Tilt

What did it do?

Tilt (originally Crowdtilt) was a platform that let groups of friends and communities collect money online for shared expenses, gifts, events or donations. Every campaign had a threshold, and the money was passed to the organiser only if that threshold was crossed. The company also offered an API so developers could build this infrastructure into their own apps.

Why did it shut down?

Group collections were a business of frequent but individually small transactions, and commission-based revenue was not enough to cover the costs of a growing team. The company expanded its team on more than $37 million of investment and aimed for international expansion, but it never became profitable. In 2017 Airbnb bought Tilt for about $12 million in cash, for the team rather than the product. Airbnb shut the platform in June 2017.

The story

The idea was born in South Africa. While working there as a microcredit collections officer, Wake Forest University graduate James Beshara designed a tool to make it easier for people to raise money for a shared cause. The first attempt was a donations platform called Dvelo; when users began using it for non-charitable purposes too, Beshara shifted the model towards group collections for parties, gifts and events. In 2011 Khaled Hussein joined as co-founder, the start-up took the name Crowdtilt, and in winter 2012 it was accepted into Y Combinator.

Growth came quickly. In May 2012 it raised $2.1 million from investors including SV Angel, CrunchFund and Reddit co-founder Alexis Ohanian. A $12 million Series A led by Andreessen Horowitz in April 2013 took total investment to $14 million, and a $23 million Series B in December 2013 pushed it above $37 million. The platform's logic was simple: every campaign had a “tilt point”, and no money was released until that threshold was crossed. Stories such as the Jamaican bobsleigh team's campaign for the Sochi Olympics, which aimed for $80,000 and passed $129,000, made the brand known; the company shortened its name to Tilt and struck a partnership with ESPN Fantasy Football to collect league fees.

But the glowing stories did not turn into a solid business model. For a time Tilt charged organisers a commission of 2.5 per cent of the money collected; group collections consisted of frequently repeated but individually small transactions. The capital raised to grow the team and expand abroad created a cost structure that this revenue could not cover. The company never became profitable.

In 2017 Airbnb bought Tilt for about $12 million in cash. It was an acqui-hire: what interested Airbnb was not the product but the engineers on the team. The platform was shut in June 2017. Fast Company described the outcome as a bargain for Airbnb and a classic loss for investors such as Andreessen Horowitz.

Tilt's story is a reminder that a product users love, and that easily wins media coverage, is not on its own a sustainable business. A payments product living on a few per cent of commission from small transactions cannot become profitable without enormous volume, and rapid growth before reaching that volume can turn the exit into a cheap acqui-hire.

Lessons for founders

• If you are building a payments product whose revenue rests on commission from small transactions, work out from the start the transaction volume needed to turn a profit, and tie your hiring plan to that volume.
• Viral campaigns bring awareness but not recurring revenue; track how often an organiser comes back to the platform as your core metric.
• Scaling up funding rounds before proving unit economics can turn the exit into an acqui-hire worth less than the money raised.

Sources

1. Tilt.com (Wikipedia)
2. The Demise Of Tilt: A Bargain For Airbnb, A Classic Loss For Investors Like Andreessen Horowitz (Fast Company, 2017-04-18)
3. Airbnb finalizes deal to buy social payments startup Tilt (TechCrunch, 2017-02-22)
4. Popular Group Funding Startup Crowdtilt Raises $23M In Series B Round (Forbes, 2013-12-16)

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