A failed attempt & lesson learned from it

A while back, I attempted building a startup around consumer data sharing.

But I found it was beyond my capacity and I considered it as a failure (followed the rule: fail fast!).

However, I had learned a few things from the failed attempt.

The idea:

Make it easy for users to share their consented data with businesses so that users get personalized and better experience/value/offer/services from companies.

Example:

Imagine an user needs a Car insurance. The user store their Car/Driving license history on our platform.

Next s/he wants to get a car insurance, instead of presenting a long form, the insurance company will get the required information from our platform with the user’s approval (kind of like google or Facebook login). The user doesn’t have to fill in the same info at 50 different sites. Also, user have a better control over their data.

Not only insurance, this could apply to many other segments (Healthtech, Fintech, etc.) whoever provide personalized products or services.

Challenges/problems in the market:

Essentially this platform idea was kind of a marketplace but for data. As like every marketplace, the main problem was chicken-or-egg first. Also, this was an idea that deals with PII (and PIA), PCI-DSS and HIPAA/PHIPA in some cases. There are quite a few regulatory compliance requirements that would need heavy investment.

I have interviewed over 50 potential users and 9 businesses. Here is the summary of what I had discovered from my research.

Feedback from potential users -

Our pitch to users were mainly around convenience, quicker error-free, most personalized and in some cases cheaper deals/outcomes.

Feedback we’ve got:

• Most tech-aware potential users immediately labeled it as “data aggregator”. Just like what some other businesses does and sell the users data.
• Some feared we might be making an information “honey-pot”, very attractive to hackers as there would be various types of sensitive-data for users.
• Most said we are being just a form-filler. The convenience is not worth the risk. I specifically asked how about the password manager software? They said they “trust” those companies because they are much “bigger”!!
• They didn’t see any immediate benefit while there are not much businesses on the other side (who accepts data from us) and this one was obvious.

Feedback from Businesses -

Our pitch to the businesses were around getting accurate/fresh data from users and be able to provide most appropriate(personalized) offer that had the highest chance for conversion/retaining. Overall a much better experience to customers.

Feedback we’ve got:

• The first question usually we got was how many users do we currently have? The most interest was how many new users we are going to drive to their sites. We couldn’t promise them a certain (very high!) number.
• They feared it will make them lose potential users as our platform makes it super easy for users to shop/evaluate more (competitor) places quickly
• Adopting this tech on their sites would take some development time (3-5 days in our estimate). They were not willing to put that effort/budget.
• Most were not willing to give the control of data to the user so that user could easily “revoke” their consent/request for removal of user data.
  (There are some more but my apologies, can’t share those for confidentiality reasons.)
  Anyway, you probably got a very good idea already.

Personally, I concluded with: getting users might not be too tough (higher CAC) but had a potential for a larger LTV. However, having the businesses adopt the platform would be the real challenge. There was also a significant effort required to keep them compliant to our platform and overall industry standards.

I had the whole working MVP almost ready. The OpenID Connect server development and putting it behind AWS ALB was quite tricky to get it right for security reasons. Anyway, I had to kind of throw most of it out (well, I repurposed quite a bit later on). But, please re-think about building your MVP before you have a pool of potential committed customers! 😊

Funny thing is, I have seen a few companies make similar platforms later on. And they’re all from very well-known brands. So I guess they are those “bigger” companies that people “trust”!

Thank you for sticking with me so far and hope this insanely long read is someway informative to you.

Cheers!