Mint’s reputation as $ for $ the world’s most successful startup studio means that the most common question I get asked is: how do you know what ventures to pursue? The second most asked question is: how do you know when to stop?
This week we announced that we are to shutdown Projecteo, so I thought I’d answer the second question in the real life context of Projecteo.
Why we shut Projecteo down.
There were three reasons to shut Projecteo down:
- Lack of ownership. Startups need a leader with a vision, passion and grit in order to grow. Projecteo’s initial leadership team left Mint within a year of Projecteo going on sale and now run the wonderful Mayku (that’s what happens if you encourage young, talented people to take risks and try stuff, folks!). In recent years, it’s became clear that nobody at Mint wants to take Projecteo on and own it. Starved of a champion, it’s stuck in first gear;
- Limited market size. Projecteo is a niche product with little by way of repeat customer base. Once you’ve bought one, as long as it works, there’s no need to buy another;
- Limited routes to market. We launched Projecteo on Kickstarter and marketed it predominantly through niche blogs and Instagram accounts. Having sweated those routes we felt like the golden age of their effectiveness had passed. These days influencer outreach is another form of paid marketing… and not necessarily a cost effective one.
With enough time and access to enough capital, I’m confident that we could have fixed issues 2 (through new product lines) and 3 (through sustained trial and error). But Issue 1 is insurmountable. Projecteo has good margins, no direct competitors and has been cash generative for the past two years. But without a focussed leader with a vision, it’s treading water at best.
Decisions to shut a startup are generally triggered by one or more of the following scenarios:
- There’s no or little demand. Customers don’t show up, nobody cares (customers tell founders to stop); and/or
- The founder gives up. It’s either too hard, too annoying or too poverty inducing (founder tells founder to stop); and/or
- The money runs out and the founder can’t raise any more (market tells founder to stop).
Scenario 3 is the outlier here since it’s a bit of a trick of the founders’ mind. It’s the reason the founder thinks is why they shut, whereas the real reason is Scenario 1 (which in turn triggers Scenario 3). But the founder can’t process Scenario 1 easily and so Scenario 3 becomes the given reason.
In the case of Projecteo it was probably a combination of Scenarios 1 and 2. But if I had to put them in order then I would say mostly Scenario 2 with a bit of Scenario 1.
To many it would be inconceivable to stop something that’s profitable and for which there is ongoing latent demand. But if you either can’t or won’t move it forward, then it’s time to shake hands and call it quits.
We’re still selling Projecteo units & wheels. Head over to the website to get your hands on the last stock we have.