DreamIt and Pivot: The Spot It Buy It Accelerator Experience

By Allison Berliner WG’13, Co-founder and CEO of Spot It Buy It

Watch Allison Berliner pitch her startup at DreamIt Venture’s demo day, which took place in December at Philadelphia’s World Cafe Live. In the pitch, she tells the story of her company’s pivot – how the team realized their first marketplace wasn’t working, and what they did about it.

My startup was accepted into the DreamIt Ventures accelerator program on a Thursday afternoon and my Co-founder and I had 48 hours to decide whether or not to participate. It wasn’t a decision we took lightly, since the accelerator takes 6% equity. We asked ourselves, ‘was $25K and access to the DreamIt community of entrepreneurs, mentors, and investors worth it?’

Flash forward five months and one pivot later, and the answer is clear. Yes.

When we started DreamIt, our company’s main product was an online marketplace serving small and medium sized retailers. Within the first 4 weeks of the program, we released substantial updates to our platform. These updates had been planned before we got into DreamIt – but, because we were suddenly in an environment with weekly mentor meetings and group presentations, we were forced to change the way we worked. Updates became “tests”, and we had to articulate exactly what we hoped each update would achieve and whether or not it was successful. This exercise became baked into our internal processes and ultimately forced us to acknowledge that our marketplace wasn’t working.

This realization could have been crushing, but we were surrounded by 11 other startups that were hustling all day, every day. The environment wasn’t conducive to quitting or taking a pass. It was conducive to making difficult decisions and working harder than we had ever worked before. So, that’s what we did.

We talked to hundreds of customers, brainstormed concepts for a new product, and tested our ideas with surveys, landing pages, and one-on-one conversations with target users. We also bugged our DreamIt classmates – the founders of those other 11 companies – to no end, asking their feedback on everything from web design to naming our new product, which is now called Spot It Buy It. Although these people had their own companies to run, they were always willing to take the time to help.

Today, we have a great team, a great product, and we’re on track to start generating revenues in February. It’s hard to know where we’d be if we hadn’t participated in DreamIt, but I think we’re better off for having done it.

People always say that being an entrepreneur is like riding a rollercoaster – high highs and low lows, sometimes in the span of a single day. When the track does start to head down, and you feel yourself speeding towards something that feels inevitable, it’s helpful to have a community to remind you that entrepreneurs make their own momentum.

AllisonHeadshot_1 smBio: Allison Berliner is the Co-founder and CEO of Spot It Buy It, a DreamIt Ventures backed startup that helps retailers and brands create mobile optimized shopping experiences and sell more through social media. She got her MBA from The Wharton School of Business, where she was an Entrepreneurial Intern Fellow and the recipient of an Innovation Grant. Over the last decade, Allison has worked on marketing and business development for a number of entrepreneurial organizations and startups including Wanderly, which was acquired by TripAdvisor, and Endeavor, an international group that sources and supports high-impact entrepreneurs in emerging markets. She currently resides in Philadelphia and is a Fellow with the Alliance of Women Entrepreneurs.

What Traction Isn’t

By Ian Campbell, WG’12, founder of What Goes With This?

Everyone is talking about traction these days. It’s what investors say is necessary for raising money in today’s environment.

My startup doesn’t have traction (yet!). But while it’s important to know what traction is, I’ve learned that it’s also crucial to know what traction is not.

Learn to recognize when you don’t have traction, and sometimes you figure out that a particular project will never have traction. Then you can let it go, the alternative being a slow slide into the dread zone of the zombie startup.

According to Paul Graham, traction is simply growth. It can be user growth or revenue growth. It’s up to you to pick your most important metric to measure traction. Whatever metric you choose, if your growth rate is below 2% average week after week, you don’t have traction. And you should probably start checking for symptoms of zombie-hood.

It seems simple, but many startups waste time building ideas for which traction will never be possible. Here are two lessons I’ve learned the hard way:

1. If your goal is revenue traction, you must have high revenue per customer.

Not having this doomed my previous startup, FitValet. We had 30%+ conversion rates to email signup for customers on our landing page. Still do, in fact – people want style advice! However, it cost us $0.85 to get a customer to sign up, and we were making $0.10/month/customer in affiliate and ad revenue. When you factor in list decay, we might have made up the marginal acquisition cost per customer in 15-18 months.

For a regular business, recouping marginal cost in 18 months is fantastic. This is why it’s so hard to quit a startup that’s growing too slowly. For a startup, this isn’t fast enough, and you’re wasting your time. There are better ideas out there, and the risk is too high to wait 18 months for one sales cycle.

Our revenue strategy (advertising/affiliate) was low revenue per customer, which simply does not lead to revenue traction. High revenue per customer is measured in dollars, not cents.

2. If your goal is user traction, your startup must have some kind of viral mechanism.

This means that you can’t be paying for your customers. Also, your mechanism can’t be “word of mouth.” Virality is planned, designed, and optimized before it’s ever realized.

When customers signed up for FitValet, there was no inherent reason or built-in opportunity for them to refer their friends. To grow virally, a startup needs a viral mechanism, such as a network effect or unprecedented daily user engagement.

My current company, What Goes With This?, has two potential viral mechanisms. First, the site is more fun when your friends are on it, because it’s a community. Second, we’re hoping our user generated content will drive SEO results in the same way it has for Q&A sites like StackOverflow or Quora.

The life of an entrepreneur

Looking back, What Goes With This? builds on many of the things I learned from FitValet. The pivot from one company to the next took six months too long, though, because I didn’t want to see the inevitable and let go of my precious idea. Today, I would see that this business model was doomed before I started building it.

This is the life of an entrepreneur. It was hard to accept that not only did FitValet not have traction, but it never would. I learned a lot, though, and some kinds of learning can only be done the painful way, by living through them. I hope that my experience can help other entrepreneurs out there learn more quickly.

Ian Campbell photoBio: Ian Campbell, WG’12, is an entrepreneur based in NYC. At Wharton, he was an active member of the entrepreneurial community and a member of the Venture Initiation Program. He is a cofounder of What Goes With This?