Jonathan Barouch was so confident about his social media startup he managed to ignore his clients for months before he had to face the fact that no one was going to pay for it.
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Barouch launched Roamz, a mobile app that gathered and showcased tweets and Facebook messages sent out in the same area, in 2011. But he would be forced to completely change the idea within 24 months.
"It was like the moment you realise your baby is ugly. You don't want to see it but after hundreds of comments you realise you can't lie to yourself about it any more. To be honest, it felt like I had been punched repeatedly in the guts," Barouch told Fairfax Media.
Initially it had all the superficial characteristics of a winning idea: it attracted a quarter of a million users, the team raised $3.5 million in venture capital and it was covered by media sites from TechCrunch to Bloomberg and The Wall Street Journal.
Business fundamentals
But the real mechanics of a business – keeping customers happy while making money, were lagging. The software was exciting. It collected social media posts and the team sold packages of this content to retailers, hospitality venues and events to promote their products or services.
Roamz was getting meetings and running tens of demos every week, but few were resulting in sales. They were meeting with big brands such as Qantas and Commonwealth Bank of Australia, but many were already exhausted by the pace of change and pressure to embrace social media.
After months of increasingly stressed meetings with his sales team and investors, Barouch realised his company was running out potential clients, and money.
"What we were offering just wasn't resonating. No one needed it. We just kept getting the same feedback, they wanted to use the data we were collecting in a different way," Barouch says.
What customers wanted
The breakthrough came after one of the United States largest retailers flew him over, listened to the pitch and said they were more interested in the anonymised data set and the insights into their clients and their feedback. Roamz's potential clients wanted a customer satisfaction tool, not another promotional one.
"I realised I had kept hearing it and just wasn't listening. It didn't fit everything we were talking about so we didn't realise how valuable it was," Barouch says.
The Roamz promotional strategy didn't help. The constant pursuit of media attention in lieu of customer validation produced an echo chamber of congratulatory hype that was hard to discount, even in the face of dwindling cash and clear customer feedback.
Pivot point
"I hate the word pivoting but we did. We took the technology, the team and completely changed the platform," Barouch says.
After a few months in development, the sales team hit the streets again and the user base has exploded ever since. The newly rebranded Local Measure now counts six of the eight largest global hotel groups as clients, one of the western world's biggest shopping mall chains as well as Qantas and Dubai's government owned tourism company.
The team has doubled to 22 and expanded with offices in Sydney, Singapore, London and the east coast of the United States and Barouch says they are still very early in their development.
"We are starting to get the customer spread and volume of data that will make it possible to identify industry wide trends and benchmarks, which will be another service we can offer to our existing clients as we continue to grow."