Re:Working on an "auction" site - Should I let an investor g...
by bradleyland on Sunday June 27, 2010 @12:05PM
(#1465652)
Welcome to the market! I'm a founder at a company that has been in the reverse auction services game for about three years, and I don't think it's lame at all :)
Don't take money until you have to. We managed to self-fund our venture by building a founder team (four of us) with different skill-sets: sales, operations, management, and technology/development, each willing to contribute sweat equity and our own cash to make it work. I know a lot of people will disagree with me here, but I can only testify to what has worked for us. I love having three other founders who I often disagree with. Technology people often need a reality check. Refining your core algorithms doesn't necessarily ship a product. In other words, I like having someone to push me to build what sells, rather than what's interesting.
What type of reverse auction space are you entering? Are you building a self-service tool? Consulting and SaaS? Our company focuses on the latter, and we've been pretty happy with the results. We're not on course to become another Google, but that wasn't really our goal. We'd be happy with a buy out from a large consulting firm after a few years.
Another piece of advice would be to have a look around at the big competition: Oracle, SAP, Ariba, etc. They've created several healthy niche markets by building really huge products that a lot of large-mid-sized (and smaller) can't use effectively, because they don't have the quarter-million dollar budgets required to implement.
There is still a lot of room for new products and new providers in this market. I think small-scope, focused purchasing facilitation tools are only going to become more popular as time goes on. Have a look at the tools and services that technology people use. We tie together services from at least five different small service providers to build our technology stack. Why can't purchasing do the same? Why must someone buy a $250k license from one of the big guys? As more technology savvy users move in to the workplace, the future becomes brighter for providers like us.
Don't take money until you have to. We managed to self-fund our venture by building a founder team (four of us) with different skill-sets: sales, operations, management, and technology/development, each willing to contribute sweat equity and our own cash to make it work. I know a lot of people will disagree with me here, but I can only testify to what has worked for us. I love having three other founders who I often disagree with. Technology people often need a reality check. Refining your core algorithms doesn't necessarily ship a product. In other words, I like having someone to push me to build what sells, rather than what's interesting.
What type of reverse auction space are you entering? Are you building a self-service tool? Consulting and SaaS? Our company focuses on the latter, and we've been pretty happy with the results. We're not on course to become another Google, but that wasn't really our goal. We'd be happy with a buy out from a large consulting firm after a few years.
Another piece of advice would be to have a look around at the big competition: Oracle, SAP, Ariba, etc. They've created several healthy niche markets by building really huge products that a lot of large-mid-sized (and smaller) can't use effectively, because they don't have the quarter-million dollar budgets required to implement.
There is still a lot of room for new products and new providers in this market. I think small-scope, focused purchasing facilitation tools are only going to become more popular as time goes on. Have a look at the tools and services that technology people use. We tie together services from at least five different small service providers to build our technology stack. Why can't purchasing do the same? Why must someone buy a $250k license from one of the big guys? As more technology savvy users move in to the workplace, the future becomes brighter for providers like us.