There’s a handwritten note next to Colette Grgic’s bed listing her reasons for closing the marketplace she had built for travel experiences, Arribaa.

Arribaa’s founders, Colette Grgic, husband Vinko and Roger Barnes announced in a pre-Christmas blog post their decision to cease developing the platform they’d built over the past few months. They’d set out to connect travellers with locals who could offer unique experiences; perhaps a small bar tour of Sydney, or surfing lesson in Byron Bay.

“We knew we had to get big — travel is a really big market — but growth ultimately depends on how acute the need is, and how much people are willing to pay,” says Grgic. “We believed we had what we needed and could get thousands to sign up.”

Grgic says the Arribaa idea was in fact validated, albeit negatively. She’s confident the model was stretched and pulled to the point where the concept and business model could be fully tested. It’s this knowledge which has helped the team get over any notion they might have succeeded had they tried one last thing.

“Arribaa was a vitamin, not a painkiller. If I go somewhere and can’t get accommodation, I’m screwed. But if I go somewhere and can’t book an experience with a local, I can go out by myself and do my own thing.”

Although Arribaa had reduced its cost of acquiring customers, grown its database of travellers and amateur tour guides, it got to the point late last year, when Grgic and her co-founders realised it was going to be impossible to get the scale needed for the business to be sustainable (i.e., earn more in revenue than it costs to acquire customers).

“The model was flawed. In September we had a serious talk, but we couldn’t say we’d tried everything, so from September to December we were really pushing hard.”

It’s a big decision for a founder to make. Thankfully, Grgic is happy to share her experience for the benefit of others.

The fleeting nature of the site’s users meant the business would only make sense on a scale of hundreds of thousands, if not millions. Because people would only use the site when they were travelling, and amateur tour guides were likely to only want to run maybe 10 tours a year — in between work and their own lives — it made it hard to get the site to hum consistently.

“The window for making a transaction was so small. When you realise how much effort it takes to get users, when you start doing it you go ‘that’s f**cking hard.”

Prior to making the decision to wrap-up Arribaa, Grgic says the team pursued a blogger outreach strategy; essentially rewarding bloggers for directing new guides and travellers to the site. It worked out much cheaper than alternative acquisition methods such as Facebook advertising and Google Adwords, which Arribaa had been testing. However using these tools ended up costing more than $50 to sign up each guide.

Arribaa founders Vinko Grgic, Colette Grgic and Roger Barnes (Image: supplied)

There are a number of reasons the model was so challenging. Grgic says Arribaa turned out to be a nicety, not a necessity: people liked the idea, but weren’t always going to use the platform. In the end, there were 150 experiences on offer, from around 110 hosts. For every host, there were approximately five travellers registered on the site.

“We had these meetings at the start of each week, a planning meeting with all our team members. We used a model from one of our mentors; tracking the number of transactions, the conversion rate and the money for each part of the cycle.”

The team had managed to significantly improve every part of the ‘funnel’; from acquiring customers, to converting them into registered users, and to transactions on the site. Yet, it became still clear it would be impossible to get the scale required, cheaply enough to cover the cost of acquiring customers.

“The lifetime value was just not enough to make it sustainable, and a subscription model would never work,” says Grgic.

It was the idea that motivated the team. Although the trio considered a serious departure from their original focus, they realised it wouldn’t motivate them in the same way, says Grgic: “For the team, if we changed, we wouldn’t have had the passion to do it.”

Around 2.8% of people who clicked through to an experience on the site converted into a transaction. Grgic says anything above 1% is great for a travel booking site.

Arribaa had raised a seed-round from a Chinese investor who came to the trio through their extended network. The investor was kept in the loop the whole time. Grgic was also talking with three potential investors about raising a second round, however it was decided she’d tell them the team wouldn’t take their money, as they’d concluded the idea wouldn’t work.

“We said ‘thank you for all the enthusiasm but it won’t work for these reasons’. We got a lot of respect for being honest.”

Up to that point, the team had been working its way through the various parts of the funnel, trying to optimise each component. They set weekly and monthly targets and KPIs, and were transparent with their investors and advisors.

“They were kept in the loop the whole time: for the KPIs, for ideas. One of our advisors said to us ‘you’re doing all the right things but it’s just not working’.”

Vinko now plans to do some product development and design contract work, while Barnes is working on a few of his own projects. Colette is hoping to get some business development work with another startup.

She describes her startup experience as being almost schizophrenic, particularly in the past few months. Most people only see the impressive sense of confidence and bravado necessary to convince users, investors and the media of your startup’s success. Yet, at the same time, you’re having emotionally challenging conversations with co-founders, investors and family about whether you can make it work.

“You have to convince yourself it’s worthwhile. There’s this reality distortion field around all entrepreneurs.”

At least Grgic doesn’t feel like she’s lost anything because of the experience. She’s learnt a huge amount, gained incredible experience she can fall upon for future endeavours, and now knows what skills she wants to develop before giving the inevitable next startup a crack.