Startup Boondoggles – Lessons from Tutorspree


broken business models

It’s funny—despite the fact that more than 75 percent of startups fail, we rarely hear the stories of how it happened (VC’s tend to hide the mangled corpses of their companies quite well). I just finished reading this short article on Pando about how an education startup (Tutorspree) went the way of the dodo bird.

This is the beginning of a series of post-mortem reports where I will go through failed startups with a fine-tooth comb, detailing what went wrong and how entrepreneurs can learn from their boondoggles.

“The problem, observers say, is that the company’s founders, Aaron Harris, Ryan Bednar and Josh Abrams had little experience in the education category and not enough time to gain domain expertise.”

Wait a second. You had 3 founders who didn’t know squat about education but went ahead and gave them $1.8 million in funding anyway? That’s like giving a kindergartener a million bucks and asking him to draw you a Picasso.

A bit harsh? Perhaps. But for all the collective wisdom of the big VC firms who invested in this (Sequoia, Lerer) they should have known better than to invest in founders with no knowledge of the industry they are trying to improve.

I don’t even want to know how this deal was sourced; probably some overzealous newbie analyst trying to make a name for himself (sorry your fancy MBA can’t always help you).

The first lesson is simple: Don’t invest in founders who are not passionate about the problem they are trying to solve. A lack of passion usually means a lack of domain expertise, which is the case here.

“But a lack of capital was not the reason Tutorspree shut down, a source familiar with the situation said. Tutorspree’s biggest issue was that the company was too dependent on traffic from Google.”

Never, EVER depend on SEO or Google traffic to generate new business. In fact, SEO is quite possibly one of the worst ways to market a startup. The best startups are the ones who have a great product to begin with and are spread virally and organically (e.g. Tinder).

If you use SEO or Google as a crutch, it usually means your product and service suck, plain and simple. SEO belongs in the realm of shady affiliate marketers—I should know, I used to be one of them.

Startup Boondoggles 2

Here is a quote from this Techcrunch article about another tutoring startup (Tutor Matching Service) who is backed by Andreessen Horowitz:

“The company has thus far grown organically by word of mouth, but is now on a mission to begin spreading the word.”

Growing organically? What a novel idea! EXACTLY what I said should have been done.

“In this case, Tutorspree was making some money, but its founders decided to call it quits.”

One of the most important lessons I’ve learned from Tim Draper: A TRUE ENTREPRENEUR NEVER GIVES UP.

If you have the good fortune of making some money, it’s not a lost cause. Iterate. Discover your weak spots. Do some real marketing. Even if you are half-assed and have no clue about the industry you are working in, do everything in your power to make it work.

Reprinted by permission.

Image credit: CC by Eliana >

About the author: Jay Deng

Jay Deng is an angel investor and venture capitalist. He invested in two companies whose exits topped $800 million. He is also the CEO and founder of Diva For Less.

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