# Flud (2010 – 2013)

- URL: https://girisimcikafasi.com/en/startup-graveyard/flud/
- Sector: Consumer apps
- Country: United States
- Total funding: $2.1 million
- Cause of closure: Failed pivot

## What did it do?

Flud was a social news reader that gathered RSS feeds from blogs and news sites into visual streams. Users could save articles to a reading list, share them on networks such as Facebook, Twitter and Tumblr, create profiles and follow one another. The app was released for iPad, iPhone, Android and Windows Phone.

## Why did it shut down?

The company got by on $2.1 million of seed funding, but the new $5 million to $8 million round discussed in 2012 never closed. In December 2012 it unveiled an enterprise version that let employees discuss news related to their work, and in 2013 it shifted its focus entirely to that product. A waiting list of 1,500 companies formed for the enterprise version, but enterprise sales turned out to be a much longer and very different process from the consumer business the team was used to. According to founder Bobby Ghoshal, investors wanted to see three to six months of data before backing the new model, while the company had only two months' worth. With money and time running out, Flud closed on 8 August 2013.

## The story

Flud grew out of a project Bobby Ghoshal and Matthew Ausonio worked on in San Diego in the summer of 2010. The idea was to gather blog and news feeds from around the internet on a single visual screen and turn reading the news into a shared experience. The first iPad version came out in August 2010, followed by versions for iPhone, Android and Windows Phone. The company positioned itself as the Instagram of news, and Fast Company named the app among the best interface designs of 2010.

A total of $2.1 million was raised from investors including Detroit Venture Partners, Ludlow Ventures and Behance founder Scott Belsky. With version 2.0, released in December 2011, users could create profiles and follow one another. But the social news-reading space quickly became crowded, and the big $5 million to $8 million round the company was aiming for in 2012 never happened.

The team then changed course towards companies. Unveiled in December 2012, the enterprise version let a company's employees talk about news related to their work, and 1,500 companies signed up to the waiting list. Within a few months the four-person team made its first enterprise sales too. But enterprise sales demanded very different skills and patience from a consumer app. As Ghoshal told it, investors wanted to see three to six months of data before backing the new model; the company had only two months' worth.

On the last day of July 2013 Flud told its users it would shut down on 8 August 2013 and that they could download their data until then. In a brief statement Ghoshal said that first the money had run out, and therefore the time. Flud's story shows that even a pivot in the right direction cannot save a company if there is not enough runway to produce the evidence.

## Lessons

- When you pivot, work out how long it will take to generate the evidence for the new model that investors will want to see; if your cash will not cover that time, extend your runway first.
- Moving from consumer to enterprise is not just a product change; bring someone who knows the enterprise sales cycle into the team before the pivot.
- Announcing an innovative product loudly before it is proven inflates expectations; Ghoshal later said too that it is better to grow a new product quietly.

## Sources

- [Flud folds: News reader startup is shutting down](https://venturebeat.com/2013/07/31/flud-folds-news-reader-startup-is-shutting-down/)
- [Why Startups Fail: A Postmortem For Flud, The Social Newsreader](https://techcrunch.com/2013/09/22/why-startups-fail-a-postmortem-for-social-newsreader-flud-and-what-to-take-from-sonars-demise/)
- [Flud](https://en.wikipedia.org/wiki/Flud)