I set a goal – to be the industry standard in pop-up experiences.
My mission was to be the industry standard in pop-up experiences by providing a limited time destination for Millennials where customers were transported to their favorite pizza moments while creating new fond memories.
I launched an interactive pizza themed pop-up museum in the Los Angeles area in 2018.
My new business started off successful! I landed several major corporate sponsorships, received 132 million potential reach in media coverage, and significant influencer engagement. The business model was sound; I had growth strategies in place; I even mapped out a 5 year multi-million dollar exit plan.
However, at the end of the day, the financial risk became too great and I closed the doors after the first location never to re-open in another city.
What happened? What business lessons can I take away from this? Why did this entrepreneurial venture fail?
1. Location – I remember my dad used to say to me as a kid “location, location, location.” Well, just like a defiant child, I ignored this.
My research revealed that Chicago was the highest over-indexing Millennial pizza loving population. By far. Los Angeles was an under-indexing Millennial pizza loving population. These insights were critical.
I originally scoped out Chicago looking for locations, talked to city officials, and decided there was too much red tape to navigate from California. My fabricators were in Los Angeles, my connections were in Los Angeles, from an operational standpoint, Los Angeles made sense.
Big mistake. Not only is LA NOT a pizza fanatic town, but it is also massive and spread out. A significant marketing budget is required to reach even a sliver of awareness in the city. I did not have millions of dollars and did not have time to seek out venture capital. Chicago, on the other hand, is densely populated and more cost-efficient to market to. Also, let’s be real, Chicagoans LOVE their pizza.
2. Pricing – my pricing was too high for the Los Angeles market. My pricing was based on competitive research alone. Competitors charged $30 for entrance, so I charged $30 for entrance. I did no further consultation on the matter.
Turns out, there are entire pricing strategies (future blog post to come) that account for more than competitive comparisons. In fact, it is a major fault to only use competitive comparisons. There are many other factors such as market saturation, competitive differentiation, and minimum margins that should go into a pricing analysis.
The LA market experienced pop-up museum fatigue quickly, so even though I was still an early entrant, high prices were no longer acceptable. Additionally, pizza is not as highly valued in Los Angeles. Lesson learned.
3. Timing of run – I was too late in the season. October was a great month to be open, but that was the only month worth being open. November and December had way too many competing priorities with the holidays. If your business is not holiday related, go ahead and pass on being open in November and December. Spring or summer is a much wiser choice.
I was racing to the start line since I knew competitors were working toward opening pop-up museums. You’re never alone with a business idea, it’s a matter of who gets there first.
By having this mindset, I jeopardized sales by launching in October.
4. Buy more used and increase oversight on costs – Oh boy did we waste money on buying new. After having liquidated all assets I now know there were better methods of obtaining our physical inventory. Seriously, cut costs as much as possible. Oversee all purchases your staff is making.
As a first-time startup, spending management is necessary for long term success because you may never make it to phase 2 with silly overspending.
What “d’oh” moments have you had in your businesses? Share in the comments!