A Product Market Fit Show | Startup Podcast for Founders
00:09:20 · Andrew Tai
[00:09:20] S1: I think that's the challenge that we learned very quickly of a two-sided marketplace. It's funny where, or poetic in a way where the journey came full circle. After we were acquired by the parent company to Autotrader, I spent a bit of time at Autotrader working on the marketplace. I saw the marketplace at big scale. That was the inherent problem with the marketplace at the beginning was creating this two sides, matching the supply and the demand. There's no easy answer for it. It was just tough. That was one of the biggest challenges for us. I think, on reflection, part of the reason I think we were successful once we pivoted into a different model, a vertical SaaS model, was just knowing what we were built for, knowing what we were good at, and knowing where we could find opening in the market, if you will. One of the challenges with building a two-sided marketplace is creating the brand first and foremost. Getting customers to come to the marketplace, Unhaggle. Listen, it's been well over a decade now. Unhaggle has a pretty nice cult following in the car community now. But that didn't come overnight. And we certainly – we realized very quickly that we were not capitalized to go out and spend the big ad dollars to compete against Autotrader to get mind share of people that were thinking about buying cars, or to compete against the automakers themselves who were advertising to potential car buyers, or the dealers themselves. We weren't capitalized well for it. We realized we weren't built to build a big brand in that way. The dealer side was a little bit easier that they – at the end of day, the dealers just wanted to sell cars. Matching them at the same time was the problem because when there weren't enough customers on there – you could have lots of dealers, but dealers would fall off when they didn't get a lot of immediate value.
00:11:25 · Pablo Srugo, Andrew Tai
[00:11:25] S0: How long between the time that you decided to start Unhaggle until you decided the marketplace isn't the way to go, we're going to sell direct to dealerships? How much time are we talking about? [00:11:35] S1: Yeah it's probably, I'd say maybe almost three years where we really focused hard on it. The problem sometimes is it wasn't going terrible in the sense that we were growing revenues. We were growing month over month, and year over year. It's just not exceptionally quickly. [00:11:56] S0: That's what I want – that's what I want to dive into. I think when we look back retrospectively, and we summarize the history, it's easy to gloss over a three-year period. Three years, first of all is a serious amount of time, but also not uncommon, especially when you had the reception you're talking about, which is not black or white. It's easy if you put it out and you just two months in, three months in, there's nothing happening. Nobody wants to sign on. You kill the thing. Through the roof, you're the next Uber, amazing. Most of these startups fall in between. I want to dig into that a little bit more. What was that looking like? Which parts, as you go back and you think through those three years, were some of the things that were working and kept you going towards it, kept you in the marketplace frame of mind?
00:11:56 · Pablo Srugo, Andrew Tai
[00:11:56] S0: That's what I want – that's what I want to dive into. I think when we look back retrospectively, and we summarize the history, it's easy to gloss over a three-year period. Three years, first of all is a serious amount of time, but also not uncommon, especially when you had the reception you're talking about, which is not black or white. It's easy if you put it out and you just two months in, three months in, there's nothing happening. Nobody wants to sign on. You kill the thing. Through the roof, you're the next Uber, amazing. Most of these startups fall in between. I want to dig into that a little bit more. What was that looking like? Which parts, as you go back and you think through those three years, were some of the things that were working and kept you going towards it, kept you in the marketplace frame of mind? [00:12:40] S1: Yeah, I think, listen, at the end of the day we were making money. We were generating revenue. We were adding customers. We were even getting decent press. Those were encouraging signs that kept us going. I think the realization was we – and we tried all kinds of levers to accelerate growth. [00:13:02] S0: What were some of those?
00:13:02 · Pablo Srugo, Andrew Tai
[00:13:02] S0: What were some of those? [00:13:03] S1: Everything from partnerships to straight up advertising. I ran a campaign on radio for a while. We tried traditional advertising, we tried digital advertising, we tried partnerships, we tried – we actually had a lot of good PR and earned media. It’s not that we didn't try a lot of different things. We did a lot of different things, but realized that hey, the trajectory that we're on, we could keep going. If we do, if we just keep going on this trajectory, we end up with a lifestyle-type business. We realized that the Unhaggle business had a certain potential. It wasn't necessarily bad, it's just not what we had set out to build as a company. We learned a lot in that the problem that we were solving is a real problem. Consumers want greater transparency. [00:13:56] S0: Was that the fundamental problem is just that consumers, as much as their problem wasn't solved, there was just so much ads spent on them in terms of car buying, that it was just hard to – the signal to noise was really weak and just hard to become top of mind? What would you say was the fundamental problem that didn't let it really take off? [00:14:16] S1: I think one, it was super hard to get mind share. I think two, keeping dealers engaged at scale was challenging. If you're not growing rapidly, and you're just this tiny little part of the dealer's business, you're not fundamental to the dealer's business. Sometimes they'll pay attention, sometimes they won't. And so the two-sided marketplace was hard to fully keep intact.
00:14:16 · Andrew Tai, Pablo Srugo
[00:14:16] S1: I think one, it was super hard to get mind share. I think two, keeping dealers engaged at scale was challenging. If you're not growing rapidly, and you're just this tiny little part of the dealer's business, you're not fundamental to the dealer's business. Sometimes they'll pay attention, sometimes they won't. And so the two-sided marketplace was hard to fully keep intact. [00:14:37] S0: I guess that's a liquidity problem. Is that how you summarize it? [00:14:40] S1: Yeah, there was a bit of a liquidity problem. That just inherently goes back to two-sided marketplaces. I have a ton of admiration and respect for entrepreneurs and businesses that are able to make it work. For us, it was just headwind after headwind. I think what we looked at was like, okay, it's a big market. There's a big problem here. If we solve the problem differently, can we create a much bigger business? Is there a much bigger opportunity that we can capture? And that's where – the vision always stayed the same. It was about how do I make the car buying experience better, more transparent, faster, more convenient. That vision always stayed the same. It's just how we actually accomplished that vision evolved.
00:14:40 · Andrew Tai, Pablo Srugo
[00:14:40] S1: Yeah, there was a bit of a liquidity problem. That just inherently goes back to two-sided marketplaces. I have a ton of admiration and respect for entrepreneurs and businesses that are able to make it work. For us, it was just headwind after headwind. I think what we looked at was like, okay, it's a big market. There's a big problem here. If we solve the problem differently, can we create a much bigger business? Is there a much bigger opportunity that we can capture? And that's where – the vision always stayed the same. It was about how do I make the car buying experience better, more transparent, faster, more convenient. That vision always stayed the same. It's just how we actually accomplished that vision evolved. [00:15:23] S0: Let me ask this. Now, you're building a second startup. I'm sure you don't want to spend three years on a go-to-market that you then realize is not the best go-to-market. What sort of signs might you look for now? Think about somebody listening here who's early-stage founder, maybe in this gray area, trying to figure out is this the thing, keep pushing, or this is not the thing, shift. What early indicators would you look for, generally speaking, not tied to auto specifically, generally speaking that, that this might just be the wrong go-to-market.