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Third is a charm: interactive TVs and pipe dreams

My third company came almost five years after the second one (not counting the “pet projects” that happened in this period). After coming back to Brazil from a less than pleasant experience working in a large, soul-sucking company in Europe, I felt it was time to try something on my own again - an idea my wife promptly embraced (and joined as a founding partner).

Being in love with “smart hardware” for quite some time (I used to build half-baked “robots” and electronic boards back when ISA was the top-notch standard for computer boards), I decided to give a shot at a hardware-centric idea this time. We spent a couple of months researching markets - everything from smart houses (too small and fragmented market) to public camera systems with face identification (too tricky to sell) and even smart watches (to the likes of the Pebble - too expensive to build and we had zero expertise on the whole supply chain). We ended up settling on the “interactive environments” niche, which is supposedly cheaper to sell and usually boils down to software running on hardware you buy on local shops.

Interactive environments are basically an attempt to augment the “real world” with digital, either by bringing online presence to physical environments or by using sensors to detect people and serve them with interesting digital information: think interactive windows, billboards you can send tweets and the like. Not knowing the market from inside out and knowing exactly which tech could we focus on, we took a few weeks building quick proofs-of-concept, talking to customers in different segments and all in all getting to know the marketplace in order to take a well-positioned first step.

And boy, did we pivot. After attempting all sorts of different “MVPs” - bluetooth marketing (contextually sending images and ringtones), touch-screen kiosks, projecting twitter-feeds in walls for events, little GSM boxes one could use to make “interactive SMS polls” and using Kinects to detect purchasing intentions inside supermarkets - we eventually settled down on the more basic “digital signage” package, licensing our platform for media companies that would like to roll out their own indoor marketing networks.

Digital signage (we’re talking a niche inside a niche, now!) is not a new thing: it compromises all forms of digital communication using billboards, indoor TVs or projectors, which can be used to convey information, entertain people while they wait in line, etc. Think the flight information screens you see at airports, or TVs on bars and supermarkets. The big pain points we were determined to fix here were the deploy complexity of these systems (updating content requires physical access to each machine) or the absurd lack of features they provide (most digital signage “solutions” out there are just recorded video or powerpoint decks playing non-stop). And thus was born BlooBox: our 100% online, one-click install, remote manageable digital signage solution that supported not just displaying text, photos and videos on TV screens, but also polling for live tweets on any topic or hashtag, splitting screen with several different kinds of content (want to put a ticker over a video stream with an announcement on the side? No problem!).

Tech lock-in

One thing we quickly learned the worst possible way was that building rich desktop applications is surprisingly hard. There are just no options out there to build the kind of thing we had in mind on (a client app that could self-update, display dynamic content, run on any platform and allow the users to build their own content with tools they know how to use, like Flash or HTML) - the only two contestants being Adobe Air and Microsoft Silverlight, both “mature” by market standards, but frustratingly restrictive in every way possible. There are memory leaks everywhere (making the app crash every X hours). You can’t do two things at the same time (Adobe Flash is single-threaded, meaning your entire UI freezes when you try to download a piece of content for later displaying, for instance). There’s no documentation whatsoever on things such as loading modules/content, or automatic updating. The list of problems and pain points kept creeping up by the second, and for every bug we squished, another two were born. We even got in touch with the Adobe Air team itself, helping them debug a couple of memory leaks on foundation components of the platform (which led us to use even flimsier beta versions for long periods of time).

Despite all that, with a bit of glue and a lot of spit, we were able to put together a functional product in a few months.

How do you price that thing?

Along with lack of adoption, pricing is the number one killer of companies/projects. Not knowing exactly how to make customers pay, we toyed with all sorts of sales models, from pay-per-use to pay-per-plugin, as well as the overly popular “ad supported” model that works so well online (but was a complete disaster in our offline context - more on that later). The big problem, in our case, was due to the horizontal nature of the market: the customers included everyone from bars (which will pay nothing for a product) to franchise networks (great clients, but with a very long sales process) and single-venue businesses, such as hospitals or clinics. Given our location (yes, here we were again, trying to start a product in the worst possible market. At least it was supposed to be “just during the beta period” this time…), we had only a handful of possible clients on each of those verticals, so specializing was not an option.

Driven mostly by what others were doing, we ended up settling on the “pay per TV” model, with a low monthly value (~48 USD/each) and free installation. The customer would have to buy his own TV and computer, though, which was costly enough for most small ones, and the support cost was an obvious red herring: the more hardware you have distributed in a wide area, the more people you need to keep everything working. You’d be surprised how often customers call in just so that you find that the system “is not working again!!!” because they’ve unplugged it from the power plug or simply forgot to turn on the TV…

Less than a year in from the day one, we were finally breaking even. But the outlook was not good: we had to make more money per customer, if we wanted to be able to keep growing at all. Our final big mistake was, ironically, trying to “eat our own dog food”: determined to not just offer the software for third-parties, we decided to go the extra mile and actually manage our own indoor media network.

The beginning of the end: “let’s just bootstrap the market!”

Looking back at it, this was possibly the dumbest decision I did in my entire life. The final change on sales model we did on the company would require a big swing in the way we presented the product to everyone: no longer would bar owners be asked to buy TV sets or pay monthly fees (we’d give them all that for free). No longer we would spend time energy and countless trips trying to convince every single layer of management on a franchise network that they should get our product and roll it continent-wide. Our sole sales would turn on trying to convince mid-to-large sized companies to advertise on our TV screens, positioned on half a dozen public spots. If we really wanted anyone to look at our network and see some potential for advertising, we’d have to quickly expand too - and so we did, growing from 6 paying customers to almost 20 free ones in less than 2 weeks (which positioned us as the second biggest ad network in the region).

That single decision that costed a fortune on hardware acquisition, incurred an even larger overhead on support and deviated us too far from what should have been our sole focus: providing software as a service, get paid for it, rinse and repeat. Selling advertising space proved itself a tedious, impossible task and undermined the morale of the team to a point that most of us simply started hating to get out of bed for yet another day of trying to stay afloat.

It’s worth noting that we didn’t just fall on this trap out of the blue: the entire ad-supported digital signage idea was a trend worldwide, with big-name networks being acquired all over. It was obviously “the way to go”. Today, a lot of those companies, even large ones, have also died out, victim of the same uneven expectation about a market trend that didn’t materialize. If there was any money to be made on the ad-supported networks, it was made by very few, deep-pocket giants. The money we spent on this “wild goose hunt” was sorely missed, in the end, and could have kept us afloat for another year.

It still saddens me to see that no one has ever done the things we pioneered in those little MVPs. The whole “interactive environment” idea is a very exciting one - if only the associated cost wasn’t so big, the tools to build it so archaic. Maybe in a few years - until then, here we are, stuck with clunky kiosks, useless interactive floor-projections and TVs displaying ads that no one pays attention to…

In the end, the company wasn’t a total failure: we managed to sell it, a mere couple of weeks before running out of cash, and decided to move on to something less hardware related, more viral. Time for some buzzwords!