One Brand’s Cautionary Tale: Oops! – There Goes $12 Million

Posted on Tuesday, February 9th, 2016 by

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Exclusive to Blade from Tim Robertson

A few years ago in a galaxy much like ours, a $12 Million startup created a very cool new concept. It was a “social” search platform - you search for a product or service, and instead of bringing up a static list of websites for you to choose from, users could visually see all the websites people were visiting in real time. They could chat with other shoppers to find out where the deals were, and share information, and “socially shop”. Sound interesting? Investors loved the idea, and the team was very excited about building it.

That’s when the problems started, however.

Whiteboard Developer Planning SessionFor one, the founders decided that one great product was not enough - the company needed a “suite” of products. That meant the development team started working on many different projects all at once, some of them vastly different from the original focus. Secondly, there was very little user testing and feedback from potential clients and customers. And thirdly, there was plenty of money to keep white-boarding new ideas.

Are you seeing red warning lights on the enterprise control panel?

The social media team did a great job. There was high engagement and plenty of brand awareness. A well-attended speaking event attracted 600 people (who were all potential customers) to hear social media luminaries. But the product - it just wasn’t ready, and spending a cool $1 million on all of that social media work was not a well planned decision.

Failing to get enough subscribers to support the business and running out of funds, the company quietly closed down after letting most of the staff go. The Toronto tech community is very vibrant, so everyone had new jobs to go to - but it was still a missed opportunity.

Lessons learned? One might be to make that new product or service solid before promoting it. Get some trial customers to test what you are offering. You and your team may be excited about what you are building, but those ideas need to be validated in the “real” world.

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The Blade Guest Post Series features experts and authorities from a wide variety of industries. All authors have been invited to share their personal thoughts on the given subject and do not necessarily represent the views of Blade Creative Branding.