We all believe our ideas are special, revolutionary and it's going to grow into a very huge company but that won't happen to every idea you have.
In the tech world, marketplaces have revolutionized how services are delivered, bringing efficiency and accessibility to industries that were once cumbersome or decentralized. However, not every marketplace idea translates into a scalable and profitable business. One of such marketplace was Round The Block, which was a marketplace built to connect driving instructors and students.
At first glance, the idea was really promising to us. I as an international student, I had this exact problem. I didn't have any family in Canada to teach me how to drive, so it sounded like a grand idea. RTB aimed to bridge the gap between aspiring drivers and qualified instructors, offering a streamlined way for students to book lessons and instructors to fill their schedules. But beneath the surface, several core issues related to scalability and sustainability ultimately led to the downfall of the platform.
One of the biggest challenges we faced was the nature of driving lessons as a service. Unlike other services that require ongoing or repeated engagement, for example ride-sharing (Uber), home services (Angi), or food delivery (Doordash), learning to drive is a one-time investment for most people. After students pass their driving test and earn their license, their need for a driving instructor vanishes.
This created a fundamental problem for us: Acquiring customers was a one-time transaction. After students completed their lessons and got their licenses, they had no reason to return to us. In a typical business model, retaining customers or generating recurring revenue is key to profitability. In this case, every new customer was essentially a one-off, which significantly increased the cost of customer acquisition without the promise of long-term value.
Marketing efforts, advertising spend, and onboarding initiatives for new students became increasingly costly, with no way to recoup those investments beyond the initial transaction. Once the customer got their license, they were gone.
On the other side of the equation were the driving instructors, many of whom were already operating on slim profit margins. Driving instruction, while essential, is not known as a high-revenue business. At the ending, we were collecting a commision from the instructors for each new student that booked a driving lesson package with them.
Driving instructors typically don’t have a high volume of clients, and their rates are constrained by local competition. This meant that increasing fees or taking a larger percentage of each transaction was not a viable option for us. Instructors were already earning modest incomes, so collecting more fees from them wasn’t fair. We couldn’t afford to increase our fees without the instructors feeling the pinch, and thus leaving our platform.
As a result, we found itself stuck in a position where we couldn’t extract more revenue from either side of the transaction. Students were temporary users, and instructors weren't making a lot of money that we could keep upcharging them.
The combination of these two factors—students being non-recurring customers and instructors not having the capacity for higher fees—revealed a flaw in the business model. In a successful marketplace, scalability often depends on repeat business or a steady flow of high-volume transactions. For example, platforms like Uber or Airbnb thrive because their services are used repeatedly by consumers. In this case, however, the customer lifecycle was inherently short, and the supply side was financially constrained.
With no clear path to create more recurring revenue streams, we became financially unsustainable. While there may have been a steady influx of new students, the continual need to acquire fresh users at high costs combined with limited revenue from instructors created a scenario where profitability was unachievable.
Also, at this point, we as founders were already getting to our breaking point where we weren't seeing any other viable options to make more revenue.
Shutting down of RTB provides important lessons for entrepreneurs and businesses looking to create service-based platforms. Scalability is critical. Without a sustainable model for retaining customers or growing revenue, even the most innovative ideas can collapse under the weight of high acquisition costs and low returns. Furthermore, understanding the economics of both sides of a marketplace is essential. If either party struggles to justify their investment or participation, the entire model can fall apart.
For RTB, the idea itself wasn't bad—it addressed a real need in the market and also brought in revenue. But in the end, the combination of a non-recurring customer base and financially strapped instructors proved insurmountable. A lack of scalability in both the demand and supply sides led to its closure, providing a cautionary tale for other startups navigating similar challenges.
RIP Round The Block!