Hindsight, as they say, is a wonderful thing. Particularly when the person blessed with it is speaking from the sidelines of an event, having passively observed, rather than being stuck in the action.
I say that because I am very aware that it is very easy to pick holes in failed projects when the projects in question were conceived, set-up and run by other people. Because I know that it’s far easier to criticise than to create. And because I don’t want to sound like a bad version of Valleywag.
But, having said all of that, is it really any surprise that Canvas is to close? For those who don’t know what Canvas is, or was, it was set-up by Christopher Poole (founder of the infamous message-board 4chan) and was going to be:
the most exciting and interesting community for real-time creativity on the Internet
According to a very thoughtful post by Poole about the site’s failure (and that of the app they tried to spin out of it):
It may seem surprising that a seemingly successful product could fail, but it happens all the time. Although we arguably found product/market fit, we couldn’t quite crack the business side of things.
None of this is particularly revelatory and it has to be said that both Poole and his investors have written about the experience in a very open, honest and humble way. But a couple of things strike me.
1: There are limited ways to make money online, particularly with communities (the factor that investor Fred Wilson pulled out in his original post): you can sell advertising designed to reach the members of the community (Facebook), you can create a community designed to sell things to each other and take a cut (Etsy) or you can charge people to be a member of the community (I can’t actually think of an example).
These broadly match the three models of physical goods, advertising and SaaS that Ben Thompson pulled out in a recent post. And Canvas was never an obvious example of any of these.
2: Poole had no background of creating successful businesses so I am not sure why he was entrusted with $3.6 million. I realise that many successful entrepreneurs are also first-timers (though actually most of them are older than the myth of the 20-something genius) but Poole had singularly failed to make a fortune out of his existing site 4chan – probably because it’s entirely uncensored and has a (not undeserved) unsavoury reputation.
It seems that he had a change of heart when it came to Canvas, saying:
We approached a few companies and no one was buying what we were selling…The nut that was interesting was the community, but it wasn’t really clear what exactly this community would do for their business
It’s quite a striking admission from this defender of internet freedoms that he tried to sell a community (presumably for the data it held) but, again, at least he’s being honest. But I’m not sure why anyone ever thought that this community would be of interest.
I realise that people questioned the likes of Twitter and Facebook when they started, but Facebook was following in the footsteps of Friendster and MySpace, so there was obvious commercial opportunity, whilst Twitter was simply more accessible – the barrier to usage were and are low, whereas wanting to remix random images was surely always going to be a niche interest.
At the end of the day, we can probably see the seeds of failure in Poole’s own words.
Firstly, they spent half of the $3.6 million they had raised trying to flog the dead horse that was Canvas before trying to pivot when they released a drawing game called DrawQuest: what I find amazing is that they actually raised the bulk of their funding after they had been live for a year, when I would have thought that the seeds of their failure should have been visible, but I guess not.
Secondly, when they did try to pivot they thought that they had created a business model by allowing people to buy virtual paintbrushes but, as TechCrunch explained:
[They] found that selling paint brushes in a drawing app is a lot harder than selling extra lives in Candy Crush. There’s just not the same emotional ‘I can’t play if I don’t pay’ urgency. “I definitely have a new appreciation for game designers,” [Poole] tells me.
Maybe they should have used some of the money to hire some.
Rather than just highlighting faulure I think it’s useful to look at what other companies have done right.
Paint, another app, has pivoted to creating physical products (as the Thomson post above highlights) whilst WhatsApp, which was founded on the mantra of ‘no ads, no games, no gimmicks’ has built up an audience of 430 million active users and now handles almost as many messages a day as the entire global SMS system.
The scary thing is that the most insightful comment on this whole episode came from a man pretending to be a dinosaur way back when Wilson announced the investment.
I really hope that Poole does bounce-back, because he’s obviously an intelligent and honest man – two virtues not necessarily widely associated with the West Coast tech-scene. And I hope that Wilson backs him again. But I just hope that it’s something that has even a slight hope of success.