Sramana: How did you handle the feedback once you realized the services groups were the ones who had a need for your product?
Jeff Leventhal: We did a product iteration to configure the product more in line with client needs. That company became a $100 million dollar company within a few years.
Sramana: Was that $100 million in transaction value? Did you take an eLance or oDesk approach with the marketplace?
Jeff Leventhal: Yes, it was like an oDesk or Elance, but prior to either of those companies. We did over $100 million dollars of transaction value. We had a 20% cut of that.
Sramana: Taking 20% of $100 million is a good business.
Jeff Leventhal: It was a good business and we started to get contacted by venture capitalists. This was my introduction into the VC world. They really liked market place businesses and they really liked our growth. We raised $15 million of venture capital.
Sramana: What year was that?
Jeff Leventhal: That was in 2005. We started the company in 2003 and we sold the company in 2007.
Sramana: What are some of the lessons you learned during that $0 to $20 million dollar stage?
Jeff Leventhal: To get a marketplace business started, you have a chicken and egg problem. Do you need the workers or the buyers first? In our case, it was the workers. That was a big lesson learned.
Second, I called the wrong customers first. Once we knew the right customers to call, it because much easier to identify who the decision makers were and who we should be calling. We were able to use trade events and magazines to some degree, but our growth really went back to cold calling. We would pick up the phone and call people. That has always been a part of my career.
Sramana: I want to underscore this. You did not organically find customers, you used telesales to pitch to the right customer base who would source through your exchange.
Jeff Leventhal: That is correct, and it still works today.
Sramana: Could you give me the statistics of how that played out? To build a $20 million dollar business, how many customers did you have to recruit? What was the segmentation of these customers?
Jeff Leventhal: We went after technology service businesses and value added resellers. We had clients like Dell and IBM all the way down to smaller service companies and project management companies. Our largest client was CompUSA. They were a $4 billion company and they standardized their service offering off of our business. They used us to deliver in-home services.
BestBuy launched GeekSquad in 2005. They went out and hired 12,000 people. Other retailers realized that they needed to do something as well. We became the engine that other companies in the retail space used to deliver in-home services.