Gamified marketing startup QuizJam has raised $810,000 in funding, just over a year after it pivoted its business model and scrapped 80% of its technology.
The funding round was led by Ian Green, director and former owner of Gull Petroleum, who has taken a 10% stake in the startup. It also included chairman of Basketball Australia Ned Coten and Sydney-based market research company Faster Horses Consulting.
The first few years as a founder are never easy, but QuizJam founder Joel Steel has had more than his fair share of twists and turns.
He first launched the startup in December 2014, as a trivia app through which users would pay to take part in quizzes, with all proceeds going to charity. However, Steel tells StartupSmart the model was more challenging than he had anticipated.
The Apple Store takes 30% of any in-app purchases, he explains, and this became something of a sticking point when it comes to charitable donations.
The charities were losing out, but to take players out of the app to make purchases diminished the user experience, Steel says.
The idea morphed into an app using branded trivia content to engage users with brands.
“The brands loved it, but something wasn’t right,” Steel says.
“We weren’t getting enough sales traction — we weren’t providing enough value to the end user.”
By the middle of 2017, the startup was running out of money.
Although QuizJam had already raised between $800,000 and $900,000 in funding, which had been poured into the product and marketing, Steel didn’t have a whole lot to show for it.
“That’s a difficult story to be telling new investors,” he says.
However, the startup maintained the support of its existing backers, who “really believed we could turn it around”, he adds.
There were “three or four times” he had to go back to those investors to ask for help. In one instance, the startup owed some $35,000 in bills and staff wages and only $1,000 in the bank.
“We always got through it. No-one ever missed a cent of their pay,” he says, and through all the struggles, he never had to let a staff member go.
“I’m quite proud of that,” he adds.
It was in October 2017 that Steel decided to take a step back and have a good, hard look at the business model to try to figure out what was going wrong.
“We broke it all down, had some deep discussions with our advisors, brand partners and agency partners.”
He realised while they were providing a good service to the brands, the end users were not engaged.
“The end user wants value as quickly as possible,” Steel says.
“How do you capture the attention of someone very, very quickly?”
Eventually, he made a drastic decision.
“We had to get rid of the app”, he says.
Having to download something is a barrier in the first place. At the same time, brand partners would rather have those people engaged on their own sites.
“We threw away two or three years of app development and started fresh,” Steel says.
“As far as the tech was concerned, we could only use about 20% of it.”
Now, QuizJam’s multi-channel quiz technology that can be embedded into partners websites or apps, keeping users engaged on their own platforms.
“It’s all about user experience first,” Steel says.
“If they’re not finding value, you’re going to lose them straight away.”
This latest raise comes as something of a relief, and a validation for the new business model, he says.
The business is moving in the right direction, and this funding boost will allow the startup to scale up its team, and to “execute on the plan”.
But there are also benefits in the partnerships made.
Ian Green and his entrepreneurial family are “obviously fantastic businessmen”, he says.
Although their experience is in a different industry, they’re “good people to have around you, who have grown businesses to that level”, he says.
“We will be leaning on them when we can,” he says.
At the same time, the startup has bolstered its advisory board, bringing Matt Houltham, managing director of marketing agency Havas Melbourne on board as a director, as well as Switch Digital chief executive Lee Stephens and Faster Horses chief Peter Fairbrother.
Switching up the business model was “pretty scary”, Steel says, partly because the startup had already raised funds, and had the ongoing support of investors.
“We just thought, if we don’t make this decision, or if we make the wrong decision, we might not be here a few months later,” he says.
“There was one way to go, and it was just the matter of taking that leap of faith — that we did know what we were talking about and believed in ourselves to execute a new plan very, very quickly,” he adds.
However, it was the right decision, and Steel advises other startup founders to be honest with themselves, and to be brave enough to make a change if it’s needed.
“We could have made that decision to pivot earlier. You can do a lot of damage if you aren’t willing to take a step back and say decisions you made early weren’t the right ones,” he says.
“Try to understand your audience and your customer and what they want, rather than what you think they want,” he adds.
“And make those changes as quickly as possible … or you could end up nowhere. We were very close.”
As well as a little hurt pride, Steel says there’s pressure when there are investors involved. Those investors believed in the original vision, and so founders can feel obliged to keep working on that, “because that’s what I’ve told everyone I’m doing”.
However, he now realises as well as investing in the business, his backers had invested in him.
“They invest in the founder first rather than the product,” he says.
“If investors are in it for the right reasons, they will support you,” he adds.
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