The Autopsy: Why our startup failed
I’ve had some time to process and analyse the Slope experience. A lot of the discussion around startups focuses on product-market fit. The high level takeaway here is that we created a product that achieved its end goal (get people more active and improve their health), but we didn’t find the fit where the unit economics made sense.
So, we join the ranks of the Apple Newton or the Segway as good products that didn’t work commercially. Here’s what happened:
The Recap
Our goal was to create the first digital therapeutic for inactivity. Translation: Doctors would prescribe Slope to a patient who needed to be more physically active.
We spent three months speaking to hundreds of doctors as we developed v1 of the app in parallel. We found that doctors loved our idea and were enthusiastic to help. However, it quickly became clear that “activating” them as distributors was a different story.
After weeks of struggling to activate doctors and little user growth, we decided to focus on getting users directly (D2C). We started to get traction by contacting people directly on Facebook. Based on this experience we started testing paid advertising.
This was our first hockey stick moment- we were recruiting users as quickly as our budget would allow. Over the next few weeks we navigated the common challenges that occur with cost of acquisition (CAC) in D2C, but we were heading in a good direction.
The feedback from other Founders and investors was that as a fitness/wellness business looking to raise money in 2023, we needed to prove our unit economics. So, our goal coming into 2023 was to focus on revenue generation.
We spent the next few months testing the paid-user funnel. Along the way, it became clear that there was one topic that trumped all others: weight loss. We had purposely avoided messaging around weight loss because we didn’t think this aligned with our ethos of making long-term, behaviour change. As a “last resort”, we decided to test it.
The weight loss messaging generated interest (clicks on social), but the funnel metrics indicated that many customers dropped out of the funnel when it became clear that this wasn’t a quick fix approach.
We were now facing the reality that we couldn’t generate enough revenue to meet key unit economics measurements such as LTV:CAC that were required to raise more money…we were running out of time and money…and eventually our only option was to shut down the business.
I hope it goes without saying that this summary doesn’t begin to capture the hard-work, dedication, and accomplishments of the team during this journey. But, like in sports, we didn’t score enough points before the clock ran out.
Here are a few specific points worth highlighting:
Strategic Blunder?
I’ve wondered if we made a mistake pivoting to D2C rather than focusing on solving the doctor-patient activation challenge. The thinking at the time was that we needed users to start growing the user base and managing performance metrics. We would shift temporarily and go back to the doctor activation channel later… we never got back there…
Of course we don’t know how another scenario would have played out. Moreover, if we had spent three more months trying to solve the challenge for no results, then I’d feel even worse! I don’t think we had a choice, but it did shift us into unfamiliar territory. We were trying to build the plane while navigating an unknown course. I think you can do one or the other, but not both…
I suspect someone with D2C or health system experience would have performed better. It doesn’t guarantee success, but it certainly would’ve helped.
Market dynamics and unit economics
While I knew that consumer health was one of the more competitive sectors, it ended up being even more competitive than I imagined. It would make a great case study on supply-demand pricing for an Econ 101 course. In short, it is really expensive to advertise in this market.
In addition to this, I underestimated the shadow that weight loss casts over this sector. It is almost the only topic that works in health and wellness, so everybody from mattress companies to food delivery to gyms use it. And it is about to get much worse.
The increasing availability of diabetes drugs for weight loss is causing an explosion of immediate weight loss “success” stories. This is changing the expectations for consumers: the quick and easy solution has gone from dream to reality. Even more concerning, this approach is being recommended by trusted sources.
Unfortunately for Slope, it made it harder to convince people to take the harder, slower path of behaviour change. It felt like we were the clean athlete realising that doping was becoming a requirement to even stay in the peloton.
Messaging
For as simple as our goal was (get people more physically active), we always struggled to frame it effectively so that it was clear what and how we were doing it. It felt like we were Jed Bartlett: great in long form, but underwhelming in soundbites. In fact, we regularly received feedback from users that we should simplify the language across all our platforms.
The bottom line is that we didn’t figure out how to say we were X for Y.
Product Market Fit
Both the MVP and v1 of the app changed behaviour, got people to be more active, and improved their health. Coaching clients particularly excelled.
- 1 to our CS team.
We also outperformed most metrics for mobile apps in health.
- +1 for our Product team.
We could get people to download and use the app for free. We were unable to transfer this to paying enough to make the unit economics work. The feedback was that people weren’t exactly sure what they were getting. Health coaching? Personal training? A workout app?
They liked the vision, but didn’t understand how we were going to help them achieve that vision. There’s a basic lesson which is that no matter how effective your product is, if it isn’t clear to people how it works, then you’ll struggle to grow.
Summary
While we fell short on this journey, there were many achievements along the way:
- We designed and built a product (iOS and Android) from scratch
- Got it approved in the app store (no small feat), got people to use it.
- Grew utilisation and produced sector-leading engagement metrics with a KPI-driven process.
- Helped people live healthier lives.
These accomplishments were the result of tons of hard work, resilience, determination, and creativity.
However, we couldn’t get people to pay enough for it to be a viable business.
As my athletic idol, Michael Jordan, said:
I’ve missed more than 9,000 shots in my career. I’ve lost almost 300 games. Twenty-six times I’ve been trusted to take the game-winning shot and missed. I’ve failed over and over and over again in my life. And that is why I succeed.
So, it is on to the next game…
Note: This was meant as the analytical assessment. I’ll write a follow up post on what I learned/what I’d do differently next time.
