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What ever happened to Tilt?
The fundraising platform, akin to KickStarter, IndieGogo or GoFundME, was an online crowd-funding
site aimed at helping users raise the funds they needed from a group or community for
whatever projects they outlined.
The company would only tilt, meaning collect and distribute the funds from users, if the
targeted money was fully raised. It ended up tilting in other senses a bit too much
if you ask me.
Try to look up tilt.com today and you will find...well...nothing. The company, once valued
at $400 million, is gone and shut down.
In this video, we will cover what happened to Tilt to make it go down.
Founded back in 2012 under the original name of Crowdtilt, the company launched as part
of Y Combinator. James Beshara, the company’s CEO, had developed a crowdfunding platform
in South Africa that he had named Dvelo.org.
He brought Khaled Hussein as co-founder to re-brand Dvelo as a platform for peer-to-peer
payments.
A 26-year-old development economist who had worked in microfinance and micro-insurance,
Beshara peered with Hussein, whose experience was limited to the creation of a small R&D
shop company and Project Management at Rackspace, a cloud computing company. I mention these
details to make a point on how important background and expertise are a part of the key players’
capabilities of an emerging company. Let’s see why.
At their initial year, the two founders had managed to raise $2.1 million dollars on their
first round. The following year and with improvements done to their platform’s taxing and third-party
development capabilities, they went on to raise another $12 million during their series
A. By December of that same year, they were already on series B with a total amount raised
of $23 million, already at a $375 million valuation.
The funding was supposed to be mostly focused on staff and international expansion. It wasn’t
until mid-2014 that the company rebranded to Tilt, and by August of that year, they
were already collaborating with ESPN for fantasy football league dues collection. It all sounds
great this far, doesn’t it? Tilt aspired to become a social network with
money exchange, somewhat of a hybrid between PayPal and Facebook (maybe FB libra?) where users (mostly aimed
at groups of friends) shared cash for day-to-day transactions such as a dine-in movie or a
supermarket run.
In fact, Sean Parker, investor on Facebook, was interested in Beshara as much as he had
been on Zuckerberg. The numbers and projections showed promise with a gross merchandise value,
a strong number of campaigns and solid potential for user growth.
A lack of a proper settlement in regards to their business model on top of it all should
perhaps have been an alert back then; but, then again, firmly deciding for a business
model was not a determining factor at the time for other thriving companies along the
lines of Pinterest, for example.
The platform’s popularity was not doing badly at all, in fact. Quite on the contrary,
TechCrunch’s rendition on Tilt from a press perspective was that, through word of mouth
alone, “campaigns had doubled every 7 weeks, actually succeeding in raising 188% of the
proposed total.”
VCs were even using Tilt as a way of raising money for their own SoMa-based gatherings.
More than 2,000 people were joining the site per month. At some point, Time magazine even
named the founders a part of its “30 under 30” who were somehow changing the world.
So, what happened? How could such a bright company fail?
A free user experience made Tilt have to face payment processing fees.
Another issue they faced was the purchasing of growth through marketing campaigns which
rewarded users at a much greater cost than profitable.
Unfortunately, and here’s where the Silicon Valley factor comes in, Beshara was enjoying
the attention and praise in the Bay Area a little too much.
The myriad of ping-pong tables, employee trips to Lake Tahoe, fridges stocked along with
daily catering, employees dressed in Patagonia backpacks and gear, and way too many parties
meant expenses higher than the company was producing for revenue and profitability.
Long story short, without focus on revenue, and more on the beer-run his platform aimed
to facilitate, Beshara ended up losing the company to a $12 million sale to Airbnb.
Investors lost about 80% of the money they put in. Even the gross merchandise value turned
out to be of no help for a company that failed to take action on the most popular transactions
it could easily identify internally.
Sold and acquired in 2017, the also Y-Combinator alumni retired the platform as early as June
of that year. This was, of course, an acquihire, as the business never actually saw any profitability,
yet brought talented staff to Airbnb’s arsenal.
Airbnb actually hired Beshara as their Product Director for its integration
and he has become a startup angel investor in the San Francisco Bay Area.
On the other hand, Hussein moved on as founder of RedDoor, a new company that deals with
tech in the mortgage sector.
Internally, there was a lack of willingness to scale and a lack of intention of devoting
resources to growth.
The company just wasn’t aiming at generating sticky business.
Similar platforms like Venmo, Kickstarter and GoFundMe started to come around so the
stakes just naturally started pointing in a downfall kind of direction.
It is precisely the frat-boy mentality that drove Tilt to a fraternity home kind of office
space and company culture. Fun, but not so profitable. Don’t get me wrong, Beshara
definitely came across as an attractive, even magnetic guy to which many people were drawn.
That’s great from a business perspective - if you actually cared about doing business.
The “ask me anything” sessions the founders held were not so transparent about profitability.
Another clear sign about a ship soon heading below water.
Instead of bringing more operational-minded managers with a broader experience Beshara
just keep feeding this “fun founder image” he had built.
Dressed as an astronaut or a FedEx guy for launches at a $200,000 salary per year, Beshara
was more focused on company culture and a fun image amidst inexperienced youth for employees
than anything else, leaving staff on meetings by themselves to play football with his friends.
Not everyone was a rookie at Tilt; but of course most seasoned self-respecting staff
left the boat before its end. An end that came with a lack of understanding on the founders
side to take business ownership before the party ended.