Let me not bury the lede. I’m super excited to announce that GRP Partners led the investment in Ethan Anderson’s new company MyTime (link has LA-based merchants but will give you a good feel for the product).
I am taking the lead from GRP and we also invested alongside a number of friends including Dave McClure, Dave Tisch, Ben Smith (Merchant Circle), Brian Lee (ShoeDazzle, LegalZoom), Jason Calacanis, Evan Rifkin, Jennifer Lum, Jay Weintraub and a whole host of other angels.
I first met Ethan in 2005. I was preparing to move back to the US from London after 11 years abroad. BuildOnline (the company I founded) has just announcement plans to be more aggressive in growing in the US. And we wanted a head of global marketing.
Because I am true to the hiring practices I preach, I wanted a strong exec who would “punch above their weightclass” by taking a job they hadn’t yet done but would hugely aspire to and thus work harder to out perform.
For Ethan it came down to two companies – BuildOnline or Google. “No choice at all!” I proclaimed to Ethan, “Google is at $400 / share. How much upside is left there?”
So Ethan went to work as a product manager at Google Video.
When Ethan was considering leaving Google we talked about it. He had an idea for a startup that would help consumers better book service jobs and would take on Service Magic, which he believed had a business model that could be disrupted.
The company was called Red Beacon. I acted as the occasional mentor, advisor and coach to Ethan. I was standing with him when he won the TechCrunch 50 award. RedBeacon was the 3rd winner (year 1: Yammer, year 2: Mint.com) – not bad company. In the same year they won Business Insider’s Startup competition. Nice sweep!
RedBeacon went on to sell to HomeDepot in what was considered a very successful acquisition on all sides.
But Ethan had left by the time of the acquisition. He had had a good run as CEO of RedBeacon but aspired to work on his next project.
When he left I called him immediately. As you know I believe in Lines, not Dots. And I had been telling my partners for a couple of years that I thought Ethan was one of the more talented entrepreneurs I had come across in San Francisco.
I told Ethan on the spot that I wanted to be the lead investor in his new company. We generally have a policy to only fund entrepreneurs once the first version of a product has shipped or it near to shipping. We like to be able to see the concept. So I asked Ethan to build his product first and then we would fund.
He was seeking $500k. I asked him if he would consider raising $3m in stead and we would put up most of the funds.
Because I knew that Ethan was on to a powerful idea and one in which he had developed huge competence and domain knowledge in. And because I wanted Ethan to be able to attract a great team, build & iterate a product, test it with initial customers and refine his strategy before having to take the wrappers off of his company.
I wanted them to have a market lead before others could try and build what Ethan was working on. And I certainly didn’t want him having to trapse up-and-down Sand Hill Road informing every VC of his next idea.
Ethan had pointed out to me that merchants were being barraged by “deal site” wanting to drive customers in the door but they didn’t have great tools to manage their customers. I told him that this had been a big theme for me for some time.
He then pointed out that for service-based businesses every slot that went unfilled the provider had very high fixed costs and very low marginal costs and people ought to be willing to sell low-demand or last-minute expiring times at a discount while selling premium times at full price or even a surge price.
In industry this is known as “yield management” and of course it needs to exist.
But more importantly Ethan developed the belief over time that consumers really needed a service that would allow them to book across many different service businesses from one convenient location.
And the convenience began over time to sink in more than anything.
What do we like about OpenTable? We like that it is 1000x better than having to call restaurants on the phone, be put on hold or call during normal business hours to book appointments.
And in a world where we increasingly log in to personal web time at late hours or on our mobile phones that’s no longer good enough.
So the focus became about creating the convenience of consumer booking all service-based businesses such as: hair appointments, dental, trainers, chiropractors, massage therapists, oil changes, pool cleaners – whatever. With a benefit to both consumers and merchants. It’s more convenient for both sides.
The next major decision for us was whether to launch in one major city or many at once. Ethan’s experience with RedBeacon led him to believe that merchant density would really matter and I agreed. So the team set out to solve the “chicken or the egg” problem by onboarding > 1,000 high-quality merchants across 50 service categories while going deep in two micro-areas within LA as our test market.
We will stay in LA and then Southern California before branching out into our 2nd & 3rd markets. I could tell you what’s next but then I’d have to kill you
They decided early to only book very high quality vendors so they build a system that could pull in Yelp & CitySearch reviews and they set the standard that it had to be highly rated. If you’re going to offer convenience as your biggest selling proposition you need to make it easy not only to book an appointment and pay for it but also to research which vendor to select based on reputation.
And the team felt so strongly about this quality vendor focus that they decided to offer all consumers a full money-back guarantee if they are unhappy with any vendor’s service. MyTime personally vets each merchant.
Finally they set out to tackle the difficult problem of “data normalization.” Basically if you want to figure out how much you want to pay for a hair stylist or a massage you need to be sure that you’re comparing apples-to-apples and merchants tend not to have standard units that they sell. MyTime aims to be the first industry-wide platform to help create consistency across the SKUs in services businesses.
When merchants sign up MyTime then helps them with marketing activities through marketing automation tools they’ve build across SEM, social, and email. The goal is not only to help local service-based merchants find new business but also to help them be more efficient in booking existing customers which should help with loyalty.
So there you have it. It’s nice to finally not be in stealth mode!
I think it’s a beautifully designed site and product. And the magic is that there is so much complexity in the way the product has to work behind the scene (and the merchant onboarding process) but the experience for users feels effortless.
I’m super proud of Ethan, Lisa, Rahul and the whole team at MyTime. And while there is much hard work to be done I look forward to seeing how the next few years evolve.
(Cross-posted @ Both Sides of the Table)