Announcing a Deal I’ve Wanted to Talk About for a Year

Posted on Feb 7, 2013 | 31 comments


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).

mytime

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?”

But I went back to the office and talked with Stuart Lander & David Lapter and said, “no prizes for guessing which job Ethan’s going to take.”

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 did.

He was seeking $500k. I asked him if he would consider raising $3m in stead and we would put up most of the funds.

Why?

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.

Ethan recruited a great team of people to help build this proposition including Lisa  Robinson running marketing and Rahul Thathoo as CTO who have been working tirelessly for the past year.

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.

Ethan took great inspiration in this from Alex Rampell of TrialPay (an advisor to the company) who had written about this concept of “Service as a SKU.”

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.

  • http://twitter.com/techzombie432 Tech Zombie

    If they can optimize yield management then they have a major hit. Groupon had zero consideration for the merchants well being and there is much room there for mytime.

  • kevinyen1

    Congrats Ethan and Mark! Sounds like a great, targeted service delivering real value. Looking fwd to seeing MyTime’s successes grow in no time.

  • http://giangbiscan.com/ Giang Biscan

    Capturing the small businesses is a huge opportunity as well as a huge challenge. Congratulations on the deal, Mark! Looking forward to see MyTime’s success.

    Btw, a minor issue: they have an infinity scroll site – with what appears to be a pretty extensive bottom menu navigation that users won’t be able to access.

  • Caroline Dahllof

    I love the one-stop site for all your service needs. And I think normalization of prices is brilliant. Will try it when I get back to LA.

  • Prasenjit Phukan

    Not only does Ethan “punch above his weight class”, he is a class act. Congrats on the terrific investment!

  • http://byJess.net/ Jess Bachman

    Great idea… the contraction of various niche sites is something I think we will see more of. We really don’t need another OpenTable for X.

  • Bita S.

    Very nicely executed – consumer behavior is shifting as we are looking for ways to book and discover deals seamlessly without having to dig through the noise.

  • http://newhaircut.com/ jaymelone

    I’m guilty of skimming the article and the site, but does it tie into the booking systems many of these places are already using, or are you going the OpenTable route by supplying new infrastructure and assuming these businesses will start over?

    Also, a small suggestion — when you’re introducing a product, give out links to the landing page that presents the product with warm-up messaging; e.g. http://www.mytime.com. Your initial link in the article took me here: http://www.mytime.com/deals/CA/Los-Angeles?bnd=34.9318,-116.8690,32.8712,-119.2860 and I had no idea what the website was about until I went back to the home page.

    Good luck dudes.

  • Kyle

    I don’t understand why Ethan would seek a relatively minor amount (500k) in VC if he’d just had a successful exit from RedBeacon, he was presumably flush and could easily finance this venture himself? So he built the product first and then you funded? It doesn’t sound like Ethan needed to take VC at all, I wonder how much value he just gave away.

  • http://www.incentivibe.com/ Adeel vanthaliwala

    Looks great – I’ve long believed that the bricks and mortar SMBs market are probably best to be attacked by serial entrepreneurs who have credibility and ability to raise capital quickly. SMBs is a marathon. After reading about Ethan, seems like there is a great entrepreneur-problem fit. Good luck to all involved.

  • Ehsan

    I’m an engineer at MyTime. We do integrate with existing calendaring/booking systems wherever we can, and we’re adding new systems all the time. We also have a lightweight calendar of our own that businesses who use a pen and paper system can switch to, but that’s not our core proposition. All that enables is for us to get real-time appointment availability data, which is a core feature.

  • Guest

    “successful exit” is a relative term. 500k is a big investment for almost any individual.

    http://www.quora.com/How-much-was-Redbeacon-acquired-for

  • Rachel Aubrey Morris

    really exciting – and great that LA is tackled first. Often ‘local’ services that do not start here miss the mark when they try and move/adapt the product for Los Angeles. It’s value as a curation tool makes it most useful to me – other appt. services I’ve tried have missed the ‘review’ piece and it’s crucial to me hiring or going to anyone. Kudos!

  • http://bothsidesofthetable.com msuster

    For starters, we funded MyTime before RedBeacon sold. Secondly, many entrepreneurs prefer to raise money both as a way to broaden the experience and resources around the table and also not to put huge amounts of their net worth into their next things. Very common (and no, we didn’t take too much ownership)

  • http://bothsidesofthetable.com msuster

    thank you. we believe we need to nail LA before moving to other cities. Plus, it helps that Ethan is from LA originally ;-)

  • sketharaman

    I think I know why the article didn’t give the link to the home page – the website seems to auto-sense your location. If it’s anything other than LA – like mine is Pune, Maharashtra, India – and you click any service, you get “no service found” type of error message. Since this will turn off people from other cities, it makes sense to make visitors come directly to the LA landing page than the home page.

  • sketharaman

    Is it only me or does MyTime sound like OpenCal before it got acquired by GroupOn?

  • http://RogerEllman.com/ Roger Ellman

    Love the idea. The emphasis on quality of execution – quality experience and value to all “customers” (both sides of the table shall we say!) is spot-on. Well done and do well.

  • http://www.leadershipquantified.com/ Leslie L. Kossoff

    Congratulations, Mark and to the MyTime team. Great idea and the perfect market for it to establish itself. The buzz of becoming the go-to resource in a market known for high-end, convenience and curated hedonism will make folks in your next markets be waiting impatiently for when they get their turn. While I’ll definitely be using the site when I’m in LA for business, I’m hoping that SF is one of those areas that’s next! (Don’t kill me if I got it right, please.)

  • http://www.pingup.com/ markslater

    So you convinced him to take 6 times what he wanted because….? some of your reasons seem genuine – but it gets me when you say……not wanting other investors to see it???? (did he get market??) would the 500k have been a convert – and the 3M obviously preferred???

    sorry but that entire paragraph did NOT sound good at all for entrepreneurs.

  • http://www.bluecoastrecords.com/ Cookie Marenco

    Congratulations! Wishing you all much success!

  • Guest

    I’m sure you’ll pivot to something great, but I am a little skeptical of the initial concept. Many (all?) of the services here seem high trust to me – I don’t just go looking for an available dentist because mine is booked up. And it is very rare that I’m looking for a new dentist. The same is true for my wife’s beauty services. To me, the consumer pain is scheduling a spot at my preferred dentist or beautician, not around finding an available one that I’ve never used before.

  • Dan Bowen

    While I certainly believe you’ll find a way to extract a strong return from this one, (particularly after watching a number of online interviews with Ethan), I confess I see your connections and marketing power pushing quickly towards an exit to a competitor rather than a viable long-term business. There are too many reminders of things I can’t stand in this product to keep me interested.

    1) Far too much Yelp, their shitty reviews and MyTime has placed competitive service ads (Related Offerings) on customer listings like Yelp always has…as a small business those things piss me off.

    2) The Groupon-like look and feel, merchant types (massage, teeth whitening, tire rotation, back-pain…etc), heavy revenue split on promoted 2/5s rev.

    3) The interesting calendar integration gets diluted with all of the other stuff around it…ie…I feel like I’m at a daily deal site rather than something that is going to create long-term relationships with my clients.

    Even with all of the things that bother me about this one the fact is you have a dream-team on it. Ethan is clearly a home-run hitter and that combined with you and GRP makes MyTime a place I would think anyone would kill to be involved with.

    For some reason I feel like we’re within 6 months of another post from you explaining how nice it ‘was’ to work with Ethan while you announce a successful exit.

  • http://bothsidesofthetable.com msuster

    Ok. so let me expand. His ask on $500k valuation wise was X. I paid 2X to invest more. I didn’t want him to take on more dilution – I wanted to see him able to focus on building a great product. I think he felt quite comfortable with the deal he got.

  • http://www.scoutzie.com/?utm_source=disqus&utm_medium=display_name&utm_campaign=disqus_display Kirill Zubovsky | Scoutzie.com

    Reading your blog over the last two-three years I have really grown to admire some of your views. One that really stands out and I like from this announcement is your focus on anti-lean approach. It seems to me that many investors are looking for an Instagram-type of success; build over the weekend, gain traction, sell. Although the best possible outcome, it is highly improbable, which isn’t good for either entrepreneurs or VCs. In this case, you gave Ethan enough runaway to experiment and to build a product that is likely to be successful. IMO, well worth the possibly additional dilution. Also, as some pointed out, if not a billion dollar company, if he can get sufficient traction, then definitely set for an acquisition. Good luck!

  • http://www.scoutzie.com/?utm_source=disqus&utm_medium=display_name&utm_campaign=disqus_display Kirill Zubovsky | Scoutzie.com

    p.s. They might want to consider a more appealing design. If Ethan wants to give me a call, we’d be happy to arrange something at Scoutzie.com
    #alwaysbepitching

  • Pat Clark

    Interesting post/concept. One question from the text – “And I certainly didn’t want him having to trapse up-and-down Sand Hill Road informing every VC of his next idea.” Would be interested in the reasoning behind your thoughts on that topic.

  • Adrian Meli

    Seems prescient you pushed him to take more money up front–will be interesting to see how it scales.

  • http://twitter.com/Deanysus Dean Cassidy

    I can so relate to the feeling of excitement and sort of anxiety in the pre-announcement state. I’ve recently invested in something big myself and feel like talking, unfortunately that is not possible, which is tearing me apart.

    Now another stage of anticipation, worry and excitement comes — how this whole thing unfolds. Hopefully everything goes well there!

    I’ve just started following you, so keep us updated.

  • http://twitter.com/jim_shook Jim Shook

    The yield management angle here is really interesting. Huge pull for the supply-side, as it immediately shows +ROI. Its nice to give a sales call where you’re telling them not only does it not cost you money, it actually costs you money NOT to join your service :)

  • http://twitter.com/hamidsaify Hamid Saify

    In 2008, I had a meeting with two guys who were doing this only for dentists. I thought, “great idea”, but what about other verticals? They wanted to capture the personal service segment. MyTime is a better version of that idea for consumers.

    Interested in hearing about the monetization strategy here:

    - Featured listing ads
    - Referrer traffic
    - Booked appts
    - Rev on bookings

    Also, wondering if there could be a smaller embeddable tool to provide to each business which can be used on their site for each appointment scheduling. That could be a great extension for people with loyalty to their dentists, salon, etc.