Reference no: EM131084098 , Length:

How a Lack of Passion and Too Few Customers Can Kill a Business The idea for YouCastr was hatched in mid-2006, during a road trip involving Ariel Diaz, Jay Peak, and Jeff Dwyer. Throughout the ride, the friends bounced business ideas off each other. One idea stuck. How about creating a platform that people could use to provide live commentary for sporting events?

It would be fun, the friends thought, for people to watch a sporting event, like a high school football game, and stream their own live commentary across the Web. Diaz shared the idea with Jeff Hebert, a friend, and within a couple of months he, Hebert, Peak, and Dwyer started building an alpha version of the site. Initially, each member of the group kept his day job, working on the idea, which they dubbed YouCastr, on nights and week- ends.

Eventually, each quit his job, and the four spent the next three years raising money, opening an office, hiring people, getting YouCastr up and running and pivoting the business. (A pivot is when a business changes course.) Often, start-ups iterate or pivot based on user feedback. YouCastr started as a virtual sports bar where people could chime in audio commentary on televised sporting events. That approach didn't stick.

It then pivoted to focusing on enabling people to provide commentary on sporting events that weren't televised, like high school football games. Its final pivot was to expand beyond sports, mainly by de-emphasizing the sports branding on its Web site, by adding a few features geared more toward video producers than ordinary sports enthusiasts.

All this time, YouCastr's revenue model called for the firm to take a commission on the sales its site generated. Each person who used the site to provide live commentary of a sporting event would sign up listeners who would pay a small fee to listen to the event. Ultimately, YouCastr didn't work. In a blog post about YouCastr's failure, Diaz provided five reasons that YouCastr failed, three of which involved either a lack of passion or an absence of customers.

First, the company ran out of money. Despite operating in a very lean manner, toward the end there simply wasn't enough money to continue operating.

Second, the market was not there. The underlying assumption of YouCastr's business model is that people would pay for audio and video commentary of sporting events that weren't covered on radio or TV. As it turned out, not enough people wanted it. YouCastr did find some narrow markets where people would pay, such as high school sports, some boxing matches, and some mixed martial arts events. But these markets weren't large enough to build a sustainable company.

Third, the team was ready to move on. The four cofounders started YouCastr because they wanted to do something entrepreneurial-not because they loved broadcasting or loved sports. They weren't the core users of their own product. This made it hard to sustain effort when things got tough.

Fourth, they saw no light at the end of the tunnel. They'd guessed wrong about people's willingness to pay to listen to live broadcasts of sporting events, and didn't see any prospects that would change. Finally, three and a half years after that car ride, it was time to call it quits. Although the founders considered themselves to be survivors, they made the tough decision to shut things down and move on.

Questions

a. To get YouCastr back on its feet and moving in the right directions, its founders realize they will need more money than they can come up with on their own. Explain the three sources of personal financing available to entrepreneurs.

b. It is essential that YouCastr do a better job of focusing on the audience that is most likely to respond positively to its product. Educate the founders of YouCastr on the basic principles of market segmentation and advise them on how to go about selecting a target market.

c. Help YouCastr's founders understand what intellectual property is and why they should protect it. Identify and discuss the four major forms of intellectual property: patents, trademarks, copyrights, and trade secrets. Please provide in text citations