As the pandemic hit, Mat Vogels wondered if his company Zestful had a chance to be one of the companies that would grow as a result of the remote work lifestyle.
The employee perks startup had raised $5 million in venture capital the fall before and entered 2020 with plans for a new office and steady growth in the HR technology landscape.
By March, the outlook for Zestful had soured.
“At first, we were optimistic that maybe we were one of those businesses that can do well during this time,” Vogels said in a recent interview. “The hard part is budgets were being cut and we were a ‘nice to have’ budget [item], regardless of how important we wanted it to be.”
The company lost nearly 40% of its business and was faced with some hard decisions, particularly related to its staff.
By August 2020, Vogels said Zestful made the decision to reduce its staff from 14 people to six and began exploring new product opportunities. Later that year, the company launched a new employee connectivity solution named Goals.
The aim was to find a gamified way of monetarily rewarding employees for completing various tasks, with some as simple as answering a question about themselves.
With a tightened staff and a new product, Zestful began 2021 with hopes that reset HR budgets would lead to a boom in business.
That never came and Vogels was once again faced with a crucial decision for his five-year-old company’s future.
“We had money in the bank and our investors were supportive with any direction we wanted. It became an opportunity cost of 'do we want to spend the last bit of cash that we have left on Zestful?' My gut feeling was no,” he said.
The next few months would be challenging, Vogels said, as Zestful cut its staff in half and weighed its options. The company made the decision in the spring to shut down and spent the next few months working with its customers to close their accounts.
Vogels sought potential buyers for Zestful, but with a decimated staff that no longer felt a desire to build the product, acquisition efforts went nowhere.
“It was a really, really hard few months,” he said. “The decision was almost the easy part, but the transition period was rough.”
In assessing its demise, Vogels pointed to his own disconnect from the mission. While he was passionate in building the company, he wasn’t doing so to solve a personal pain point.
“It was an opportunity that I saw, and I was passionate about bringing that opportunity to life. But it wasn’t something that I was creating for myself or a problem I had in the past, so that founder-market fit wasn’t there for me,” he said.
While Zestful ultimately didn’t work out, Vogels has launched a new product under the brand that he said better aligns with his passions.Over the last few years, he’s become a fervent tennis player, describing his interest in the game as “addictive.”
So, when he struggled to find partners to play with, Vogels launched a side project late in 2020 to build a matching and community platform for the sport. Rally Tennis began first as a personal project, funded entirely by Vogels, and quietly launched a beta version app in Denver this year, garnering 300 sign-ups in the first week.
With that early traction, Vogels began to wonder if there was a larger opportunity in front of him.
Zestful still had money in the bank and a small team to support the fledgling venture. When investors gave the company the green light to pursue the idea with the money they had committed to Zestful, Vogels was ready.
“We had the momentum with Rally Tennis, and I felt like instead of returning funds or putting the money back, let’s take one more swing for the fences. We have nothing to lose at that point,” he said.
In a year full of business pivots, Vogels described his new venture as more of a “hop.” Rally Tennis doesn’t utilize any of Zestful’s technology but does operate with the same cap table and bank account.
With a rebuilt application and a larger financial backing, Rally Tennis launched nationwide in June and has grown to nearly 10,000 users. On the application, players can find matches, compete in leagues, chat with the community and watch skill tutorials, among other things.
In contrast to Zestful, Rally Tennis is maintaining a small team of three full-time employees and two contract developers. Vogels said he will be focused on finding a firm product-market fit before he even considers growing the staff.
“No hiring, maybe ever. That’s the one thing I’m very burnt out on, hiring and building out a team. We won’t do that until we absolutely have to,” he said.
Vogels admits that Zestful’s ultimate collapse took a toll on his confidence and left him wondering whether he was “actually good” at being a startup founder. Now, with a renewed focus at Rally Tennis, Vogels feels back at home.
“A lot of other founders will agree, there is nothing else that I’d want to do,” he said.
