Hi Chris! What's your background, and what are you currently working on?

I’m Chris Brownridge. I’m 35, I hail from the UK but now based in Seattle, USA. After more than 3 years, $4.4M in venture funding, 500k users and more than $1M in revenue, we recently shut GawkBox down. As a first time CEO and Co-Founder, there’s a lot of lessons that merit sharing for others who are embarking on the same journey.

Our vision at GawkBox was to help content creators (YouTubers, Twitch streamers) make a living doing what they love. We built a platform where viewers of live streams could play mobile games to donate real money to streamers. The best part was that the viewers had to pay nothing -- it was the mobile game publisher (such as Rovio, who make Angry Birds) that funded the donation to the streamer on the viewer’s behalf. GawkBox took a % of the transaction.

An early “About GawkBox” video:

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What motivated you to start Gawkbox?

I come from an entrepreneurial family -- my mother and father have been running a metal fabrication business for more than 30 years. Ever since my teenage years, I’ve been running with different business ideas. In the eBay glory days of the early 2000s, I would try and fund my social life by buying and selling whatever I could get my hands on -- from bread baskets, to cameras and concert tickets. I ended up getting my father’s company eBay account banned… who knew that reselling concert tickets was against TOS!? 

After a stint working for an artificial intelligence company in Paris (VirtuOz - acquired by Nuance), I spent 4 years at Google where I tried a couple of other ventures, including a Google Adwords PPC agency and one my mother was most proud of -- a monthly condom subscription company! Neither really got off the ground. While Google was an incredible learning experience, I was always getting itchy feet and found myself looking for something that could better cater to my entrepreneurial mind. Through some networking, I found the co-founders of a small mobile advertising company called Vungle -- fellow Brits, they had just moved to San Francisco for an incubator called AngelPad. They were pre-launch and pre-revenue, with a tiny team -- I took a gamble on joining them and hastily moved to San Francisco from London in 2012. Vungle (later acquired by Blackstone) gave me the incredible opportunity to build a hugely successful global company from scratch, leading an organization across 5 global locations and witnessing ‘rocketship’ type growth that doesn’t come around often. As exciting as it was to play a leadership role, I always had the desire to do it as CEO -- so after close to 4 years I left Vungle, moved to Seattle with my wife and started GawkBox with an old Vungle colleague shortly after.

The idea for GawkBox came out of our vast experience in the mobile advertising market from Vungle. We had a lot of relationships in that space which allowed us to identify a pain point -- back at the start of 2016 that pain point was working with influencers to scale user acquisition. We envisaged building a new type of mobile ad network but focused on influencers. 

How did you build it?

For the first year or so, we actually ran the business like an agency. We leveraged existing tools and did not build any technology of our own. While we knew the mobile game space well, we did not know the influencer space well -- so we chose to learn about that side of the market by operating an agency for our first year. We worked with many influencers to run interesting game-integrated content, such as this video we made for Big Fish Games’ Gummy Drop. 

This strategy not only allowed us to learn about the influencer market, but also generated enough capital for us to hire others around us, including bring on our third co-founder, Tony -- and ultimately raise our first small round of $700k in December 2016 from London Venture Partners. Until that point, we were entirely self funded. 

We raised that first round from an idea and a presentation. Our original concept was a platform for advertisers to find, analyze and run campaigns with YouTube influencers. Interestingly, within weeks of that money hitting the bank, we completely changed what we wanted to build, pivoting to our GawkBox idea that allowed fans to support content creators by playing mobile games. I’ll always remember our first official board meeting in January 2017 -- we were pretty nervous about how our board member and main investor would think about us changing the product vision entirely (it turned out we had nothing to worry about!).

After we learned of the support of our board members, we set about building the MVP to get to market as quickly as we could. As we hadn’t managed to hire full-time Engineering by this point, we offshored development for this first version. We had a functioning (if poorly designed!) product a few weeks later which we launched to our waitlisted test customers with haste in the spring of 2017, before opening it up more widely shortly after. It might not have looked great, but it certainly worked as intended -- shortly after full public launch we were seeing hundreds, and sometimes thousands, of signups per day. We catapulted from making zero revenue to at one point hitting $7k in a single day, all within a couple of months.

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Which were your marketing strategies to grow your business?

Rather than marketing strategies, we leaned predominantly on an outbound sales model to acquire new customers (YouTubers and streamers) to our product. Our team was extremely effective at striking up conversations with content creators using a tried and tested playbook. We leveraged an offshore team to generate hundreds of thousands of leads and would feed them into an automated outbound contact process using Yesware. This was certainly effective insofar as acquiring influencers to our product (over 2 years, we added more than 20k to the platform), especially at the outset. It helped that our solution was innovative and first to market -- our promise was built on a way for influencers to earn easy money, who wouldn’t sign up!? In our first few months, we talked to thousands of influencers who, on the whole, saw incredible results from the product at the beginning. These results drove further growth via word of mouth -- adding hundreds of new influencers each day taking us rapidly to that $7k day in revenue. One YouTuber earned so much money from us, he managed to buy a house with his earnings!

GawkBox story of the YouTuber who bought a house with his GawkBox earnings:

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Which were the causes of Gawkbox failure?

In spite of our early success, we didn’t maintain that momentum. The success of our platform was reliant on three different customers: the mobile game publisher (who paid for the donations to the influencer), the influencer her/himself (who needed to talk about GawkBox to their fans), and the fans (who needed to play the games to trigger the donation). For a mobile game publisher to continue using our platform, they needed to see a return on their investment -- generally through fans that continued to play their games. Unfortunately, many fans would download games to trigger donations and then not play any further, meaning that paying for our platform became unsustainable for the game publishers. While we made efforts to create a more sustainable model for them, we lost many of those early customers -- and with fewer games to play paying fewer dollars, influencers and their fans became less and less interested in our platform. 

In spite of that, we were still early in the life of the company at that point and may have had the opportunity to change course, but I believe one particular strategic moment steered us down a pathway that became ever more challenging.

When we raised our second round of funding in July 2017, we focused our pitch to investors around the burgeoning live-streaming market. We felt that this represented our best chance to raise capital -- live streaming was one of the hottest investment trends of the year. We made this decision in spite of the fact that the recorded video on YouTube had been the primary driver behind our initial explosive growth. However, we felt that YouTube just wasn’t exciting for investors and believed we needed something more to raise investment.

We successfully raised capital with our live streaming pitch and that set the frame around many of our strategic decisions moving forward -- including how to address our declining revenue as game publishers deserted the platform. 

From that moment on, everything that we focused on was in the live streaming space. We ignored some of the positive signals we saw from YouTube in favor of the unproven live streaming ecosystem (for us at least). We spent the next 18 months developing different features for live streamers -- none of which repeated the initial success that we had. By late 2018, with only 6 months of cash left in the bank, it was becoming clear to me that it was going to be challenging to get to a point where we could raise another round of financing. We made lay-offs to give ourselves more time to find some positive product metrics and raise a new round of financing. We didn’t have much time -- I needed to be out fundraising early 2019 to have any chance of raising.

Our team and board of directors went back to the drawing board. Over Christmas 2018 we came up with a new concept that represented somewhat of a pivot from our original approach -- and over the space of just four weeks, we built a team-based competitive gaming platform for content creators. We launched an alpha test of the revamped platform late January 2019 and for the first time since summer 2017, saw great initial metrics. With a glimmer of hope, we continued to develop the concept -- knowing that I needed to be out fundraising within a few weeks to have a shot at extending the life of the company. With our beta about to release to 100 content creators and their fans, Apple took the wind out of our sails -- we were rejected from the App Store. 

It took more than 10 weeks to get approved -- by this time it was early May and we had just weeks of cash left. We ran out of time.

During a board meeting at 10 pm on July 3rd, 2019 we made the difficult decision to shut the company down, letting the remaining team of 9 go. After more than 3 years and $4.4M raised, we had failed to take the company to where we everyone was expecting us to -- and I entered into a summer of insecurity with my tail between my legs.

Which were your biggest mistakes and challenges you had to overcome?

This section could easily turn into a novel, so I’ll try to be brief! GawkBox was my first “proper” time as a founder & CEO. I went through a lot of firsts as CEO -- raising capital, reporting to investors, managing a board of directors, owning recruiting (both employees and board members), setting vision & owning company strategy… the list goes on. The first time that you do almost anything in life, you generally aren’t that great at it -- on the whole, I think starting and running a company is the same. It takes experience and practice to get better.

As a CEO, I now realize that you have so many responsibilities, but you only have the same amount of time in the day as everyone else does. Layer in a young family, and it means you have to be extremely good at prioritization, time management, and decision making… and it is very hard. 

I often prioritized the wrong things. 

Sometimes I deprioritized having external conversations because I had other things on my plate: legal, health insurance, accounting…these are very important, but there are others who can take this responsibility from the CEO. This led me to have a suboptimal understanding of the market we were in -- I didn’t talk to enough customers or other companies in the ecosystem. Because I didn’t have a maniacal focus on the customer, it meant that we didn’t have an organization-wide customer-driven culture and in the end, it led to us not building a product that customers truly needed. By deprioritizing conversations with other companies in our space (competitors or potential partners), I didn’t have as good a picture of the live streaming ecosystem as I should have -- and also limited our strategic partnership options when I most needed them.

We could’ve invested our money more intelligently. 

We may have found ourselves in a different scenario these past few months if we had been more frugal with our spending immediately after raising our last investment round. Flush with close to $4M in the bank and believing that we had the next billion-dollar business, we prematurely set about investing in growth -- just 3 months later we’d more than doubled the team and were spending an equal amount on sales & marketing as we were on engineering. However, at that point our product had shown only poor retention metrics -- so we spent more cash filling our leaky bucket up faster only for our churn to increase. We ramped our sales & marketing spend out of sync with our product development.

Which were your expenses? Did you achieve some revenue? In the end, how much money did you lose?

Initially, after launching our MVP we grew revenue very quickly - growing from $0 to over $100k MRR in just a couple of months. We leveraged that momentum to raise our second round of financing of just over $3.7M, following on from a small $700k in late 2016. Even at this early stage, GawkBox appeared to be on track to make significant business and was certainly a horse that many bets on. 

Just 2 years after raising that $3.7M, we found ourselves in a very different situation. Our bank balance was dwindling. Our significant user base (more than 500k) was now mostly inactive. We’d spent the majority of our investment funding different product iterations that did not materially change the economic outlook for the company. We decided to pause on efforts to raise additional capital for the business and made the difficult decision to close the business.

While we made over $1M in revenue, we were experimenting with different business models and found it difficult to keep our cost of goods sold (COGS) predictable. Our lifetime gross margin was under 10%, leaving us with precious little to cover our expensive personnel costs. As a software company, the majority of our expenses were people based and our OPEX was generally proportional to the size of the team we had -- generally ranging from $100k to $200k per month. The only outliers to this were around fundraising events when legal costs made up a significant portion of monthly operating expenses.

If you had to start over, what would you do differently?

I like to look at this as “what will I do differently next time” -- as I think it’s important to note that in spite of the outcome not being what we wanted, nor expected, I don’t regret anything about the experience. We achieved a lot at GawkBox -- raising $4.4M, getting to 500k and making more than $1M in revenue is no small feat, and I’m extremely proud of that. If I were to replay the experience and take a different pathway, I may not have experienced what I did or acquired the skills that I did -- all of which will set me up even better for my future endeavors.

After reflecting on my experience for the past few months, there are some key aspects that I would think about differently next time around. 

1. Spend more time with customers, particularly as CEO. Three types of customers are too many -- you simply don’t have the capacity to understand each of them deeply enough!
2. Use that customer time to ensure that you’re building something customers actually need. Cure their cancer, don’t scratch an itch. Create a product that solves an ongoing pain so that people will pay for it, repeatedly.
3. Better understand the unit economics of the business so you know how many users/customers you need to make it work. 
4. Force yourself to have conversations with other companies in the space. Know your competition, but don’t be afraid of them. You can out-execute them!
5. Wait until you have strong product retention before scaling sales & marketing investment. (I’m not saying don’t invest at all -- but optimize investment toward areas that will help you validate the product is what people need)
6. Take heed of your data when making strategic decisions. Recognize when something is working, and when something is not.
7. When difficult situations arise (and they always will) -- focus on how much you’re learning from it to help you get through.

Which are your favorite entrepreneurial resources?

I listen to a lot of podcasts, My First Million, Creator Lab and How I Built This. I’d recommend every entrepreneur read The Mom Test, a great guide on validating problems with customers. I am also a member of Trends by the Hustle - which is a great weekly newsletter for entrepreneurs!

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Where can we go to learn more?

I wrote more about my journey and lessons learned for Entrepreneur’s Handbook here. Currently, I am testing some other ideas out within my own personal incubator, Pastel Frog, and am advising other early-mid stage startups.