Sramana Mitra: Who were these thousand participants and how did you get them on the platform?
Ray Grainger: We started with our own network of people we knew. We come from a service provider industry so we have a lot of people in our network who are service providers in one capacity or another. Between the three of us, we leveraged 300 or 400 people who we knew or were connected to. As we did that, other people would refer and say, “I know somebody who might benefit from this.” That cascaded from there and it added about a thousand people over a two- or three-month period. From April through about August is when we thought that we had data points to really tell us where to focus.
Sramana Mitra: How did you transact? What’s the other side of the coin? How about the people who actually needed projects done?
Ray Grainger: We spent a little bit of marketing dollars in Google Ads. We did some PPC stint to draw in people who were looking for specific types of services to post their needs there and then identify people who would transact with them.
Sramana Mitra: Google PPC actually converted in this scenario?
Ray Grainger: It did, but uneconomically.
Sramana Mitra: It doesn’t matter. At that point, uneconomically is okay because you’re trying to validate a concept.
Ray Grainger: It did and it converted. We had hundreds and hundreds of projects, needs, and posts. What we were trying to validate, frankly, was what would be the largest transaction type that would convert from the Elance and oDesk type of marketplaces for commodity or routine type of work. It was around the $1,500 range. That wasn’t the business that we wanted to be in.
We didn’t want to be in the business of giving a transaction fee for a low budget project where everybody was bidding down to a smaller amount. We took a different approach of how we would do our connections. We focused on building a network. People loved the platform. Instead of spending tens of millions of dollars trying to target all the right people and get them together, what we decided to do was build the one side of the platform first – the service provider side – and then provide the facilities to work with their subcontractors and clients and have those mechanisms in the product and have them build out the initial stages of the network through an invitation model. That worked out really well for us.
Sramana Mitra: I have one question and this is slightly backtracking. Can you give me an example of the kinds of PPC keywords that you harnessed?
Ray Grainger: I recall one in particular that we felt validated our hypothesis. I don’t remember the exact keywords but it was something along the lines of branding, brand strategy. One transaction came in and posted. This wasn’t a giant company but this was a coffee roasting company on the East Coast who needed to do brand strategy. They posted it and I believe it was for about $45,000. Some people applied to provide that service. I knew their skills and their profiles and I would monitor. These were people who have built brands before.
I called them up and I said, “You have all these great people who are trying to provide you the service and you’re not selecting from them. Why not?” He says, “I need somebody in the food industry,” I went and found one just to validate the hypothesis. I found somebody who had great credentials. They’re out of Atlanta. I said, “Would you participate in my project?” She went in there and posted her profile. She applied and he still didn’t convert. I called him up again. He said, “I really need somebody who has done it for a coffee roasting company before.” It underscored what I see in the general staffing industry right now.
Sramana Mitra: They want as precise domain knowledge as possible.
Ray Grainger: You have to be exactly the right person. If you don’t have those credentials, I’m looking for a trusted referral from somebody else. That’s how larger-volumes work.