Startup Analysis - Workflowy

Workflowy isn’t new, it was built in 2010 and was a member of the Y Combinator S10 class. I use their product every day and so I’m intimately familiar with it. As a company, I know less about them. I’ve never met the founders, talked to them, or asked them questions. I was thinking about Workflowy the company the other day and puzzling over what direction I think they might be headed in. To make a long story short, my basic conclusion is that if these guys are ready to cowboy up and focus on growing their userbase, Workflowy has a lot of unrealized potential still in it.
Here is a breakdown of how I came to that conclusion–some things that I considered, and some questions that I still have.

Product #

Right now, Workflowy is used by rabid fans who can’t live without the product. I know if it went away tomorrow, I’d be lost…I don’t know what I did before, but now I can’t live without it. This is a common sentiment among others that have used the product.
The product has two big things going for it:

• it’s perfect
• it’s ‘done’

Both great things. The product just works, is as fast as you could ever want, and has every feature that it needs. Of course it’s dangerous (and disingenuous) to ever say that a product is done, but I really think it applies here about as well as it could anywhere. This is huge, because it frees the business of having to compete on features, and frees the developers of having to continue iterating and adding features. Workflowy can move on and now focus purely on growth.

As the product user base grows, this can and will necessitate a lot of development work, so this isn’t to say their work here is done. Rather, their product is ‘done’ in the same way that something more mature like, say, Facebook is ‘done’. FB devs don’t spend all their development cycles adding new features, instead they work on scaling, security, day-to-day operations, etc. (this isn’t the greatest example…FB still crashes and periodically adds new features, but the point is that they don’t compete on features)

How big is Workflowy now, and how many hurdles have they already cleared while scaling their product, though? That’s something that I don’t know. It seems like everyone that has tried the product loves it and uses it, but it’s tough to tell how big their user base is just from the number of gushing blog posts about them from random fans. Have they had to really scale the product yet, or is that a hurdle that would need to be cleared if they hit hockey-stick growth?

Market #

The market for Workflowy is potentially huge. Essentially it’s anyone who wants to remember and organize things. Because Workflowy is so open ended there are lots of different use cases for it so I would argue the market is probably approaching the number of people with devices capable of running Workflowy.

This means that the biggest challenge is user acquisition, and it’s tough to come up with a strategy for this because the use cases are so broad. Word of mouth is going to be the best way for this app to take off, and that’s a hard thing to accelerate.

Team #

It doesn’t appear that this is a problem that the Workflowy team is working to solve. As hard as it might be, there’s work they could do to stimulate the buzz around Workflowy and trigger more growth.

Herein lies the biggest question I have about Workflowy. Are these guys still working on it? What are their motivations? Do they want to grow? Do they still even devote full time to this, or are they on to other things and just let this run as a side project? There is no real blog, no news, no way to tell if these guys still are even working on this or if they care about growing it.

To be clear: if the answer to all the above questions is no, they don’t want to grow and are content to let their product, which needs nothing, run at whatever scale it currently exists, that’s fine. Their only costs are the electricity to run the thing, and that’s probably balanced out with a relatively small base of Pro users at $5 per month.

But if these guys are ready to cowboy up and really focus on growing their userbase, I think Workflowy has a lot of unrealized potential still in it. The team has shown that they have fantastic product instincts, and that counts for a lot. They are at a new juncture in their business now, and I think some questions would have to be answered about the team before I really understood what the longterm outlook for Workflowy is.

(For all I know, Workflowy is quietly growing at a meteoric rate and taking over the world as we speak. It’s just hard to tell because they aren’t showing it the way some up-and-comers, like Groove for example, are.)

Business Model #

Right now, Workflowy makes money with a freemium model, where ‘Pro’ users can fork over $5 a month to backup their data and change their stylesheet (I like to live dangerously, and I just have a plugin that injects my own custom CSS anyway, so I pass on this upgrade). I can’t imagine that more than 1% of their users have pulled the trigger on this one, and if you told me it was a tenth of that or less, I wouldn’t be surprised. As useful as those features might be, their product is just so damn good without them that I don’t care.

If you told me I had to pay $10 per month to use the service, I would. I’m hooked. But I don’t see this as a viable option for Workflowy unless they’re content to operate at Lifestyle-business scale. If you want to charge all your users that can be a great way to make money. You have to know who your users are, how much it costs to acquire new users, and what their lifetime value to you is. And it helps if you can segment them somehow and price discriminate, but I don’t really see a compelling use case for B2B Workflowy, or any sort of Enterprise service tier.

Now, if you’re asking a startup what their exit strategy is, you’re putting the cart before the horse. That should not be the focus, building the best possible business should be. But that doesn’t mean that a potential investor can’t or shouldn’t think about this. It’s an important thing to keep in mind, because if there is no liquidity event on the horizon, or a path to one, then it’s obviously hard to make a case for that being a suitable investment.

I see the best exit strategy for Workflowy as a potential acquisition. Imagine if when you wanted to make a list in Evernote, it was a Workflowy list (have you ever used Evernote’s built-in text editor? It’s horrible!). Imagine Asana with tasks that you could move and reorder like Workflowy lists. Imagine Google Keep being extended to function as Workflowy. I would use all three of those products and my life would be all around better for it.