TL;DR:
- After an eventful year of experimentation, 5 cohorts and 50+ paid customers (Fellows), I have decided to sun set BIPF as a fellowship/ cohort-based course business.
Despite a lot of experiments this year, I couldn’t find Product Market Fit with BIPF and I've come to the (painful) conclusion that it is not financially wise to go into 2024 this way. Apart from impractical unit economics, I also didn’t feel a strong sense of conviction in the underlying business model.
I shared the news to our current fellows that we will simply switch to exist as a free private founder community until Dec 2024 and we’ll revisit our future again.
So, instead of dragging my feet for another year, I decided to simply swallow the harsh pill and come to terms with the reality so I can do what's best so I can support my family (both in the US and in India).
Here is a list of challenges the core biz model behind BIPF faced that ultimately led to me deciding to not continue:
- I couldn’t feel the compounding effect even after multiple cohorts. It felt like going uphill for every cohort. When I started in Jan 2023, I had a rule that if the 4th cohort felt just as hard or even harder to sell vs 1st cohort then it’s a bad sign. If the number of people joining in 4th isn’t at least 2x the 1st then it’s a bad sign. The data doesn’t lie. The 4th cohort we had less 1/2 of the fellows we had for the 1st cohort .. despite terrific NPS and testimonials. (see them here)
- No recurring revenue component. We acquired ~55 customers in 2023 but I have to go out and get another 55 next year just to scratch the surface. Based on our P/L, I would need 110 paid customers to get to the sustainable profit I had in mind and this seems impractical.
- There is no asset, no IP in the business. Cohort-based courses are tied to personal brands of the teachers and creators. So, even after 5 years, ultimately no one would buy it from me given how closely intertwined it is with me.
- At the core of BIPF, it was a B2C education business. And in this economic market, education is a discretionary expense unless it comes from the pocket of an employer. Since BIPF was largely targeted at early-stage founders who are already financially stretched, I kept having to give out so many scholarships which leads to poor unit economics. I even experimented different price points ranging from $399 to $3500 across a wide range of founder personas and yet that didn’t resolve the core challenges.
- No pre-programmed recurring habit to rely on. Most adults just don’t value education because actual learning requires a) time and reps b) transformation which often is painful
- Fitness and education businesses are 2 tricky businesses where the customer pays and STILL has to do the work
- As compared to say for ex: you hire a company to come paint your house. You just sip your coffee in your office room and the house is painted perfectly. You pay, they work. In education and fitness, you pay and you still have to put in a good amount of work.
- Had to ask myself: “Have I done any cohorts this year? Why haven’t I?” I’m a growth mindset person yet I didn’t because they are huge investments of time (opportunity cost) and money (high price tier compared to books) This was the reckoning that humbled me. I asked myself.. “How could I sell/evangelize a huge set of people to do something that I myself aren’t doing?”
- ARPU was strong but the sales cycles were very infrequent. Part of this having to switch between sales vs running the actual cohorts.
- Made $110k top of funnel but net profit was less than $50k and at the stage of my life this is strenuous and impractical to continue.
- I have 2 families I support (my family in India and in the US). The minimum burn rate is $8k. So the take home has to be nearly $100k and I didn’t have conviction that we’d get there by Dec 2024. Yet I would accumulate personal debt (via credit cards or loans) a total of $50k by the end of 2024 which didn’t make sense.
- All of these learnings and reflections clarified to me that the path is not worth pursuing further.
Emotionally, this was a painful decision to make given how much love I poured into BIPF. But pragmatically, this was the right move. In stead of regret, I am choosing to be grateful I got the chance to learn so much this year 🙏
Takeaways:
I plan to be extremely prudent in evaluating my future business ideas based on my learnings from BIPF. Here are some must-have criteria for my future endeavors:
- Exit friendly (something a buyer would be interested in buying like a tech platform, ideally a SaaS or marketplace)
- Has a recurring revenue component (MRR) from day 1
- Something I’d use and pay for myself (actually pay, not just say this for the sake of it) This makes sales 10x easier
- Strong FMF (aligned with my background, prev experience and connections etc) This makes GTM 10x easier
- Clearly validated demand (customer has a pre-established habit for something like this on a frequent basis)