Shut Down: July 2010
Founders: Paul Biggar, Nathan Chong
Funding: Seed funding (Y Combinator)
Newstilt was a journalism startup that operated for only 3 months after launch (or 8 months from being founded). The Newstilt concept was to provide a set of online services for professional news journalists to build their own brands and content networks (e.g. services such as web site design, content management and syndication, advertising, etc). It was conceived as a means to provide a sustainable business model for online journalism.
Co-founder Paull Biggar wrote a lengthy blog post titled “Why we shut NewsTilt down“, which provides detailed and insightful commentary into why the company failed. Along with my own thoughts and input from several other analyses, the reasons for NewsTilt’s failure and the lessons that can be garnered are distilled below.
Why NewsTilt failed
There were quite a few factors suggested that contributed to NewsTilt’s downfall, but they fall under a few major categories: 1) poor execution, 2) lack of industry understanding and passion, 3) problems between founders and 4) lack of investment.
1. Poor Execution
The idea behind NewsTilt sounded good in theory and generated a fair bit of enthusiasm, but poor execution helped to derail the company. There were a few key components behind the poor execution:
a) Not delivering the core features that would have attracted journalists – NewsTilt promised alot of features to journalists, but then didn’t deliver them. This may not have been a problem if the promised features were incidental, but even the most important features weren’t provided. For example, one of the core promises was that NewsTilt would help journalists build their own brand using their own domains, but this was inexplicably cut from the minimum viable product “in order to make the launch date”. Instead, NewsTilt hosted all the content in its own website, barely differentiating itself from other news organisations. This was understandably perceived badly by the journalists and content eventually dried up.
b) Overpromising, but not delivering – this seems to be a recurring theme with NewsTilt. They promised the journalists their own platform, promised to do the promotion and marketing for the journalists and then promised a bunch of technical features that were never implemented. The problems probably weren’t the promises themselves, but rather the capacity to fulfil them. In each case, NewsTilt either didn’t have the expertise or the resources to actually deliver on the promises.
c) Re-inventing the wheel – NewsTilt decided to build the entire platform from scratch, rather than using commercial or free software components (e.g. WordPress) that people were already familiar with. This turned out to be a mistake, as their limited resources were sucked into building the common platform instead of developing the core features.
2. Lack of Industry Understanding and Passion
Neither founder knew much about the news industry or journalism in general, and Paul Biggar admits that neither of them really even cared. This contributed to a number of problems including a lack of understanding of who the customers were and what they wanted to read and choosing the wrong journalists. Moreover, Paul didn’t even use the product himself and wasn’t particularly passionate about news and journalism. As a result, both founders were completely ignorant as to how they could actually deliver on their promises.
3. Problems Between Founders
Paul Biggar alluded to “communication problems” with his co-founder Nathan Chong, which resulted in them having disparate visions of NewsTilt. Living in different cities didn’t help their communication problems either. The co-founders hadn’t worked on any projects prior to NewsTilt and found their relationship stressed from the very beginning.
4. Lack of Investment
NewsTilt received only seed funding from Y Combinator (around $50k) but what they needed was alot more investment capital so that they could pay the journalists and give them incentives to write. Their scope was far too ambitious to be implemented on a bootstrap budget and it was likely bound to fail without further funding to pay for the content, development and marketing costs in order to build the audience and gain traction.
- Make sure the minimum viable product (MVP) includes the core features that will attract customers (or contributors in NewsTilt’s case). Ensure that the MVP delivers on the key promises of the product.
- As a corollary to 1), work on the core features that will differentiate your startup. Where possible, try not to re-invent the wheel by using standard third-party packages.
- Industry knowledge or at least passion for the subject is essential. As NewsTilt have demonstrated, trying to start a business in an industry you don’t care much for is not likely going to end well.
- Co-founders should have some past experience working together and should have a good rapport. It’s often said that being startup co-founders is like being in a marriage and therefore personal compatibility and a strong relationship is a must.
- Once you alienate your customers or contributors, it’s a long road to winning back their trust. NewsTilt managed to alienate both their contributors (by not delivering on promised core features) and customers (e.g. requiring Facebook integration and launching without any content).
- If the scope of your startup requires large amounts of funds to build traction, then you need to either secure funding or reduce your scope.