Showing a Pivot in Real Time: An Honest, Open Conversation with Ken Mooso
One of the core principles we hold dearly at Nex Cubed is transparency. We believe by seeing the world through clear eyes, and “telling it like it is,” we will get to the right solution.
It is with that spirit in mind that I was honored to sit down with one of our founders, Ken Mooso, CEO of PersonaFi, who wanted to talk through his recent pivot. It was an open, honest, and yet tough conversation since he basically scrapped the mobile app he spent the last round of funding building and went back to his original web-based newsletter and Facebook community.
He is not alone in this endeavor. The recent downturn has made survival and capital preservation very important. Consequently, we are seeing companies of all sizes “go backwards” and become more conservative in their product development (see the recent piece on Business Insider, Death of the Big Tech Moonshot). All companies are coming in on the risk curve.
That said, there is a right and wrong way to do this, and I appreciated Ken’s approach. Some of the things that I was struck by in Ken’s approach that I think all founders could take note of:
Consensus - Using a consensus-driven approach with his shareholders, employees, and then to his community members to build buy-in to this pivot.
Self-Awareness - Ken was able to self-assess how he lost sight of the core startup principles of incrementally testing your way into a new, minimum viable product.
Honesty - How being honest with your community and investors actually has put him back on the path to revenue and a new round, showing how overcoming your own personal feelings of failure can often drive the best results for your company.
Hope you enjoy this conversation as much as we had having it.
(Text summary of our interview has been edited and paraphrased for clarity and brevity)
Mike Ma: Can you start with just a quick introduction of yourself and then PersonaFi?
Ken Mooso: I'm the founder and CEO of PersonaFi. I have spent about thirteen years working in financial services. I've always been very passionate about investing ever since I was a teenager. I was able to build a social media following of about 30,000 through a Facebook group, just by sharing my experience working in the stock market. Retail investors are educated and know how to invest on their own.
We're currently pivoting and looking to create great content and solve for the limited types of investing research.
Mike: So you reference the pivot right? You started as a web community and platform, then you built an app, now you're pivoting back. Can you walk me through this recent pivot and why you did it?
Ken: The direction of the pivot really came about for two reasons. Maybe I'll start with the first, and why I wanted to pivot in this direction. When I started PersonaFi, I wanted to do something that I could be proud of.
And the point that I was most proud of what we did was when we had a newsletter. I was writing the newsletter, I was submitting the trade alerts, I was alerting people that were subscribed and following us to those trades, and I really enjoy the content. I think that was probably when I had the most fun. And it was not just me. There were other traders that helped out and built the community.
But that's when I felt like we were at our pinnacle, and that kind of leads into the second point – we are returning to where we had the last true validation of our product.
We had a social aspect. There was a Facebook community. We know that people like to talk about what they're doing and converse amongst each other about it, and then also they like to be able to follow and subscribe and pay for premium content coupled with trade alerts. We were very successful at that point.
Mike: Can you say more about like the pinnacle, in terms of users, revenue, and even funding because you ran a really successful WeFunder campaign.
Ken: So during the pinnacle was probably late 2021, and we were at about $15K MRR.
When it came to revenue we had 1,300 subscribers. We had about 80% daily active users. There was a lot of excitement about what we were doing, and then we were able to raise simultaneously while growing. That WeFunder was able to raise over $650K.
Mike: So that's pretty good — $10/mo, $120 ARPU. Pretty good velocity starting out early. So then, tell me what happened?
Ken: We interpreted data as, “Well, users love to be able to talk so we'll build our own social platform versus using Facebook or a Discord channel, and we know that they love trade alerts. So we'll just combine all that into our own app.”
Facebook has an algorithm that doesn’t exactly engage the people to be able to reach the people we wanted. And it was difficult to moderate due to bots. Bots are a huge problem. In fact, it was always near impossible for us to grow.
So we built our own platform, and our revenue just tanked. We thought that there wasn't enough advertising, we thought it just needed more time. We thought we had to improve our sales funnel, and we did make good improvements on that.
But I guess it kind of goes into where we are right now. We've reached a definitive point in conclusion that it's not the platform, and it's not our sales funnel. It's really just the method of distribution of that content.
Mike: When you say platform, you mean app. You made it, then you moved everyone off of Facebook and the newsletter where you were generating all this revenue. And you lost a lot of users, right? And you learned, it’s really expensive to build an app.
So, tell me about this pivot now? Now, you are moving forward. Can you tell us how you tactically did that?
Ken: The first method of communication really came down to a decision with the team. I first consulted with my attorney about the different avenues we can pursue and even with you as well. I wanted to make a decision before taking it to the team. The idea was, “Why not pivot the company back to something we knew was working before?”
The advice of our attorney was to take it down to a shareholder vote. These are the people that know the business and poured their blood, sweat, and tears into it, too. Just be able to open it up for debate. There could be good ideas that come up. And we took it to a shareholder meeting and surprisingly the vote was unanimous. The entire team agreed that this was the best decision.
Now we're currently still in the process of pivoting. We discussed what our pain points were. So therefore even though we're going backwards, we're not going back to the same mistakes.
We wanted to have it on the website versus through email distribution. So we're still going to use email as part of our sales funnel. But it's not going to be that where the newsletter is going to go up.
One of our growing pains that made it difficult for us to grow was because people actually said they didn’t get the email or went to junk mail, or they actually hit “unsubscribe”. It was a mess every single weekend. I had no way of verifying if they were paying or not.
So, what have we done right now? We set up the website. We set up a Discord channel, and we've made the announcements on the application of Facebook. We want to make everything known simultaneously so we can have the whole team move together.
Mike: It sounds like you took a very consensus-driven approach, but you have the majority of the equity, right? So you really didn't have to do that. But it looks like you’ve gotten a lot of love for this move.
Ken: There were a few users who were a little bit sad to see the application go, and it's because they like the community, which I do, too. But overall it was very well received.
I was definitely nervous to tell the investors because I wasn't sure how well it was going to be received. In fact, two of our biggest investors ironically just texted before the announcement to see how the app is going. Because they know. They can see things, so it's like they're not blind. I was very real with them and told them the current circumstances.
They were both very open to the pivot, and it was well received. One investor actually said, “I would like to invest more.” The other one was probably right about there, too. But I didn't take the money. I always want to make sure I get there first, because I feel responsible for people's money. I want to make sure I get on solid ground first before I put anything more at risk.
Mike: You've been out trying to raise money with the app as a platform, and no one really stepped up to the plate, including your existing investors. But as soon as you did the scary thing, that's when investors raised their hands and said, “Actually, now I am interested again.”
At the end of the day, like particularly at the seed/pre-seed stage, we're betting on you, right? Everyone saw the app wasn't doing well, and no one really wanted to say it. But as soon as you said it, everyone thought it was a big relief.
That’s a positive signal that you have self-awareness. The honesty and vulnerability, I think, is much more marketable. That’s what we are betting on.
So, it also sounds like you have gotten some revenue again?
Ken: Right now, our next step is really just to make sure that we are able to gauge the interest. It's not simple because they're paying through Apple, we have to get them to unsubscribe and subscribe. So we do have campaigns going out to retain and make the transition over.
But with our audience we're excited about that because we're going back to our users to tell them we're going back to the old way and we’d love to give you a free month to try it out. And then we're looking to overdeliver.
So we are very focused on the quality of the content. We've got a very defined vision of what it will look like before it goes out.
That was one of the things that made me excited about this because going back to the old newsletters, I tried several different ways of coaching content, and I think that the yield showed that the subscribers were not very interested in it as well.
Mike: Looking back, what would have you done differently, or what have you learned from this as a founder?
Ken: The biggest lesson I've taken is really to think clearly about what the data is telling you, and what validation you get. Really take the time to ponder all the possibilities of what that data may mean, because we did have the validation for this roadmap.
But we had tunnel vision, therefore it was a sprint in one direction. Build at all costs. Get there, that's the destination versus continuously making sure that validation is there and may be being open to other ideas.
The old newsletter is still validated, being on a web-based platform, that's still validated. But we thought we needed our own app, our own delivery system. Because of that we spent a lot to build it to make it happen, realizing that wasn't what the users really wanted.
Mike: If we thought about this from a lean startup perspective, which is ironic because one of your other advisors is Eric Ries, the author of The Lean Startup, it's about really honoring the idea of a minimum viable test or minimum viable product, right?
You had strong economics and were on a 6-figure run rate. You raised capital. And now you want to test building an app. Maybe the way was to roll the app out while you still have the existing revenue stream versus killing the web platform. You killed the revenue. You did a hard cutover.
That is an MVP, but that’s a maximum viable product.
Going forward, I hope that you set up tests in the right manner so you can get bite-sized listening.
Actually, I know you will take that into the next phase.
I am still stoked on PersonaFi. I know it’s not easy and I appreciate what you’re doing and talking to me so honestly and openly. I wish you more continued success.
Ken: Awesome. Thanks, man.