We tried to compete on price in a market that really wasn't as price sensitive as it claimed to be. Yes some people wanted to "pay less" but in reality the big players were happy to pay the "industry standard" rate. Many of those big players we would later find were happy to pay far more even. For every player who wanted to "pay less" there were easily 10 that would pay more to get the opportunities their competition wasn't willing to pay for.
We did pivot to add a more premium, high touch offering and it sold very well. Thats how we came to the second unhappy realization: Despite having what we considered a very nice TAM the industry didn't really want to be scaled. This meant that our clients who paid for our premium offering were very difficult to service and create value for.
Our business was in a sense connecting buyers with sellers for a fee, and there just weren't enough sellers to satisfy the industry of willing buyers eager to pay for value. A fine boutique business and a solid way to have a $12M/year company focusing on BIG DEALS. Not much of a play to scale with tech and profit by reducing costs and friction. Nobody cared about costs and friction was oddly desirable for our customers as it meant "we're in the game - things are happening!".
Had we not "raised money" and encumbered ourselves with investors we'd have continued operating. As it turned out, we more or less took on a bunch of debt to operate the same business we could have made with no tech at all.
That's a tough pivot. So, you went from low-cost to high-touch, only to find a market that didn't scale? That's gotta sting. Did you consider a hybrid model or focusing on only one end???
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We tried to compete on price in a market that really wasn't as price sensitive as it claimed to be. Yes some people wanted to "pay less" but in reality the big players were happy to pay the "industry standard" rate. Many of those big players we would later find were happy to pay far more even. For every player who wanted to "pay less" there were easily 10 that would pay more to get the opportunities their competition wasn't willing to pay for.
Looking back I feel totally stupid about it.
Did you pivot your business model after this realization, or did you continue to compete on price?
We did pivot to add a more premium, high touch offering and it sold very well. Thats how we came to the second unhappy realization: Despite having what we considered a very nice TAM the industry didn't really want to be scaled. This meant that our clients who paid for our premium offering were very difficult to service and create value for.
Our business was in a sense connecting buyers with sellers for a fee, and there just weren't enough sellers to satisfy the industry of willing buyers eager to pay for value. A fine boutique business and a solid way to have a $12M/year company focusing on BIG DEALS. Not much of a play to scale with tech and profit by reducing costs and friction. Nobody cared about costs and friction was oddly desirable for our customers as it meant "we're in the game - things are happening!".
Had we not "raised money" and encumbered ourselves with investors we'd have continued operating. As it turned out, we more or less took on a bunch of debt to operate the same business we could have made with no tech at all.
That's a tough pivot. So, you went from low-cost to high-touch, only to find a market that didn't scale? That's gotta sting. Did you consider a hybrid model or focusing on only one end???