The Life and Death of Project Stag
If you look at the bio on my personal website, it says that, “I’m a 4x founder-turned-VC.” But only two of the entries on my LinkedIn page list me as a founder or cofounder: DataHero and Commonwealth Ventures.
The third company I cofounded, The Engineer & The Designer, was a consulting company formed with my long-time partner-in-crime, Gail Yui. From 2016 - 2018, we consulted with Series A and B startups in Silicon Valley, helping them to align their product and GTM strategies (I never added it to my LinkedIn profile because it was really just a short-term cash flow business while we each figured out what we were going to do next).
But there is a fourth company that we cofounded that almost no one knows about.
This is the story of Project Stag.
Chapter 1
Gail Yui was the unofficial third cofounder of DataHero. She was involved in the earliest days of the startup, back when it was known as Glean. She designed most of the UI in our original prototype, all of our logos and pitch decks, and pretty much every graphical asset the company ever had. At the time of DataHero’s founding, Gail was leading creative for a Sequoia-backed company that was about to go public, so she couldn’t officially join until after we had raised our Pre-Seed round.
When DataHero was acquired — about 4 years later — our fastest-growing customer segment was digital marketing agencies. Shortly before the acquisition, we discovered that they were a perfect fit for our product: each agency managed multiple clients and each client used multiple SaaS services (like HubSpot, Google Analytics, etc.). The agencies spent considerable time each month manually creating reports to demonstrate their value to clients — reports that could be automated in DataHero. DataHero’s reports weren’t an out-of-the-box fit, but the agencies didn’t care. They had a clear and urgent problem and DataHero was a pain killer.
After DataHero was acquired, that part of the platform and its emerging go-to-market was shelved. To Gail and I, it felt like a missed opportunity. Months later, as we decompressed over pisco sours in her hometown of Lima, Peru, we couldn’t help but feel that we had unfinished business. It wasn’t the first time we had talked about the digital marketing opportunity after transitioning out of DataHero, but that night (possibly because of just how many pisco sours we consumed), I turned to her and matter-of-factly said,
“We’re going to have to build this, aren’t we…?”
She silently took a sip of her drink and simply nodded.
Chapter 2
When we returned to San Francisco, it was on.
We reached out to some of DataHero’s former agency customers and found that they were all desperately searching for a new solution. We spent the next several months on the road, traveling from agency to agency (with more than a few stopovers at HubSpot’s Boston headquarters). The opportunity was crystal clear to us. Small-to-medium sized agencies were willing to pay $1,000 or more each month if we could solve certain analytics and reporting problems for them with a turn-key solution. We were pretty sure that it wasn’t a VC-scale opportunity, but we knew exactly how to design it, how to build it, and how to sell it.
Using the revenue we were generating from The Engineer and The Designer, we incorporated a Delaware C-corp (aptly named, “The Engineer and The Designer Labs”), brought on some engineering help to accelerate development, and went full steam ahead.
But what would we call the product?
Based on our customer research, we knew that digital marketers (and marketers in general) appreciated brands that felt exclusive, so we drew inspiration from private member clubs like The Battery (which, at the time, was the hottest ticket in SF). One night, we met up for drinks at a nearby restaurant and looked up to see this masterpiece looming overhead. Immediately, we knew that our logo would be a stag.
We spent about 20 minutes trying to figure out what the company name should be, what domain names were available, etc., but quickly agreed that was a waste of time (we were still pre-alpha, after all, so who cared?). We settled on the interim name “Project Stag”, knowing that this particular nomenclature would reinforce the feeling of exclusivity that we were going for.
Our minimalist business cards had no branding, no names and no contact details. Instead, the cards had an embossed gold image of a stag on one side and a URL and access code on the other.
We handed out these “exclusive” cards to digital marketers around the world to grant them the privilege of access to our alpha product. And they ate it up. Within a matter of weeks, we had hundreds of digital marketers testing out our product.
Chapter 3
Project Stag was designed from the ground up to give digital marketers two things:
Instant, out-of-the-box reports that could deliver value at any point in the client revenue journey, from demo to closing to monthly reporting to upselling
A feeling of exclusivity akin to having unlocked a “cheat code” for their business
With only a domain name, Project Stag could instantly provide a comprehensive analysis of a company’s online presence (everything from website speed to code errors to SEO performance). Add social media accounts and connect a few key services and the depth of analysis grew by orders of magnitude. One of the key early features was a competitive analysis, which digital marketers could use to visually compare a client’s online presence to those of their competitors (a feature that was particularly effective during sales pitches).
The alpha users loved it. Project Stag was saving them dozens of hours each month while generating client reports that looked far better than anything they were currently delivering. But as we got closer to public release, something seemed off. We noticed that usage was dropping off sharply at around the one month mark. We dug deeper into the data and saw a concerning pattern: agencies would onboard a client, connect all of the requisite accounts and create the initial reports…then never generate anything else for that client.
Red alert!
Gail and I immediately reached out to a number of the alpha testers and arranged for in-person meetings. Over the course of several weeks, we criss-crossed the continent, visiting dozens of digital marketing agencies in a bid to understand what was going on. We quickly discovered that we hadn’t built as turn-key of a solution as we had thought.
While Project Stag indeed saved the alpha testers dozens of hours of work each month, we discovered that the reports it created didn’t fully replace what they ultimately delivered to clients. Almost all of the agencies augmented their reports with a significant amount of editorial content (intended to demonstrate how knowledgable they were and, thus, support the hefty retainer fees they charged). The agencies were copying the output from Project Stag into their existing report templates and continuing with their mostly-manual reporting processes.
Moreover, we learned that the time savings were mostly coming from their junior-most staff, whereas the features we had planned for subsequent releases (such as a recommendation engine to help them prioritize client improvements) were where they really saw the value. The agencies loved the competitive analysis feature as a sales tool, but it was a “nice-to-have”.
By the time we finished our feedback tour, it was unequivocally clear that the alpha version of Project Stag was not a pain killer. Despite that, a number of the agencies wanted to continue using the product (and were willing to pay a nominal amount for it), but nothing close to what we were aiming for. We would need to deliver a significant number of features that we had planned for future releases before we would be able to generate meaningful revenue.
Chapter 4
At this point, we faced a decision. We had significantly decreased the amount of consulting work we took on in order to focus our efforts on Project Stag, but were nearing the end of our runway. We estimated that it would take at least 6 more months of full-time effort to implement the functionality that we believed would deliver meaningful revenue. That left us with two options:
Raise angel capital to support the work needed to get us to cash flow positive
Ramp back up our consulting work and continue to bootstrap (knowing that the pace of Project Stag would decrease and it would likely take 10-12 months to start generating meaningful revenue)
Later that week, Gail and I met up for dinner to figure out our path forward. Over the course of the evening, we discussed the current state of Project Stag and debated the potential paths ahead, analyzing and over-analyzing each option.
After several hours, Gail paused and stared off into the distance. Then, in a scene that inverted the conversation that had birthed Project Stag, she turned to me and matter-of-factly said,
“I don’t want to do this for the next 5 years.”
I silently took a sip of my drink and simply nodded.
Epilogue
It turned out that while we were both excited by the opportunity that the digital marketing agency use case presented, neither of us was deeply passionate about digital marketing itself. We would later come to recognize that our initial interest stemmed from what it represented within the context of DataHero — a missed opportunity — rather than a particular excitement about marketing analytics.
We explored several acquisition scenarios, but all of the offers were contingent on the two of us joining full-time and bringing Project Stag to production. As neither one of us wanted to do that, we ultimately shut down the project and shuttered the company.
Shortly after that, I joined 500 Startups as an EIR and embarked on my journey as a VC. Gail returned to senior operating roles, working with later-stage companies while mentoring for Sequoia’s Ascend program.
I wrote this post not only to share the story of Project Stag, but because of the profound effect the experience had on one particular aspect of my approach to investing: how I view “founder-market fit”.
Many investors place a premium on “founder obsession” — the degree to which a founding team is driven to solve a particular problem. My experience with Project Stag led me to realize that it’s possible for a team to execute for a fairly long stretch of time with the velocity necessary to succeed, but without having a deep, emotional connection to the problem they’re solving. In other words, I believe that some founding teams can get so caught up in the excitement and momentum of building that they mimic the obsession investors are looking for. That adrenaline enhances everything they do — including the intensity with which they talk about the problem they’re solving.
But, eventually, the adrenaline that comes from the excitement of building runs out. And when it does, if there isn’t a deep, emotional motivation to fall back on, momentum quickly fades.
Which is why I ask a very specific question of founders,
“Why is this the problem you want to work on for the next 7-10 years? What will keep you working on this when many of the people around you stop caring?”
I find that this particular framing can elicit some very illuminating facets of a founder’s personal experiences and personality — including the real reason(s) why they’re doing what they’re doing.