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Lessons from an 8-Month Wasted Venture with No Returns
Cashflow Chronicles
September 22, 2023
Week’s Top Picks
Quick Entrepreneurial Tales, Investment Stories, Interesting Stuff & Resources to Spark Your Fire
First up, the best “average Joe or Sally turned rich” case studies from around the internet…and more from the web.
(1) 31-year-old mom left her job for a simple and easy side hustle—she brings in up to $101,000 a month, works 30 minutes a day
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Here's a sneak peek of what we’ll cover in today’s Gymlisted Case Study Special
✔️ How a simple family chat birthed the Gymlisted idea.
✔️ The relentless work and passion poured into the project.
✔️ Marketing strategies that didn't quite hit the mark.
✔️ The key challenges that kept Gymlisted from succeeding.
✔️ Eight months in, yet not a dollar earned.
✔️ Exploring 5 different paths with less risk
Hey Cashflowers,
From a casual conversation with a gym-loving cousin to a full-fledged tech-driven startup... Gymlisted had it all.
Dive in as we chronicle Tom Zaragoza's dream project that aimed to reshape the way gym enthusiasts found their fitness haven.
Big Ideas
When Fitness Meets Tech
Tom Zaragoza, a passionate coder with a knack for problem-solving, found his next big project inspiration through a simple family chat.
His cousin, a gym owner, struggled to find new members and asked Tom: "Could tech make this easier?"
The vision soon became clear: Gymlisted would be a platform bridging people seeking a gym with private, local options.
And it would be more than a listing site. People could use the portal to manage and purchase memberships online, directly on Gymlisted.
Gymlisted would then take a small cut of each transaction. The perfect passive income business model on paper.
So Tom got to work…
Not Just Another Side Project
With a knack for coding and an entrepreneurial mindset, Gymlisted was Tom's dream side project.
He worked on it during evenings and weekends alongside his full-time developer job.
This was going to change his life and revolutionize the industry 🏋🏽♀️
Features were extensive, from user-friendly search functionalities Stripe-integrated payment gateways, to rich gym profiles.
He was making gym memberships as easy as online shopping. After all, people hate all the hoops they have to jump through to cancel. This way, it would be as easy as a click of a button.
However, he has made huge assumptions without validation, a dangerous ploy for any business…
Marketing Strategies
Ambition in Overdrive
Once the site was built, Tom needed to spread the word.
Tom onboarded an old high-school friend to help him do the marketing.
He needed to get the attention of two audiences. People looking for a gym and people who owned/managed a gym.
Tom had three main strategies to attract both.
1) Cold Emailing. They pitched their ideas to gym owners via cold email, probably the most scalable and accessible outreach method. They got a few responses and generated interest.
2) Social Media. They sought out customers on social media i.e. people searching for "where to find a gym?" and "find gyms in..." Then they would respond and re-direct them to Gymlisted
3) Offering a complimentary service for free. In addition to the cold emailing and direct outreach, Tom offered to take premium photos and videos of the gym.
These are all great strategies.
We especially like the third one because once the gym has the images, they need somewhere to post them. That's when Gymlisted offers its fancy profile and lead generation services to solve that nice, new problem 🤝
Once they had gym owners and people looking for gyms onboard, here’s how they planned to make a profit…
Revenue Models and First Hurdles
Gymlisted's revenue model was simple yet effective.
For every successful transaction between the gym and the user for memberships, Gymlisted would take a slice.
It's kind of like how a credit card company does.
His 'bank transaction' model seemed foolproof.
Yet, at this point, with zero revenue and escalating costs from server maintenance to marketing investments, the financial landscape grew rocky.
And Tom soon realized his fatal error…
He suddenly asked himself, “Wait, does anyone actually want this?”
Wrong Turn
Facing the Giants and Why Gymlisted Failed
Gymlisted's biggest problem quickly became clear.
Not enough gyms wanted it 🥶.
Even with the digital age upon us, many private gyms have a certain way of doing things. Especially when it comes to their crucial income stream, memberships. There’s a reason why they don’t make it easy to cancel because it would make their business unsustainable.
And when they peeked at their competitors already doing this, they found giants. Some had been in the game for years, even getting publicly traded. For newbie Gymlisted, fighting for a spot against them was tough.
Tom tried switching gears – making Gymlisted a spot for personal trainers. But by then, his enthusiasm was low, and the passion dimmed.
Tom accepted the harsh truth and ended the venture without wasting any more capital.
Lessons, Reflections, and the Road Ahead
While Gymlisted may not have achieved its intended glory, its journey offered invaluable lessons:
Market Research is King: Understanding real market needs trumps assumptions. Every business needs a demand to succeed. If you want to create that demand, you will need a bigger budget.
Know Your Competition: Knowing the big players in your sector can shape your strategy. Competition is good, but you should know about it before you implement it so that you can bring something different.
Yet, was Gymlisted truly a misadventure? In its essence, the idea held potential. Perhaps it was before its time, or maybe the market nuances were more intricate than anticipated.
But it also taught Tom some valuable lessons, and now he has created a new successful SaaS solution called Vocalmatic, which translates audio and video into text.
Exploring Lower-Risk Alternatives
Playing devil’s advocate, here's what Tom could have done instead of using his high-value coding skill. These might have been more risk-free alternatives that wouldn’t require a ton of work upfront:
(1) Custom Digital Solutions: Tom could've built bespoke digital tools tailored to individual business needs, offering a more personalized touch.
(2) SaaS for Gyms: Tom could've created software to help gyms operate more efficiently instead of just connecting people to gyms.
(3) Gym-Centric CRM Systems: A dedicated system to help gyms manage client relationships, keeping members engaged and loyal.
(4) Online Modules: Tom could've crafted digital courses teaching gyms about online marketing and customer service, sharing his expertise.
(5) Digital Consultancy: As a digital guide, Tom could've assisted gyms in enhancing their online presence and customer engagement.
In summary,
Even though Gymlisted faced its fair share of hurdles, there's a lot we can learn from Tom's journey.
Dive deep into market research, be ready to pivot when needed, and always remember: no matter how solid your idea is, it won't take off without the proper market demand.
A business plan here is an excellent exercise to achieve all the above.
In the world of startups, it's not just about having the vision but also about executing it right.
We hope you enjoyed this deep-dive case study.
Until next time,
Cashflow Chronicles
AI Update of the Week
Introducing "Poll the People": Revolutionizing Market Research!
Powered by OpenAI, this tool masterfully combines AI and human smarts for rapid and precise data analysis.
Key features include AI-enhanced word clouds, rich audience demographics, and an intuitive insights tab. For entrepreneurs researching business ideas, it's a game changer.
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