So today, I would like to share the tale behind inSparq, a company I am very proud of though had a challenging history. inSparq started life as a group communication product, promising cross channel messaging across email, sms, facebook and twitter. The idea was that the company would bridge together all of the channel options into a single product so you can have one single conversation with a group of your friends anywhere. Our beta was a google plugin that let you have groups inside of gmail along with some really cool identity management tools. We thought we had the next google or facebook on our hands. Myself and the CEO financed the company to launch and we shipped the product. It worked. Sort of. Still buggy, we got about 1,000 users engaged with the product, sent out thousands of messages and started fundraising. We got about half the round committed and even had a merger offer with a division from a large public company. Everything sounded great. Just one problem – we realized we didn’t quite have product market fit. The product was getting used, once and not getting critical mass. We thought we saved Google (we still think it solves core communication issues in how gmail operates) but we weren’t google, so we couldn’t get it rolled out.
At that time, we had $10,000 remaining in the bank from our original investment and about $200,000 in additional debt. Yes, we had committed investors but upon review we didn’t feel comfortable taking in the capital. $10,000 in cash. Oh yea, we also had credit card debt.
We made decision one fateful night to immediately stop spending. We (painfully) let all of our people go and cut all expenses (except for one – waste of a few hundred dollars!) and that one we eventually cut too. We put all of our potential revenue streams and ways to take our product to market differently up on the white board and went through them one at a time. We asked ourselves, can this make money ? Can we execute with limited resources? Ultimately, we found one revenue channel that seemed like it could work, which was at the time ‘referral marketing for daily deal companies’. One of the big ones had asked us if they could use our technology to make their deals more viral (with better communication and grouping tools). At the time, we liked the idea of it though had no idea how to actually do it. However, now faced with imminent doom, we paused. Stopped. We proceeded to spend the next 60 days doing customer development and market research to validate our market concept. We interviewed deal companies, we interviewed deal buyers. We did surveys. We did mockups. We did wireframes. We did clickable wireframes. Finally, after 2 months of grueling research, we felt we had validated demand from customers and retailers for our potential product.
Then on our last breathes of fresh air and funds, we embarked on a pivot…that story and where we ended up today is for another day …
Lesson: Cut fast. Cut as soon as you KNOW it won’t scale. Follow the revenue and the customers and you will be successful.