“Our Biggest Mistake €? Too Much Focus On The Product”

Co-founder of a failed service for interaction of citizens and municipalities MyCity Stepan Mitaki about lessons learned. I have always been inspired by leaders who published the history of the failure of their startups. It seems that their stories are always the most popular in the business community.

The errors of others much more instructive than success stories. And I commend those entrepreneurs who openly talk about their failures. Largely because they have to re-remember the details of failed history, while after the closure of the company they probably want to forget about it and move on.

At least I felt so, when my team realized that the project MyCity came to an end. The preparation of this material was for me a kind of introspection. I wanted to share the feedback we received from investors, entrepreneurs, customers and other people with whom we spoke during our campaign to attract investment.

I wanted to perform these reviews and realize that we could have done differently to succeed. And most importantly — I wanted to take a step back, then move on. Before I begin, I want to say that work on the MyCity was one of the best and most important experiences of my life. Ive never been able to obtain so much knowledge in such a short period of time, and no entrepreneurial adventure is not opened in front of me so many opportunities after completion.

Note. I cite in the article are real (but anonymous) investor feedback we received after the presentation of the project in Silicon valley in September-October 2015. In 2014 we launched a communication platform that unites citizens and local authorities.

Initially, we did not anticipate that it will be a commercial product. First, we have created a simple website to communicate the residents of our hometown. But later we began to receive commercial offers from the administration of other cities and decided to build a business based on the product.

As a result, we have created a platform where the authorities of each city could create a site for their settlement. There they could communicate with citizens on how to improve the city. The center of their communication was a map where users could share ideas.

After some time trying and testing various approaches, we determined the vision of our product. First, we didnt want it turned into another tool for complaints. We wanted MyCity has become a place for new ideas and improvements, not quick edits.

That is a place for healthy discussion between local administration and citizens, where the concept of further development of the territory goes from the bottom up, not Vice versa. Secondly, we didnt want to MyCity turned into a SaaS product. Its not the software, platform or website to search for landmarks.

Usually local authorities are launching online projects with their own resources. Usually they make a long URL impossible to remember or find. They are not intended for long-term interaction and often become part of a larger ecosystem.

With MyCity, we wanted to achieve their ambitious goals — to create a network of municipal sites for all cities in the world. The user simply typed the address of MyCity in the browser and got to the page of the city, which would look the same anywhere in the world. And we knew that the reduction of customization in theory, suggests a larger scale, however, it carries a larger difficulty.

The project was faced with the classic problem of “chicken and egg”. While the website does not use at least one government, it is useless for people, because there is no one to respond to their suggestions. If a website is not the residents, its value to local authorities is reduced, because otherwise theyd have to promote it yourself.

On this issue, immediately drew the attention of the people with whom we talked (here and below quotes from these letters). Unfortunately, this product is not for us. The city authorities and its so hard to sell it projects, but the task becomes even more difficult if the product development requires the direct participation of people. A problem “chicken and egg”, which is difficult to solve.

We already had a ready solution to this problem. As we wanted to create a website guide, and dont have software installed, we first needed users. Therefore, our idea was to create a bottom-up demand — from society to government, and not Vice versa, as did most companies in this field. We reasoned.

If we manage to establish a critical level of demand among residents, the local authorities will not be able to abandon the use of the service. This idea sounded good in theory, but in practice, she faced some difficulties. One of them was the problem with the use of the service in the long term.

In almost every city we observed high interest of the residents to the project in the first days after registration, which subsided after they had run out of ideas or improvement. So he didnt fall, we needed to maintain a dialogue between the government and users, and that is incredibly difficult. But the biggest problem is the scale.

We realized that if we manage to create a sufficient level of demand in one market, it does not mean that it will be easier or cheaper to scale it to another. I really like what youre doing. I have worked with online communities and ideas. Although these projects create great value, it is very difficult to find people with the necessary skills to implement them.

Of course, there are great cases, but there are big problems with scaling. We have already seen how the services to report city service tried to develop the demand from the bottom up. We think there are still problems with scaling. We will discuss this with the team, but something tells me that this will be the main reason to abandon the product.

From another investor, we also received an interesting opinion: Because the frequency of interactions per user is limited, you will be hard to create a truly valuable product for the city authorities. I appreciate your attempts to solve the problem, because the gap [between residents and city authorities] do exist, but we are not going to participate. It seems so obvious, but for some reason we never thought about this throughout the year and a half that we were engaged in the development of MyCity.

On these platforms, like ours, representatives of the local authorities will be able to interact with only one user in one time unit, which is quite inefficient. As a result, the problems with scaling the service, and its our job to figure out how to fix it.

While this is one of the main obstacles we faced. MyCity is ideal for one-off projects to enhance citizens. We have seen this on the example of the Norwegian city of Tromso, where MyCity was launched in the framework of a broader initiative “Where is tromsø?”. It turned out that our platform difficult to integrate into existing processes, because it is not a tool for regular complaints.

This is a fundamentally new process of involving people in the life of the city. Some time ago we asked representatives of the city administration tromsø whether they will renew the annual subscription to MyCity for the third time in 2017. At the moment the initiative “Where is tromsø?” ended, and the responsible officials are busy with other projects.

Their answer was very informative. They said that although our product is good, and they understand its purpose, they now have a special project where he could be useful, and to understand, to be or not, it will take 6-7 months. Now we have a special project for your product. We like the concept. MyCity allows you to easily gather the opinions and ideas of citizens.

But we dont know what to do with collected opinions. We need to determine how — and when — we will use this tool. For example, when we are interested in peoples opinions. About the development areas. How we will use their ideas.

How do we demonstrate that we are actually listening to them. Who are the representatives of the municipality will be responsible for this. It turns out that before purchasing the product should solve a lot of issues.

That increases the hurdle for those who decide to use the product for the first time. It seemed to us that this new and interesting challenge which we must address. We knew that our job is to find a simple and functional solution for municipalities. We were going to create not just an online platform, but the system of interaction with the residents.

However, we have failed to understand how to do it. If you closely follow the latest it trends, you have probably noticed that the technology market for the state” the last two or three years is on the rise.

Some companies managed to achieve success, some major venture capital funds began to invest in “it for the state,” in the interest of potential buyers is increasing. But first and foremost, you must know the difference between information technology for public authorities and for citizens.

The founder of the first venture capital Fund, which specializiruetsya on the financing of the companies in the field of information technology for public authorities — Govtech Fund, Ron Bouganim excellent performance by the summit Code for America in 2015. He described the market technology for the state and highlighted the differences between technologies for citizens and authorities.

In Govtech Fund adopted the following definitions for these terms: During the lecture Buganim noted that his Fund invests only in companies that create technology for the state. According to him, it products for citizens is important in the whole ecosystem, and they need support, but they have no sustainable profit model, and they are often non-profit organizations. For Example Vote.org.

And although it startups [civilian sector] can scale quickly, they need time to find its foothold. This applies especially to groups in new industries. Many such organisations are still unable to find your business model.

One of the reasons is the difficulty of assessing the effectiveness of tools for citizens. But the government purchased it product, it first has to evaluate its effectiveness. In the middle of 2015 we have applied to the accelerator TechStars. During the second stage of the selection process we had to go through Skype interview — to introduce the team, discuss the product, current growth, vision and so on.

“How are you going to evaluate the success of your customers. How do you determine that the government copes well with their work from the point of view of citizens?”, asked during an interview with our source, and it was a very important question. And we answered.

“Dont know”. And really, how are we supposed to assess. The number of approved ideas. This is not entirely correct. The number of ideas that officials have given an official response.

No. We thought about how to assess the level of satisfaction of citizens or the authorities. And although it was the most successful idea, the metric was still very inaccurate.

We have not been able to determine the correct metric, and we just moved on, deciding to come back to this question later. Then we started having problems and we understand how important our business was to calculate this metric from the beginning. By the way, most companies in the field of “it for the authorities” assess the success of its service from the point of view of the number of saved taxpayer money.

It is quite a powerful metric, but they do not work for the company from the scope “of it for citizens”. These companies must find your key metric to assess the effectiveness of, and this is very important. This is my favorite lesson. I think we made the wrong conclusions and overestimated the demand for a platform for solving social problems.

Every time we ran MyCity in a new place, we have received many positive reviews from local residents. People liked the tool, they shared it on social networks, added their ideas. However, they rarely participated in the discussion of other peoples ideas and not so often contributed to the development of the whole ecosystem.

In our view, was partly due to the lack of direction and partly because of lack of motivation.

There is a joint study by several teams of Google called “Studying us “interested observers”. Complex relationship with civic duty”. It contains a lot of useful information about what people think about our civic duties and how they perform them. How “interested observers” plan to do and how they do not match. They do not take political action in defense of their values.

And although the “interested observers” say that voice — the source of power, they often refrain from expressing their own opinions. And besides, they are not interested in the opinions of others. Ive always wanted to create a product that would benefit not only a group of other people, but my real friends.

Perhaps this is due to ego, but for me it is a great indicator that you are creating a global and useful product. Unfortunately, its not about MyCity. And its not that my friends are far from the technology or they dont want to make their cities better. In fact, MyCity never caused them a response.

They didnt see the impact of the service on their lives, and frankly, they didnt want to strain and contact with civil problems. Its not as fun and cute in our age of consumerism. Yes, its sad.

But I think this is another challenge for all those working in the field of “information technologies for citizens”. It seems to me that a fundamental change has already started, I see more and more talented young people who refuse to work in fashion and advertising agencies choose to work with the government. In the organization Code for America, the organization of Presidential Innovation Fellows or in their own companies that create products for the state. But we need to work even harder to fulfill a civic duty seemed to be more attractive to a wider audience.

Glad that improvements still space. In the same study, Google says about three factors by which to motivate people. “Interested observers” of acting in the interests of society much more often if it coincides with their own interests. Most often motivates them one of these three factors:

They have the ability to use a personal or professional experience. They have their own interest. They want to experience emotional satisfaction.

Most often it is people who have time to spare, and they cant understand what they could do to influence the social problem. And they are not sure that if you try, you will succeed. To influence the behavior of citizens, we need to increase the likelihood that their action will lead to the desired result, improve the satisfaction that people get after committing the act in the public interest, and to reduce the “cost” of the action. This is definitely not the easiest task.

This list would be incomplete without a lesson, which was given to us very hard. According to my partner Dennis Kreminskaya, this is the main reason for the failure MyCity. In the end, it is necessary to seek the reasons for the failure of the company itself, and not only in its environment.

Some startups cant find a better business player view, some admit that they lost focus on the product, some are closed due to high operating expenses. Our biggest mistake — too much focus on the product. Repeat it many aspiring entrepreneurs. Weve spent enough time communicating with real buyers.

We took for granted a lot of assumptions about product, market, consumer habits. But it was all just hypotheses, which we never checked. That is, did first steps, noticed the interest of the market, then turned the engine to full power to quickly develop a product based only on our intuition.

Im not saying to rely on intuition when developing product — bad. But we spent an unforgivable little time for communication with clients. We believe that we can impose our imaginary consumer model on real users, but we failed.

Before heading to San Francisco, we have set a deadline of October 3. This day should have been over the Code for America summit, and we agreed that if until then will attract investments, the project will be frozen. Each of the founders of the company had to combine work and participation in the project. We have distributed the time evenly and continuously faced difficulties.

If we managed to attract investments, then we would be able to fully concentrate on MyCity, but it seems that we have squandered energy, and we needed a break. Six months passed and I found work in the most appropriate place for themselves — the Government of Moscow, product Manager city website Mos.ru.

Work on MyCity was an experience that changed my life and sent me in a completely different way. Of course, I never would have managed it alone, and I will always be grateful to its partners-partners — Denis and Anton. We parted ways but we have kept good relationship. No one knows what will happen next, but now all is well.

Im ready for new beginnings. The original English language publication in the blog of the author.

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