RunKeeper

Shikhar  Ghosh; Shweta  Bagai

Case | HBS Case Collection | July 2018

RunKeeper

by Shikhar Ghosh and Shweta Bagai

Abstract

The case examines the focus of an early stage company and how venture capital can distort a founder’s view. It encompasses issues such as financing, understanding the founders’ definition of success/failure, defining and pivoting a business model, and determining the organizational impact of a pivot as well as the role of VCs and boards in outlining company strategy. In 2008, Jason Jacobs, a fitness and technology enthusiast, created RunKeeper—an iPhone app to track a runner’s distance, speed, calories, and route taken. In its initial years, RunKeeper was a fast-growing, profitable company and did not utilize the $1.5 million it raised in its Seed and Series A rounds. As RunKeeper gained momentum, Jacobs created a grand health vision (Health Graph) that would increase the chances of securing VC funding. Heralded as the “Facebook of Fitness,” RunKeeper willed itself to be the one-stop location for all important health information for consumers. Despite raising $10 million, the next few years were turbulent. RunKeeper became allergic to revenue, ramped up its burn, and tried to pursue both the running app and the Health Graph—but did neither well. At the end of the case, the company is almost out of cash, and Jacobs has exhausted his prospects for raising external capital. He needs to revert to his current investors to keep the company afloat. Jacobs’ instinct suggests that refocusing the company on its core product and runner base would be the best way forward. However, the last round was raised on the promise of a big health vision. Jacobs wonders whether his current investors would fund a smaller vision and how onerous the terms would be. Would they push Jacobs to pursue a sale in an over-crowded health app market? Or would they decide that he was not the right person for the company?

Keywords: early stage funding; Pivot; Entrepreneurship; Venture Capital; Business Model; Health Industry;

Language: English

Format: Print

13 pages

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Citation:

Ghosh, Shikhar, and Shweta Bagai. "RunKeeper." Harvard Business School Case 819-020, July 2018.

Case | HBS Case Collection | July 2019

Instabeat - One More Lap?

Shikhar Ghosh, Nicole Tempest Keller and Alpana Thapar

This case follows Lebanese entrepreneur, Hind Hobeika, an engineer and competitive swimmer who spends seven years trying to launch a wearable heartrate monitor and motion sensor to help swimmers track their performance while swimming. While the Beirut-based entrepreneur gained initial traction soon after founding her company Instabeat in September 2011, winning $150,000 in prize money from business plan competitions and raising $100,000 from a local venture capital firm, Hobeika soon faced a series of set-backs in trying to manufacture the product. Given the complexity of the hardware product she was trying to build, Hobeika had invested a significant amount of capital in the manufacturing design and had faced continuous delays. In addition, the product was not proving to be economically viable. By early 2016, Hobeika was out of money and had to let her team go. The business issues had also taken a toll on her personal life. However, Hobeika saw a potential path forward. The VC who had originally backed her was closing a new round of funding and was willing to discuss another potential round. More importantly, while in London, she had recently met Alex Asseily, a prominent Lebanese-British entrepreneur who encouraged her to stay the course. He suggested that she relocate to San Francisco, where he would soon be based, and offered to help her. Would it be worthwhile to leave everything behind, relocate, and rebuild the business? Hobeika had to decide  should she continue or not? If so, under what circumstances? If not, what would she do next?

Keywords: Startup; decision making; entrepreneurship; hardware; technology; manufacturing; prototyping; design; organizational culture; female protagonist; Decision Making; Entrepreneurship; Hardware; Technology; Design; Organizational Culture; United States; Lebanon;