we achieved a lot with Tutorspree, we failed to create a scalable business. I've
been working through why. In doing so, I’m trying to avoid the sort of hugely
broad pronouncements I often see creep into post mortems that I’ve read: “don’t
hire people!”; “hire people faster!”; “focus on marketing at all costs”;
“ignore marketing, focus on product” etc.
focused here on the strategic causes of our failure. While I learned a huge
amount about operations, managing, and team building; mistakes made in those
areas were not the ultimate cause of failure just as the many things we got
right within the company did not ultimately lead to success. I also recognize
that this doesn’t cover every detail, even on the strategy side.
Too good to be true
didn’t scale because we were single channel dependent and that channel shifted
on us radically and suddenly. SEO was baked into our model from the start, and
it became increasingly important to the business as we grew and evolved. In our
early days, and during Y Combinator, we didn’t have money to spend on
acquisition. SEO was free so we focused on it and got good at it.
worked brilliantly for us. We acquired users for practically nothing by using
the content and site structure generated as a byproduct of our tutor acquisition.
However, that success was also a trap. It convinced us that there had to
be another channel that would perform for us at the level of SEO.
our first year, that conviction drove our experiments with a series of other
channels: PPC, partnerships, deals, guerilla type tactics, targeted mailings, craigslist
posting tools, etc. Each experiment produced results inferior to those from SEO.
The acquisition costs through those channels were significantly higher than
what was allowable based on our revenue per customers. We also found that potential
customers coming through PPC were converted at a lower rate than those
originating through SEO. Even as we sharpened our targeting, experimented with
messaging, and sought advice and consulting from more experienced parties, we
found that paid channels just weren’t good enough to merit real focus.
dynamic put us in a strange position. On the one hand we had a channel bringing
in profitable customers. On the other hand, we did not have the budget within
our model and product to push hard enough on other channels.
AirBnb Head Fake
the end of our first year, the divergence between our success with SEO and our
failure with other channels dovetailed with a whole set of lessons we drew from
analyzing user behavior on Tutorspree. We realized that there were fundamental
problems with the product of Tutorspree which both prevented us from converting
visitors to customers at optimal rates and from having enough capital to spend on
acquiring more visitors/potential customers.
had modeled ourselves on AirBnB, believing we were a clear parallel of their
however, was fundamentally different. Parents simply didn’t trust profiles and
a messaging system enough to transact at the rate we needed. Our dropoff was
too high, and the number of lessons being completed was too low. We realized
that we were wrong in how we thought about the entire market, and radically
altered our model to suit in March of 2012. Looking back, it is also apparent
that we were able to ignore our error for as long as we did precisely because
SEO worked as well as it did. The dynamics of our marketing provided air cover for
any other issues we had.
the new model Agency as we pulled in aspects of a traditional agency’s
hands on approach and combined it with our matching system and our customer
acquisition channel – SEO. Within a month of the change, we doubled
revenue. Six months after the shift, our revenue had increased another 3x and
we’d increased margins from 15% to 40%. The new model gave us our first
profitable month, and put us within striking distance of consistent
profitability. It looked like we had cracked the product problem. Our conversion
rates were way up and per user revenue was climbing rapidly. Those factors gave
us the budget we needed to more productively experiment with other channels.
all of our customers came from SEO.
and Better Model; Same Old Channel
of 2012, we had virtually infinite runway and were at the edge of profitability.
We still wanted to swing for the fences, and, given the radically shifted
economics presented by our new model, we made the decision to retest all the
marketing channels we had tried with our initial model and then some. We knew
that only having a single scaling channel – SEO – would not let us become huge,
so we began pushing for another scalable channel.
the strength of where we were and the challenges we saw, we raised another
round with the explicit purpose of finding the right marketing channels. While
we considered raising an A, we played conservatively, deciding that we wanted
to find the repeatable channels, then raise an A to push them hard rather than
raise too much money too early.
finished that fundraise in January, began a much needed redesign of the site to
fit with our significantly more high touch model, hired a full time growth lead
and began to push rapidly into content marketing, partnerships. Then, in March
of 2013, Google cut the ground out from under us and reduced our traffic by 80%
overnight. Though we could not be 100% certain, the timing strongly indicated
that we had been caught in the latest Panda algorithm update.
our SEO gone, we took a hard look at our other channels. While content may have
played out in the long run, and in fact showed signs of the beginning of a true
audience, the runway it needed was far too long without the cushion provided by
SEO. PPC - mainly through Adwords (though also through FB) – was moving in the direction
of being ROI positive, but the primary issue turned out to be one of volume
rather than cost. Because of our desire to focus heavily on the markets in
which we had the highest tutor density (and therefore the greatest chance of
filling requests), we had to carefully target our ads in terms of geography and
subject. Given that dynamic, we simply couldn’t find a way to generate enough
leads, no matter the price. In the end, that calculus applied to nearly every
paid channel we could identify.
reliance on SEO influenced nearly every decision we made with Tutorspree. At
the beginning, it influenced our decisions to allow tutors to sign up anywhere,
for almost any subject. On the one hand, that brought in leads we could never
have specifically targeted. On the other hand, it spread our resources out
across too many verticals/locations. That problem was compounded by our move
into Agency. While we were converting at a higher rate and price than ever, we
were also forced to spend too much time and money on completely unlikely leads.
When you build your brand on incredible service, it becomes very hard to simply
our SEO collapsed, we routed virtually all of our technical resources to fixing
it. In that effort, we had significant amounts of success. We regained most of
the traffic that we lost with the algorithm switch in June. We regained a
significant portion of our rankings. However, the traffic that we were getting
at that point was not as high quality as that which we had been getting
of how successful SEO was, it was the lens through which we viewed all other
marketing efforts, and masked the issues we were having in other channels along
with important realities of how the tutoring market differed from how we wanted
to make it work. We were, in effect, blinded by our own success in organic
search. Even though we saw the blindness, we couldn’t work around it.
taught me a lot of lessons. I learned about product, users, customers, hiring,
fundraising, managing, and firing. I made some bad hires because of my own
blind spots and desire to believe in how people operate. There were periods of
time where I avoided conflicts within our team too much – decisions that were
always the wrong ones for the business and that I regretted later. Those
mistakes were not ultimately what caused our failure.
is the largest lesson for me that SEO shouldn’t be part of a startup’s
marketing kit. It should be there, but it has to be just one of many tools. SEO
cannot be the only channel a company has, nor can any other single channel
serve that purpose. There is a chance that a single channel can grow a company
very quickly to a very large size, but the risks involved in that single
channel are large and grow in tandem with the company.
especially true when the channel is owned by a specific, profit seeking,
entity. Almost inevitably, that company will move to compete with you or make
what you are doing significantly more expensive, something Yelp gets at well in
their 10K risks section: “We rely on traffic to our website from search
engines like Google, Bing and Yahoo!, some of which offer products and services
that compete directly with our solutions. If our website fails to rank
prominently in unpaid search results, traffic to our website could decline and
our business would be adversely affected.”
me, this is a lesson about concentration risk and control. In this case, it
played out on the surface in our only truly successful marketing channel. That
success wound its way through everything we did, pulling all that we did onto a
single pillar that we could not control.
necessity we had to concentrate risk on certain decisions (something likely
true of most small startups). I did not have the time or resources to do
everything I wanted or needed to do. I never will. But I need to be cognizant
of the ways in which that concentration is influencing everything I do. I need
to make sure that it doesn’t dig me into holes I can’t work out of on my own.
Ultimately, this post mortem is about the single largest cause I can identify
of why we failed to scale Tutorspree. In examining our SEO dependence, I was
surprised at how deeply it influenced so many different pieces of the company
and aspects of our strategy. It powered a huge piece of our success, and
ultimately triggered our failure. There’s a symmetry there that I can’t help but
appreciate, even though I wish to hell it had been otherwise.
 This is a whole
other issue I explored in the Tutorspree blog at the time. It seems that Google
is increasingly favoring itself in local transactional search.
recently ran into this issue, but were able to overcome their immediate problems
through some impressively fast and thorough work.