Talks

The LivingSocial Story

RailsConf 2011, Aaron Batalion, "The LivingSocial Story"

RailsConf 2011

00:00:03.879 hey guys I'm going to talk today a
00:00:05.720 little bit about our story um how we
00:00:08.200 started how we went from four to 1400
00:00:11.160 over the past year and a half um so I'm
00:00:13.639 Aaron and I'm a r programmer I started
00:00:16.960 here at at the Lone Star no fluff just
00:00:19.520 stuff in 2005 I heard this guy speak
00:00:21.320 some of you know him Dave Thomas uh talk
00:00:23.840 about this thing called Ruby I was a
00:00:25.480 Java developer at the time not really
00:00:27.279 thrilled kind of looking around what I
00:00:28.840 would do bought the book that night
00:00:31.240 started cranking and then got a job at
00:00:32.680 this place Revolution Health hired as a
00:00:34.840 Java architect a few months of arguing
00:00:37.640 about soap wisd and Enterprise SOA uh
00:00:41.239 took a couple people in a back room in
00:00:42.680 nights and weekends and built a
00:00:43.879 prototype in rails uh went to the CTO at
00:00:46.360 the time couple weeks later and said I
00:00:49.120 think we should take your team of 80
00:00:50.640 developers and make them all earn Ruby
00:00:53.640 um didn't go over well but we did launch
00:00:55.160 the product in time so we we did it uh
00:00:58.600 2007 Healthcare tart startup takes rails
00:01:01.199 mainstream pretty early to to take a big
00:01:03.239 team and switch them entirely to
00:01:06.280 rails um we launched the product we were
00:01:09.040 kind of happy with what we had done and
00:01:10.680 and we and a couple of the folks that
00:01:12.439 had worked on that tiger team to turn
00:01:14.439 everything to rails uh started thinking
00:01:16.759 about leaving we left the company um in
00:01:19.159 the summer of 2007 and started hungry
00:01:21.200 machine hungry machine a name that still
00:01:23.119 really means a lot to me um is was a
00:01:25.439 consulting firm at the time myself Val
00:01:27.240 Eddie and Tim on the business side the
00:01:29.280 three Tech Guys left first and and kind
00:01:31.520 of thought we could do something on the
00:01:33.119 Facebook platform it had just launched
00:01:35.320 um we knew that it was the cheapest way
00:01:36.920 to acquire users probably that had ever
00:01:38.600 been on the history of the internet and
00:01:40.399 there was this thing called the social
00:01:41.479 graph and what kind of interesting
00:01:43.000 applications could we build um so we
00:01:45.320 made money and built apps for folks like
00:01:46.680 Animoto and ESPN and JibJab but we had
00:01:49.000 our own products at the time as well
00:01:50.399 called visual bookshelf really simple
00:01:52.200 idea was collect the things you cared
00:01:53.840 about things you want to read things
00:01:54.960 you're reading now um collected millions
00:01:57.439 of reviews and and millions of members
00:01:59.520 took the Hada further and went from
00:02:01.000 books and we went to movies we knew this
00:02:03.399 still applied we went to restaurants
00:02:05.200 started doing things in the local space
00:02:07.039 went to my favorite
00:02:08.720 beer um and we thought we had this
00:02:10.759 business model we had these lengthy
00:02:11.879 reviews had this great content it would
00:02:13.280 be awesome SEO tons of free traffic but
00:02:16.040 no Revenue so then he said okay fine
00:02:18.519 we'll put these little buttons on the
00:02:19.440 site and if people click on them then
00:02:20.720 they'll buy them on Amazon and then wait
00:02:22.680 we're going to get 80 cents so the
00:02:24.640 book's 10 bucks we were the highest
00:02:25.879 level of the Amazon and e-commerce
00:02:27.480 affiliate relationship $10 book 8%
00:02:29.879 Revenue not really that interesting you
00:02:31.800 need a lot of traffic to to actually
00:02:33.519 support the the salaries of of five
00:02:36.480 people so then we said fine we'll do
00:02:38.360 these custom advertising deals we'll go
00:02:39.879 out to these marketing companies we'll
00:02:41.040 go to these book publishers we'll skin
00:02:42.480 our site we'll look like Myspace but
00:02:43.959 screw it we don't care we're going to
00:02:46.000 make money we got to make money we have
00:02:47.360 to support the company that didn't work
00:02:49.560 as well not really again scalable
00:02:51.280 Revenue three to four month sales Cycles
00:02:53.280 really hard to find these businesses so
00:02:55.120 then we launched this app this is a
00:02:57.480 really simple concept that was built on
00:02:58.800 the platform that we had built and the
00:03:00.280 general idea was take our entire product
00:03:02.280 to make it one page pick five things you
00:03:04.120 cared about in this case you pick five
00:03:05.760 songs it would post this this feed item
00:03:08.040 into your Facebook feed with the
00:03:09.120 pictures that you picked and maybe some
00:03:10.360 comments of what you
00:03:11.959 wanted and we became the number one
00:03:13.879 Facebook application 0 to 35 million
00:03:15.959 users in three weeks fastest organic
00:03:17.640 growth on the history of the Facebook
00:03:20.519 platform six billion hits a month at the
00:03:23.080 time about four Engineers this was a lot
00:03:25.239 of traffic this was a lot of fun but
00:03:27.599 Revenue
00:03:29.959 had no way to make money so he said
00:03:31.080 screww it fine we'll go back to the same
00:03:32.120 trick that we did before we'll just
00:03:33.599 start selling advertising so we were
00:03:34.879 Coca-Cola's first social media ad spin
00:03:36.599 we did Target we did Green Day we did
00:03:38.319 American Idol and then we did Britney
00:03:39.959 Spears and I was like
00:03:41.920 guys we need to think of something
00:03:46.239 else so then these guys came along do
00:03:48.519 you know who these are this is
00:03:50.239 Farmville they beat us they became
00:03:52.239 number one they got the number one sort
00:03:54.159 of spot on the Facebook platform they
00:03:55.680 had more users than us and they had this
00:03:57.439 other really awesome thing which was
00:03:59.439 pain customers we didn't have that we
00:04:01.799 had no Revenue they had this website
00:04:03.079 where users came put a credit card in
00:04:04.680 and made and they made money off of it
00:04:06.599 we really didn't have that yet so we we
00:04:08.760 spent a few months we it thought about
00:04:10.640 ideas we had 80 million users we really
00:04:12.760 didn't have a scalable success we didn't
00:04:14.799 have something we had we had millions of
00:04:16.199 dollars in Revenue a month but we had no
00:04:17.959 way to get to 10 million or to 100
00:04:19.799 million we needed a new idea so we built
00:04:22.360 this app at the time there were a few
00:04:24.600 competitors in the space took us about a
00:04:26.600 week to build we built our first social
00:04:28.560 commerce platform
00:04:30.280 we sold a sushi place I think that day
00:04:33.360 53 sold I bought 10 other co-founder
00:04:37.280 bought 20 my wife bought a few I think
00:04:39.320 she felt bad for us um and there were
00:04:42.919 and now there's hundreds of clones and
00:04:44.360 everyone says it's so easy to compete
00:04:45.800 but to succeed I think you really have
00:04:47.680 to out execute and out innovate in this
00:04:50.280 space living socials had the fastest
00:04:52.680 market growth of anyone in the space in
00:04:54.240 the first 20
00:04:55.520 months the fastest Revenue growth as
00:04:57.840 well in the first 20 months
00:05:01.320 and we've gained two to 3% market share
00:05:02.919 each month for the last 18 so I'm going
00:05:04.720 to talk about a little some of the ways
00:05:06.680 that we believe we've gotten
00:05:08.280 there first technology I describe our
00:05:11.360 our our business and our company a bit
00:05:13.720 like an iceberg in which you only see
00:05:15.160 10% above the water the consumer apps
00:05:17.280 that you play with every day whether it
00:05:18.479 be iPhone or iPad or website or mobile
00:05:20.440 web that's on the top and I think
00:05:22.440 everything else we've built internally
00:05:23.680 to scale this business is what's
00:05:25.680 underneath know we've built we've always
00:05:27.759 believed we're strong technology three
00:05:30.120 of the four co-founders are technical
00:05:31.440 we've built a lot of internal tools to
00:05:32.880 scale out the operations process scale
00:05:34.880 out the recruiting process customer care
00:05:37.199 Merchant
00:05:38.520 relations we buil custom iPad apps that
00:05:40.919 we've deployed to our entire field sales
00:05:42.400 team of which we have the largest in the
00:05:44.080 industry over a thousand people in
00:05:46.280 cities across the world that actually
00:05:48.199 walk in and shake the hand of a local
00:05:50.080 Merchant these native apps that we've
00:05:52.080 built tie into all the data that we've
00:05:54.160 accumulated that tells what should work
00:05:55.800 what doesn't work what's the best thing
00:05:57.080 for this
00:05:58.520 Merchant uh contract process right on
00:06:00.960 the device e signature goes right into
00:06:03.039 our systems you know I think it's
00:06:05.000 important to understand that this is not
00:06:06.240 just daily emails the U Got Mail thing
00:06:08.000 was pretty funny rich but that it's not
00:06:10.400 just emails this is really solving local
00:06:12.000 e-commerce and how do we continue to
00:06:13.639 innovate just to give you guys a sense
00:06:14.800 of the size of this space let's let's
00:06:17.039 talk about a local uh skydiving place we
00:06:19.080 ran here in
00:06:20.080 DC that morning they sold $500,000 in
00:06:23.319 skydiving trips hundreds of people
00:06:24.960 decided to go skydiving 98% of those
00:06:28.000 people didn't know they were going
00:06:28.919 skydiving that morning we're building
00:06:31.199 bigger businesses you know a successful
00:06:32.840 startup is not just I have a company and
00:06:35.039 I'm making revenue and I have users
00:06:36.919 wouldn't it be cool if you're actually
00:06:38.080 Shifting the GDP of the country because
00:06:39.800 you're making lots of companies
00:06:41.599 successful all local businesses that's
00:06:43.720 what this is
00:06:45.000 about we've done a few things to
00:06:46.800 innovate in this space recently Living
00:06:48.319 Social escapes being one of them it's
00:06:49.599 kind of a weekend in the box so imagine
00:06:51.440 a bed and breakfast you have a great
00:06:53.720 restaurant to go to you have a uh a
00:06:55.520 farmers market in the morning maybe a
00:06:56.840 winery Tour all packaged up editorially
00:06:58.840 controlled cul ated by our team
00:07:01.400 launching all over the the country and
00:07:03.240 now in Europe and
00:07:05.520 Australia in the first week of launch we
00:07:08.039 were the largest flash travel site on
00:07:09.360 the web you know strategic deals Amazon
00:07:12.199 is one of our investors and we did this
00:07:13.720 deal where we sold an Amazon gift card
00:07:16.199 worth $20 for1 we sold cash for less
00:07:20.199 cash people bought it uh a million over
00:07:24.919 a million sold in that single day we
00:07:26.680 believe one of the largest single items
00:07:28.240 sold in the history of the web in in a
00:07:29.759 single day that was a lot of
00:07:32.160 fun uh Amazon Deal 6% of e-commerce that
00:07:35.560 day this is a Goldman Sachs report that
00:07:37.000 shows what was the total volume of all
00:07:38.639 e-commerce on that on any given day this
00:07:41.199 was a big
00:07:42.840 deal Living Social Adventures another
00:07:45.120 product that we've launched that that
00:07:46.520 that we've cultivated we throw events
00:07:48.280 all over the country now we have our own
00:07:50.039 team in in 30 cities across the us we
00:07:52.199 throw events like Canadian for a night
00:07:55.280 a what we do is we run out an ice rink
00:07:57.840 we get a professional curling instructor
00:08:00.039 we like serve poutine Selen deon's
00:08:02.319 playing in the background and we'll have
00:08:03.879 like tegs of molsen beer and it we'll
00:08:06.319 just throw a party and these people that
00:08:07.560 come to these parties all over the US
00:08:08.960 become like huge brand ambassadors for
00:08:10.560 us you know some people say you may buy
00:08:12.159 a grief Pond but you join Living Social
00:08:14.240 we're building local experiences and I
00:08:15.840 think our our adventurous product is a
00:08:17.199 big part of that Living Social instance
00:08:19.840 something we were first to Market with a
00:08:21.039 few a couple months ago it's realtime
00:08:23.080 e-commerce right so you you're walking
00:08:24.680 down the street you pull out your iPhone
00:08:26.479 you say where do I want to go to lunch
00:08:27.759 today if Chipotle is on one side of the
00:08:29.840 road and California tortillas on the
00:08:31.639 other wouldn't it be cool if they
00:08:33.159 actually fought for your business that's
00:08:35.240 the Living Social instant product sort
00:08:37.560 of like looking into the
00:08:39.000 future you know let me talk about some
00:08:40.800 of the Lessons Learned um how how we've
00:08:43.399 grown this business and how we've
00:08:45.120 scaled um execution matters and ideas
00:08:48.480 don't so what's the first social
00:08:53.120 network um is it six degrees.com is it
00:08:57.440 frster has anyone ever heard of Myspace
00:08:59.800 I think that's an interesting thing to
00:09:01.000 think about it's really important to
00:09:02.880 take an idea and to execute on it and to
00:09:04.760 build upon it and to grow that idea um
00:09:07.760 culture matters spend time on it if the
00:09:10.000 folks see our t-shirts um a little Live
00:09:12.760 Hungry on the top some strong moves in
00:09:14.279 the middle surpris and Delight your
00:09:15.920 customers and your merchants and some
00:09:18.200 bourbon on the bottom that's just the
00:09:19.560 engineering team but that's
00:09:21.920 okay um when you're Building Technology
00:09:24.720 teams I'm a strong believer in less of
00:09:27.120 the right people can do more if you have
00:09:29.120 hundred of developers or 150 product
00:09:31.279 people it's very different if you have a
00:09:32.600 core group of people that you that are
00:09:34.680 awesome and that you love working with
00:09:36.160 every day who can really contribute um
00:09:38.800 you know just a couple months ago our
00:09:40.160 team was only 10 folks we've since done
00:09:41.959 some great Acquisitions recently brought
00:09:43.680 some really amazing people onto the team
00:09:46.399 um the team itself matters a
00:09:49.920 lot uh know your metrics Dave McClair
00:09:52.360 500 startups acquisition activation
00:09:54.120 retention referral Revenue
00:09:56.480 are um know these stats know this data
00:09:59.760 understand a lot a lot of where we came
00:10:01.079 from as a company was Facebook
00:10:02.240 application so it was about metrics it
00:10:04.040 was about tweaking viral coefficients it
00:10:06.440 was about growing user bases this
00:10:08.480 supplies even more so in e-commerce
00:10:10.480 really important to understand this and
00:10:12.600 to live and breathe
00:10:15.040 this uh be nervous or you aren't trying
00:10:18.480 hard enough if you're not making
00:10:19.880 decisions at some point every month in
00:10:21.320 your company that that aren't scaring
00:10:23.480 you to death you should go work for
00:10:26.360 someone else this is about like making
00:10:28.720 hard decisions I'll tell a story of you
00:10:30.720 know in in mid or late September October
00:10:33.720 no in 2009 our company you know had
00:10:36.680 money in the bank for a 12-month Runway
00:10:39.120 we had just built this prototype and we
00:10:40.800 took our Runway to five weeks we believe
00:10:43.480 that we were willing to make a bet on
00:10:45.079 this um since then we've raised about
00:10:47.519 $630
00:10:49.200 million so it it came
00:10:52.279 back build your toolbox um we were able
00:10:55.720 to build the Living Social instant
00:10:57.600 product or the living social escapes
00:10:58.959 product we had a platform that was
00:11:00.800 malleable that was that we could take
00:11:02.240 and build into new things we had scaled
00:11:04.519 applications in the past you know our
00:11:06.120 our PI five apps had had billions of
00:11:07.839 hits a month so having an Amazon day
00:11:10.320 meant we could stand up to that traffic
00:11:12.880 um and that's not a simple thing to do
00:11:14.399 unless you've had the experience of
00:11:15.560 scaling applications take software and
00:11:18.279 and iterate um don't ever throw anything
00:11:21.639 away
00:11:24.160 JS just it out if you're an early
00:11:27.800 startup
00:11:29.600 get it on the internet don't ask your
00:11:32.000 mom don't ask your friends don't ask
00:11:33.639 your buddies if you have two ideas do
00:11:35.519 both of them don't talk build get it
00:11:38.720 done the only thing that matters is you
00:11:39.920 have users that play with your stuff
00:11:41.240 this matters a lot when you're
00:11:43.040 early and don't ever be satiated um I
00:11:45.880 think we as a company have had a lot of
00:11:47.760 plateaus but as an entrepreneur it's in
00:11:49.839 my DNA I'm never happy with anything I
00:11:51.800 build I always believe I wake up in the
00:11:53.560 shower and I think about how can I make
00:11:54.680 that thing better um don't ever be happy
00:11:58.160 there's something next there's something
00:11:59.800 next that you can achieve you know one
00:12:01.680 million in Revenue a month is great but
00:12:03.200 what if you can make it 10 what if you
00:12:04.480 can make it a hundred um just never
00:12:07.360 never give
00:12:08.519 up and thanks say
00:12:17.360 hi there's a handful of folks wearing
00:12:20.399 these shirts and others as well come by
00:12:22.480 say hi um thank you