How a founder spend his life savings on an app with no users
Here’s how a founder in Singapore spent $200K of savings building an app with no users, and how to avoid doing the same.
This is easier than you may think.
A cautionary tale for those starting out.
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I’m not naming this founder for obvious reasons, but his idea was to improve communication between teams, managers and employees, improving staff engagement and reducing churn.
He would sell to HR teams in corporates, then add training (selling 3rd-party content), advertising and more.
The founder had made some money in recruitment.
Now for a tech startup.
This chap wasn’t technical, so he paid an agency to build v.1 of the software.
He called it an “MVP”, but it wasn’t one.
He believed it had to be in the App Store and Google Play, so it ended up being much bigger than intended.
Despite stripping out half the functionality, it cost just under $100,000.
“How did that happen?!”
He didn’t know. But never mind, it was pretty.
Time to launch.
Exciting!
But when the developers submitted to the App Store, it was rejected.
No major changes luckily, but after the back-and-forth it cost an extra $10K.
Finally live though!
Then…
Crickets.
He’d done no marketing, focusing 100% on the product.
No waiting list, no fanfare…
Nobody knew it existed.
Quickly, he found another agency to create an ad campaign on LinkedIn.
Surely that was how to target HR professionals?
$10K set-up and management fees, $5K for a landing page and tracking, plus $5K media budget to test some ads.
The ads did create some website traffic (so the agency hit its deliverables), but there were almost no downloads.
$130K spent. No users.
Fear set it.
In the analysis, the two agencies and founder identified the problem.
He had stripped out some of the most interesting functionality!
“Nobody can use half an app…”
So he agreed to pay the developers to add it back in.
Another $50K.
Gulp.
But finally… it was “done”.
So how would he launch it?
$180K down, he doesn’t want to pay the marketing agency.
Luckily a friend comes to the rescue.
She’s a marketer in a big company, has some ideas and will accept equity as payment.
She focuses on social media, using both the company’s and the founder’s accounts.
Tumbleweed.
She asks for some budget for email marketing.
With no alternative, he agrees.
This actually works, and they get some calls set up with HR people.
They talk.
Most have no budget.
Some don’t see a use case.
Others say it’s interesting… sort of.
What now?
…
Running low on cash, the founder decides to raise investment.
(This is where I met him, in 2019.)
With zero traction, nobody invests.
Cash runs out, so the founder takes a job.
He plans to do this on the side, but soon realises it’s impossible to make progress.
So he parks it.
“One day, I’ll come back to it.”
But he never did.
$200K gone.
Don’t be this guy. ↑
Anyone seen someone do this?
