they’re the exception not the rule. Makes me think of the classic 90/10/1 rule of UGC. Ironic and fun to see a human behavior heuristic I learned online come to life IRL. I digress.

A supply-side constrained marketplace is neither new nor insurmountable. But it does make things harder. 

I also think attendance would be a challenge. As far as I can tell, people only attend events with people they don’t know if one or more of the following conditions is met:

• EITHER they’re desperate to make new friends like them eg new Mom, you’ve arrived in a new city 

• OR they think the event looks exceptionally appealing (eg Coachella, super hip wine night)

• OR it aligns with a deep interest (eg table top board games, football league)

• OR to have sex / find a partner (eg going out to bars)

Again there are ways to address these challenges, but unclear if the juice is worth the squeeze. Speaking of the juice…

BIZ VALUE

Arguably more difficult than delivering user value here at scale is capturing value ie making money so you don’t have to rely on your own savings and/or VC cash forever. 

In our pilot, we charged $10 per person per month and got 16 friends to join. My sense is that reaching scale at $10 a month would be hard to impossible. Nearly all software-only friending offerings I found in research were free or freemium, meaning cumulative money per user (LTV) will likely be low. (Interesting exception is The Breakfast app. “Creative-community” seems to increase wtp…) So, we’d probably need to adopt a freemium model to scale.

Meanwhile, I imagine retention at scale would be hard. Finding friends is generally not a “hair on fire” problem. If you’re a new Mom or moved to a new city in the last 3 months it might be. After that, inertia seems to be too powerful. This is also gonna make acquiring users hard (read expensive) so I’m not optimistic about how much we’d need to spend acquiring users. 

It also doesn’t scale that well so to add more users our costs would go up considerably. I expect we’d need an army of community moderators to vet people and keep the energy going. Then there’s the fact that we’d need to contend with the cold start problem every time we expanded to a new city. 

Finally, underlying all these unfavorable dynamics is the glaring fact that there is little to no barrier to entry to this problem and no compelling “why now”. Helping people make friends is maybe the canonical “tarpit” idea: it looks appealing from far away but once in it you get stuck and die. Nothing’s really changed in the last few years to enable us to come up with an as yet untested hypothesis.

Given all this, we came to the conclusion that this was not a promising market opportunity. We care about this problem but not enough to die on its proverbial hill. 

THE WORK

We pretty quickly realized that the core work to win in this space is branding, marketing, community management, and event planning. I’m a decent host but so are a lot of people… and there are a lot of people way better at branding, marketing, community management, and event planning than either of us. Meanwhile, our differentiating skills on product, tech, AI were under utilized.

So, we weren’t doing ourselves any favors picking this problem. Something that really drove this home for me was finding Kndrd, a NYC-based startup doing basically exactly what we were trying to do with Gather. They have way better marketing, branding than we did. I don’t think there’s that much opportunity to differentiate on product or tech so… how would we beat them and others like them? All I could think of: blood sweat tears and burning a lot of VC cash. Didn’t sound fun. Startups are hard enough without stacking the deck against yourself.

Then there was the question… do we enjoy the work? My co-founder doesn’t live in Stockholm so most of the work for an IRL idea like Gather fell on me. At first, I really enjoyed the work. I love organizing small events among my friends and this felt like me basically getting to do that. Over time, it became a grind. Maybe that’s inevitable.

I guess one takeaway here is that the work is probably going to be a grind either way so don’t pick the idea based on what work I like… pick based on a problem/audience you care about + where you have differentiated skills/experience + where you see market viability.

Why we ended it

We shut down Gather because we don’t currently see a path to solving the problem of finding community in a new city with a scalable tech company and we’d prefer to explore other problems where we’re better positioned to build a viable business than continuing exploring this one.

How I’m feeling

Overall, I feel good. I’m happy I ignored all my smart, more experienced entrepreneur friends who told me not to bother with consumer social and gave this a try. I’m also happy about the way in which I approached it and everything I learned, much of which is transferable my next project. Most of all, I’m proud of what I created for my friends who entrusted me with their money and time. 

It is bittersweet because helping people find community in a new city is still a problem I care a lot about and part of me was hoping I could tackle this personal passion while pursuing my professional goals (ikigai???). It turns out I can’t. At least right now. That’s ok. There are other ways to help folks find community than starting a company (*gasp*). 

What’s next

We’ve started exploring ideas that better fit our differentiated skills (product, tech, AI), have a more compelling why now (eg generative ai), more structural advantages (b2b), and are related to domains we have experience in that others might not (the inner workings of an r&d team at a tech company). 

I guess you really do either die a b2c founder or live long enough to see yourself pivot to b2b 🤡.

Cheers,
Lachlan (and my co-founder who would prefer to be anonymous at this time*)

*I promise he’s real he just goes to another school far away!!1!!11!!!1!

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Unrelated, please enjoy this grainy photo of me at an expat Thanksgiving last weekend. Happy Thanksgiving!! 🦃