Lessons from a London startup
My personal reflections on founding a startup in the daily deals industry
On October 5th 2010 I wrote some code that would spider the Groupon website every morning, analyse the content and send me an alert if there were deals that matched my needs. It was a simple solution to the comically un-targeted daily deals emails I had started to receive. There are only so many leg waxing deals you can be offered before taking action. A few days later I decided to spin my code into a simple website, and added Living Social and KGB Deals in to the mix. Within a month Buyometric was launched to the public. Daily deals were red hot, and the tech press covered the launch. Within 6 months over 10,000 users were receiving an individually tailored email every day. By 2014, it was 1 million.
I’m proud of what Buyometric has achieved. Right from the beginning we were totally focused on the end user. We were the first to introduce the ability for customers to pause emails. We were first to introduce behavioural targeting. We were first to analyse deal uniqueness and intelligently eliminate duplicates. We were first to consolidate deals from different cities into a single email. All these features have now been widely copied. If we had been watching and reacting to the competition these innovations may have never come to be. Instead we focused on the users and their experience. Commercial temptation was never far away. Low quality deal partners offering high commissions and companies wanting access to our data were always around the corner, but I made it my mission to put the user first. And it proved successful. We survived daily deals.
For me, the time is now right to move on. Watching the 300 millionth email leave our servers provided the ideal signal that now was the time to try something new, safe in the knowledge that a highly competent team will continue to deliver and grow the service. I’ll remain a very active advisor — an easy task when you’re based out of the same office.
Buyometric was a simple solution to a real problem. We made some good decisions that saw us grow into the UK market leader. But we also made some mistakes. As I leave, I thought I’d reflect on some of the learnings that I’ll take with me to pastures new, and those that I’ll leave behind.
Investment doesn’t have to mean cash
An investment deal doesn’t always have to involve cash. While others in the deal space were busy raising rounds of VC money, we took an alternative approach. We knew that 95% of the money being raised was for user acquisition. At the time Groupon were driving up the price of PPC advertising to a level we couldn’t afford — after all, a customer is worth less to an aggregator over their lifetime than they are to a deal site. Instead, we approached a company that had a very large database of price conscious consumers. We traded equity in exchange for marketing access to those users, and for technical resources and infrastructure. This deal almost guaranteed early success and put us in a strong market leading position, while ensuring our cost base would remain low.
Growing via cash-flow inhibits fast growth
While our equity trade gave us fast access to users, we needed to rely on cash-flow to grow. With a two or three month delay between a commission being generated and landing in our bank account we never had the cash available when we really needed it. Raising some cash would have enabled us to grow the team and expand internationally while the market was still young. The barrier to entry into new markets was fairly low, since the technology would replicate easily, but we missed the opportunity and allowed later entrants to seize the initiative. In hindsight I would have raised some cash as part of our investment deal, and been more aggressive launching into key international markets sooner. International scaling is something I’m keen to execute in my next venture from day one.
Hire for attitude
It’s common advice, but the experience of hiring developers for Buyometric has shown me first hand the value in hiring for attitude and training for skill. London has too few good engineers, so our job adverts would attract very few serious contenders. When hiring our second developer, I interviewed five people, all good on paper, but all leaving me underwhelmed. A last minute applicant came and showed me his one and only commercial web project. The code was not logical at all, but he presented it to me with immense pride. He passionately defended his completely unnecessary hard-coding with more enthusiasm than the previous 5 applicants combined. I made the decision to hire him on the spot. He’s since become an excellent developer, playing a critical role in our success. Where possible I now ignore lists of achievements printed on CV’s and instead focusing on personality and attitude.
Scale when needed
At the end of November 2011 we signed our first white label partnerships deal. It was significant — 50,000 users would be transferred to our service. But we didn’t have a platform to handle a white label. The site was due to go live in January 2012, which gave us 6 weeks (including the Christmas holidays) to completely rewrite our simple linear PHP code into a flexible MVC framework that could handle multiple domains. The deal provided the team with a single purpose, and we worked flat out over those 6 weeks. Our lead developer spent his Christmas in Greece reworking the entire codebase. He pulled off the extraordinary and we launched the white label on cue. The deal was a big success. We were the first in the industry to launch a white label service and many more partnerships followed. Each new deal would put pressure on our architecture, but as with the first, we dealt with the scaling when it was necessary. Putting people under pressure is often a good thing — for them as individuals and for the team.
Focus on what matters
While there are some complex technologies involved in keeping Buyometric running smoothly, the core principle is very simple: Collect deals, classify deals, match deals to individual users, send email containing deals to users. The user click from an email sends them straight to a deal partner (via a brief overlay at our servers). Much of the tech for this was laid down in 2012. During 2013 we focused on developing new features to tempt users onto our website — to browse, to interact, to review and to rate. While our motivation for doing this was sound, 98% of our customers never saw what we had done. For the vast majority of the user base, Buyometric is an email. A clever little email, but just an email. If I were to relive 2013, I would spend a lot more time on that email and far less time on our website.
Keep control of the important stuff
From day 1 I was interested in how we could control as much of the technology stack as possible. This included the email architecture. Email delivery specialists would call on a weekly basis, telling us they could improve our delivery and open rates. But we persisted with our own solution. And we mastered email. The net result is that we have almost no emailing costs, while competitors of the same size can spend more than £10,000 per month on third party services. What’s more, knowing the dark art of mass email is an invaluable skill that I will take with me to my next project. Often dismissed, it is still the most powerful notification tool of them all.
Trust your instincts, stick to your vision
When you create a product or business you always have an initial vision of what you want it to be. This vision will mature and evolve, but it will also suffer constant attack. Customers and potential customers, partners, investors, developers, manufacturers, employees, friends and family will all voice their suggestions and requests. This process can easily chip away at the clarity of your vision, leading to a process of regression to the mean. The most boring products in the world were designed by committee.
Don’t let your vision suffer death by a thousand cuts. Guarding against this attack is one of the hardest things to do, because the enemy often comes in the form of the people you most trust and respect. While something I’ve certainly not mastered, my experience with Buyometric has hardened my resolve to trust my instincts. Knowing whose advice to act on, and whose advice to discard, is ultimately a judgement call. For me, it’s taken experience of both success and failure to realise that often my gut feeling is correct, and that changing course to please others is the wrong thing to do. Learning to believe in yourself is perhaps the most valuable lesson of all.
Thank you Buyometric.
Follow me at @paulfisher