In 2019, TetraScience CEO "Spin" Wang needed advice. Five years earlier, he had cofounded a startup that saw early success with a hardware product designed to help laboratory scientists in the biotechnology and pharmaceutical spaces more easily collect data from various instruments. At the time, longtime technology CEO Patrick Grady warned the cofounders that the growth was illusory, and that they should think about how to better structure their business and to start anew thinking about design in four facets-category, product, organization, and ecosystem. Paying attention to these "first principles," Grady believed, would lead TetraScience to pivot away from its initial hardware business and into a new cloud-based service. The cofounders had rejected Grady's advice at first, but in 2019, with the company facing bankruptcy, Wang called him up again to talk strategy.
Sarah Kunst knew the elements of a successful startup from her tenure at venture capital firms. In April 2018, however, her own app - Proday, a home fitness platform featuring exercises filmed by professional sports stars - was floundering. Kunst theorized that Facebook algorithm changes had ruined her marketing plan, but needed to be confident in her diagnosis before allocating resources to a solution. She thought back to Proday's launch two years earlier to see if she could pinpoint where it all went wrong.
This case features the same protagonists as Ample Hills Creamery (HBS No. 822-073), and can be used as a continuation of that story. Ample Hills Creamery started in 2010 as a temporary ice cream pushcart in Brooklyn, New York City. On the strength of inventive flavors and clever marketing, husband-and-wife founders Brian Smith and Jackie Cuscuna built a premium, artisanal dessert empire of 16 retail locations in four states. However, some decisions that fueled their rapid growth were double-edged swords, and the couple filed for corporate and personal bankruptcy in 2020. After ruminating on their mistakes, Smith and Cuscuna decided to start another premium ice cream brand, at a much smaller scale, using the lessons they learned in their Ample Hills experience.
Ample Hills Creamery started in 2010 as a temporary ice cream pushcart in Brooklyn, New York City. On the strength of inventive flavors and clever marketing, husband-and-wife founders Brian Smith and Jackie Cuscuna built a premium, artisanal dessert empire of 16 retail locations in four states. However, some decisions that fueled their rapid growth were double-edged swords. Licensed partnerships with Disney raised the brand's profile, but necessitated expanding production. The factory they built was expensive and introduced new logistical challenges. And the native New Yorkers were unhappy with a pricey West Coast expansion. In March 2020, they filed for bankruptcy, disappointing the venture capital investors they had attracted and the legions of fans who did not understand why the popular brand was not turning a profit. The protagonists' story continues in The Social (HBS No. 822-074), which tells the story of their second ice cream venture.
This is the conclusion to Agora (A), where founder Elsa Sze decides if she wants to continue investing energy in her civic technology startup. Agora was a civic technology (civic tech) startup founded by Elsa Sze, who wanted to enhance the connection between political officials and their constituents by facilitating virtual "town halls," making underrepresented voices heard and benefiting elected and appointed leaders who often struggled to collect meaningful feedback. Despite success in startup accelerator programs, challenges and complexities with government sales cycles led Sze to pivot the company multiple times, until she was selling customer service software to corporations and pondering whether she still wanted to build and sell Agora. A short financial runway meant she had to quickly decide where to invest her energy.
Agora was a civic technology (civic tech) startup founded by Elsa Sze, who wanted to enhance the connection between political officials and their constituents by facilitating virtual "town halls," making underrepresented voices heard and benefiting elected and appointed leaders who often struggled to collect meaningful feedback. Despite success in startup accelerator programs, challenges and complexities with government sales cycles led Sze to pivot the company multiple times, until she was selling customer service software to corporations and pondering whether she still wanted to build and sell Agora. A short financial runway meant she had to quickly decide where to invest her energy.
In 2015, the co-founders of Dating Ring, an online dating startup that relied on human matchmakers to arrange dates between its members, were deciding whether to either shut down the service or instead manage Dating Ring as a "lifestyle company," ramping down growth expectations, abandoning plans to raise more venture capital, and keeping tight control over costs. Dating Ring's founders originally aimed to achieve a billion dollar valuation, and their participation in the elite Y Combinator accelerator has stoked their ambitions. However, growth had subsequently sputtered and the founders had not been able to raise more venture capital.
In May 2020, SoftBank executives, having invested nearly $2 billion in Katerra, decided the vision of an end-to-end, vertically-integrated construction process was worth saving-with some major changes to company structure. The SoftBank Vision Fund invested $200 million in Katerra as part of a company restructuring in which cofounder Michael Marks stepped down as CEO, and former oil industry executive Paal Kibsgaard was promoted from chief operating officer to CEO. However, by June 2021, Katerra had initiated the bankruptcy process. Should Katerra's failure be attributed to mistakes made by the company's management team? Or did the company encounter a series of misfortunes that made it impossible to continue forward?
In April 2020, Katerra executives struggled with a series of decisions that would determine the fate of one of the best-funded construction startups in history. Katerra was founded in 2015 by technology-industry executive Michael Marks and commercial real estate developer Fritz Wolff to "redefine the construction industry." Over the next four years, Katerra raised $2.5B in venture capital investment and grew to 7,500 employees. Focused on creating a fully integrated commercial real estate development process, Katerra built and operated factories manufacturing building components ranging from pre-fabricated wood panels to windows, acquired architecture and general contracting firms globally, and developed a series of proprietary software systems to design and manage construction projects. Management touted a project pipeline filled with eager commercial real estate developers and multifamily housing projects, but actual revenue was lacking. Katerra would soon run out of money without additional investment. Customer complaints about Katerra's ability to deliver on promised time and cost savings, coupled with the departure of one of the company's co-founders, call into question the company's strategy and Marks' leadership. Investors must decide whether the company's vision is salvageable, and if so, what steps they should take to construct a pathway to profitability.
Resolves the questions raised in Troverie (A); recounts pivots and efforts to raise capital from strategic investors and sell Troverie; and shares the founder's post-mortem reflections on what went wrong and what he might have done differently.
Six months after the August 2018 launch of Troverie, a U.S.-based online retailer of luxury watches, the average cost of acquiring a customer is much higher than originally projected, and the startup is incurring a substantial loss on each sales transaction. Could customer acquisition costs be reduced through optimization of marketing messages and channels, or did high marketing costs presage a fundamental problem with Troverie's business model? Troverie was an authorized retailer of 17 luxury watch brands, and had partnered with brick-and-mortar jewelry retailers that would drop ship the watches from their inventory in exchange for a share of Troveries's revenue. The brands were authorizing online sales for the first time, to combat "grey market" outlets that sold their watches without the manufacturer's warranty.
uBiome provided clinical tests that sequenced the DNA of human microbiome samples, providing data on health conditions directly to consumers or to prescribing physicians. Founded in 2012, the San Francisco-based startup raised $105 million from top-tier venture capital firms and recruited prominent biotech executives and scientists as board members and advisors. In April 2019, the FBI raided uBiome's offices to investigate claims that the company had repeatedly billed individuals without their consent to meet aggressive revenue targets. uBiome's cofounders/co-CEOs resigned soon afterward. The company declared bankruptcy later that year after a board committee concluded that management had indeed pursued policies of questionable legality, including improper insurance billing practices, improper use of a telemedicine physician network, overly aggressive marketing tactics, and the presentation of misleading information in fundraising pitches.
Avni Patel Thompson, founder and CEO of Poppy, an online marketplace for on-demand childcare, revisits the venture's final months, and discusses the steps she took in the wake of the shutdown. This case explores experiments the company conducted to refine its original business model, as well as how Patel Thompson rekindled her entrepreneurial ambitions. It is part two of an A and B case, the A case being: Poppy: A Modern Village for Childcare Case 818 075, November 2017.
A founder looks back at the issues at play in the final year of failed furniture e-commerce startup, Dot & Bo. He shares his perspective and learnings in the aftermath.
Baroo CEO Lindsay Hyde must secure venture capital funding if she wants to save her pet services startup. If she is unable to finance a series A, she will need to sell or shut down.
Baroo CEO Lindsay Hyde was facing unrest from the board of her pet services startup in August 2017. One board member (and lead investor) was alarmed that Baroo's growth was slowing while it's appetite for funding was accelerating. Hyde wanted to hit the gas and continue expanding to new cities, which meant she needed to raise venture capital. How could she convince the board and potential investors that the business opportunities were too good to pass up and an infusion of capital could help her steer Baroo through the speed bumps?
C case to 820002 In 2016, senior management at Moz, a venture capital-backed startup providing software tools for digital marketing professionals, must decide how to address a looming cash flow crisis precipitated by failed efforts to broaden its product line. Seattle-based Moz had originally focused only on search engine optimization (SEO) software. Aiming to accelerate growth, over the past three years the startup had launched products targeted at content marketers, social media marketers, and small local businesses. Adoption of these new products had been disappointing, and the resource drain and distraction of launching them had reduced the growth of Moz's core SEO product. Management was wrestling with whether to either: 1) shut down or sell the new products; or 2) double down on the new products, funding further investment in them by selling the core SEO business or milking it as a "cash cow."