We reported last week that Singapore-based startup iSyndica would be ending its services on Oct 10.
Our post attracted comments from iSyndica’s co-founders on what went wrong. Some of the comments were rather long, so we have parsed them for you.
Of course, the oft-quoted statistic is that nine out of 10 startups fail, but the failures don’t get as much attention as the successes. So we appreciate the iSyndica folks for their candidness.
Here’s the updated story:
iSyndica is a cloud-based tool where one could upload a multimedia creation and sell it via their distribution platform. Their offering to customers was, “turn their passion into profit.” To sign up for this service, users had to pay a certain amount.
iSyndica was founded by four partners, Gwyn Jones, Hugo Angelmar, Thomas Gorissen and Sebastien Coursol.
Jones resigned iSyndica early this year, citing personal reasons. According to Jones, Coursol resigned recently. Angelmar told us that he left the company in early July.
According to this comment on our original post from Jones, “The investment terms included a clause that if both founders (myself and Seb) were to leave the company, then the company would be closed down, and any money left returned to the investors.”
Jones also said that money “wasn’t directly the issue” since iSyndica had raised US$1.1 million in funding.
Coursol, who was the firm’s CTO, had similar sentiments to Jones, as he wrote in a long post on 29 Sept on a forum for microstock photographers, one of the groups of people who used iSyndica’s services.
“iSyndica had some reasonable backing, however the business results were disproportionately small in comparison to the original objectives,” Coursol wrote.
According to Coursol, iSyndica’s business model was broken. It couldn’t get enough users to pay and it couldn’t make a commission from distributing content because of stiff competition:
Because, from the start, based on our positioning as a tool for contributors, and not a microstock agency on steroids (with distribution), we were caught between a rock and a hard place: most potential users don’t really feel like paying and we can’t make a commission on content sales for fear our distribution network would collapse under anti-distribution warfare from agencies who would see us as direct competitors endangering their supply line.
Coursol used a Starbucks analogy to explain why iSyndica couldn’t charge its users enough:
Most of us, me included, have no problem spending $5 at Starbucks to get a coffee. Well, heck dude, you can get a coffee just about as good, if not better, for 50 cents if you make it yourself. I don’t see us counting our pennies then, right? You enjoy the coffee and forget you just pissed out $4.50.
When it comes to providing a service that revolves around you (or I) making money, suddenly prices become a much more sensitive story. You start comparing your income versus your cost. And the truth of the matter (some here pointed that too) is that the majority of contributors really don’t make that much. And because most people don’t value their time, the $5 spent on a coffee suddenly becomes a more attractive proposition than $1 spent on saving you a couple hours of work.
In the end, Coursol wrote, although the company had funding and decent technology, it couldn’t generate enough profits to justify continuing with it.
You do not get investors without having to measure yourself to some minimal expectations. And thus, while the platform was technically sound and could have gone further. But in terms of business, in terms of pure profitability, we shot ourselves in the foot (and the head) from the start and it was time to pull the plug, instead of pissing money in a black hole.
Jayesh Parekh, one of the firm’s early investors, told us in an email after our first post went up: “We started a service that showed good prospect a couple of years ago. We launched the service and it did not take off as expected. And now the majors are getting into the same space. So we decided to return the balance of the money back to the investors. Got to keep trying. Keep at it.”