The history of this company has something to teach you about how to run your business, if you pay attention.
Here’s a brief overview of the history of TeachStreet:
2007: Founder Dave Schappell bought a scooter and visited the dealership looking for a scooter instructor. He was directed to an old bulletin board at the back of the store, and thought “there must be a better way,” and TeachStreet was born.
2008. TeachStreet secured $2.25 Million in venture capital. Website launches in April with 25,000 Seattle-based teachers. TeachStreet rolls out to Portland, Oregon in August, and San Francisco in November.
2009: TeachStreet adds additional cities: New York in April, Chicago in May, and Philadelphia in June. Completes 2nd round of funding, securing another $1.2 million.
2011: January/February TeachStreet became “essentially profitable.” February 23rd, Google revised its search ranking system in the update known as Panda and 2/3 of TeachStreet’s traffic disappeared overnight. TeachStreet continued serving teachers and students and rolled out new features throughout 2011 while trying to rebuild it’s traffic volume.
2012: February 2nd, TeachStreet announces that it will be closing down on February 15th, staff to be joining AmazonLocal.
TeachStreet was founded by people experienced in the world of e-commerce and staffed with people experienced in product development. Web 2.0 technology, affiliate marketing, and SEO. Yet, 400,000 classes and 50,000 monthly visitors weren’t enough to keep TeachStreet in business.
Why Did TeachStreet Fail?
There are two main causes of TeachStreet’s demise:
- It took TeachStreet 15 months to roll out any paid services or any other sources of revenue.
- TeachStreet was heavily reliant on Google for traffic for customers.
As a result, they were simply ill-prepared financially to weather the kind of storm that resulted from the loss of their Google traffic. They hung in there, rolled out new features, and tried to make it work. But ultimately, they decided that it was best to quit.
What Does the TeachStreet Story Mean for You?
Since 2008, Google has been rolling out updates to its search engine regularly, and since 2009 those updates have been nearly monthly. The goal of the Panda update that walloped TeachStreet was to filter out sites that used sketchy techniques to boost their search presence, but casualties included scores of other sites as well. Many recovered; many more did not.
But this update was not unexpected. In January and February that year, before the big Panda update, Google hit Overstock.com and JcPenny.com with public outings of their “shady SEO practices.” This represented a shift in Google’s attitude that was furthered with the Panda update. This unprecedented public outing should have served as a warning to other businesses to clean up their SEO practices.
Here are some guidelines to follow so you don’t follow in TeachStreet’s footprints:
- Cultivate multiple sources of new business. Google is the biggest name in search and likely to remain so for some time, but that doesn’t mean its the only search engine. Do what you can to gain exposure on the other, lesser-known search engines. Also, broaden your traffic to include referral traffic and traffic generated by your own direct marketing efforts, sources which are more immune to changes at Google.
- Pay attention to the search industry. You don’t need to read technical journals or esoteric forums to keep your finger on the pulse; just check out SEOmoz.com’s Google Algorithm Change History regularly and look for trends. When you spot a trend that may impact your business negatively, take action.
Any time a business is reliant on one source for new customers, that business is taking a huge risk, whatever that source may be. Years ago, I worked at a small software reseller. This business was started by a husband and wife in their basement. Within 9 months, they had signed a big contract with a major airline manufacturer (who will remain nameless). Another large contract followed two months later. They went from $25k in sales to $250k in less than one year. Two years later, the contracts were not renewed and without any other customers, the business went under.
Diversification is important when it comes to business. Remember the old adage “don’t put all of your eggs in one basket?” It’s still around because it’s true; cultivate many sources of new customers and your business will be better positioned to weather any storm that happens to blow your way.