Why Dragon’s Den Wasn’t Enough To Sustain An App Based Business: It’s All About Product-Founder Fit
Tangoo, originally the iOS pocket concierge dining app, was in my eyes a growing success within the world of apps. The app garnered over 20,000 semi-active monthly users but I soon realized that in the grand scheme of things, we were further away than we thought from sustainable monetization. We had a long stretch to push through and when we realized that the “product-founder fit” just wasn’t there, we needed to pivot.
“Product-founder fit” refers to how well a company’s desired product fits your skills and passions, alongside, the hard math and economics of your business model. In the early days of a company, pivoting your company takes a lot of finesse, and it ultimately comes down to how quickly you can balance your dreams with understanding your “product-founder fit.”
When pivoting your company, it is crucial to take your personal strengths, and your original vision into consideration. Do the two align and is that vision still relevant now? Food has always been a centre point for Tangoo, and continued to be so after the pivot. To me, food helps creates the best interpersonal and meaningful moments. It slows us down to be present with what matters in the world, connect with others deeply and can act as a spark of action as we break bread and exchange insights and energy between people.
Tangoo’s vision is to create memorable connections and conversations through food experiences. Within this vision it has proven to be a gateway of entrepreneurialism for the people we recruit. As a leader, I also have obsessed food’s fluidity between work and life and how something this omnipresent and important in people’s lives helps my staff jump into something as uncomfortable as working at a startup, much more bearable. The isolation and grind of building technology can blur this vision and also, it simply has never been a strength of mine or my team.
In terms of strengths, mine have always been around funnelling creativity, empathy, and tenacity to inspire my team and customers to be the best versions of themselves. This requires a lot of deep and face to face time to accomplish and having to manage an app that served the masses, spread my team and I too thin to serve who were ultimately the customers who paid us, the food businesses. My strengths could be utilized to serve my vision better than having it being centred around an app.
Going back to my vision and strengths meant that my overnight success fantasy came to a screeching halt, and the reality of rolling up my sleeves again to service my business customers began. In the end, the shift paid off, as Tangoo in early 2018 broke the $20,000 milestone of predictable income per month - $20,000 recurring dollars beats 20,000 app users.
Do Your Homework: There Are No Silver Bullets
One major takeaway from this article that is crucial for small businesses (or potential small businesses) is to look into the success rate of your business instead of hoping to catch a big break from an opportunity like Dragons' Den. In Tangoo’s case, consumer apps are a double-edged sword. On the one hand, they make some people millions and as a result, inspire so many others to pursue entrepreneurialism. On the other hand, most fail. Although I had sat on both sides of the fence, and even had an appearance on Dragon’s Den, the numbers were against us. After a mere 1,000 downloads from the Dragon Den, I spoke to other founders about their app post-mortems and found out that keeping people active on their apps often and long enough for advertisers to pay enough money to keep apps wasn’t economically viable, or even enough to pay the founder.
As an example, let's say you get some virality and get to 100,000 app users, that’s 5x more than we did in two years. Your major barriers as an app are that making money is hard and acquiring users is expensive. For acquiring new app users, most companies spend $4.12 of marketing dollars per app download and $8.21 for that user to make an account - you’ll need to have some capital raised in case you don’t magically go viral. If you do want a chance at virality, you’ll need to budget $110,062 to hire at least one iOS developer who can create a fantastic product that people want to share with their friends. Lastly, you are competing with the likes of Facebook, Instagram, Whatsapp, and Google Maps. 73 percent of users time is spent in their top three apps so apps are only really worth it in most consumer's eyes if they use it as a staple. That’s why 72 hours after installation, 77 percent of users never use an app again.
Take this example, and apply it to your industry. Look into the factors that will contribute to your company’s success or failure, so that you can get a realistic idea of what your journey will look like. The odds will always be against you so don’t let this math get you down. What you want to avoid is battling the hard math while also being misaligned on product-founder fit.
Solve Customer Problems People Are Willing To Pay For
Focus on solving the problems of customers willing to pay you while you stay true to your team’s unique skills and passions (your product-founder fit).
I realized this shortly after the Dragons’ Den airing, when money was running out and most of my team moved on. I had to get very focused on who I solved problems for and how it tapped into my unique talents.
Instead of starting a new company, I decided to do what I did with our first pivot of going from an event company to an app; find a kernel of gold and focus everything on it. The kernel we found with our app was solving for end-user restaurant discovery and shooting to do it at scale. Now it was focused on a Business-to-Business (B2B) model that solved the pains of those who had money for us; the food businesses!
To accomplish this, I forced myself to pick apart my app and search for the elements within it that fit what both my business customers and I really cared about. In the end, we saw it was deep digital storytelling to the masses and meaningful creative collaborations that got both the businesses and us excited. Most importantly, it tapped into a skill that was unique to our DNA and one that most other tech founders didn’t have - building human and creative relationships between us, our influencers, and the restaurant community.
All along, Tangoo’s app was powered by creative food influencers who helped tell our restaurants stories through creative media and authentic storytelling. Some of these influencers had more followers than we had total app users so we realized that we could clone Tangoo’s app by 100 overnight and connect our clients to people on a platform they were already spending 32 minutes a day on, Instagram.
Instead of further fragmenting our restaurants’ online brands, they could work on building their own digital brands and instantly do it at scale. So we pivoted to Influencer Marketing which required flexing our skills of creativity and relationship building to add value that most app companies couldn’t deliver. Our currency has always been connections, not technology. Tangoo Version 3 was born and since then, we have added more integrated social media and digital products to better help restaurants and food brands build meaningful one to one relationships with their customers at scale.
And it turns out, there are established and growing budgets from businesses to commit to growing their digital brands. Our $50/month premium app subscription suddenly went up by at least 20x with no new technology needing to be built by us and most surprisingly, no significant extra effort was needed to convince someone to pay $1000+ per month instead of $50.
20,000 users are now $20,000 monthly dollars going into our bank account. Arguably a much better foundation to work from than relying on going viral and raising venture capital.
Don’t, however, think that we have given up on leveraging technology to grow at scale. We now have a solid foundation of revenue and a business model to learn our customer's problems intimately so that when we see a pattern of problems or processes that can be automated, we’ll be reinvesting back into our existing app and perhaps many more. This year, one of our staff spun out a digital medium called Noms Magazine which supplements our digital services and starts to once again have us flirt with technology...this time we’ll make sure to do it right.
With seven years of entrepreneurial experience under my belt, I hope my experiences and reflection will set you off on the right foot if you are looking to start your own tech company or, you feel like your current app company needs a different direction. I wish I had read this article before I started my entrepreneurial journey but on the other hand, we must all learn to embrace the journey and do our best to keep equilibrium between the hard realities of the market, and where you truly have a competitive edge.