by Tim Jahn on October 5, 2010
After working in the corporate world for over 12 years and being called a “lifer” by an HR rep, Eran Davidov decided it was time to try something new. So he decided to take a year off and travel the world.
He didn’t get past Central Park. A good friend called and convinced Eran to move to New York City to work on a startup revolving around the home style food marketplace. When that company didn’t work out, Eran and his friend started brainstorming other startups involving marketplace ideas and came up with an idea for a marketplace for unused daily deals called lifesta.com.
So I’m the co-founder of Lifesta, and we’re the only full service resale market for daily deal vouchers; and we can talk more about that. And then me personally, my partner and I are both in the corporate world.
I was originally an engineer by training, started working in Sun Microsystems about thirteen years ago in Israel, worked there for about six years, and was the CTO of their site in Israel, then relocated to the US for about six years working in their California branch.
I was the director of Java ME, Java Mobile; all the engineering teams reported to me. I had a pretty interesting job doing that. And about a year ago I decided it was time to do something else. I mean, 12 years at Sun I was — I actually had an HR rep call me a lifer.
Seriously, I said, “Okay, okay, it’s time to do something different.” And I’ve got to say, right, over the years, that’s 12 years of time, I didn’t do the same thing all the time. It was actually a very good environment for checking on different things. There was the engineering side of it, the management side; it was very fascinating from that perspective. It just got to the point where I needed something different.
And I actually started thinking — this is roughly when Oracle was starting their — they were talking about buying Sun and they were coming in. It took a long time for them to do it, but for me, this was a like change is coming anyway, do I want to control how things are going to be?
And I actually started thinking about taking the year off, right. The market wasn’t great, take a year off, do a trip around the world, take a lot of pictures, and enjoy myself and then come back and look for a job. And as I was doing that, I had a friend who was starting a company over in New York, and I worked with her in Sun Israel, many, many years ago.
And she said “Why don’t you come join us? You’ve got the perfect background for it, you’d be the guy.” And she convinced me, right, that it was a great idea. And so, I found myself moving to New York and starting a new company.
So my trip around the world is usually around Central Park. And we actually started a completely different company not related to daily deals in any way. We were doing a marketplace for home-style, sort of small food producers that cook specialty foods.
And we figured out that for us to be able to make this to work, we would have to essentially become a restaurant. Because operation-wise, we would have to juggle a whole bunch of sellers that we would directly either hire or potentially compensate in some way.
This wasn’t the model we were comfortable with because none of us were food cookers or restaurant owners. We were more about the technology and the marketing side of it. So, we decided that one’s probably — at least for now, to put it on hold. I think the websites still up, but we’re not pushing it in any way.
And so, we spent I think, two months during this brainstorming session, like every single day we sat down and we had a marketplace for food so we said, “Okay, the brainstorm topic is marketplace. What else can you do with a marketplace?”
And we didn’t really stick to marketplaces; it was just a jump-off point. And so, we had ideas around, you know, a website for various models of photography online, not any of the regular models, some variations on live video. We had very, very weird ideas, things that you wouldn’t even think about relating to any of these topics.
And then one day we’re sitting there, it was after two months of brainstorming, we’re pretty tired of the whole process already. It was like one of those rainy days where we ran through the rain to sit in some café because we didn’t have umbrellas with us — miserable.
And my partner says, “You know, you’ve been using Groupon for a while now to check out New York when you moved here, why don’t we do a resell market for those Groupons?” And she’s laughing, right, as a joke, and I’m looking at her and saying, “You know what? That’s actually a brilliant idea.”
How did you actually go about executing after you got the idea? What was the next step into saying, “Okay, we’re going to make this a reality?”
Right. So a couple of things, right? We’ve learned a lot of stuff from the first one. First, it doesn’t matter how many times you read about start-ups, and how many times you are going to fail, or you’re gonna to switch, and how quickly you have to move. Until you go through it, you don’t get a feel for it, right? So we’ve been through one, we actually felt what it’s like.
And so, the first the thing was trying to validate the model, right? Are there enough people out there that will actually want to sell daily deals? And we basically started it by talking to some of our friends. The interesting thing about Groupon is — I mean, they’re selling phenomenally, and most people still have not heard about them.
It’s like, if you go down the street and you ask — I don’t know about Chicago, Chicago might be different. But in pretty much anywhere else in the US, if you ask people what Groupon is 80% will say, “No idea.”
It’s amazing considering how many — it’s unbelievable. And I’m not talking about people that are out of their income bracket; I’m talking about people in the income bracket with a target have no idea what Groupon is. So, we started asking people. So number one, we had to find a few people that had those Groupons, right?
But number one was finding out enough people and trying to figure out their behavior when they buy Groupons. And we originally thought, you know, people buy one or two, right. Like that’s how we felt, like each of us bought a couple of Groupons over the past six months or so.
And then, we talked to some friends who did know about Groupon, and one of them was showing me her Groupon page and she had like ten or 15 over the past three months that she just bought. And apparently she’s not one of the heavy users, right?
So first of all, we had to figure out some of their usage patterns around Groupon; what people do. People do a lot of buying because the deal seems interesting and they just want to snag it right now, but then they don’t always use it, right?
So, I talked to her and she’s been buying these, but she hasn’t been using all of them. There’s a couple that she bought, and now is not planning on using at all. But just because she looked at the website or the service, eventually, and found there’s nothing she wanted. There’s a couple that she just didn’t get around to and will time out very soon. So, people buy and then they think.
So, first of all we wanted to figure out if there was enough market, if there’s enough people that will actually sell. We didn’t think there was going to be a problem with the buyers because once you give them a big enough discount it’s interesting to buy. So, we had a couple of ideas there, but we wanted to make sure, first of all, there was a market.
Second thing we did was figure out the quickest path to get a website up, so that we can actually test it on people we don’t know. And I think the website was up in five weeks.
So you were more concerned with actually getting a proof of concept out there, something to prove this is gonna to work, than getting like, the perfect ideal website up?
Correct, because one of the lessons we’ve learned with the previous — the previous company was called Auntie Chef, as in, you know, your aunt that cooks really, really good. And we spent a lot of time brainstorming ideas for it. And we had just cool features, absolutely a must, it will create the community, and this cool feature is absolutely a must, it will drive more sales, and we had a lot of those, right?
And we ended up, I think it took us like four or five months to build the site where we could have probably cut down two or three months of the process and validated the idea much, much faster. So you learn, right? You learn that, I mean, limited budget. No one’s paying my salary, right?
You really have to find out very, very quickly if the model is going to work or not. And then once you have the basic model you can start tweaking it, adding more features, doing more things to do more conversions. But how do you very, very quickly verify this will work?
It seems, like, so easy. I’d say it seems like a Cinderella story, but I know this hasn’t been easy for you. You know, you didn’t just overnight, start making money off this. What were some challenges along the way?
Number one, is you’ve got partners, and you have to agree because at this point these are not employees in a company or someone from high up who hands down the thing that you shall do. This is your vision, and your vision has to agree, and it’s not always going to, right?
So we have to learn better ways of how to agree on what we think needs to move forward or disagree and how do we get past that. And we’ve worked together in the past, so we weren’t strangers to each other, but once it’s your website, you know, everything becomes more elevated.
So, we had to learn, I’m not going to call it processes because to people it’s more like a communication or relationship. But we’ve learned a little better on how we each think and what we think that mattered. So if you look at the website, my partner is the designer, right. So the design for the website came from her because that’s her passion. If I were designing this website, it would look like Craigslist.
And I can tell you the design is critical because part of what you’re conveying is the warmth from the website, or the professionalism. Which Craigslist is succeeding despite that, but probably because people know it already.
So, we’ve got different strengths and we have to learn how to deal with them. Different visions sometimes and we have to align it, or potentially put some A/B tests in place to see what works better, what doesn’t work better. The other side is, you are shooting into space.
I mean, there is no one you can talk to that will tell you, “Yes, this will work.” There’s no Gartner Report that says, “This market is X or this market is Y, or you know, the best way to do it is this way.”
You’re essentially guessing, and you have no idea, I mean, you are throwing a stone and you don’t know if it’s going to hit or if it’s just gonna fall short, or fly long or — you have no idea, and you have to make it better. You have to believe in yourself and make it better.
That’s not very easy for a lot of people because when you’re so used to someone saying, go three steps that way. or if you’re suggesting it, but someone high up says, “Sure,” as opposed to, “I want to walk three steps forward,” if I get there and it’s not the right thing, I’m just going to stumble. You have to be able to accept that. There’s a lot of uncertainty, a lot of risk, and if you’re risk-adverse, it’s probably not the right environment for you.
If you came across someone who was in a similar situation, they had an idea, and they were getting ready to execute, what would be your one piece of advice for them?
I’m assuming they already believe in themselves. I’m not going to say believe in yourself otherwise, they probably wouldn’t be in this thing. I would say find the absolute shortest path to prove that the model works, even if it’s not perfect, even if you have to tweak it later.
Because otherwise what’s going to happen — and there was a Tech Crunch article about two months back, I think, some university professor was talking about two entrepreneurs who were doing the perfect thing by validating their idea over and over with people, but when he got down to the point they haven’t built anything.
And they’ve been doing this for two years, two years. And the comments he was getting from everyone was how is this the right model? They’ve been talking to people for two years about a product idea that they haven’t done anything on. So they’ve got a lot of feedback, but until you put something in the hands of users, you don’t know how they’ll really react, right?
They can tell you they’ll like it, X, or they like it, Y, but then when you give it to them, they say, “oh, it doesn’t fit my wristwatch, it doesn’t work, I’m not going to click it, I don’t have time.”
The shortest, quickest path to get something in their hands, even if it’s not perfect, even if it’s not, you know, even if it’s not scalable, it’s not the right thing, you should plan for it — even if it’s not scalable, the design is not right, the coolest feature you can think of is not there, what’s the absolute minimum you need? Build that.
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