Hi and welcome to my wantrepreneurship blog!
The past two months have been yet another roller coaster that ended in… well it didn’t end the way I hoped. I wish the title of this blog was “First customers using the app - learnings”, but today’s post is more of a post-mortem. In fact, it’s two post mortems in one.
However, that’s not a bad thing (well not completely). In 2023 alone, I can count 5 projects and/or teams that I’ve started and stopped, so far. Even if they didn’t grow to become “real things”, giving up on each of them was hard. But every time, I learned a new way to let go, which is an important spiritual and emotional skill.
Iro - campaign results and wrap up
Quick reminder: Iro was a mental health AI companion that I started with someone I met in the Antler program.
In my last post, I discussed why it’s important to validate Iro’s value proposition before building the actual product: It’s to make sure people are even remotely interested in what we offer. To test this, we ran ads to get people to sign up to Iro’s waiting list.
This was supposed to give a rough idea of the cost to acquire a customer (CAC), and determine if there’s a business case for the project. What’s a good CAC, you ask? Ideally, it should be free - word-of-mouth, baby! But we can’t want to wait for words to be exchanging mouths when there’s not much to word about 🤷♂️.
Taking market averages for conversion rates down the funnel (e.g. waiting list to install, install to paid), we get a picture of how freaking hard B2C and mobile apps can be! Unless you can have very low cost-per-click (cheap ads), you need amazing conversion rates from ad to waiting list.
Check out the chart below, where I plot the Cost of Acquisition against ad cost (Cost-per-click) and conversion. If the conversion rate is 40% (which is amazing), we’d need an ad cost of EUR 0.2 (which is super-cheap) to reach a CAC of EUR 50. At a price of EUR 70, we’re left with EUR20 to run the company, and that’s no-bueno 🙅♂️ for a software company.
I heard B2C is “hard” from multiple people, multiple times. Only after making this chart, did I believe it. However, “hard” doesn’t have to be a show stopper. Doing “hard” things is awesome! So we went ahead with the campaign.
And then we didn’t get close to the results we were aiming for. We had agreed to stop the project if we couldn’t validate the value proposition, so no problem - right? But this hurt nonetheless. As with romantic break-ups, business break-ups can be painful and confusing. Even when it’s a planned breakup.
If there is one fundamental reason for this one beyond the flopped campaign, it’s founder compatibility. On paper, we were extremely compatible, matching on almost all of the 50 questions (founder compatibility discussion prompts). People of course are (mostly) not on paper. We tend to act differently from synthetic (ideal?) descriptions of ourselves. We also never fully assimilate synthetic description of others.
So Iro is ☠️. What’s next?
Pronto - forming and storming
Shortly after wrapping up Iro, I learned about another co-founder matching program happening in Paris - Hook. It lasted a month, it’s backed by 42, and there are no strings attached unless you get their investment at the end (5% for 50k + a 3 month incubator). The program itself was scrappier (in a good way) and more down-to-earth than Antler.
After the first week at Hook, I teamed up with two people (another business generalist like myself and a product engineer). All three of us had experience with Sales or Sales Operations topics, so we did about 30 customer discovery interviews to understand pain points in this area. When one of our interviews ended with a lot of noise (customer getting very emotional about a problem), we decided to pursue that idea.
If you’ve ever done any cold outreach, or any customer outreach for that matter, you will know how painful it can be. You write to 100s or 1000s of prospects to maybe get a few meetings booked. If you want to have a slightly better response rate, you need to personalize your message for every customer. And that’s hard.
Fun fact: there are 127 trillion emails going around every year, of which roughly 10 billion are outreach emails sent by sales people to other businesses.
Enter video. More and more, businesses send video messages to sell to each other instead of text. While it may sound awkward at first, video converts much better. An outbound agency owner we interviewed (confirmed by stats on the internet) told us emails with a personalized video message inside convert 2-3 times better. But making videos, especially a lot of them is hard and takes long.
Double hard!
We had started talking to more customers to validate the problem-solution fit, while hacking together the first version of a solution. People were interested and eager to see a demo.
However, we hit a founder compatibility wall after our second round of pitching to Hook - this time it was a combination of values, working styles and role definition. One of the team members left the team, and we are still talking with the other one about how/whether to continue together.
🗿Personal update: How’s it going, Stefan?
While the above may sound negative, I don’t think of it that way. I’m learning a lot (hope to write more about that soon), every time.
I’ve also been keeping my mood up with the marathon training. Writing this on the Paris-Amsterdam train, I can’t help the excitement - race day is Sunday October 8th.