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My startup was doomed
A postmortem on SaveTogether, the collaborative savings app that wasn't.
I just killed my first experiment.
Below are the details of my idea, process, and decision.
Personal finance is broken because you have to do it alone. Saving money with the help of your community lifts all ships.
Several months of ideation / tuning. Beginning to build the product. A few weeks of customer validation.
The majority of people have too much pride/dignity to ask for help and would not engage in such a platform
Here is the detailed journey:
Genesis of the idea
I make a decent amount of money, but for the majority of my career I’ve lived paycheck to paycheck. It’s not because I don’t understand budgeting or finance. Mostly it’s because I believe in investing in myself and my family in the form of experiences and lived education. Ok… and I’m subject to consumerism. Top-of-the-line gear is my weakness.
But, I do succeed saving money in one vehicle: my 401k. Why is that?
For me it comes down to a few things:
The money comes out without me noticing
It is stored separately from my cash accounts
My employer matches my contribution (instant 100% return)
There is a penalty for early withdrawal
The money grows tax free
My new company focused on replicating the dynamics of 401k accounts for non-retirement savings (downpayment for your house, your kids college, etc.). I named these “medium-term” goals.
The first 2 points are simple to replicate. The second 2 I assumed are possible to replicate. The final point, I made the north star for driving legislative change through my new platform.
Initially I dug deep on how to set up a rigid structure to prohibit early withdrawal of funds. This led me into Trusts, smart contracts, and other legal setups. It all felt too difficult. Consumers want something easy to understand and trust.
Then it hit me. Most of the world doesn’t actually operate based on legal norms, but rather social / societal norms. The most powerful agent to prevent people from spending their savings would be their own human network.
Peer to Peer / Collaborative Savings
At this point, I was coalescing around the two most fervent reasons people fail to save money:
They are living paycheck to paycheck and don’t feel like they have extra money
They succeed at “saving” but then spend it later on a trip to Cabo or a new xbox
Social savings would solve both of these issues. The format would be simple. You have a public profile listing savings goals you’re working toward. You can share the link with people in your community who are aligned with your success. Your network can opt to support you with recurring or one-time donations as encouragement.
In return, the supporters receive “read-only” access to the account. This means they can see the balance and transactions, but cannot use the funds themselves. The interface would incorporate notifications / reminders for giving thanks, ideally publicly on social media.
Wow. At this point I was convinced I was on to something. The biggest expense in Fintech is acquisition. I’d found a model where viral sharing was a core part of the product (establishing a savings goal only REALLY pays off when you invite several people in your network to join).
The best part, there were clear ways this product could grow with P2P as the foundation.
Having “nailed” the underlying mechanisms, my mind quickly imagined ways this business could grow and change more paradigms.
We could sell it as an employee benefit where your employer can match your savings for your “medium-term” goals similar to the way they match your 401k. Most employees are a LONG way from retirement. What a better retention tool!
We could empower a new form of giving: “Direct Micro-Philanthropy” where a celebrity like John Legend could say “I want to donate $300 to any 7-14 year old kid in the greater Atlanta area who sets up a college savings account”
We could become the de-facto tipping platform for gig workers, where reading their story leads to high resonance with their humanity and corresponding larger tips
Wow. This is going to be big. Time to quit my job and build it.
MVP. MVP. MVP. Are you chanting it yet? That’s the next step, right? Get to something viable, see if users like it.
I was on board. I jumped right in. Setting up wireframes, building infrastructure, coding the initial flows.
It was so therapeutic to be at the early stages of building again.
And for that reason, I don’t regret it. But I am glad I caught myself quickly.
Two weeks into unemployment I read Gagan Biyani’s article titled “The Minimum Viable Testing Process for Evaluating Startup Ideas”.
It felt a bit like being stabbed by a knife (I have indeed been stabbed during a scuffle over a board game once, different story, and only in my thumb, phew!).
I vowed from that day I wouldn’t code again until I had validated my core hypotheses.
Deciding On The Core Hypotheses
If you haven’t read Gagan’s piece. You should do that now. It’s better than mine. The quick version is: determine the core hypotheses that must be true for your company to work. Test those in the most basic / elemental way. Build as little as possible to enable the test.
So I put pen to paper (well, fingers to keys because my Dad is a doctor and my handwriting tells my lineage).
One of the first warning signs was that coming up with this list was much harder than it seemed. And, I ended up brainstorming a list of many core hypotheses that needed to be true for this to succeed (More on this in takeaways below).
Here are the top few that gained my primary attention:
People feel a need to save money for their goals
People are willing to ask for assistance reaching their financial goals
Gig workers will be excited to use the product for incremental tips
Older generation wants to give money to causes they believe in
Testing the Core Hypotheses
Building a startup is full of sacrifices. In this case, I decided to sacrifice my facebook account. But, honestly, I’ve been looking for a reason to do that for a long time.
I joined every group I could find that focused on rideshare, gig economy, or delivery. I no longer saw any friends in my feed. Instead I saw complaints about making lousy money, memes about odd passengers, and lots of screenshots of hype users who just “made a ton of money”.
I soon became the most hated new member of a few of the groups.
I posted a survey.
Don’t do that. I was called “scammer” more times than I care to remember.
So, I shifted my method to posting questions targeting use cases I imagined my app enabling. The most successful involved asking what other drivers thought of my idea of putting a poster in the back of my car, or stickers on my deliveries that low-key asked for a better tip.
The response was thunderous. No. No. No. We are not beggars. We will never ask for tips. It’s tacky. Customers hate it. You’ll get deactivated.
There were a few nice people that said “give it a shot.” But overall, people hated it. The theme was “We have dignity. We will not ask for handouts.”
One thesis had been strongly invalidated. Gig workers didn’t want this as a tool. It also gave me strong concern for the hypothesis that people are willing to ask for assistance. The response was so innate and fervent against asking for tips, I can’t imagine this group would be willing to ask for help with their personal finances.
For the other theses, I used a simple google form, distributed via my facebook and instagram. The findings of the survey showed:
People do not feel like they are bad at saving money
People feel like there would be marginal benefit from sharing their financial information with their network
People would be slightly more inclined to share financial information with their network if the network was contributing.
Oof. My theses were dropping like flies.
Along the way, I also spent a lot of time on zoom calls with friends, VCs, CFOs, and strangers. Major learnings included:
On GoFundMe, no one creates a fundraiser for themselves, they are always initiated by a merciful 3rd party
On Wealthfront, nearly no one uses the goal-based savings tools (Further evidence is the ultimate failure of Simple, which followed the same paradigm)
CFOs thought the employee benefit idea was novel, but not compelling enough to make it through the quagmire that is selling into the benefit
VCs gave the typical “Consumer is hard” and also highlighted the need to drive urgency
At this point, the company is dead. Could parts of it still be viable? Probably. But, the main levers that I thought would make it a screaming success, were wrong.
What did I learn?
Test your theses first.
Luckily I caught myself quickly. But I’ve talked to many entrepreneurs who are months or years in without doing the proper testing for their idea. It’s easy to make excuses here, or to pass off your close network as wider validation. It’s uncomfortable to face the potential that your theses are wrong. Do it now.
Consumer Fintech is crowded.
I started taking a screenshot of every company that tried to advertise a consumer Fintech solution to me. I may have to pay for extra google photos storage now. There are a lot. And the fact that they are resorting to spending on social media for acquisition signals they are not resonating enough to spread the product organically. Consider a different space for new companies to maximize your success rate.
Every existing paradigm you try to break drastically decreases your chance of success.
I was attempting to convince the world that:
They should publicly list their savings goals
They should share their transaction data for select accounts
Companies should offer matching programs for non-401k accounts
Just to name a few. Each time you introduce a major paradigm shift, the chances of success drop. Of course, it’s still possible to pull off. But, worth consciously acknowledging it is extremely hard to do.
Startups are a strange stress/fun cocktail
I feel invigorated, excited, and hopeful while also feeling exhausted, stupid, and confused. But overall, I feel like I’m growing at a fast pace. I’m glad I’m in this stage and I’m ready to lean in further.
In classic entrepreneur fashion: “This is just the beginning.” I plan to share more details of my journey soon. Including the outcome of my last week where I engaged in over 70 cofounder dates.
Thanks for reading and I’d love to hear your feedback!
If you read this far, you are now rewarded with the blooper / highlight reel: