So what did you learn from running a consumer internet company?

Ruth was number 20. I don’t know Ruth, and I didn’t know the other 19, but they all sent me emails/Linkedin messages that read something like this:

So sorry to hear about Bizzy. I am building a very similar service but with a twist/different monetization/different target audience: can you share your learning from Bizzy?

I answered few in writing, few via phone calls and even had couple of face to face meetings but when number 20 hit my inbox, I figured it time to have a permanent link I can send people to… Every answer here deserves a post of its own, and one more for the questions I haven’t answered yet, but let’s start with something… I also tried to write the answer in a more general way, so they are useful to the broader audience. So here are some of the questions I’ve been asked:

  • What worked? this is a very open ended question but here are some highlights:
    • People loved our product. this is the entry ticket to the game. Building a great product gives you the right to play, although not necessarily the right to win. I would invest (almost) any amount of time and talent in building a product that will wow the users. People expect nothing less and with so many options, will not touch any product that seems to be sub standard.
    • Leveraging existing behaviors–  It’s an uphill battle whenever you want to teach users to do something new. Foursquare, for example, did a great job teaching few million active users to check in. The moment we piggybacked on Foursquare check ins, the number of people “Checking Out” with Bizzy grew dramatically  People loved to check out, they just didn’t remember.
    • We had a unique voice- Early on we hired Emily that became the voice of Bizzy. She wrote our blog posts, tweeted on behalf of Bizzy and most importantly, wrote the UI language for Bizzy so that bizzy sounded like a person you want to hang out with, and not like a robot.
  • What didn’t work? also, an open ended question… the short of it is:
    • We didn’t rally the number of customers a consumer app needs in order to survive. The model of “let’s get bazillion users and monetize it later” requires to acquire, something like bazillion users… Unlike products that are monetized from user #1, in most consumer internet products you play an all or nothing game and if you don’t get to 100s of thousands of users within your first year of operation, you may as well relaunch if you still have the money. It worked for Path.
    • We were part of a big company. ReachLocal was as good as it gets when it comes to hosting a startup and supporting our urge to innovate but we were not a real startup, despite the fact everyone tried their best to behave like one. We didn’t wake up every morning thinking a dollar we spent today might be the last one. As Chris Dixon said: you are either a startup or you are not. It’s hard to explain the type of “fear and greed” motivation you get from being a real startup but it has been fueling the Silicon Valley for 50 years now for a very good reason.
  • Where did you get your data from? Phew! this is an easy one.. we got our data from number of sources but if I had to do it all over again I would go exclusively with the last source we added: Foursquare venue API. Is it perfect? no- it is littered with duplicates, wrong categorizations and goofy venues like  “4062 Jew canoe” but it is free, up to the minute with new venues and best of all, global. We augmented the venue data with our users’ ratings, tips and insights.
  • Can we buy your user list?- in general, I will not recommend for anyone to buy any user list, especially not one of a free product. There are so many apps out there and so much spam that it is more likely that a user that gets an unsolicited email from you to never use your product, rather than giving it a try.
  • What were the issues with monetization? Bizzy was pre-monetization and our focus was all about providing our users with the best recommendations and discovery experience. I would assume (and experienced in the past) that any local company will face a massive challenge getting enough businesses to spend enough money in a scalable way to make a profit. Small local businesses get many phone calls from the Groupons of the world, email marketing providers and everyone else that the biggest challenge will be getting them to pay attention to what you have to offer, especially if you have less users than Foursquare or Groupon…
  • What are the biggest challenges in user acquisition: It’s another case of “I need a post just for that” but in short…
    • There is tons of noise in the market and dozens of new consumer apps a day
    • Since there is so much noise, you need continuos tech press love to rise above the noise
    • It’s hard to get a this level of love, unless you are already famous
    • Viral marketing works well. You just need a really big base to make a difference. If my math is correct,  a base of 1000 users that grows a stunning 1% every day, will yield under  40,000 users in one year. If you started with 100,000 users after a successful launch, it will be just under 4M users, which means that it is nearly impossible to rely on virality alone to grow a consumer based product.

Granted, these lessons might be very different for other entrepreneurs in different companies so debating my learnings and doubting them is welcomed…. I will not take it personally…

So what did you learn from running a consumer internet company?

4 thoughts on “So what did you learn from running a consumer internet company?

  1. Ravi says:

    This is really good stuff. No blame-games, no finger pointing – just an honest and sincere presentation of the facts. Great job, Gadi! Feel proud to have been a part of Bizzy.

  2. AnoDyNoS says:

    Excellent & insightful post, thank you.

    One question : since you app v1.x was released, hence there could be no more development costs, why didn’t you leave the app and servers running ? Was it too expensive, was it pointless ?

    1. Thanks. First, I think that since users have so many options, an app that is not “pushed” and gaining momentum will die eventually so keeping it up would only delay things, not change them.
      In addition, the app was owned by ReachLocal (our parent company) so the decision of keeping the servers up or not was ultimately theirs.

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