Lessons Learned from UberNote Failed B2C
UberNote Online Web Notes started as a side project built in a townhouse north of Baltimore on nights and weekends. We had our own personal need to keep our notes in the cloud. (This was before mobile apps, smartphones, and our most significant competitors had an online note product.)
As UberNote grew useful for our friends and family, we created a company and left our full-time jobs to travel down the path of a technology start-up. Starting a company with some of your best friends is not something everyone gets to experience, and I believe we truly valued it. UberNote went through all the ups and downs of a start-up; funding, a start-up incubator (Launchbox Digital), paying customers, various business models, failed attempts at being acquired and finally shutting down.
Since then, everyone has gone on to do truly awesome things since UberNote. We have employees of Yahoo, Mozilla, and MathWorks among our alumni. UberNote had ups and downs, but ultimately I wouldn’t trade the experience for anything. One start-up that has emerged out of the dust of UberNote is Referral Rock. Referral Rock is a web service for creating customer referral programs for small businesses.
Lessons Learned and Applying them to Referral Rock
The UberNote experience has helped me to become a better entrepreneur. Here are some of the best lessons I learned out of the ashes of UberNote and how I’m applying them to Referral Rock:
1. Have a well-defined target market
One of the biggest struggles was identifying our market. We would always say something like:
“Our market is everyone! Students, teachers, web workers! Everyone who takes notes and wants access to their notes anywhere can be a UberNote customer/user”.
Without a well-defined target market, we were not marketing well, and our product had no focus. We were a jack of all trades and a master of none. In the end, we realized the way people take notes is very personal and we just couldn’t effectively develop a product that hit the nail on the head for the whole market were trying to target.
With Referral Rock the idea started with a target market of service based small businesses like independent photographers, dentists, massage therapists, event planners, business coaches… This could be refined further by looking at the success of the product across the various businesses, but so far the product is fitting well across various service based small businesses.
2. Don’t be so close to your own product, to where it clouds your vision
We were proud to “dogfood” our product, but we became too attached to addressing our own personal needs. We were in love with our own vision for how note taking should be. Yes, that was the primary reason we started UberNote and building a business out of a need you can identify with is a good thing… we just stayed too close to it for too long.
Being so close to our product led us to often make decisions based on what we wanted to see vs. what our users wanted. We didn’t recognize until it was too late that we were the outliers within our market of note-takers.
At some point, you are not the ideal user for your product anymore. Once you decide your that prototype/proof of concept is suppose to transition into being a business you have to realize you are not the target customer and you are not building this just for you. You have to see where your customers take you and use their feedback to help craft the product. You can still be visionary for your product, just not blindly.
With Referral Rock I am making a concerned effort to practice customer development. I have discussed with customers their needs and their current practices for referral marketing. I have also discussed with them their workflows and the value a product like Referral Rock can bring them. Yes, I have my vision for Referral Rock but it has changed since the onset and I’m allowing it to be fluid as I discover more about my customer’s needs.
3. Validating people are willing to pay as early as possible
If you told me what percentage of UberNote’s user base were actually willing to pay for a subscription, I might not have continued working on it for so long. We spent an embarrassingly long time (2-3 years!!!) before we actually started charging people for the product. When we finally did start charging, it was out of desperation, and we were extremely disappointed. The number of recurring users for our product did not convert into a high enough percentage of paid users.
We thought we were in a land grab for market and charging for the product would just slow us down. I will also admit that not knowing if people would pay for UberNote allowed us to be detached from the reality of if we have been wasting our time with it. We could continue to craft our vision with no responsibility, which was a big mistake.
With Referral Rock (at this point) I have not started charging yet but I plan to…. very soon… I swear. I can’t call it a business till it actually makes money. Otherwise it’s a dream and a hobby right now.
4. First Mover Advantage
With UberNote we were cautiously pessimistic about mobile apps and never built one. We never capitalized on the green pastures of a new marketplace that would have made perfect sense for our target market of “note takers who want to have access to their notes anywhere”. I’m not sure what excuse we have for not building something directly for mobile (except a mobile version of our web-app). The only thing I can say is the combination of understanding your target market and being close to your product attributed to this bonehead blind spot. Anyone have a time machine I can borrow?
I have yet to come across a way I can apply this to Referral Rock. Hopefully in the future I won’t be as boneheaded and will recognize the opportunity when i see it.
5. Business SaaS > Selling to Consumers
I want my next startup to be B2B. It is so much easier to justify paying for a service. Personally, I see both sides daily.
1. With my consulting business, I can easily justify an expense in my head and make that decision to swipe out the AMEX in no time flat
2. Personally, I’ll waffle and gawk at paying for an online service. Thinking, it should be free. In the end, I usually end up not purchasing.
5. Burn out is real
UberNote had some early wins that kept our heads in the game. We had some excellent blog press and retention of traffic at the right times when we needed it to keep going. Right now we have slow growth and a consistent user base, which honestly has prevented us from throwing in the towel many times.
We don’t have hockey stick growth or tons of press. Maybe if we did, we’d be approaching UberNote differently.
Outside the initial rush of starting a startup (first year?), how much does your effort and fortitude relate to your traction, growth, and retention? I’d argue that they have a pretty close correlation.
The Startups Don’t Die, They Commit Suicide article is especially relevant to me and how UberNote ended up.