Outbox Blog â¢ Outbox is Shutting Down -- A Note of Gratitude
TL;DR : It cost them $5 million to realize there was not enough demand for their product.
After raising $5m in June of last year, we set out to onboard the 4,000 individuals we had amassed on our central-San Francisco waitlist. We projected converting a large percentage of these individuals, and planned to scale our marketing efforts at a projected cost of $20 per acquisition.
However, after an extensive email marketing campaign to our waitlist, total yield from the waitlist was under 10 percent. And as we started marketing outside of this network, we had difficulty finding a repeatable and scalable acquisition channel. Across all of our efforts, our acquisition numbers were over $50 per lead.
As our marketing efforts lagged behind schedule, our density numbers remained consistently flat, causing us to spend about double our projected cost to service each customer. Even our most dense routes cost us approximately 20 percent more than our break-even target.
After several months of testing and refining, we reasonably concluded that we were executing well and collecting good data â it told us that there wasnât enough demand to support the cost model.
It doesn't sound to me like they spent all of $5M to discover just that . It sounds like they've got money left over from that $5M raise and are pivoting. Lessons learned.
Whew. That makes me feel a lot better!