LayerVault

What did it do?

LayerVault was a service that stored designers' files in the cloud, saved every change as a version and made it easier for teams to review and hand off designs. The company aimed to bring to the design world the version-control approach that developers use for code, and ran the designer community Designer News as a side project.

Why did it shut down?

The founders started writing code in 2011, and in August 2012 the company raised a seed round from investors including SV Angel and Red Swan. In September 2014 co-founder Allan Grinshtein left the company and Kelly Sutton took over as CEO. On 11 March 2015 the company announced that it had not become financially sustainable, had used up its capital and could not find new investment; the service closed on 11 April 2015. According to the designer Khoi Vinh, there were happy customers who used the product passionately, but there were not enough of them to reach the pace a venture-backed company needs. Vinh also wrote that he had heard the product was seen as better suited to agency workflows than to product development teams.

The story

LayerVault was born from a product that Allan Grinshtein and Kelly Sutton started writing in New York in 2011. While developers tracked every version of their code with dedicated tools, designers struggled to keep their files' history in order. LayerVault offered a version-control system that stored design files in the cloud, recorded every change and made it easier for teams to review and hand off designs. The company also set up Designer News, a community where designers shared news and discussion.

In August 2012 it raised a seed round from investors such as SV Angel and Red Swan. The product won praise in design circles, but that praise did not turn into rapid growth. In September 2014 co-founder Grinshtein left the company and Sutton became CEO; the company said the change would not affect the customer experience.

On 11 March 2015 LayerVault announced that it would close. According to Sutton's note, the company had not become financially sustainable, had used up its capital and had not found the new investment needed to keep the service running without interruption. Users were given until 11 April to download their files, and refunds or credit were provided for the unused part of subscriptions. Sutton said they had built good technology but had not managed to turn it into a business.

The designer and writer Khoi Vinh wrote that the company had loyal customers but had not reached the numbers a venture-backed company needs to survive. Designer News lived on after LayerVault closed. The story shows that, at a time when the design tools market was being energised by products such as Sketch and InVision, even a well-made tool cannot survive without the right scale and business model.

Lessons for founders

• For tools serving a niche professional audience, compare the market size with venture capital expectations; for a well-loved but small product, slow and profitable growth may be a better fit.
• Be clear early about which workflow your product fits into; being seen as an agency tool made it harder for LayerVault to spread within product teams.
• Side projects can become valuable assets; Designer News lived on after LayerVault closed, and structuring such assets separately preserves value at closure.

Sources

1. LayerVault, the version control app for designers is shutting down (The Next Web, 2015-03-11)
2. The Demise of LayerVault and the Market for Creative Tools (Subtraction.com, 2015-03-12)
3. Saying Goodbye to Our Founder, Allan Grinshtein (LayerVault Blog, 2014-09-22)
4. LayerVault company profile (Tracxn)

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