“Looking backwards, what would I have done differently at this stage in the development of the business? I think we should’ve done a much better job of customer discovery. When we talked to people, or showed them the service, we subconsciously led the discussion to hear what we wanted to hear…”
Here’s my profile of Christian Homeschool Network from the October 2015 issue of MinistryTech magazine.
Over the past several months, we’ve discussed what it means to be a startup (in business or ministry) and defined a startup this way: a new venture working to solve a problem where the solution is not obvious and success is not guaranteed. We’ve also discussed what it means to be an entrepreneur, and specifically a Christian entrepreneur, which we defined as: a person, driven to glorify God in all he does, and ruled by the Word of God, who starts a new venture and is willing to risk a loss in order to achieve the success of the venture.
Over the past few months I’ve started introducing you to specific Christian startups and entrepreneurs. Some of these ventures and people may be ones that can help your church, ministry, or business, but my main intent is to encourage, inspire, and educate you as I hope you too will be growing as a Christian entrepreneur.
This month I’d like to use my most recent startup as a case study.
7 Disciplines of Biblical Business Success
In 2008, I taught a class for 3 homeschool families on the “7 Disciplines of Biblical Business Success.” As part of the class, the seven students formed into teams and developed business plans for innovative business ideas that they had developed. To walk them through the process, I also developed a business plan for the idea of an online social network for Christian homeschooling families. Through the course of the class, the idea took shape and feedback I was receiving indicated that it may be commercially viable.
In 2008, online social networks were an emerging phenomenon. MySpace had ruled the market for the past several years, but Facebook would pass 100 million users by mid-year and pass MySpace by the end of the year. The opportunity that we identified was that a) homeschooling families are natural networkers and have generally adopted computers into how they run their schools; b) online social networks provide core technologies and capabilities that could enhance the homeschooling environment, including providing an opportunity for social interaction amongst homeschooled kids; c) however, Christian homeschooling families have legitimate concerns about privacy and the safety of their kids on secular social network platforms. Although not as big as MySpace and Facebook’s broad target market, with approximately 2 million homeschooled kids in the U.S. in 2008, the addressable market for this concept appeared big enough to support a business.
With that as background, we incorporated Christian Homeschool Network, LLC and began work on Hschooler.net, the online social network for Christian homeschooled families. I documented many of the technical decisions we made along the way in a 2010 Christian Computing series titled “Launching Online.” In short, we leveraged a lot of open source software and web-based services to be able to quickly launch with limited resources.
My primary goal with Christian Homeschool Network was to provide an educational opportunity for homeschooled students to learn what it meant to launch and operate a business in a way that is honoring to God. Over the next several years, 9 different students served as interns for the company. Unlike many internships, each student was given a significant role in the company, whether it was taking responsibility for graphic design, marketing, or product development or in writing software for new features. I and a couple of other dads served as mentors and coaches helping the team make good decisions, and each semester the team met with an advisory board made up of business and ministry leaders, as well as parents representing the needs of the target market. The interns received virtual shares in the company and whenever there was a profit, 50% of the profits were distributed to these virtual shareholders. We averaged one distribution a year for four straight years.
By the end of 2008, we had a barebones version of the service up and running and began getting feedback from a few friends and family. We continued to develop capabilities and make tweaks throughout 2009, officially launching in February 2010.
Looking backwards, what would I have done differently at this stage in the development of the business? I think we should’ve done a much better job of customer discovery. When we talked to people, or showed them the service, we subconsciously led the discussion to hear what we wanted to hear – that this was a great idea; that people were scared of Facebook and MySpace; and that homeschooling families needed something like this. We had a relatively complex revenue model (subscriptions, advertising, and in-app purchases using a virtual currency) but we didn’t do a good job of listening for whether people saw enough value in the service for it to generate meaningful revenues. We focused on developing capabilities that people said they wanted (e.g. an online grade book) rather than addressing the needs that were keeping people from becoming active users.
Our first major pivot came in the summer of 2011. We had realized that the biggest challenge we had was a lack of scale. Anyone who joins Facebook will find existing friends who are already active users. That wasn’t the case with Hschooler.net. We decided to shift our primary target market from individual families to large groups of homeschooling families who would bring existing networks with them. Our first such customer was Midwest Parent Educators, a network of over 1000 homeschooling families in the Kansas City area.
Our second major pivot came in the spring of 2013 when we rebranded from Hschooler.net to CXfriends, broadening our market to all Christian families and enabling us to target churches, Christian schools, and other organizations not exclusively homeschooling focused. Unfortunately, we used this rebrand to also redesign the site and introduce a significant amount of new capabilities. Despite our pre-launch testing, when we moved into production, the performance of the service took a significant hit. Being near the end of the school year, we were also losing the focus of some of our core interns who had been with us from the beginning and were now approaching graduation. Bottom line, we lost the opportunity to maximize the rebranding and we lost significant momentum. Of course, Facebook had been continuing to increase in strength, making it ever harder to compete.
On August 1 of this year, we officially shut down CXfriends and ceased operations. Although I am very happy with our success against our primary goal of providing learning experiences for the interns, our business success was limited. We made mistakes and weren’t well prepared to recover quickly from those mistakes. We failed to spend enough time with our target customers to truly understand them (those that embraced Facebook didn’t need us; those that rejected Facebook were just as likely to reject us). But our biggest challenge was that our value proposition put us on the same battlefield as a very well resourced competitor with significant structural advantages that we could not overcome.
My prayer for the interns that passed through Christian Homeschool Network, LLC, and for you, is the same as Paul’s prayer in Colossian 1:9-14, which begins “For this reason we also, since the day we heard it, do not cease to pray for you, and to ask that you may be filled with the knowledge of His will in all wisdom and spiritual understanding; that you may walk worthy of the Lord, fully pleasing Him, being fruitful in every good work and increasing in the knowledge of God”.