He raised $250K, had thousands of users, but failed— because he didn't pivot fast enough. | Darius Vaillancourt, Founder of Howdy

Darius started an EdTech startup to help users of online courses collaborate with each other. It blew up during COVID when everyone felt isolated. It gained thousands of users. They were engaged. They came back to use the platform. And, most importantly, they dramatically improved completion rates for online courses.

Darius thought he had it. But it turned out universities didn't want to pay. What users cared about was not what universities (the buyers) cared about.

His biggest lessons is that he should've pivoted much sooner. Here's why.

Why you should listen:

• Why success and failure are often not that far apart.
• Why engagement and usage don't always lead to revenue.
• How to figure out the KPI that matters for your buyer.
• Why users and buyers are not one and the same.
• Why you need to pivot much sooner than you might think-- or like.

Keywords
startup challenges, entrepreneurship, online learning, EdTech, market dynamics, product development, business strategy, lessons learned, networking, pivoting

Chapters

• 1:23 What is Howdy & The Origin
• 5:46 First Steps & The Business Model
• 12:41 Driving important KPIs
• 17:08 Pivoting Before Shutting Down
• 25:03 The Lessons Learned

Transcript

Pablo Srugo (00:00):

Well, Darius, welcome to the show, man. 

Darius Vaillancourt (00:01):

Thank you. Great to be here

Pablo Srugo (00:03):

So, we've done a few of these kinds of episodes around  startups that didn't work. Obviously, as people know, my last startup didn't work. So I've learned what it feels like to work for five years and not end up with, with a win. But I think what I've realized is there's so much to learn from these stories. I learned a lot going through it myself, but I'm also learning a lot talking to people who've gone through it and didn't make it through. And especially because after doing so many interviews with hyper successful founders, I just realized that there's a lot of things that successful founders associate with their success that I know failed founders did too, and didn't succeed. So trying to suss out exactly what really kind of makes the win and what doesn't, I think it's important to get both sides.

Guests (00:50):

“That's product market fit, product market fit, product market fit. I call that the product market fit question, product market fit, product market fit, product market fit product market fit. I mean, the name of the show is product market Fit.”

Pablo Srugo (01:03):

Do you think the product market fit show has product market fit? 'cause If you do, then there's something you just have to do. You have to take your phone, you have to leave the show five stars. It lets us reach more founders and it lets us get better guests. Thank you. 

Thank you for sharing the story. Let's start at the beginning, what is Howdy and how did you kind of end up there?

Darius Vaillancourt (01:22):

So it's definitely unusual given my background was in real estate, private equity and development. And so essentially what happened is I was working as an investor, were PSP investments, and I wanted to, I'd always wanted to start my own thing. I'd been kind of a hustler entrepreneur since I was a kid. And I decided to start an asset optimization platform. And this was about 2019. And so I did that for about a year, had some initial customers, had to build out a product, had revenue and all the things about doing things that don't scale. And then covid hit. And we had to do a complete left turn. And we wound up with Howdy, which was really setting out to make online learning more social and engaging by connecting people, taking the same course through live video. And how we got there was, because of the asset optimization platform, we were essentially trying to create a marketplace that compared different companies to do a collab inside of their office space.

Darius Vaillancourt (02:25):

And so if I'm a late stage startup and I want to kind of build a pipeline of tech talent from a bootcamp, a bootcamp may go to that startup office space and say, Hey, look, can we do a free presentation here? We'll let other people in from the public, it'll bring recognition to your brand. And then we'll also kind of build, start building that pipeline of junior engineers that could potentially come on and you can hire them. And so it was this idea of optimizing space that the startups were using and then allowing other companies to come in and pitch them or use them for informationals or different presentations, trainings, et cetera. And once Covid lockdowns came into place, that business model became untenable. And we saw this need, obviously to go remote.

Darius Vaillancourt (03:18):

And essentially, you know, thinking back, my mother's a retired New York City public school teacher, you know, my brother is a public school teacher. And so education has also been really important to me and access to education. And so we saw this opportunity now where everybody was on lockdowns and really no way to interact. And so we said, well, people are learning like, the signups for online courses has gone through the roof with everyone on lockdown trying to learn a new skill. What if we use those platforms as a channel to connect students taking those same courses through a technology that we built. And so that's basically what we did. So it was a completely different right turn and it was-

Pablo Srugo (04:04):

Where, where does that come from? Like does that just organically kind of pop in your head? Do you see something- do you know, a student who all of a sudden learns from home or what is it that actually leads to that idea?

Darius Vaillancourt (04:13):

Yeah, I saw that everybody now was going onto Zoom and trying to conduct these webinars, but was completely missing the network or the in-person experience that these boot camps or these other kinds of training companies were able to provide. And so I saw this gap where it was like, okay, these companies are still charging the same amount, 10k for a coding bootcamp or whatever, but the experience is significantly degraded. And so thinking about, okay, well how do we- you know, these were our initial customers, partners and people that we were kind of co-developing the, the platform around, if you will. It really wasn't even building any code at that point. it was more just trying to understand user sentiment and customer discovery. And so anyway, so that was it. It was like, everything's been turned online overnight , but the experience is horrible.

Darius Vaillancourt (05:07):

There's no network, there's no community, there's no ability to make real human connections. And we all know from time in college we know people that some, you know, that are successful, like networks are so important. And yet that was completely devoid from this segment of the market. And we wanted to come in and provide a solution with this idea that anyone, regardless of geography, of upbringing should be able to build an authentic network for work and life. And we use these learning platforms as sort of that initial beachhead and channel to do that. 

Pablo Srugo (05:38):

Where do you go from there? Like do you just go off and start building V1? Do you start doing a bunch of classic research and customer discovery?

Darius Vaillancourt (05:45):

Yeah, so the natural thing was to go to my grad school professors and ask them, you know, I knew that there were some that had really successful online courses. So I went to Barry Nalebuff, who's kind of in academia and entrepreneurship, a bit of a folklore in that he's also a world class academic, but also a very successful entrepreneur. He co-founded Honest Tea and sold that to Coca-Cola for a bunch of money. He had a successful course on Coursera. And so I basically said, okay, what's a good starting point? Where are my relationships today where I could potentially get distribution and start it there? And he agreed to try it out. So we, at that point we had built sort of a widget that you click on a popup, you can see the other students taking the course, and then you can click on their name and schedule or invite them to a chat and then join that call with them.

Darius Vaillancourt (06:44):

And so all without leaving the course experience. And so we tried it out in a very janky, hacky way. You know, you put in a link. We hadn't built in like any single single sign on stuff or integrated, and we saw Engagement, it's actually starting to work. And engagement was going up, you know, online courses, even for the best courses taught by professors like Barry Nalebuff who's from Yale. They have low engagement, they may be better than the average, but like you're talking, 90% of students drop out of a course who start one. And so it's a massive problem that's plagued the industry for years and no one's really been able to figure it out. And so we actually saw engagement rates, completion rates start to go up. We were like, wait a minute, we're onto something here. This is actually working. And so we kind of doubled down. And then we got another university. So Berkeley school of Music was out of Boston, you know, world class music school. They piloted us with three courses. It started, they started to see positive metrics and they went from three to 60, 70 courses in like a span of maybe a month. 

Pablo Srugo (07:54):

What was the- were they paying for this or, what was the revenue model?

Darius Vaillancourt (07:57):

That was the thing is that, you know, we, so we had very smart angels and advisors. You know, I had like the former VP of product at LinkedIn Learning and other vets that have been come, you know, come outta Silicon Valley that basically said, don't charge the schools anything. Like you're effectively building a marketplace, like keep getting the product right. This was maybe like a year into product development and they said, don't worry about monetization right now. Like, just make it so good that they can't ignore you. 

Pablo Srugo (08:27):

What year was this by the way?2021?

Darius Vaillancourt (08:29):

This was 2021? Yeah. 

Pablo Srugo (08:32):

Okay. I mean there's a macro context here. Maybe, maybe that's important. I don't know. But like, there's a lot of hype in the market. There's a lot of things that, you know, there's a lot of free money at bay. 

Darius Vaillancourt (08:41):

Right, exactly. It definitely wasn't a time of discipline and frugality, let's put it that way. And so I think the overall sentiment was just keep growing out the platform and those things will kind of fall into place. And

Pablo Srugo (08:54):

What did they imagine?  but I will say the other side to it is that there are a lot of times when people hear that it sounds silly, but the reality is a lot of massive products got built that way. Got built by not caring about monetization, but there's always at least an idea of what could be. So I guess in your case, like these people that are telling you, and you're obviously accepting it, so you have some, you know, idea of it as well. Like what was kind of a master plan? Like, yeah, okay, we'll build this marketplace, we'll get a lot of people to start collaborating and talking to each other. We won't charge the schools, but then we'll charge…?

Darius Vaillancourt (09:25):

So the master plan, we really were thinking about education into three categories. One was the training that you get or from the education, like the skill that you actually learn. The other one was the certificates or the degree. So what does that say to the world? What signal is that and the value of that signal. And then the third was the network that essentially were the three pillars of, and each one of those are massive opportunities. You know, you have credentialing and certifications, you know, there's different CER certifications, there's masters, you know, companies are roll-, or excuse me, universities are rolling out different types of masters to lure other segments of the market. It's a huge revenue driver. But then this net and then the skills obviously that you learned through those programs. But what was missing from any of the virtual programs and still is today quite frankly, is this network piece, right?

Darius Vaillancourt (10:17):

And if you're learning online, 'cause we all know there's convenience of learning online. Not everybody can pay an arm and a leg. We have this plethora and a massive access to this content to learn, but we have no network. So we were really gonna build the plug and play network for any online learning program that you kind of integrate in your course. And you, you kind of have all the tooling to increase engagement, student experience right there within your existing learning management system. And we all thought that was also an attractive approach. 'cause It was like, we all know the switching costs associated with trying to get these traditional institutions to move from one platform to another. And so our value prop was to say, look, you're already using this. You don't have to change anything. We're just going to enrich impr and improve engagement to what you already have.

Darius Vaillancourt (11:10):

And that, that was the approach or strategy that we took to begin with. And then, you know, obviously we were thinking about this expert network to layer on, you know, afterwards where we thought, you know, building marketplaces is notoriously difficult. And so we thought, okay, if we start with the students, right? Like if we just allow the students to build a peer-to-peer network through this platform and we have that demand, then we can sort of provide supply. Because the students that were already on these platforms, they were not having a good experience. As I said, the engagement rate, you know, the completion rates are you talking about 5-10%, you know, for courses with hundreds of thousands who are taking it? And, and then again, like it's just a human thing. We wanna build relationships, we wanna support each other, we wanna feel like we can be encouraged and held accountable. So that was it.

Pablo Srugo (12:03):

It's kinda like- the net is like, you know, you own, at the end of the day you'll own the students and obviously those students will pay for other courses, maybe pay for expert advice, maybe, you know, whatever, like TBD, maybe they get recruited. You could be like a LinkedIn for students. there's just a lot of different places you could be if you have an engaged base of smart people in your network.

Darius Vaillancourt (12:22):

That's exactly it, that was precisely our thinking and why we were so excited about it.

Pablo Srugo (12:25):

I mean, you're getting the right signals, you're getting usage, you're getting engagement. Can you share some of that, on the one hand I understand- like how much, how much did completion rates improve my by when you talk about engagement, how did you measure it and and what were some of the numbers?

Darius Vaillancourt (12:41):

We measured it based on a couple things. So one was the likelihood to come back for a meeting. So we'd look at cohorts that started out in certain time periods and like what was the percentage of the people who engaged with someone that came back for a second meeting just to see like- and obviously a big part of our focus was like quote unquote time to magic where, you know, when you want someone, when you, someone comes onto the platform or comes into the widget or whatever, you wanna try to accelerate the time that they can actually schedule and connect and jump into a live session with someone. And so we were looking at that, okay, so that, that was one metric. And then the other metric was just completion rates. Like how many people that are not using the tool completing the rate.

Darius Vaillancourt (13:30):

So just without, before Howdy, taking just a standard Coursera or edX, these are the platforms that we were on, what were the completion rates there and versus what they were for the students that actually participated in, in our thing. And so that wound up, I mean it varied across courses. So if you use 95% as a benchmark, we were seeing in cases like 80, 75%. And you know, when you look at it in the context of a free course, right? Where students are, I mean, it's a freemium model where they come in and they sign in for the course and they pay for the certificate. That's huge, right? Because you're talking about thousands of students that you otherwise wouldn't be monetizing that are now going through that system. And you know, we were also benchmarking it to other companies like bootcamps that were getting a lot of attention, like Lambda school for example.

Darius Vaillancourt (14:21):

And they were putting through a couple hundred, I think at the outset of their program. Now obviously they were bigger. each student, I think their average CV value or however they measured it was like 30, 40, 50 grand. So it was, they could do that and still build an attractive business. We were kinda looking at, wait a minute, here's this really successful darling in EdTech that's like processing a few hundred and here we're doing like, you know, hundreds in the peak thousands, right? So we just had very exciting, very encouraging statistics. that in some ways is the holy grail of online learning. And we seem to have sort of figured it out to a certain extent. Obviously I need to continue to improve. And we had a ton of ideas to do that, but it was very promising and that's why we were able to get the adoption engagement and participation from these schools at the beginning. 

Pablo Srugo (15:11):

So you're starting to roll out, like you said, that one university, Berkeley, they're rolling it out to more and more students. Do you try and raise money or do you just keep building product? Like where are you trying to go with this?

Darius Vaillancourt (15:21):

A couple things. One is, I mean, I tried to suss out the willingness to pay, but the issue was these were like our lighthouse partners and so they were really valuable because we had all these, like the average study group on our platform was like four different continents, right? So like, people literally were coming from all over the world to meet, learn, and support each other. And so you had different devices, you had different you know, communication tech cultures. That all gave us a really challenging set of technical problems that we thought if we could get right by these courses, we'd build a really robust platform. But then also the testimonies that, you know, the testimonials that came from that- it's like, listen,we've got Yale, we've got Berkeley. So we didn't want to, so we would push it, but we would never push it that hard because we were using that to sort of continue the snowball.

Darius Vaillancourt (16:18):

And in hindsight that, you know, now that I'm effectively an expert in ed tech to certain, you know, any person who builds in this space quickly learns. That's not the right approach for this market, right? And so you learn and hindsight is 20/20. But yeah, absolutely. I think in retrospect we should have pulled the plug, like maybe taken the device out and said, Hey, listen, sorry, we see the numbers going down, we'd really love to support you, but we also have a business to run. And I just didn't wanna put ourselves in that adversarial kind of situation. And I was a first time founder and again, like the relationships mattered and I was just trying to like, and it was allowing us to build a really good product around it too, right? And so, but but that ultimately wasn't the right decision to say the least

Pablo Srugo (17:08):

<Laugh>, what did you- and just remind me, when did things happen? When did you end up shutting down the business?

Darius Vaillancourt (17:13):

The end of last year. So 2023. 

Pablo Srugo (17:18):

When do you start seeing the signs that, you know, things aren't kind of going the right way?

Darius Vaillancourt (17:24):

about a year in, I mean, yeah. And then that's when we pivoted and we tried all these other areas. And so, you know, I just realized that it was really hard. And listen, it's no fault of the buyer. Like ultimately if you're not delivering the thing that they want, then it doesn't matter. And so, I realized that whatever vision or product we were building wasn't resonating with the economic buyer. It was resonating with the user. The students loved what we were doing, right? But the economic buyer had a different set of priorities. 

Pablo Srugo (18:00)

What were their priorities?

G(18:01)

Their priorities were things as simple as just digitizing their content. So like, okay, they've got now this covid situation, they've gotta start having courses online, or maybe they wanna start a new certificate or online, you know, online first programs.

Darius Vaillancourt (18:17):

And so now they've gotta create all this content that's tailored to the digital form. So that's one thing. The other thing that’s top of funnel, schools are probably one of the- universities are probably, you have probably some of the best marketing people in the world because you have to generate a massive top of funnel and continue to feed that in order for the the business you know, of the school to work. And so anything that would attract more students into their program or build that top of funnel was super valuable. Ultimately, like MOOCs, like a world class program like Yale or, or Berkeley or Cass or these others, it's like at the end of the day their priority is their traditional business, which is the core university. The people that are going there, you know, spending $80,000 a year to get a degree, an undergraduate, whatever, that's really their core constituency. as great as it is that they have this content and as helpful as it is to the world, ultimately, the experience there is just, you know, it's institutional bandwidth. They're just limited to where they can prioritize. And so it's really no fault of their own, but it's just the way that market is structured

Pablo Srugo (19:35):

yeah and that makes sense. And I think like large enterprises like this, this is true outside of just EdTech. I think any large enterprise understands what their core business is and is always going to be focused on that core business. And as a founder, you gotta figure out what that is and if you're making a 10 x impact on some fringe thing nobody cares about, you just never gonna get the attention you want. My question to you is, as you start seeing these signs, do you start to pivot into some of these other problem areas?

Darius Vaillancourt (20:07):

Well, it's a good question. So we pivoted into other areas, but we pivoted, quite frankly, into a different market. So we weren’t as excited about this market anymore because the alternative was like, okay, we're gonna build a learning management system or we're gonna build like an attendance tracker or like, there wasn't anything that really jumped out at us as being really exciting and we thought could create a big market. And so we ultimately decided to change markets altogether and we went into SMB. So think of your online tutoring course, you know, online bootcamp, your sales and marketing online course, you know, but these are not institutional companies. They have much tighter budgets. Yeah, they can make decisions faster, but they're harder to get to. And there's a million different variations of what they need. And so it's like, how do you know what the beachhead is in terms of like, do you go all in on like language tutor market, right?

Darius Vaillancourt (21:10):

And build a product for them to start and then expand from there. Like, because I wasn't coming from a background, like this wasn't my expertise. I was learning every day on the fly about the market and everything else. And to know I literally had to go out and do the hard work of pounding the pavement to try and build up excitement and figure out who the buyer was and how to get to them. And this is extremely resource intensive when you're trying to do this in like a small team. And so like that was sort of, but again, I wanted to make sure that I didn't have any regrets looking back and say, oh, what about this SMB market? And then we even went to an enterprise, you know, you can talk about that.

Darius Vaillancourt (21:52):

but I think what's really one thing, it's like you gotta be able to say, okay, what is my target? What are my goals? And be really honest about achieving them. And if you don't achieve them, you have to have the hard conversation of saying maybe it's time that we go, you know, in a different direction or we shut down or we look for a buyer or whatever. And I think just being sort of a tenacious founder and wanting to give it my all, I wanted to explore these other avenues because I certainly didn't want to give up, 'cause we built a really awesome product and users had really loved it. And so, you know, I wanted to, but again, hindsight is 2020.

P(22:35)

Do you think there's something you could have done that would've- 

G(22:37) 

In retrospect? Yeah. I'll tell you what I could have done, I could have pivoted , like right around a year before we shut down the company, we could have integrated large language models into the peer-to-peer sessions to basically be an automated facilitator for these different topics. And so if you had a student that was, you know, multiple students coming to study group, you know, one of the challenges that we ran into as well as like, okay, making sure that there's someone who's like, kind of type A that's gonna like lead the discussion and like, it's clear like what the intent of being in that group is. And so we had to build very hand engineer prompts or suggestions or like links to like study notes or content. And we did all that stuff through traditional deterministic code. But I think quite frankly, there's still enough truth to sort of layer on these large language models and like have this expertise that's like scalable through an LLM, but then also have like the network and human connection. So I think like if I was going back to the do list, that's where it would be. But by then it was like I was, I was so burnt out like the team, you know, it was like, are we, I just went through all these iterations, now there's this new technology, okay, let's try another year to try to figure this out. 

Pablo Srugo (24:00):

Yeah, so tough man.

Darius Vaillancourt (24:00):

It was really tough. And then and then ultimately it was like, wait a minute, my background is in real estate. it's like if everything had been remote forever and everybody was, you know, living in their, you know, hyperbaric chambers and never interacting,, yeah, sure this would've grown to infinity. But that when, when we came out of the pandemic, that was no longer the reality. And, so like the market had, we had gotten less excited about like this virtual opportunity and market and all while when we're pivoting again, it's like, wait a minute, I've done over a decade of, of of real estate, private equity development, construction and so maybe, maybe I need to get back to my roots. So,

Pablo Srugo (24:45):

So maybe like on that note then we can, we can end it there. And my last question to you would be if you had- what is either the, or some of the kind of biggest lessons that you take from this that if you were to start another startup you would really have top of mindgoing into it?

Darius Vaillancourt (25:03):

I mean, I think the most important thing is, in retrospect, you know, it sounds obvious to understand the structure of your market. There are certain industries, education, I know some people that have built in healthcare that share this, is that because of the regulation and the way, some of these universities or institutions have existed for hundreds of years in some cases, their priorities are not always what their customer, you know, if you look at a student as a customer, like their customer's priorities are always not, they are not always their priorities. And so really being honest with yourself about: is what I'm building, aligning with who ultimately is writing the check? And I think it is super, super important. And again, because I didn't have that background in education, it was, I had to figure that out. I had to learn it and for me it's like I'm a student, I wanna have a network, I wanna meet people, you know, I went to get an MBA, it's like one of the reasons you get an MB is so you can build a network and support, but, not everybody has the luxury of doing that.

Darius Vaillancourt (26:11):

Not everybody can like, spend a bunch of money or go off to the United States. And so I wanted to create that opportunity for other people, but like it didn't matter in the end if there were just some structural barriers to making that happen, right? So just studying that I think very closely is very important. And then the other piece of this is obviously trying to push for buy- get them to pay. Like, hey listen, if you're not gonna pay, it's obviously not that important to you. Like, let's just be adults about it and stop trying to think that- 'cause On the one hand, everybody says like determination, look at the person that went through this five years and paid themselves nothing and you know, slept on their friend's couches and then they emerged with like 50 million ARR and, and the reality is like one that rarely, rarely happens. And two, like there's other signals that you can gain where you can build confidence that whether or not that's the right decision. Like if you believe and you have the grit to do that, great, but try to pull in those signals to make sure that you don't have to go through all that pain and suffering needlessly. Yeah. And then there's some, you know, there's a million other things, but those are I think the most the ones that have been seared in, in my memory forever I think. 

Pablo Srugo (27:26):

Awesome man. Well Darius, thank you so much for sharing the story with us.

Darius Vaillancourt (27:29):

Awesome. Thanks Pablo. Take care.

Pablo Srugo (27:32):

85% of people who listen to the show just started listening to it this year. You're probably one of those people. In fact, the odds are 85%, guess what, you need to go back 'cause there are over a hundred other episodes that you need to check out that are just as good if not better than this one. Don't miss out.