In 2013, my co-founder and I started Zoute, a public transit platform that provides real-time departure and routing information to help get transit riders from point A to point B quickly and efficiently, using mobile apps. Our service operated in 100+ metropolitan areas in the US, Canada and Australia and acquired many users. But at the end, we failed to take our vision further. We eventually got acquired by another startup in San Francisco and shut down our service. I still think about these lessons daily.
There are many reasons why we failed. Building a startup is hard. Even when you have a great product, a great team and a great timing, you could still fail. Like Reid Hoffman, LinkedIn co-founder put it, "Starting a company is like throwing yourself off the cliff and assembling an airplane on the way down”. Even when we know that there is a high chance that we will fail, failure sucks! And we’d rather not fail. But if we get to do this over, we definitely would. So it is important to draw some great lessons on why we failed.
No plan to make money
We did not have a solid plan to make money. For us, there are two possible options to make money: The first option is to sell our products to public transit agencies; this includes provide real-time tracking solutions and mobile ticket solutions for them. The second option is to get a lot of users so we could monetize by ads.
First, it turns out that government agencies have very long sales cycle. Because government agencies do not have a single decision maker, they tend to move things very slowly and conservatively. Their goal is to avoid any screw up, and not to innovate. Someone warned us about this before, but because this is our first company and we felt a strong conviction of improving the experience for transit riders, we decided to do it anyway.
Second, in order to make money from mobile advertising, we have to have a lot of users, and we need users to spend a lot of time on our apps. We have neither one at the beginning. It makes it impossible to monetize from Day 1. Plus ads sucks! So we would only go with this option if all else failed.
Competition
We should have done better research on competitions. Instead, as first time founders, we were blindly excited to start building the idea and did not do our homework. It is very important that you understand the market and the competition very well. Even if you decide to ignore competitions, and clearly sometimes you should to avoid distraction when executing your vision, you should still need to understand the war that you are fighting. When there is competition, your product has to be at least 10x better for people to leave their existing service to join you.
Talk to your users, not your friends!
One of the biggest mistakes that we made was not talking to our users. I meant users, the people who need and use your product! For our case, it is the transit agencies and the people who take public transit daily. We only talked to a few of them, but these conversations gave us great insights on how we should build the product. But we should had done this a lot more before we even started writing the first line of code.
We made another huge mistake - we talked to many of our friends. The problem with talking to friends is that they are afraid to hurt you, especially when they know that you've gambled your full time job, your life and your time into this venture. Many times when you ask them, they are going to tell you that the idea is brilliant. I don’t think they purposely not to tell you the truth. The problem is, they are not your users and to them, the idea actually sounds good.
I cannot stress how important it is to talk to your users early. The reason is real users are not afraid to tell you the truth and what they really look for in your product. You desperately need these honest feedback.
We failed. But we have learned many things, and if we have to take this journey all over again, we would.