My first project that made any money was a website called SaveRally.
In early July, 2010 I built a business site for a custom home builder and he paid me $2000 for it.
I was determined to take that $2000, re-invest it in a website I could “flip” for a quick profit, and then take that money and build something bigger.
SaveRally was that intermediary flip.
Spoiler: I eventually sold SaveRally for $2600 and then quickly built a similar site and sold it for $5600. I had another $50,000+ in sales lined up, but they all fell through because I’m bad at sales.
Here’s the full story…
In 2010, Groupon was THE unicorn startup. The “coupons as a business” craze spawned thousands of copycat sites. Everyone had their niche or angle and SaveRally was mine – I would build a Groupon for students.
My first step was to build an ugly website. I remember hanging out on my brother’s couch, listening to Mixergy and building a demo site on a local server. One of the Mixergy interviews was a live call with Andrew Mason, Groupon’s CEO & Cofounder. Andrew and Andrew were chatting about how Groupon purchased a competitor only to find they should have done better due diligence. I texted in my question, “Why did Groupon buy a fake company?” Basically they were growing fast and making mistakes.
Here are some of the early demo sites I created from the couch:
Notice that I was mucking around with colours instead of actually building a business. I like to tinker because it’s easy, and you learn stuff and it feels productive. The problem is that tinkering is just making 1% adjustments over and over again, when your business needs you to focus on the 80% that actually matters. For SaveRally, nobody gave a shit about the background pattern except for me.
How to Solve The Chicken & Egg Problem: Part 1 “Businesses”
When I was tinkered out, my next step was to solve the Chicken & Egg problem that many online businesses face: I’d get both businesses and consumers committed to my site at the same time.
To get businesses interested, a mentor suggested I ask for advice and not contracts; in hindsight this is some of the best advice I’ve ever received. That day, I cold emailed dozens of businesses saying I was a student starting a business and requesting a coffee meeting to pick their brains. Within a week I had seven of these meetings, and five of those I eventually featured on SaveRally. I also asked for advice from businesses that had been featured on Groupon, my family, friends, professors, etc.
Here are some highlights I remember from the meetings:
- The owner of a popular restaurant, the new bohemian, said it wouldn’t make sense for him to do a deal unless I had at least 2000 email subscribers. He did some rough calculations on the number of sales needed to justify training his staff, etc. He made specific suggestions on how to reliably scale up on campus;
- A nice lady with a high end lotion shop told me I needed to be fearless in promotion. She had rented a high traffic storefront to attract customers, and then converted them to repeat buyers via her website. Two months later she sold her lotion business to a major competitor. I gave her a jade plant;
- The Owner of The Eatery, a cool fusion restaurant, gave me some advice about being unique, quirky, etc.
As I was having these meetings, I started hustling to apply the advice these mentors gave me. I cold called, cold emailed and cold dropped in to hundreds of businesses near campus. Here is some of what I remember from this outreach:
- An old guy that ran a pizza shop didn’t really understand my emails, so he asked me to call, and then he didn’t really understand me on the phone, so he asked me to come into his shop. So I came into his shop and he yelled at me for coming into his shop;
- A lady with a fancy tea shop told me it was the dumbest idea she ever heard and laughed me out of her shop;
- Some Indian dudes with an Indian restaurant patiently listened to my pitch, but didn’t really understand. Notice the pattern of me not communicating well;
- One of the contacts, Brandy of Spa Haven was AWESOME! She agreed to be featured on SaveRally and referred a couple of her friends for me to feature as well;
- A lady with a fancy cupcake shop turned me down for a reason I heard over and over again, “I’ve already been pitched by eight similar websites this week”;
- A guy with a movie theatre wanted me to dump SaveRally and partner on a new site with him: I would bring the technology, his assistant would hustle the deals, and he would ????. His suggested equity ratio was 40% me, 30% him and 30% his assistant, so that I would “still have a controlling interest”, aka bullshit;
- A dude that ran a trashy party bar really close to campus showed up 20 minutes late and talked mostly nonsense. He wanted me to make his posters for UFC fights. I’m 99% sure he had a coke problem;
- I showed up at one restaurant for a meeting with the owner and it was closed because it had failed multiple health inspections.
At the time, incidents like the pizza shop or tea shop would shake me up. But actually, what takes way more mental endurance is continuously reaching out when you hear back from less than 10% of folks. Since then I’ve learned to separate emotion from marketing and instead treat it like a mechanical, analytical process.
Here’s a crappy explainer video I made on Fiverr:
How to Solve the Chicken & Egg Problem: Part 2 “Consumers”
While I was scouting out businesses to feature on SaveRally, I was also trying to drive consumers to sign up for notifications about deals. I considered someone interested if they signed up via the email optin form on SaveRally. I was on a tight budget and was very unsophisticated in marketing, so relied on a couple of random ideas and the help of friends.
Here are some of the specific initiatives I used to drive consumers to SaveRally…
- I made tear-off flyers and posted them all over campus: residences, bulletin boards, bus stops, etc. I added photos so they would stand out. I estimate this strategy accounted for 75% of all email signups. Cost, $80?;
- I designed and printed bookmarks and cards. My friends helped hand these items out to people around campus. Thank you to Geoff, Ian, Nick, Kyung Hwa, 婷婷 and everyone else that helped out. I distributed these too, and would open up the “free newspaper boxes” and stuff them in as inserts. I wasn’t tracking, but I’d guess this provided another 20% of signups. Cost, $279.17;
- I posted a note on EVERY door in three of the main residence areas on campus, this was probably the other 5% of signups;
- Facebook Ads! At the time Facebook’s ad system was super rudimentary;
- I emailed the Dean’s office to see if they would share my story as a student initiative, the Dean’s assistant replied but nothing ever came of it;
- I emailed the law school class president to share out the message on listserv, I don’t think that happened. Friends of friends wrote articles about the site though;
- I tried to negotiate with a printing company to make business cards that had SaveRally on the front and their company on the back. They said no, but offered me a discount;
- A writer for the university newspaper got in touch to do a story, but then he disappeared, which is basically what happens with the NYT now. When I called up the main line for the newspaper office they said, “typical Josh.”
My competitors hired students to go around with clipboards and collect email addresses, paying them $1 per email address. That strategy was probably way more effective than my random and less direct methods. All in, I had about 250 email signups after a week of promotion. That’s not a lot, but I thought it was enough to get started with offering deals.
A Masters student saw my marketing materials and called to setup a meeting. Him and some lady were working on a Multi-Level-Marketing approach to group buying. They had an idea and had written an application for a patent they never filed. They wanted me to be their first patsy.
Here are some pictures of my marketing materials:
Dumb Admin Stuff
I wasted a bunch of time and money on dumb admin stuff like setting up a corporation, getting a 1-800 number and a fax number. Shout out to my tax law professor for helping with incorporation, which he likely assigned to his Articling Student, so very win-win.
Building a Functional Site
At first I thought I would need to build a custom site to sell deals and fulfill orders. I called up one of my competitors to ask how they built their site, and the guy told me about clone scripts. You can buy clones of Yelp, Monster, Reddit, Twitter, Fiverr, etc. that have most of the same functionality as the original site. There is a market for these clone sites because people like 26 year old me think you can just copy a successful business model without doing any market research. Fools.
For the Groupon clone, options ranged in price from $300 to $1500. One site was offering a subscription-plus model where you pay $99 per month to use the software and then 5% of every transaction that goes through the site.
I ended up choosing a $1000 clone from a company in India that specializes in clone sites, they had one for everything. I chose this version because it seemed to be full featured, had a relatively attractive base design and was fairly “no strings”.
The clone provider installed the site for me, and from day one it didn’t work. I learned PHP so I could try to fix it, and found obvious stuff like “they didn’t connect the site to the database” but there were more nuanced problems that I couldn’t adjust. I discovered they had given me an old version of the software, and when I asked them to update to the current software version they deleted everything, including the database of emails I had collected. I had two contacts at the company, a sales rep and a tech guy. The tech guy wanted me to buy and send him a bunch of iPhone 4s that he would sell before they officially launched in India.
The technical issues delayed my planned launch, so I contacted the clone company’s main help desk for support. They had no record of me, my purchase or registration. 🙁
Here is what I think happened: the sales rep and the tech guy colluded to rip off their company. The sales rep would make the sale to an uninformed consumer, AKA me, and then the tech guy would do the install based on his access to the software.
I had paid for the clone script via Paypal and disputed the charge, “the product or service I bought wasn’t what we agreed to.” I didn’t win the dispute because Paypal doesn’t cover software code, but it definitely put the clone company into stress mode.
I fixed the biggest site issues and launched a week later.
The first deal I featured on SaveRally was “10 anytime classes” at a yoga studio near campus. The deal sold 18 vouchers at $29 each, for a total of $522 revenue. I kept $130.50 as a 25% commission fee and sent a cheque for $391.50 to the yoga studio.
Later deals included a hot stone massage, eye glasses, mindfulness workshops and slim fit women’s’ jeans.
Some friends thought I was brilliant for inventing this business model because they hadn’t heard of Groupon yet. I gave Groupon all the credit.
One classmate bubbled about how she was trying to start rallies – that was cool.
Thank you to Dury for helping with the logo.
Closing & Selling SaveRally
The first SaveRally deal went live the first week of classes. Before classes started I was working from morning to night on the code, marketing, etc. Once classes started I gave in to overwhelm, and three weeks later closed the site. I believe it’s possible to be a law student and run a business concurrently, but you have to be smarter than I was and invest in help. You also need to take care of your body, because if you are tired and foggy your productivity drops a lot.
I emailed Andrew Mason, Groupon’s CEO & cofounder to sell him the site for $1. My goal was for Groupon to buy SaveRally so I could say Groupon acquired it.
Andrew didn’t respond to this one, so I posted my SaveRally site for sale on Craigslist and Kijiji. Here’s the ad:
Within one day, a lady contacted me to buy the site. She had a business renting people-sized bubbles that you could float around in. I posted the site for sale for $5300, she countered with $1500 and we agreed on $2600. She bought the site and converted it to a “Groupon for Mexico.”
Building and selling Groupon Clones seemed like easier money than running Groupon Clones, so I posted a similar ad in major cities across North America. Everyone wanted to create a “Groupon of Something”, so I offered a turnkey solution: you get the software, a customized design, instruction manual, marketing plan, web hosting, etc. I listed the sale price as $5600 because I thought it made it look more calculated.
I had a lot of email interest, about 10 phone calls and a couple of in-person meetups. In the end, most of these sales fell through because I told them how HARD it was to actually run this business. One lady who ran a crafts business bought the package for $5600 and made a deals site for Arizona.
An Email That Andrew Mason Did Respond To
I emailed Andrew Mason in 2010 to tell him he’s awesome, and he responded:
What I Learned From This Project
Here are some of the key takeaways I learned from the Groupon Clone business:
- Don’t waste time on multiple versions of your crappy website, just set one up and roll with it;
- You don’t need to incorporate, you don’t need a 1-800 number and you probably don’t need a virtual fax;
- Printing business cards, bookmarks, etc. is probably a waste of money, but the clip off flyer strategy was actually pretty effective for getting early users;
- If I did this again, I wouldn’t bother with a fully functional website. It’d just setup a way for people to get on an email list, send the deals out and manually process any purchases;
- When you work on projects, opportunities start popping up everywhere, e.g., the scammy MLM thing and the theatre guy. Not every opportunity is bad, but you should evaluate them with a very critical eye;
- As Pitbull says, “ask for money, get advice; ask for advice, get money twice.” If you want customers start by asking them genuine questions. You will build relationships and they will be more willing to buy from you later;
- Aestheticians are a dope source of referrals. They basically talk to people all day long, so a lot of opportunity to share your thing. The same should go for massage therapists, hairdressers, chiropractors, etc.;
- People want to help you. My friends, professors, random strangers, etc. When you work on stuff, people are willing and happy to help you;
- GoDaddy hosting sucks;
- When you sell stuff, it’s okay to mention the drawbacks, but don’t belabour it. “You are going to have all kinds of tech problems” is pretty ineffective sales language;
- You meet a lot of miserable folk when you cold call, etc. Don’t let it ruin your day;
- Copying an existing business model into a new niche can work, but you need to iterate to make it fit well.
- FWIW: I learned a lot from this project but I don’t consider it a big financial success. It didn’t meet my hope/expectation of being a super profitable “intermediary flip”, and when you factor in my time the ROI isn’t terrible but isn’t super compelling either.