Should we continue the startup or shut it down?

We are a food discovery startup which tells its user the best dishes to have in a restaurant. The initial growth and retention for us has been quite low and we have not been able to make a single $ in revenue yet. From the initial customer interviews, we were quite optimistic that the product has great potential, however, things are turning out to be opposite of what we anticipated. At what stage should we take the business decision to continue/discontinue the product?


A good question. The fact that you don't have revenue yet may be result of a number of factors. Without knowing more specific information about your product, key customer segments, your team, and other key data, it's not possible to give you a definite continue/or shut down recommendation.

That said, generally, I would recommend adding a third decision point - the pivot. Many businesses don't see the expected returns after initial launch or MVP testing, and decide to pivot to a different direction, ultimately finding success. The pivot can be a slightly different product (product-based pivot), a slightly different market segment (market-based pivot), or both.

Here are some recommended action items to help you uncover extra insight as you examine whether to continue, close down, or pivot:
1) How did you organize the initial customer's interviews? What kinds of questions did you ask them, and were any of them leading questions?

2) Review your core customer segment(s) at this point. How did you determine a product-solution fit to them? Are the customer segments clear and specific enough?

3) Did you run a MVP (minimum-viable product) to test potential product-market fit? Were any findings contrary to your initial assumptions?

4) Consider running another set of quick interviews. Determine any differences between the new interviews versus the initial customer interviews.

5) Make some hypotheses on the key assumption or factor that could have contributed to zero revenue. Run a basic test to confirm that hypothesis. If correct, you may be able to pivot by eliminating that factor or substituting with something else. For example, pretend that your core assumption is that young urbanite foodies will appreciate recommendations on best dishes. If that assumption turns out false, then you may need to consider pivoting to a different customer segment (professionals who don't have time to research the best dishes?)

6) Examine your pricing model. How did you determine it? What tests have you made? Try running a few simple tests with alternative pricing schemes, and see if anything changes.

7) What is your current monthly burn rate, and how long can you project to last at this rate?

Answered 8 years ago

I've been through this several times with my startups. In fact, you should expect to make this choice over and over again as you build this company.

The truth is, the decision is already made for you. Either your hypothesis about the market failed to prove valid, OR the experiment you designed to validate the hypothesis failed. Either way, you can't continue "the product" in its current form.

The real choice in front of you involves three dimensions: 1) market, 2) funding, and 3) intellectual capital.

1) Do you still believe there is a latent market need involving the mechanisms you listed (food discovery, restaurants, consumers)?

2) Can you afford to keep trying (and do you have the runway to get far enough to prove the market well enough to raise more money)? Put another way, can you afford to go long enough to prove your point AND get investment to scale if you do prove it?

3) Do you have the intellectual capital on your team to start over with a new solution (MVP) and a proper market test? Can you come up with a stronger solution?

If the answer to ANY of these is 'no', then stop.
If the answer to ALL THREE is yes, then keep going.

It's really that simple. Make this decision today. You shouldn't waste any more time.

Oh, and one last point. Don't beat yourself up about this either way. Sometimes these small failures are an essential precondition for innovation. In the future, try to build as little as possible to prove your point (sometimes you can get away with building nothing but a deck or a low fidelity prototype). Then the go/no-go decision doesn't seem so weighty.

Good luck.

Answered 8 years ago

What you didn't explain was your model for making revenue.

Who is your customer?

Is it the end users...or paid advertisers? The restaurants? A third party?

I wonder if you've thought this through.

Loads of people have this SaaS idea...they dump resources into creating it. But why didn't they line paying customers up FIRST?? I don't get the mentality. It's backwards. You prove the thing is viable first; then you develop it. Why people persist in doing the opposite baffles me.

Answered 8 years ago

I agree with some of the other answers here: At this stage, you need to stop and review your product, your market, your monetization strategy and your burn rate.

Before attempting to pivot, raise more money, or shutdown, try this simple exercise that can help you get a clear 50,000ft view :

- Gather in a room 4-6 people who understand your product and your market. At least 1-2 should be outsiders (not employees)

- Build a first CANVAS (Business Model Generation : Read the book!) on a white board. This will help you think in depth about your value proposition(s), your Customer Segments, Channels, revenue streams, cost structure, etc.

- Let the people in the room give suggestions, write up to 3 elements per block, up to 3 words per element: This will force you to be concise and get straight to the 'meat' for each answer

- If there are multiple possibilities. as is almost always the case, create multiple canvases, one per hypothesis.

This can help you gain much better clarity (no pun intended) and unearth current challenges as well as new opportunities.

Good luck.


Answered 8 years ago

I'll be blunt: it's a bad idea. Someone should've told you before but likely was being polite.

As useful as it appears, we can't and don't need an app for everything. Do restaurants really want this? Do people really need this? Trying and learning is a normal part of life and this app is just not something people need. Spending $10 to find out a dish is crap is not the end of the world - it's the experience that counts. Is someone going to spend more time looking at their phone or doing it the old fashioned way by asking their waiter what they like?

Plus, customer interviews are bullshit until you actually ask someone to spend their money. There's huge difference between 'would you buy this' and 'will you buy this right now.' Anyone will tell you an idea's good until they have to put their money where their mouth is.

Answered 8 years ago

Screw it, let's do it.

If you believe that your idea has the required potential to become a niche player, then find ways to continue it, by keeping your costs low. If you think its an amazing idea, don't stop. Once you take a pause, you stop forever. It depends on how much convinced and committed you are.

1. Do a paid pilot with a set of end-consumers and see if people are willing to pay for this kind of service.

2. If they don't, try and create a value for the restaurants or hotels and charge them.

3. In both cases, if they like the product but are not willing to pay, then you haven't created enough value for them. Take feedback from them and work towards adding more value. Go back to them and re-do the pilot. Success is inevitable.

Answered 8 years ago

Some great answers here which mostly say the same thing: revisit the customer development / validation part as it appears you may not have done this correctly or in the best possible way.

You know from the results you've got that growth and repeat usage is not occurring (let alone revenue) and while it's tempting to think "perhaps we haven't found the right marketing channel yet" or "if only we gave it a bit more time".. the most obvious answer is always "this is not something people really want".

What you really needed to hear in customer development was "one of the biggest issues I have in restaurants is that I always get confused about what to order and it's a big problem for me. I'd happily pay to use a service on my phone which would tell me what to eat based on my preferences"

What I think you might have got is:
"sounds like a neat idea - i'd give it a go".

which really translates into:
"it sounds a bit of fun and novel and I'd probably try it out once and then never bother again. It's not really a problem or issue I lose sleep over to be honest"...

Answered 8 years ago

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