Enthusiast Group enters deadpool reflectively

What follows is an interview with Derek Scruggs, founder and CEO of The Enthusiast Group. The Enthusiast Group has decided to shut it’s doors at the end of this month. It’s very hard to do and so people don’t do it enough, but Derek wanted to share his thoughts on failure. I learned a great deal from sharing one of my visible failures, and I hope Derek reaps the same benefits. I want to thank him for his candidness. Here’s the interview:

Q: I’ve covered Enthusiast Group (Your Cycling, Your Running) a few times before on my blog. You’ve made the decision to shut it down at the end of this month. What happened?

Our initial business model was to launch a series of niche commmunity/social networking sites around various adventure sports such as mountain biking and rock climbing. Long story short – we were never able to attract enough users and traffic (defined as at least 1 million monthly page views) for our sites to be attractive to advertisers. Our sites have grown organically and a couple are thriving, but they are still small by the metrics most people consider successful. Furthermore, the outdoors industry is not especially progressive when it comes to online marketing, so it was difficult to convince them to try much beyond the banners & page-views paradigm that’s dominated the web since the beginning.

Once we realized publishing wouldn’t work, we tried to shift gears to become a service provider of social networking platform and custom applications. But we were late to the game in that market, and for most companies we talked to (and there were a lot), this was a “nice to have,” not a “need to have.” It will be interesting to see how this market shakes out. I suspect Ning will ultimately be bought by Google or Yahoo or Microsoft and they’ll basically become Yahoo Groups 2.0. But will, say, Adidas use them (or any other provider) as the core of a successful social networking strategy? I have my doubts, for obvious reasons.

Q. What will happen with the users and the site? Will you simply shut it down?

We are trying to sell them. So anyone who might be interested, there’s a list of them here. Worst case, we’d like to find some spare rack space in a data center somewhere and keep our servers up, even if we don’t actively manage them day to day.

Q. What’s the big lesson or lessons(s) here for you?

Hmmmm… There hasn’t been an overriding “Ah ha! So that’s what we did wrong” kind of realization. A few months ago I had lunch with a guy who started an action sports video site and apparently traffic is through the roof. I asked him what the secret was and he confessed that he doesn’t really know. The site has a tight, clean design and ours are a bit cluttered, so that’s one thing. (Though there are plenty of popular sites that are just flat out ugly. Check out MTBR.com.) They focus on one thing (video) while we tried to offer a lot of different media types, so perhaps we should’ve just kept it to one or two. His site is really driven by what his son likes to see, so they have a prototypical user to test things against. Then again, my co-founder Steve and our former sales director are both avid mountain bikers and we leaned on them heavily when designing our sites.

Another issue we constantly argued over was whether to pursue the individual site approach vs. a mega-site encompassing all activities. There are compelling arguments for both approaches, but I can’t say with any confidence that going the mega-site route would have had a different outcome.

One thing we did discover is that it’s a heck of a lot easier to build traffic when you can leverage off someone else’s user base. For example, we did a couple of charity projects whereby we donated money to organizations like the International Mountain Biking Association for each user they sent to us who uploaded a photo. That worked very well at jumpstarting traffic, but the hyper nichey nature of our sites meant that there were only one or two charities in each segment, so we couldn’t go to that well very often. (This perhaps is an argument for the mega-site strategy – then we could’ve aggregated all the relevant organizations together and done an annual campaign with each.)

Finally, I guess one thing we’ve known all along is there’s no substitute for great content. We got some really nice stuff submitted from our users, especially photos, and our Enthusiasts-in-Chief (the lead blogger for each site) are all good writers. But we clearly lacked in comparison to, say, LifeHacker, which offers a ton of useful tips every single day, or even Perez Hilton which, though tawdry, has a powerful personality behind it who dishes snark by the bucketload.

Q. They say what doesn’t kill you just makes you stronger. So what’s next for you and your partner?

Actually, I have an appointment later today with a funeral home. 😉

Seriously, since we got past the emotional trauma of confronting the brutal facts, we’ve both been excited about the future. I’m making the rounds with local companies, especially tech startups, but also investigating opportunities in China, where my wife is from and where she’s currently pursuing here Ph.D. At this point I’m definitely looking for a job, not another founder opportunity, but startups are in my DNA, so I don’t see myself getting a job at, say, Qwest, and they probably wouldn’t deign to grant me an interview anyway.

Steve is looking for consulting or other opportunities in the new media world. Steve is something of a rock star in the newspaper industry because he’s been predicting the collapse of the industry for the last decade. Now that trend is accelerating, which means there’s enough pain that they realize radical change is necessary, so they look to people like him for guidance.

Q. Can you give us some advice for first time entrepreneurs?

If you have a business idea, show it to as many people as possible. Most ideas aren’t very good, so it’s good to get outside feedback very early in the process so you don’t waste your time on something that doesn’t work. And recognize that they may be wrong too. We got lots of positive response to our business plan, but that didn’t translate into success.

In the course of showing your idea around, you will meet a lot of sharp people and build relationships that will pay off years later. I moved to Boulder in early ’99 after 12 years in Chicago. For the first year or so I was kind of lazy about meeting people, but since then I’ve been a networking maniac (though I rarely go to networking events per se, just do one-to-one outreach via email, which by the way is how I met my Steve). That paid off bigtime when we started looking for investors, and now that I’m forced to look for a job it’s an even bigger help.

Companies come and go, but relationships usually last through several companies, jobs and sometimes even spouses. Cultivate those relationships and you’ll find happiness whether your company fails or ends up being the next Google. The journey is the reward.

Thanks Derek. Keep enjoying the reward.

file under: Blog, Startups