By Todd Allen
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We're live at AOL for tonight's installment of Start Grind. Derek will be talking with Zaarly founder, Bo Fishback. The show starts at 7pm PST, so get ready to start hitting refresh.
Fun fact: Bo played basketball (shooting guard) at SMU.
Derek: Tell us about your background.
Bo: He grew up in Georgia driving 50 miles to school. His father built his own company. His undergrad degree was in Bio-med, but he's never used it. His first job was an internal start-up in a larger company. Went to get his MBA at Harvard. Did a couple startups, sold them, then ended up working for the Kauffman institute.
At one point he considered a pro golf career.
Derek: When did you decide to be an entrepreneur?
Bo: He had a good time in college and the startup career just happened.
He ended up with Kauffman in Kansas City because he wife was in the area for med school. He asked the Kauffman foundation if they "wanted to hang out" and it went from there.
He seed-funded Angel Hack (later Angel List) and Startup Weekend.
D: How was Angel List back then?
B: They've had the same vision the whole time. This time it's hitting on all cylinders.
D: How did Zaarly start with Startup Weekend?
B: He went as a favor to a friend who was having a birthday. Bought his ticket on Thursday. He was bored with pitches he heard, looking at his notes file on his iPhone. He decide "fuck it, I'll pitch something." He pitched cold and off the top of his head... and the judges liked what they heard. 10 people worked on it during the weekend. He only knew 1 person (ex-lawyer) on the team. Their technical co-founder was just recommended to him as the best tech guy who happened to be in the room. "We won the human capital lottery with him." Bo does NOT recommend starting a company that way. He admits there was a lot of luck involved. He also thinks outside guy - inside guy - technical guy is a good co-founder formula.
D: What happened after that weekend?
B: Levarr Burton is a friend of Bo's and tweeted about Zaarly. He knew Ashton Kutcher, so he sent him an e-mail to come to startup weekend. He showed up with Demi and Rumor. Ashton sat in as a judge instead of Bo. They won the weekend and had instant offers.
D: How do you know these celebrities?
B: Ashton was an introduction from a mutual friend. "Ashton + Fishback + Kauffman = Awesome" was the e-mail. He likens some of the relationships to "deposits in the karma bank" that he hadn't ever intended to withdraw.
D: Is the karma banking deliberate?
B: No, it's just about being around nice people.
D: Term sheet in 2 days?
B: Within the week. They tried to build a mobile web version of Zaarly in 10 days for SXSW. No one eat or slept for 10 days. Rented an RV for SXSW. His father-in-law drove to Austin to buy a parking spot for $3K. Their first hire fixed their app in their RV overnight at the last minute. They turned off the first version after 1 day and started to build the real one. They got great buzz, but weren't even incorporated yet.
D: And that was 13 months ago. Now you have 4 guys. What next?
B: They sat down in San Antonio and all tried to think of 5 people they wanted to work in again and then three they didn't know. Meg Whitman was on that list. Then they started calling people. Building marketplaces is hard, so they put a bunch of recent grads on 2-month contracts to see what they could do.
D: How do convince people to shut down their company and join Zaarly.
B: "We know what we're trying to do and there's no pivot." Clear vision is key to it. "We create a no excuses employment market." People trusted them when they started Zaarly and that was part of it. He quit a job he loved, with a 6-months-pregnant wife to start Zaarly and people ascribed value to that. The mission of the company hasn't changed at all since starting.
D: If it doesn't work then?
B: Then it's been a great ride. There's no thought of selling to eBay and cashing out.
D: How did Meg Whitman sign on?
B: We had real honest conversations about how they valued experience. He had investors calling for 2 months straight. Some investors threatened to seed competitors if they wouldn't get let in. "I'm not a huge believer in the value of smart money," Kleiner-Perkins is exceptionally helpful, though. He met Meg while she was at Kleiner and they were having the formal pitch. "I'm not doing a deal with you unless Meg is part of the package." She agreed to be on the board during the due diligence period that she joined HP. All the board meetings are at her office at HP.
"I still haven't done a financial projection for this company."
D: Has your life always been this good?
B: "I fundamentally believe I'm the luckiest person on the face of the earth." Bo was homecoming king. He has a terrible memory for the bad and embraces the good things. He described his hoops skills as not remembering the missed shots (see: Starks, John; Smith, JR). He doesn't read ANY news about Zaarly. Sometimes his wife will tell him. He doesn't like when people analyze startups from the outside. Zaarly hires on social proof -- friends of friends. They like each other. He hasn't been on a ride like this before.
D: The Drew Story?
B: Bo was havng dinner with Drew over at Dropbox. Bo said Dropbox was killing it and he'd be cashed out well in a year. Drew said there was ZERO chance. Of 5 startups, Dropbox was the only one where the wind was at his back and everything just clicked and the hard parts went away. No way was he giving up that experience. He was on for the ride. Bo feels that way about Zaarly. Bo also feels that not only has he been lucky, but a lot of successful startup founders don't acknowledge how lucky they've been. You appreciate things when you work for them.
D: What's up with the new update?
B: Hyperlocal means anonymity of buyers isn't such a good thing. They're introducing face and social proof, like # of Twitter followers. Sellers wanted to have their identity known, early on. Instead of a blank form to "ask for anything," now there's a recommended list of things to ask for the user activation period. They can control that list geographically. This helps with the problem of thinking of the first request.
They're discussing the filters for the creepy stuff. Derek is blushing. But the creepy stuff gets filtered out, and there's weird stuff that doesn't make it to the site.
D: How do you bring the market to the site. Do you raid other markets like AirBNB does with Craiglist advertisers?
B: They call people up: "Do you want more money?" "Are you like Groupon?" "No." Past that, the online transactions create relationships. Bo met his nanny when she drove him to the airport. That's what can happen with Zaarly.
D: Can a startup build a marketplace organically?
B: He wouldn't say it can't, but he doesn't know how it would happen. Social can amplify.
D: What are your biggest 3 cities?
B: New York, San Francisco, Oklahoma City.
D: What's the mobile to website traffic ratio?
B: Up to 84% mobile (app).
D: As an app, can you launch in just one city?
B:You can. Uber will just tell you there isn't anything available and they track that data. Zaarly just launched everywhere. And it gave them data/learning experiences in different areas. As more people get on the system, the menu of possible things increases.
D: What about competitors? Nobody's ever taken off.
B: Timing play. Like eBay the idea isn't new, but they just hit at the right time. Mobile came of age, location-based transaction came of age, etc. He's seen 83 companies in their space. He's seen "about pages" that are cut and pasted (with typos) from Zaarly. He doesn't worry about competition. There will be a few companies in the space.
Audience Questions:
Q: Are you trying to figure out the solution for people who are discovering things to buy?
B: Products are hard. They have engines, but a lot of it is done by hand. It's a lot of things being tackled as different problems.
Q: Any plans to go international/international?
B: Yes. Sooner than later.
Q: Will people start making their living on Zaarly, like eBay stores?
B: Yes. It's just starting to happen. Some couples just do Zaarly stuff on the weekend. A guy in Kansas City made $5K in one month hanging Christmas lights.
Q:Do see people that just do anything?
B: We call them "hustlers." "Sir Aaron" did 80 gigs in a month. A PhD student in Chicago has done 90 deals.
Q: What's your biggest concern in growing the company?
B: _Right now_ it's about the culture of the company and keeping it the same as it goes over 50 people. He has to start institutionalizing the culture.
Q: Did you start with buyers or sellers?
B: Buyers -- mistake. In most marketplace 85-90% of sellers are also buyers, but only 2% of buyers are sellers. It's a balancing act, though.
Q: When you walked up to the stage to pitch Zaarly, why did you focus on commerce.
B: "I hate Craiglist." He doesn't like putting limits on marketplaces. The idea had been sitting on his phone for 2 years. There's a special opportunity right now.
Aaaaaand, that's a wrap.