Flowtab

What did it do?

Flowtab was a mobile app that let bar customers browse the drinks menu on their phones and order by prepaying with a saved credit card. Orders appeared on iPad screens in front of the bartenders, and a text message went to the customer when the drink was ready.

Why did it shut down?

Started by Mike Townsend and Kyle Hill in 2011, the start-up released the app in February 2012 before it had signed a single bar. The first launch party in Santa Monica looked promising, but in July 2012 the servers crashed during a bar crawl organised with Uber and Thrillist. Although 12 bars in three cities were active in January 2013, usage remained patchy, organic growth never materialised and winning new users required constant marketing spend. In February 2013, as rivals BarTab and Coaster collapsed, Flowtab had $20,000 left in the bank and its target of a $300,000 round fell through. Having spent $110,000 in total and reached fewer than 2,000 users, the company shut down on 17 April 2013.

The story

Flowtab started from a problem everyone has had in a crowded bar: how do you get your drink faster? In 2011 Mike Townsend and Kyle Hill decided to answer that question with a phone app. The customer would browse the menu on their phone and pay with a saved card, the bartender would see the order on an iPad in front of them, and the customer would get a message when the drink was ready.

The team released the app in February 2012 before it had signed a single bar. At the launch party held at Copa d'Oro in Santa Monica it took 150 orders and processed $1,200 in transactions. In July 2012, however, during a three-bar crawl organised with Uber and Thrillist, the servers crashed under the load of 300 participants. The team raised $50,000 in investment in its first month in San Francisco, and in January 2013 an investor from Palo Alto added another $25,000. At that point 12 bars in three cities were active.

The numbers, however, showed the product was not catching on. There was no organic growth, usage varied widely from bar to bar and no density of venues had formed where users could use the app every time. Each of the 92 new users won at an event on Super Bowl night cost $5.50. In February 2013, as rivals BarTab and Coaster collapsed, Flowtab had $20,000 left and could not reach its target of a $300,000 round.

Having spent $110,000 in total and reached fewer than 2,000 users, the company shut down on 17 April 2013. The founders turned the site into a farewell page listing lessons such as doing things that do not scale, talking to customers at the earliest possible moment and, if you are going to fail, failing fast.

Lessons for founders

• In a venue-based app, do not expand to new cities before you have built, in one area, a density of venues where users can use the app every time they go out.
• If you have to win every new user through events and campaigns and users do not come back of their own accord, the problem lies in the product, not the marketing.
• Load-test your infrastructure before a big launch event; a crash that spoils first impressions may be impossible to make up for on a limited budget.

Sources

1. The Decline And Fall Of Flowtab, A Startup Story (TechCrunch, 2013-08-31)
2. Flowtab: Lessons (archived copy) (Internet Archive, 2013-10-19)

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