Why Most Company Side Projects Are Destined to Fail
January 19, 2016
In 2011, my co-founder Brendan and I thought of a killer idea for a company side project: a video production marketplace.
Ever since we launched Wistia back in 2006, we’d come to realize that the core problem a lot of our customers had wasn’t finding good video hosting. The problem was actually making videos. Very few companies back then had in-house video teams, and finding a production company could be an intimidating and mysterious struggle.
Sometimes customers would come to us for help. We’d ask where they were based, what kind of video they were looking for, and what kind of budget they were working with. Brendan and I would discuss the people and companies we were familiar with and combine our mental Rolodexes to figure out the best option.
After we did this a few times, we had a eureka moment — we could remove ourselves from this equation entirely. We could set up a site where businesses and production companies could talk to each other, agree on the details and pricing of a video, and start making content right away. And this wouldn’t just be for Wistia customers. It would be for any business trying to make videos.
That’s how 50 Grove, named after the street address of our Somerville, Massachusetts office, was born. This was a problem that the Wistia team seemed perfectly positioned to fix, and we thought we had the perfect way to do it.
Instead, we learned a lot more than expected about how company side projects are often set up to fail.
Right in our wheelhouse
Brendan and I had enough experience in the video production space to know how marketplaces had failed before. It really excited us to think we had the solutions to mistakes that we’d seen others make, like:
Inconsistent quality: Marketplaces weren’t curated enough, which meant highly varying levels of quality. To solve this, we had video producers and production companies send us portfolios of work in order to get listed, and we did the picking.
Unclear pricing: Companies on other marketplaces often didn’t list their prices, which resulted in a lot of mismatched connections and wasted time. To address this, we had everyone on the production side list their approximate costs. That gave businesses a sense of their options and made things easier for the video producers, too.
We built the 50 Grove website fast, launched it, and immediately got tons of great feedback, both from videographers happy to be working and businesses happy to be getting amazing videos.
But as time passed, 50 Grove started to drag.
The biggest problem was a lack of resources. We didn’t have the time or means to give 50 Grove what it needed, so the enormity of the project put us all under a lot of strain. A few years later, as Wistia packed up to leave Somerville for our new office in Cambridge, we left the other 50 Grove behind as well.
“We didn’t have the time or means to give 50 Grove what it needed, so the enormity of the project put us all under a lot of strain.”
What happened? Why weren’t we able to invest in the resources 50 Grove needed? It’s a question we’ve thought a lot about, but haven’t really written about until now. It’s not the brightest moment in Wistia’s history. We made a couple of big mistakes, and since then, we’ve examined what those missteps were and why we made them.
We’re writing this now because the “company side project,” as an idea, is really beginning to take off. If you’re thinking about starting your own side project, save yourself some stress, and learn from our mistakes.
Mistake #1: No one took direct ownership
2011 was a huge year of transition for Wistia. That was when we made our first real video and started understanding how video marketing might actually drive Wistia’s growth. Our ragtag team of five was beginning to expand, as was our workload.
But we also had this idea for a video production marketplace. It felt important that we do something about it, but none of us had the time or the energy for it. We decided to get some distance from the idea by hiring a contractor to build the site for us. While we were busy hand writing embed codes, tinkering with Final Cut, and chasing down deals, our amazing side project would come to life. Then we could focus 100% on Wistia again, but we would have this cool thing called 50 Grove in our back pocket.
The contractor finished the site and sent it over. It went live. People liked it, at least at first. Then they’d run into a semi-debilitating bug or get a 404 while checking out a video production provider. They’d email “50 Grove Support.” Then they would wait. And wait.
And then wait some more, because all of those support emails were going to a shared inbox at Wistia. No one had been assigned direct responsibility for dealing with 50 Grove even though technically, working on 50 Grove was on everyone’s to-do list. It was just ranked consistently near the bottom.
That was when we had to face the harsh truth that we’d hired a contractor to build 50 Grove because we never really wanted to build it at all.
When we finally shut 50 Grove down, a gigantic weight came off everyone’s shoulders. It was disappointing to let our customers down, but the relief that came as a result of wiping it off our to-do list was palpable. We’d hired a contractor to build us this site without thinking through the long-term strategy. Who would be responsible for fixing bugs? What work would be required for day-to-day maintenance? We had never really thought about that kind of stuff. We were five people. We just figured it out as we went.
Growing companies just don’t _do_ low-priority objectives. You can make a to-do list, but by the time you’ve worked through the most important items, 10 more high-priority things always seem to crop up and demand your attention. If you want something to actually get done, you have to make it a high priority for your team and enforce it, or assign responsibility to a specific person. Otherwise, it’s just going to drag your team down until the day you decide to scrap it.
“Growing companies just don’tdolow-priority objectives.”
Mistake #2: We didn’t have the right incentives in place
As soon as we conceived of 50 Grove, we knew that it had to be free. We’d seen other production marketplaces charge businesses, and even video producers, for things like listing or closing fees. We didn’t want to do that for a couple of reasons:
Video producers and businesses are both our allies. Nothing that we do at Wistia would be possible without the creative geniuses behind the companies and the creators that work with us. The last thing we’d want to do is profit from bringing the two together.
We weren’t used to charging extra fees. Wistia ran (and still runs) on recurring subscription-based revenue. To this day, the reliability and regularity of that model is the reason we haven’t had to raise significant amounts of money, and we didn’t want to mess with it.
In other words, we thought that we were doing something nice for our customers. We didn’t expect anything in return. It was just the kind of thing that an idealistic young startup is liable to do.
Little did we know, we’d already set 50 Grove up to fail, because our team’s incentives and 50 Grove’s incentives were in total conflict, and the two couldn’t co-exist.
Our team was small and totally flat in structure at the time. Every team member had the freedom to choose the projects they worked on, and this was usually highly effective. We didn’t want bosses telling people what to do. In flat teams, that doesn’t happen: people self-organize and gravitate toward the projects that have the biggest measurable impact.
We built a tool for automatically transcribing videos, we optimized our homepage for conversions, and we got our videos to load way faster — all of those improvements clearly bumped up our growth, increased our revenue, and gave us profits that we could reinvest back into Wistia. But no one chose to work on 50 Grove. Since we didn’t charge for the service, working on Wistia’s core product always took precedence.
In the end, our effort to do something nice for our customers actually wound up hurting them. We had to shut down 50 Grove, but we learned something important. A flat team will always neglect projects that aren’t expressly valued by the company.
Mistake #3: We thought it could just be a side project
When we first started 50 Grove, it wasn’t supposed to be an extension of Wistia. This was something we were doing for our customers, not for us. We didn’t want to make it seem like we were promoting our hosting service or getting involved in video production. We bought a new domain name for our passion project — 50grove.com — so it could take off in its own way separate from Wistia.
We didn’t get much traffic.
When we moved it to “50grove.wistia.com,” people started signing up almost immediately, but we still didn’t take the hint. We imagined 50 Grove as its own entity, even as it became increasingly clear that 50 Grove grew in popularity the closer we associated it with Wistia. Despite this, we never looked into the conversion data to see if 50 Grove users were becoming Wistia customers or vice versa.
When you look at companies successfully building side projects, one thing sticks out. They build tools, often free, that people in a particular niche find genuinely valuable. Then the company uses those tools to drive people to their core business:
Crew, an online marketplace for designers and developers, started Unsplash — a repository for high-res, commercially-allowed images they weren’t using anymore. It’s now the number one referral source to Crew.
StatusPage.io, a tool for communicating with your team and users about downtime, started Better Error Pages — a free tool for building customized error pages. They tracked that about 0.2% of visitors converted to paid accounts, which sounds low until you realize it led to $116,000 in annual revenue for StatusPage.
We, on the other hand, started a side project that didn’t support the needs of our core business. 50 Grove didn’t generate revenue, and if it sent traffic to Wistia, we weren’t tracking it. We thought our side project was supposed to be compartmentalized — something kept nice and tidy and totally on the side. But because of that compartmentalization, we neglected it, and that didn’t do any good for either 50 Grove’s users or Wistia’s reputation.
This is the paradox: In order for your side project to succeed, it needs to become more than a side project. It needs to either generate its own revenue or send traffic to your core business. Otherwise, what you’re really doing is starting a whole new business, and you can do that. You just can’t treat it like a side project.
“This is the paradox: In order for your side project to succeed, it needs to become more than a side project.”
Fortunately, as humans, we’re all capable of learning from our mistakes.
In 2014, we launched the Wistia Community. In this space, Community members (Wistia users and nonusers alike) ask for advice on technical issues, learn how to find good video producers in their area, and discuss the nuances of putting together a great piece of work. They’re sharing lessons with one another and building relationships.
This project is going a lot better, and that’s because we set out to avoid the mistakes we made with 50 Grove. That’s why we did things so differently:
We hired a community manager to oversee the project day-to-day. This full-time employee would be responsible and accountable for the success of this project.
We integrated it into Wistia and the needs of our users. The benefits that 50 Grove gave to our users were abstract. With the Wistia Community, our users have a designated place on our site to talk video production and marketing.
Wistia users now have access to the exact kind of information that was on 50 Grove, except now it’s vetted by their fellow entrepreneurs rather than us. The people that use Wistia are a valuable resource. They’re video producers and marketers, all of the people we wanted to be part of 50 Grove. Now, these knowledgeable members of our community can help each other!
50 Grove wasn’t meant to be, but it did turn out to be necessary. When we saw how enthusiastically people were commenting on our blog, and Facebook, and Twitter, we knew that we should build a community where we could bring all of that together — but we also knew what mistakes to avoid along the way.
If you’re still thinking about starting a side project at your company, go for it. Just take our missteps into mind. And remember: you will make your own mistakes, but it’s the way you bounce back from them that will define your company.