WHAT WENT WRONG? Right After Raising $25 Million, LinkedIn-Wannabe BranchOut Started Losing Millions Of Users

BranchOut CEO Rick Marini

Photo: BranchOut

Sometimes a startup that appears to be doing really well, can suddenly look very unhealthy.BranchOut attracted a significant amount of attention from the media and investors when it grew from 400,000 monthly active users last December to more than 8 million in April.

BranchOut is a career network within Facebook that helps people find jobs via social connections.

The impressive growth made it easy for BranchOut to raise a $25 million Series C round. Founder Rick Marini received phone calls from more than 25 investors.

But in the two months since, BranchOut’s traffic has nosedived. Now less than half its monthly active users — 2.7 million — remain (see charts below).

We spoke with Marini yesterday about where his users have gone, what his investors think of the dwindling numbers, and what it means for the future of his company.

According to Marini, BranchOut attracted 8 million users in five months by making user acquisition its priority. His team worked hard to get virality on Facebook and people flooded to BranchOut, but they weren’t engaged with the product.

Marini realised he needed to shift his focus if he wanted to retain new users and build a lasting company.

About 45 days ago, Marini shifted gears with his investors’ blessing. He laid off a few sales people and hired more engineers, knowing BranchOut’s active user numbers could suffer.

Now BranchOut has all hands on deck working on a major product redesign that will be launching in a few months.

“To build a lasting company, you need to accomplish three things,” says Marini. “The first is user acquisition. The second is user retention. The third is monetization. We killed it in user acquisitions. Now we have to move on to the next phase, which is retention.”

We asked why Branchout couldn’t focus on both the product and user acquisition at once. “The last six months we were just trying to keep the site up,” Marini tells us.  “You can’t anticipate growth that fast or project it realistically. You like to do these things in parallel but sometimes things take off and you don’t have the choice. At a certain point you have to have the courage to say, ‘We need to rebalance this company.'”

Even though people were flooding the app, BranchOut felt the product could be a much better experience for its users.

“In order to build a product that’s valuable for our tens of millions of users, we’re de-emphasising user acquisition for the next few months while we evolve the BranchOut experience to help our users express what they’re doing in a professional capacity on a daily basis,” the company says.

Of course, if the product wasn’t good enough, then why were users ever an emphasis?

Marini says the user acquisition push was “absolutely not” an investor-luring tactic.

“We had already raised $24 million in the first 1.5 years of the company so we didn’t need the Series C,” he tells us.

We asked how investors feel about the significant dip in traffic.

“Our entire board said this [shift in focus] was the right thing to do,” says Marini.  “So we decided to scale back and take a breather. We’re still growing, just not at that incredible pace.”

Marini and his team of 45 better learn to multitask quickly.

Here’s what BranchOut’s traffic looks like (via AppData):

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Photo: AppData

branchout dau

Photo: AppData

branchout dau

Photo: AppData

branchout dau

Photo: AppData

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