I think it goes a bit beyond that. The way I understand the story, they shut down because it wasn't bringing the traction necessary to raise the next round. The company needed a VC-backed growth trajectory, which apparently was not happening.

This is right. It was clear we weren't going to be able to raise another round of financing, and even if we could, it was unclear how that would enable us to change the state of the things, namely that our business didn't represent a startup opportunity. Frankly if someone had offered me a term sheet, I wouldn't have accepted it.

We didn't really have many options. We tried to build a business and failed. We could have tried to raise a bridge financing -- but what are we bridging to in that case? A financing (no), an exit (also not an option, as we found)?

Ultimately spinning things down into a skeleton state and doing our best to operate the service for the coming months (heck, maybe years) was the only path forward.

Re: the OP, I think 400k MAUs is actually pretty decent for a mobile app, but maybe I'm mistaken.

Hi - congrats on the openness about DrawQuest. Did you consider building cloud based offering for DrawQuest that would allow consumers to save their drawings onlike and or share kids drawings with family members? Or selling physical products like Paper did?

You got it.

Imagine that all these 400k consumers were bringing just $1 of income (not profit) each. I suppose that operating the whole thing is significantly less than $400k a month. To sensibly kill a service that brings in a couple hundred thousand dollars of profit a month you must be a large corporation, not a startup.

$1 of income per unique visitor per month is much too high to be a good number to plan with. If your site doesn't have a natural commercial interest you're going to be selling adds at a rate that corresponds to maybe a $0.01-$1 CPM. If the average unique visitor views 50 pages a month that's just $0.0005-$0.05 in income per person.

Consumer startups with such little traction don't get anywhere close to $1 per user per month. I ran a start-up with a million uniques a month and we were making a fraction of a penny per visitor.

You said "visits" which implied you were making a website. This is very different than the gaming space.

We make more than $1 per monthly active user and I know for a fact that our game monetises poorly when compared to the free to play games that monetize very well.

It is definitely possible to make $1 per unique per month in a consumer startup -- but it varies heavily by niche.

Each individual visitor (which does not correspond directly to a consumer) usually brings a fraction of a penny to the table, if anything at all.

They were probably bringing in much less than $1 for each of those 400,000 people.

Much, much less :)

Agree. 400K uniques/month isn't a lot. I'm surprised Poole was seemingly satisfied with this number, considering he knows exactly how much traffic one would need to survive.