The author of the blog Product Habits Hiten Sha published an article about why the service for task management Trello failed to reach a billion dollar valuation. Edition vc.ru publishes an adapted translation notes. System task management Trello is its Creator, Joel Spolsky presented at the conference TechCrunch Disrupt in 2011.
“Then the product resembled a conventional Board with stickers, transferred to the browser on the iPhone. Instead of having to re-stick the stickers on the physical Board, the user can drag them to the virtual,” writes the author of the material. For several days the Trello website received more than 130 thousand visitors, and about 22% of them registered in the system. The idea of developers was to create a simple and useful tool that could benefit anyone.
A few months after starting the tool Spolsky wrote in his blog. “Create a horizontal project that would be useful in any sphere of life, is almost impossible. The user will not pay for such a tool too much. This development is a big risk.”.
In January 2017 Trello has acquired a developer of tools for business Atlassian for $425 million. The tool is used by tens of millions of customers. Trello has managed all but one company have not learned how to attract and retain paying customers.
“The Trello team focused on the growth of the user base and monetization planned to do then. And by the time the company remembered their paying users, it was too late. They have chosen other tools,” continues the author of. He notices that Trello will perfectly complement the set of tools from Atlassian, but to continue to grow independently of the company would have failed.
Trello is an electronic Kanban Board. Control system Kanban in the 1940-ies popularized a large Japanese company. The basic idea is that every card on the Board represents a product or part. When the card moves on the Board, in reality, the product to which it corresponds, too, is moved, for example, from the factory to the Assembly.
“When the Trello team started to implement a similar system for collaborative editing in the browser was very difficult from the technical side. Other SaaS platform at the time relied on massive databases, but Trello went the other way — data was cached when the user first opened the page and saved for faster work”. The data, writes Sha loaded almost instantly. Everyone who worked with the Board, saw the changes within a fraction of a second.
In 2011, this design gave the advantage of Trello, but by 2016 to create something similar was just the same, and the Kanban Board, says Sha, began to appear in large quantities. Asana co-founder Justin Rosenstein in one of his interviews said. “We commend Trello and believe that the team did a great job and demonstrated an innovative approach.
But we see Trello more as a separate function, not a standalone product”. “Trello could be a billion-dollar product, if positioned as the system of record, says the author of the material. ? Imagine that you can move the entry from boards marketing Board sales or an overall road map for the product and not have to switch between the individual boards.”. But Trello was never the system of record.
Electronic Kanban Board is an important and cool feature, but, in the end, it is not so difficult to copy. “In the field of SaaS winner is not one who first creates the product. The winner is the one who constantly makes their product better and solves problems of users. If you create a popular feature, it is required to copy,” explains Sha.
“To build a billion-dollar company operating on a freemium model may. In 2013 the “cloud” service Dropbox with the volume of audience of 200 million users, was valued at $8 billion. It happened six years after launch and before the company presented investors with your business plan before revenue is mainly accounted for the monthly payments from users $10″.
Trello user base grew even faster than Dropbox — about three years later after the launch, it was 10 million, and Dropbox after three years of work had 4 million users. But the company failed to pay the free user to a paying audience. In 2013, the Trello team has announced the launch of a paid subscription Trello Gold for $5 per month customers are able to customize the appearance of planks, upload up to 250 MB of documents as attachments to cards, as well as use custom stickers and emojis. Everyone loves stickers, but its not a good enough reason to pay for software.
Paying for the use of Dropbox, the client receives 50 times more space than the free version. “The value proposition Trello is not so obvious,” writes Sha. According to the author, the Trello team should advance to consider usage scenarios of the product and its worthwhile to offer.
Instead they built a freemium product, and monetization decided to do later. “Cost to allocate the usage scenarios and to ask questions. Do product competitors that solve the same problem. What is the income of the users who will use the tool in this scenario.
For example, the team found that the greatest payment potential are lawyers, estate agents and designers. In this case, the designers would need a calendar, and the lawyers — the possibility to open a Board”read-only. The Trello team has included these functions in your business plan, but drew attention to them, because I wanted to keep a broader focus. But if you create a product for everyone, it is especially important to segment your audience and to draw attention to the importance of each category of customers.
According to the author, business Trello would benefit if the company managed to gain a foothold in the market of small and medium-sized companies. But the service did not occupy a Central place in the workflow of such projects and to pay for it teams didnt want. Trello launched a paid plan for small business in 2013. The company was charged $200 from the company in the year.
Later service went to pay for the number of employees — $10 per person per month, payment once a year. For this money, users get an unlimited number of boards and integrations between them, the privacy settings for boards and records and the ability to open the cards read-only. While many companies are constantly Trello used only a small part of the team, and to pay the management was forced for all. As a result, the business refused tool.
Sha believes that the teams Trello cost to integrate the tool with other services for small and medium businesses as deeply as possible. Imagine that you can set tasks in Trello from GitHub directly. Leads in Salesforce can also be controlled from the Board of the company. The tool could become a kind of dashboard for all other services — it would be incredibly valuable.
Instead, all of these services copied function Trello — because customers needed them. The faster Trello to be left to the corporate market, the higher would be the probability of success, according to the author of the material. The company launched a subscription that focuses on large companies in 2015.
A year later, the index of ARR (annual subscription revenue) reached $10 million. The main problem with this model, he continues, was the fact that she was focused on companies that have used Trello in their work. Various departments were conducting their own boards, but to become a single system for conducting the Affairs of the Corporation Trello could not.
According to the author, the company should copy the strategy of Slack. To start with employees and distribute the tool on the team and the whole company, watching how they use the service. Slack helps companies to structure communication and to create a hierarchy. Large companies love the flexibility.
If Trello has allowed corporations to set the boards so that they fit to any team that would help the service to cover such organizations completely. “Its easy to look back. But do not forget that creating a SaaS product worth even $10 million, not to mention $425 million — a huge success. The company has achieved a lot.
She created a simple and elegant product that was easy to use and in many ways was ahead of its time”, concludes Sha.