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The Decline And Fall Of Flowtab, A Startup Story (techcrunch.com)
99 points by BIackSwan 1367 days ago | hide | past | web | 36 comments | favorite

I am the founder of Flowtab, and my goal in writing this story was to share what we learned and accomplished instead of letting it rot for eternity in Dropbox. Thus, we opensourced everything from our pitchdeck to source code on Flowtab.com.

Kyle Hill and I are already back at it. Together, we launched www.homehero.org a marketplace for senior caregivers, let me know your feedback!

- Mike Townsend

Thank you for going the open source route! There are so many cases where a company goes under and something of value is lost because the original developers couldn't maintain it.

For example, I would have loved to have seen a community-maintained version of Glitch [1] take over after the game died out, but Tiny Speck refused to open up the source code because they believed it would be too complicated for anyone but themselves to run—a justification which has never made sense to me.

And if nothing else, it gives a deep peek into how a production system is run, something I'm always grateful for.

[1] http://www.glitch.com/

I agree, and thank you.

Would like to know what your marketing plan is to get the product in the hands of the target market. Which is people that are old enough to have parents that need caregivers.

How are you going about (or are you going to go about) doing that?

Also noting on the page that there is a lack of information that can be had (it's one page) w/o supplying information and signing up.

homehero isn't going to work either. You're competing with word-of-mouth, craigslist, basically any other thing where jobs are posted. On top of that, if you have nobody posting caregiver jobs on it, you have no product, because people will check it out, find that there are no caregivers there and then never come back.

Flowtab provided a service that wasn't needed, this doesn't either.

I don't agree at all. Care-giving for elderly is definitely a growth industry. It's not easy building a marketplace, but I think this one has potential.

Not all startup failures are created equal, but when it comes to true flops like this one, one of the commonalities I've noticed is a general inability of the founders to step back and see the forest for the trees.

From http://alpha.flowtab.com/:

   We also set a major company milestone to reach 50 "Flowtab regulars" (defined by 2 or more orders in a trailing 30 day period) by March 1st 2013.
That's a really remarkable comment given that the venture was started in May 2011. With its $1 per order fee, this means that after nearly two years, the company's "major" goal was to acquire 50 customers who would deliver a baseline of $100 in revenue in a month.

Sadly, one of the lessons listed on http://alpha.flowtab.com/ is "Do things that don't scale."

Agreed. I was the founder of Flowtab and I can tell you we always felt just one step away from success. We felt mobile ordering was inevitable and those who fought the hardest for the longest would win. I think different now...

It seems like the "inevitibe" attitude works contrary to startups.

Its like a convenient way to remove your obligation of actually encouraging people to do something because "they'll do it on their own"

Many things that seem inevitable are only so in retrospect. At the time, they were probably seen as unlikely or simply possible.

Frankly after 6 months we began to realize that it would be nearly impossible to earn any meaningful revenue from users or from the bars themselves.

Only two of our bars in Denver actually paid for the product ($1,500 for license + hardware upfront, plus $99/month), which wasn't enough to justify the $3.5 million valuation we raised on. What got our investors excited is tapping into the $3 billion of advertising dollars spent by the liquor companies every year. In 2012 less than 3% of this was actually dedicated to mobile, these were the deals we wanted to go after. So it became more about user growth and number of orders than revenue.

I still think there is an opportunity there -- giving liquor companies a better way of marketing their products on-premise through mobile. But I doubt it will be a mobile ordering app that cracks the nut.

Kyle H.

First, thanks for sharing your experience.

This seems like a good example of how investors can be a detriment. Your original concept was designed to solve a problem you thought existed with the drink ordering process. The marketing "pivot" is completely unrelated to that and assumes a completely different problem for a completely different customer.

Personally, I don't think there's much to the marketing concept. When at a bar, most people are going to order what they like, and they're going to be engaged in a social experience. Both of these things work against a mobile app that is trying to serve as a channel for delivering in-bar advertising for liquor companies.

"Flowtab wasn’t saving you enough time or energy to make it a compelling experience."

Serious question - was it ever going to? It always seemed like a backend-heavy way to optimize for a trivial inconvenience. I have to say, It seems to me this was a failure because it was just plain a bad idea. That makes for a pretty short story, though, I guess.

I'm also one of the founders of Flowtab. When we started the company we made a lot of assumptions about the demand for our product and the ease in which we were going to change bar culture. The demand for the product was there (people used it, they often had a good experience) but it wasn't memorable or valuable enough to make them use it EVERY TIME. That was the hardest thing to do.

Sure we were saving people time, and making the drink ordering experience more efficient (no cash, cards, open tabs and an easily-accessable drink menu), but what we learned is that people in bars are there primarily so socialize, and they don't always need maximum efficiency like you do when you need a ride home (enter Lyft, Uber) or want lunch delivered (Seamless, GrubHub). People in bars like the social friction, and we were offering them a solution that took the social aspect out of the drink ordering process. Hindsight 20/20.

Hopefully other entrepreneurs read our story before dedicating valuable years of their life to a similar product in the space.

Kyle H.

With 50,000 bars/nightclubs in the US, and witnessing the success of other mobile payments companies (Levelup, Kuapay, and Starbucks app) it seemed inevitable especially considering the poor ordering experience in many establishments.

Mike T

Is Levelup actually considered successful? I have seen it in several establishments around here (Seattle) but I have never seen it used, and the employees tell me it is not popular or easy (unlike, say, Square). I don't know Kuapay. Starbucks had something of a firm place from which to launch, so it's not really comparable.

What's the poor ordering experience? Trying to get the bartender's attention? I would submit that a poor order experience is a consequence of the establishment, not the fundamentals of the ordering process. Personally, I like the bar experience, it's personal, it's immediate, you can get recommendations, and it's fairly equitable for everyone around (shovers will be ignored by a good bartender, though a good bartender is by no means guaranteed). On the other hand, a remote ordering situation turns every bar into a drink machine activated by an impersonal, drive-thru-like interface. If you prefer that to the existing system, perhaps you should patronize a better bar!

I agree that there is probably some interesting way to leverage personal technology in this space, but it's not this. This app does not improve the "ordering experience," it eliminates it. That's a bad idea.

It's in Boston a fair amount, I see people using it.

There's a much simpler solution that solves 80% of the chaos at bars as well. If the bar ever gets crowded enough that you need at least two bartenders, put a sign that says "order here" at one end and "pick up here" at the other. Basically, make bars operate more like Starbucks.

Great postmortem. These kinds of high-altitude narratives, which describe the overall lifecycle and tell the key stories, are utterly fascinating, success or failure. When you're so focused on something, then discover parallel narratives to your experience, you gain perspective that's useful and even emotionally valuable.

They're very common within the game development world, after becoming a regular, beloved feature of Game Developer Magazine (now defunct). Here's a big list of them, perfect for a Saturday afternoon:


Is there any collection of these kinds of articles for contemporary startups, or similar postmortems that are also worth reading?

Back in the early 2000's, it was FuckedCompany.com. It was a daily dose of layoffs and shut-downs amongst (mostly) tech startups.

There is TechCrunch's Deadpool now. Not updated nearly as frequently as FC used to be.


Thanks, it would have been a complete waste if we didn't publish this...

Vitamins and painkillers. I see a ton of small businesses around Seattle using Square, and purchase food with a small literally hole-in-the-wall restaurant with it about once a week. Square solves a very serious pain point.

This seems to be more on the vitamin end of the spectrum. It doesn't solve a pressing issue I have when I walk into a bar. On a related note, this idea also seems to suffer from almost a marketplace-style issue: both the seller and purchaser need to use the app, which just makes things even harder.

If you do decide to tackle a marketplace idea again in the future, I recommend adopting a multiple phase approach where the first part doesn't require buyers and sellers. Build a product that will benefit one side or the other (I recommend the sellers), and then pivot into a marketplace strategy once you have sufficient traction.

Edit: in reading over the article in more detail, I have one thought. I personally would've tried positioning the software as an easier means to order room service in hotels. Ordering room service sucks, and I'd much rather use the equivalent of Eat24 or GrubHub than picking up the phone.

Square solves a very serious pain point.

Depends. I've seen and heard multiple stories of cab drivers or business owners failing to process using Square. For them, it certainly was more of an annoyance than a painkiller. In most these cases, I ended up paying cash.

Also, here's a truth about painkillers that few talk about: painkillers are quickly commoditized. This is why you'll find vitamins to cost more than tylenol even though it's the Tylenol that helps you when you have 102 fever.

I think you're taking me a little too literally.

Incidentally, worldwide vitamin sales are expected to reach $3.3bn in 2015[1] while pain management drugs (ranging from OTC drugs to opiates) are expected to hit $60bn the same year[2]. So, painkillers revenue is ~20x vitamins.

[1] http://www.prweb.com/releases/vitamins/food_supplements/prwe...

[2] http://www.prweb.com/releases/2011/1/prweb8052240.htm

I've noticed that there are a lot of startup ideas that fall into the general category of "if we can get businesses to adopt us and get users to adopt us then ... profit."

I worked for a company called DoTheGood way back in 2001 that had a similar issue, although our problem was even worse since we really needed 3 parties to adopt us (businesses, nonprofits, and users).

I think these sorts of ventures are just incredibly difficult to make work without a massive amount of money to throw into advertising and sales. There's a huge chicken and egg problem where, in the FlowTab case, users want bars to adopt it and bars want users. You can't just hope that your technology is nice enough because no matter how nice it is, without enough bars and users the tech is worthless.

If you have millions (or tens of millions) to push into advertising (to acquire users) and sales (to acquire businesses) then maybe it could work, but it just makes things that much harder.

Of course, we can identify some startups that did make it despite the chicken and egg problem, like AirBNB and eBay, to name a few.

It's known as a two-sided market (http://en.m.wikipedia.org/wiki/Two-sided_market). Very challenging to start, particularly if it requires upfront fixed-cost for one or both parties, as in this case.

Great story. TC, VB and others should do pieces like this more often. One comment:

Flowtab could not be distributed through partnership with companies that sell Point of Sale (POS) systems.

Anyone have insights into why this is?

I do! So before Flowtab I built ZingCheckout, a web Point of Sale (now used by Tesla Motors). I learned a ton about POS distribution, it was a big part of our growth strategy. However, a POS reseller really can't justify the cost in selling only Flowtab (like you could with a POS) because it was an ancillary product and couldn't yield the high upfront sales $ from bar owners.

Mike Townsend

Was the focus on mobile ordering or mobile checkout at the end of the night (or when the patron decided to leave?)

Integration with a POS would make that a better experience than everybody trying to get the bartenders attention to close out the tab.

While the story of the rise and fall of Flowtab was compelling, I thought Flowtab did a great job with http://alpha.flowtab.com. This site is a really effective way of telling their story and I commend them for including several "artifacts" (resources) for public consumption. It's never easy to admit failure...

Thank you... I think it's valuable that entrepreneurs learn everything they can from the fallen soldiers before them before dedicating valuable years of their life to a startup. That's why open sourcing this was so important to us.

I like to think of startup guys as scientists... even if we didn't find the cure for cancer, there's still value in discovering the 100 antidotes that DIDN'T work.

FYI the alpha site is the same as our main site, www.flowtab.com.

Kyle H.

I completely agree. I really appreciate the story and timeline feature of the alpha site.

I really really appreciate that, did you see all the resources on bottom of Flowtab.com?


"Its life became a startup story that most don’t tell: A company that didn’t make it."

Well actually there have been quite a few of these lately.

When I go to a bar, I want some human interaction for a change. Ordering drinks is part of the experience. But that's just me.

I am sure this was a fantastic learning experience for the founders.

Best of luck next time!

The problem was that this idea was a feature of a point-of-sale (POS) system, not a product.

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