Start up Reflection: Athena Technology (2019)
I've had the privilege of consulting and working with various startups, and it is valuable to reflect on the lessons I've learned to assist others on their entrepreneurial journey. In this post, I'll share insights and tips I gained while working at Athena Technology, a software company that focused on revolutionizing the taxi industry. Joining Athena Technology right out of college was my first exposure to the vibrant world of startups.
Despite its eventual closure after about two years of operation due to external competition and rapid scaling, Athena Technology left a lasting impact on the taxi industry, which was in dire need of a catalyst for change. Today, one of the founders of Athena Technology operates on the product side of a new tech company in the taxi industry, while the other founder provides consulting services to the taxi industry in his spare time. Both individuals, whom I had the privilege of working with, are truly innovative minds from whom I learned invaluable lessons.
Now, let's delve into the key findings from my time in the taxi industry.
Background & Problems We Were Solving
In 2019, the taxi industry faced significant challenges as technology companies like Uber and Lyft disrupted the market, compounded by the crash in medallion values. Taxi drivers struggled to make a living, and the once valuable taxi asset - a medallion - was depreciating. Moreover, the industry leaders seemed reluctant to adapt to the changes sweeping the transportation sector, leaving the taxi industry stuck in the past.
Athena Technology emerged as a software company with a mission to improve the taxi industry. Founded by Spyros Messados, the son of a successful taxi fleet owner, Athena Technology benefited from Spyros' two years of experience working in his father's taxi company. Before I joined Athena Technology, Spyros had me work at his father's company as well, allowing me to gain firsthand knowledge of the business. Alongside Spyros, Christopher Loh, a brilliant and tech-savvy mind, was the other co-founder and someone I deeply admired working with.
Solution
To address the challenges faced by the taxi industry, our initial product was TaxiOs - the first GPS digital taximeter to receive regulatory approvals from both the state of New York and the city of New York. We focused on serving New York City yellow taxis and developed a driver-centric B2B platform equipped with analytic tools and 3rd party integrations that aimed to improve taxi driver utilization.
With TaxiOs, we aimed to tackle three primary pain points:
Taxi Drivers were losing money: We wanted to provide tools and solutions that could empower taxi drivers to increase their earnings and improve their overall financial situation.
Technological lag behind Uber & Lyft: The taxi industry needed to catch up with the technological advancements brought by ride-hailing companies. Our platform aimed to bridge the gap and equip taxi drivers with modern tools and features to enhance their efficiency and competitiveness.
Customer preference for Uber & Lyft: To win back customers who were increasingly choosing Uber and Lyft over traditional taxis, we focused on creating a seamless and user-friendly experience for passengers. By incorporating customer feedback and insights, we aimed to regain market share and rebuild trust in the taxi industry.
Major Findings
1. Scaling too QUickly
When I first embarked on my entrepreneurial journey, I overlooked the potential downsides of scaling too quickly. This is a common oversight among first-time founders of early-stage startups, as we often focus on the investor perspective of rapid user acquisition leading to faster profitability. However, scaling too quickly can have detrimental effects, mainly depending on the stage of product development.
Limiting the user base for testing a new product or feature is crucial. It allows for close collaboration with users, gathering feedback to improve the product. By restricting testing to a smaller group, founders can address issues or bugs that may arise before a general release. We refer to beta testing, which serves as the final round of testing before reaching wider audience.
Reflecting on my experience at Athena Technology, I had the opportunity to discuss our journey with the CEO. We identified that one of our biggest challenges was onboarding too many users during the beta testing phase. Our product, TaxiOs, was deployed in approximately 250 taxis, accounting for less than 2% of the market at the time, which seemed manageable. However, scaling too quickly diverted our focus from product development to operational support, damaging our reputation. Instead of helping taxi drivers make money, our product introduced bugs that exacerbated their financial struggles.
This brings me to my second point: understanding your customers. When introducing new technology products, there are specific user segments known as early adopters who are more willing to embrace and provide feedback on early-stage products. Working closely with these early adopters can yield valuable insights and drive product improvements. However, in our case, most of our users were not early adopters. Most taxi drivers simply wanted to focus on driving and making money, with little interest in the underlying technology. Our product disrupted their workflow and worsened their financial situation. We should have realized that we were testing a market segment that was still being prepared for our product.
Looking back, if we had restricted our testing to early adopters and a smaller group of 10-20 taxis, we could have improved our product and gained a deeper understanding of our drivers' needs. It would have allowed us to maintain our focus on product development rather than diverting significant resources to build an operational support team to handle driver issues. While it was commendable that we managed to assemble an 8-member support team, the funds allocated to operational support could have been better utilized in the product development phase, perhaps a year or two down the line.
2. Taking Care of Your Customer
This valuable lesson has stayed with me throughout my career, shaping my approach in every job I've taken on. Particularly in client-facing roles within the service industry, it is crucial to recognize that our customers are the ones who pay our bills. Taking care of them involves demonstrating genuine care and mindful communication.
During the period when our product was causing issues for drivers, our CEO made it a point to personally engage with them at the end of each day. He invested time in understanding their concerns and challenges. I had never encountered a CEO who genuinely cared about customers and aimed to improve their lives. He didn't view them simply as drivers but as human beings. The CEO's treatment of the drivers set a benchmark for how we, as a team, were expected to interact with taxi drivers. It became evident that many taxi fleet owners treated their drivers poorly, and I observed this behavior when visiting other fleets. Our approach of genuinely caring for and respecting the drivers helped us survive for a few additional months, as some of these drivers genuinely wanted us to succeed.
Additionally, a significant aspect of my work at Athena Technology revolved around operations, specifically driver support. This role required us to resolve the problems drivers encountered with our product remotely. We underwent training to troubleshoot and fix issues within a two-minute timeframe quickly. Any delay beyond that often resulted in an agitated driver and potential loss of income. More often than not, drivers would call in a frustrated or angry state, and we had to address their concerns while maintaining their composure adeptly. Through this experience, I gained a profound respect for those who work full-time in customer support roles.
3. Competition
Even if our product had not encountered early setbacks, we would have faced a formidable challenge competing against companies with solid brands and significant capital. Existing competition can often be insurmountable, even if you have a superior product that has the potential to revolutionize the industry.
During that time, the taxi industry was dominated by two major players: Arrow and Curb. Virtually every taxi in NYC utilized one of these payment processors. Initially, both companies didn't perceive us as a threat because we were a minor entrant operating in ten taxis. However, the competition intensified once our product replaced theirs.
Our competitors had the financial and human resources to assess how drivers would respond to our product. They could identify what was working and what wasn't and incorporate elements from our offering to enhance their own. Being larger entities, they could swiftly execute development initiatives while focusing solely on product improvement without the need to acquire customers. To our competitors, we served as a free marketing tool because those who had switched to us eventually returned to their product.
In hindsight, we can't blame ourselves for attempting to enter this market. Sometimes, you need individuals like my CEO willing to take audacious risks to drive industry improvements. Over time, Athena Technology triggered a ripple effect that was needed in the industry. In many ways, we catalyzed a series of transformative events within the taxi industry, which can still be felt today.
However, I cannot emphasize the importance of understanding your competition when developing a new product or feature. In today's highly competitive business landscape, knowing your competitors is vital for several reasons. Let’s take a look at it from Arrow and Curbs' perspective.
Firstly, understanding your competition allows you to identify gaps and opportunities in the market. By thoroughly analyzing existing players, you can pinpoint areas where their products or services may be lacking or underserving customers. This knowledge enables you to position your offering strategically, filling those gaps and providing a unique value proposition that sets you apart.
Secondly, studying your competition helps you stay abreast of industry trends and innovations. You can gain insights into emerging trends and best practices by monitoring product development, marketing strategies, and customer interactions. This knowledge allows you to adapt and evolve your product or feature to meet evolving customer needs and preferences, ensuring you remain competitive and relevant in the market.
Furthermore, understanding your competition allows you to anticipate and proactively respond to their actions. You can quickly assess potential threats or opportunities by closely monitoring their moves, such as new product launches, pricing changes, or marketing campaigns. This knowledge empowers you to make informed decisions and take timely actions to protect your market position or seize advantageous situations.
Additionally, studying your competitors helps you identify their strengths and weaknesses. By evaluating their offerings, customer feedback, and market reputation, you can gain insights into what they excel at and where they fall short. This knowledge can guide your product development and strategic decisions, enabling you to capitalize on their weaknesses and differentiate your offering based on your strengths.
Looking back, while there were challenges and setbacks, we cannot fault ourselves for attempting to enter a market that needed improvement. Entrepreneurial endeavors often require individuals willing to take bold risks to drive industry transformation. In the case of Athena Technology, we catalyzed change and set in motion a ripple effect that is still felt in the taxi industry today.
Understanding competition and conducting thorough market analysis are paramount when introducing new products or features. By gaining insights into existing players and their strategies, entrepreneurs can make informed decisions and adapt their approach accordingly. While the journey with Athena Technology had its share of ups and downs, the lessons learned have profoundly influenced my entrepreneurial mindset and will undoubtedly shape my future endeavors.