LTB #1: Stepping back from Overly, what's next?

My first newsletter ever 🎉 

Thank you for joining my new experiment! I realized that writing down thoughts allows me to process them better and clarify things for myself. As it turns out, it also helps others - that is what inspired me.

I want to provide as much value as possible and leave all the bullshit out of here, but your feedback is very important, so please reply to this e-mail if you have anything.

Let’s go!

This one is going to be longer than upcoming ones, but here is what I am covering today:
1. What has been happening with Overly lately?
2. Why hibernate Overly?
3. Future of Overly?
4. What I am going to do?
5. What has been happening with Overly lately - in detail

Once I started writing this, I realized there was so much to it that I would have to split it into separate emails. However, today, I will start only with “practical” reasons - in the future, I will expand more on psychology and main learnings.

What has been happening with Overly lately?

TL;DR
1. Started here - Jan 2023, we made the leap of faith and left the agency business to have an undivided focus at Overlyapp.com. Still, it was one of the best decisions.
2. Need for outbound - Our product growth, until then, was all organic, but it was not enough to break even, so we needed to focus on outbound to increase MRR.
3. Choosing focus - We had clients, so we analyzed which had the highest LTV, ARPA, and use case, which was not “just for fun” and went after them.
4. Raising funds—I also tried to raise funds. In a few months, I traveled to many events and met with more than 100 investors, but my fundraising attempts were unsuccessful.
5. No results - Six months later, we could not convert almost any client through our outbound means, and we started questioning our strategy and product.
6. Started panicking - Realizing that the end of the runway was approaching, we started going in every possible direction to get to break even - whether we believe it or not. We lost focus, and that started to burn us out completely.
7. Decision to stop - We realized that the direction we took last months would not achieve anything - either we would reach complete burnout or mess up our product. That is when we decided to stop, hibernate our company, and take a break for a few months. Regain a clear look at product, company, and business, and decide what and how to move further.

An expanded version of what has been happening at the end of e-mail for those who do not have time 🙂 

Why hibernate?

I still believe this company has potential, but it needs new verticals, new approaches, new ideas, and clear thinking.

Gatis and I need to take a rest and do something else for a few months - something we really want. Something that takes our minds off Overly completely. Get back fun, play, and creativity that has been lost in grinding. (The next day after this decision Gatis started smiling again 😀)

Deattach our identities from the business. During the last 10 years of entrepreneurship, our identities have grown with the company(-ies), so for everything that happens to the company, we aim at ourselves. In the next newsletter I will touch on why this is bad. 

Change the mindset - somehow, we grow into the mindset that this is our only chance to be successful, to build business, etc. This mindset alone is limiting our thinking.

Nothing to lose - as it can sustain itself, there is nothing to lose in taking a break. In our case, a few months will not impact the business.

Finally, we understand whether we are ready to push Overly further, whether there is a vertical we truly believe in, whether we can find a strong “why?” for us personally, and how much more time we should invest before we call it a day.

Future of Overly?

For now, nothing will change - we are encapsulating it as it is right now for few months. We will do some minor fixes and improvements, but just the critical things. We will serve customer support and serve everyone who wants to use our product. We have prepared everything so that the product can run independently for as long as income does not dip radically.

I see two possible scenarios:
1. We will come back with new power in a few months.
2. We pass it to someone who is ready to fight for further.

What I am going to do?

This is a good one—I do not know yet, and that is the beauty of it. I will slow down my life. I need to decompress a bit, restore my social life, spend time with family, learn something new, and work on projects I have wanted to work on for some time now.

Right now I have only one goal. While grinding, I noticed some services that I needed but were not there. There is one particular - a boring one, but I needed it so much. I decided to build an MVP of that to see how it works out, but there is a trick. I have always wanted to learn to code, so I created a challenge to build it myself.

I have gone through HTML, CSS, and JS syntax and am now doing React. I need to add a bit more backend knowledge, and I will start putting it all into practice → will start to build the first microservice in the next few weeks. I will keep you updated.

❗️❗️ I did not cover something you are interested in? Reply to this e-mail.

What has been happening with Overly lately? (expanded)

Quick backstory. My entrepreunal journey started in 2013 because of Overly. I believed that AR was something printed media needed, but I quickly realized that it was not the case, so I pivoted to agency business to find use cases for AR.

Fast-forward to 2022—The agency business was doing amazing (1.5m ARR in 2022), but I realized that it was not the future I wanted. I burned out because I was doing something I did not enjoy, so the business itself became very draining and boring for me. In early 2022, we started investing in Overlyapp.com product to set it up for our Agency business exit.

2023 started with a leap of faith - we exited the agency and went all in on our new baby - Overlyapp.com. By then, Overlyapp had promising results - we had constantly growing traffic, around 1k new registered users per month, and MRR was somewhat promising. Everything signals that we need more capital and put undivided focus on it.

I was running around startup events, meeting with 100+ investors, and trying to raise funds for our product, but I faced a lot of pushback due to a lack of trust in augmented reality. Around April/May, I gave up as I realized with the metrics we have right now, we will not be able to prove that we have potential - that is when we decided to invest everything in proving that we can deliver. And this is where it all got intense…

Our first surprise came when we found that we had bugs in the MRR calculation. In May, we had 4700 EUR MRR, but the payout from Stripe was only 1850 Eur 🤔 We have a lot of yearly subscribers, so numbers do not have to match, but that was too big of a gap. The actual MRR was around 2700 EUR.

That is when we turned on ultra-saving mode as all our financial predictions were flushed down the toilet. From a team of 6, we became a team of 3. The funny part is that - the output did not change. We were overstaffed for the stage we were in and realized only when started to run out of money.

We dropped our roadmap, and both Co-Founders (Gatis and me) turned full attention to sales. We had only one goal - grow KPIs, land investment, or at least break even and bootstrap. We took all our clients, filtered by customers with the highest LTV (e-commerce) and ARPA (artists/museums). The problem with Artists/Museums is that they are super high-churning customers, so we decided to have lower ARPA but stickier customers - thus, average e-commerce clients were our customers for at least 24 months. Went all in on E-commerce.

I think we tried everything. Creating landing pages, paid ads, events/conferences, and cold e-mail outreach (we had a spam machine running at 5k e-mails per day), personal e-mail approach (Gatis went crazy on this), communities, and other approaches. We even offered to create everything for free - from 3D models to publishing to their site. We just wanted to see the impact. In 6 months we managed to get one client for 100Eur / Year. 😵‍💫 

Where is the problem? Apparently, companies are not ready to invest in AR content (3D models). Also, AR does not seem to be having enough impact on conversions to justify the content creation price. At least for now.

This is where I gave up on e-commerce and decided to focus on what was working for us already - organic traffic. Try out different PLG tactics - to see if we can convert more users from incoming traffic. Improved landing pages, improved product usability, implemented many new hooks, tested different pricing models, and much more. Although we had a bit of an increase in MRR in 2023, it is still not enough to call this a business. And we are running out of cash.

Here we are - March 2024—and we are almost at the same place we were in January 2023, which made me think and ask questions:

1. If we cannot break even in 1.5 years, how much longer should we push?

2. What am I doing wrong?

3. Is this a problem with a product, or is it me?

4. Are we already too long into AR so we cannot see clearly?

5. Maybe I am not an entrepreneur after all?

This was when I realized I needed to stop. At least for a moment.

For the last 5 months, we have been trying everything (no matter how stupid the idea seemed), but If I look back, those were already moves of despair and were not thinking clearly. After some hard conversations with Gatis, we have decided to “hibernate” the company for a while - if we let go of staff we have left and cut all costs, it can cover itself, and if nothing changes radically, it can go indefinitely like that. All it requires is 5-6 hours of customer support per week at this moment.

Thank you!