I came across a report on the Startups that closed down in 2017 and I would like to compliment the team that put this together for furnishing relevant details about these startups.
One such startup that closed down its operations was Fella Homes. It’s quite fascinating to see how a startup tries to behave as if its a very mature organization with unlimited resources at its disposal.
Quote “Fella Homes is a technology-enabled home rental solution provider trying to make home rental affordable, accessible and transparent. It aims to provide an ecosystem of furnished rental homes suitable for bachelors, working professionals, students and families too“.Unquote (Italics mine)
While the intent to make home rentals affordable, accessible and transparent is indeed very noble and lofty, its my submission that where they went astray is in their target customer definition as bachelors, working professionals, students and families too.
Now, let’s pause a minute and reexamine their statement.
At the outset, it seems to cover the entire population that is looking at renting a residential unit. Bachelors, working professionals and families!! Who else is there? In effect, they have said “Everybody who wants to rent is our customer” and there started the downfall.
Why do I say that? I have been crying hoarse on this deadly mistake and wrote many blog posts such as this.
They broke the cardinal rule of a startup when they made this statement for the simple reason that they cannot afford to cover the entire gamut of rent-seekers.
It is indeed very sad and tragic to find startups led by enthusiastic and passionate founders going down the drain on account of lack of clarity on their customer definition.
Well, what could have been done? If their research had pointed the high level of difficulty being faced by a particular segment say ‘bachelors’ in securing quality rental accommodation, then that should have been their starting point.
I would even go to the extent of specifying a geographic filter to define the target segment in a laser sharp manner and then gone ahead with the operations that would have solved this problem.
Its not that Fella Homes did not have Money. In fact, they raised $2 Million in early 2016!! I understand that they acquired a similar startup soon after. Possibly, this enlarged definition was on account of this acquisition.
So Founders!! Please focus on building your solution to solve a real problem of a customer segment that you can really address!!
We at Idea to IPO Growth Consultants, focus on the fundamentals of your business right from an idea stage all the way to your becoming a leader!! So get in touch with us today to build a strong foundation for your business.