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hey guys I'm going to talk today a
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little bit about our story um how we
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started how we went from four to 1400
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over the past year and a half um so I'm
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Aaron and I'm a r programmer I started
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here at at the Lone Star no fluff just
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stuff in 2005 I heard this guy speak
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some of you know him Dave Thomas uh talk
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about this thing called Ruby I was a
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Java developer at the time not really
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thrilled kind of looking around what I
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would do bought the book that night
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started cranking and then got a job at
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this place Revolution Health hired as a
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Java architect a few months of arguing
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about soap wisd and Enterprise SOA uh
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took a couple people in a back room in
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nights and weekends and built a
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prototype in rails uh went to the CTO at
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the time couple weeks later and said I
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think we should take your team of 80
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developers and make them all earn Ruby
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um didn't go over well but we did launch
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the product in time so we we did it uh
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2007 Healthcare tart startup takes rails
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mainstream pretty early to to take a big
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team and switch them entirely to
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rails um we launched the product we were
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kind of happy with what we had done and
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and we and a couple of the folks that
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had worked on that tiger team to turn
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everything to rails uh started thinking
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about leaving we left the company um in
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the summer of 2007 and started hungry
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machine hungry machine a name that still
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really means a lot to me um is was a
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consulting firm at the time myself Val
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Eddie and Tim on the business side the
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three Tech Guys left first and and kind
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of thought we could do something on the
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Facebook platform it had just launched
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um we knew that it was the cheapest way
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to acquire users probably that had ever
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been on the history of the internet and
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there was this thing called the social
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graph and what kind of interesting
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applications could we build um so we
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made money and built apps for folks like
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Animoto and ESPN and JibJab but we had
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our own products at the time as well
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called visual bookshelf really simple
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idea was collect the things you cared
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about things you want to read things
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you're reading now um collected millions
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of reviews and and millions of members
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took the Hada further and went from
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books and we went to movies we knew this
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still applied we went to restaurants
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started doing things in the local space
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went to my favorite
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beer um and we thought we had this
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business model we had these lengthy
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reviews had this great content it would
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be awesome SEO tons of free traffic but
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no Revenue so then he said okay fine
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we'll put these little buttons on the
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site and if people click on them then
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they'll buy them on Amazon and then wait
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we're going to get 80 cents so the
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book's 10 bucks we were the highest
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level of the Amazon and e-commerce
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affiliate relationship $10 book 8%
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Revenue not really that interesting you
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need a lot of traffic to to actually
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support the the salaries of of five
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people so then we said fine we'll do
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these custom advertising deals we'll go
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out to these marketing companies we'll
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go to these book publishers we'll skin
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our site we'll look like Myspace but
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screw it we don't care we're going to
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make money we got to make money we have
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to support the company that didn't work
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as well not really again scalable
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Revenue three to four month sales Cycles
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really hard to find these businesses so
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then we launched this app this is a
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really simple concept that was built on
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the platform that we had built and the
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general idea was take our entire product
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to make it one page pick five things you
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cared about in this case you pick five
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songs it would post this this feed item
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into your Facebook feed with the
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pictures that you picked and maybe some
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comments of what you
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wanted and we became the number one
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Facebook application 0 to 35 million
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users in three weeks fastest organic
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growth on the history of the Facebook
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platform six billion hits a month at the
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time about four Engineers this was a lot
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of traffic this was a lot of fun but
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Revenue
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had no way to make money so he said
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screww it fine we'll go back to the same
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trick that we did before we'll just
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start selling advertising so we were
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Coca-Cola's first social media ad spin
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we did Target we did Green Day we did
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American Idol and then we did Britney
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Spears and I was like
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guys we need to think of something
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else so then these guys came along do
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you know who these are this is
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Farmville they beat us they became
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number one they got the number one sort
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of spot on the Facebook platform they
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had more users than us and they had this
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other really awesome thing which was
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pain customers we didn't have that we
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had no Revenue they had this website
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where users came put a credit card in
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and made and they made money off of it
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we really didn't have that yet so we we
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spent a few months we it thought about
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ideas we had 80 million users we really
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didn't have a scalable success we didn't
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have something we had we had millions of
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dollars in Revenue a month but we had no
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way to get to 10 million or to 100
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million we needed a new idea so we built
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this app at the time there were a few
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competitors in the space took us about a
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week to build we built our first social
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commerce platform
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we sold a sushi place I think that day
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53 sold I bought 10 other co-founder
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bought 20 my wife bought a few I think
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she felt bad for us um and there were
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and now there's hundreds of clones and
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everyone says it's so easy to compete
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but to succeed I think you really have
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to out execute and out innovate in this
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space living socials had the fastest
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market growth of anyone in the space in
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the first 20
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months the fastest Revenue growth as
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well in the first 20 months
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and we've gained two to 3% market share
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each month for the last 18 so I'm going
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to talk about a little some of the ways
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that we believe we've gotten
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there first technology I describe our
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our our business and our company a bit
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like an iceberg in which you only see
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10% above the water the consumer apps
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that you play with every day whether it
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be iPhone or iPad or website or mobile
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web that's on the top and I think
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everything else we've built internally
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to scale this business is what's
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underneath know we've built we've always
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believed we're strong technology three
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of the four co-founders are technical
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we've built a lot of internal tools to
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scale out the operations process scale
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out the recruiting process customer care
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Merchant
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relations we buil custom iPad apps that
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we've deployed to our entire field sales
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team of which we have the largest in the
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industry over a thousand people in
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cities across the world that actually
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walk in and shake the hand of a local
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Merchant these native apps that we've
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built tie into all the data that we've
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accumulated that tells what should work
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what doesn't work what's the best thing
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for this
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Merchant uh contract process right on
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the device e signature goes right into
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our systems you know I think it's
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important to understand that this is not
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just daily emails the U Got Mail thing
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was pretty funny rich but that it's not
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just emails this is really solving local
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e-commerce and how do we continue to
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innovate just to give you guys a sense
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of the size of this space let's let's
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talk about a local uh skydiving place we
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ran here in
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DC that morning they sold $500,000 in
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skydiving trips hundreds of people
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decided to go skydiving 98% of those
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people didn't know they were going
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skydiving that morning we're building
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bigger businesses you know a successful
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startup is not just I have a company and
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I'm making revenue and I have users
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wouldn't it be cool if you're actually
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Shifting the GDP of the country because
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you're making lots of companies
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successful all local businesses that's
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what this is
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about we've done a few things to
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innovate in this space recently Living
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Social escapes being one of them it's
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kind of a weekend in the box so imagine
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a bed and breakfast you have a great
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restaurant to go to you have a uh a
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farmers market in the morning maybe a
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winery Tour all packaged up editorially
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controlled cul ated by our team
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launching all over the the country and
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now in Europe and
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Australia in the first week of launch we
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were the largest flash travel site on
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the web you know strategic deals Amazon
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is one of our investors and we did this
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deal where we sold an Amazon gift card
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worth $20 for1 we sold cash for less
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cash people bought it uh a million over
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a million sold in that single day we
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believe one of the largest single items
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sold in the history of the web in in a
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single day that was a lot of
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fun uh Amazon Deal 6% of e-commerce that
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day this is a Goldman Sachs report that
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shows what was the total volume of all
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e-commerce on that on any given day this
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was a big
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deal Living Social Adventures another
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product that we've launched that that
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that we've cultivated we throw events
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all over the country now we have our own
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team in in 30 cities across the us we
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throw events like Canadian for a night
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a what we do is we run out an ice rink
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we get a professional curling instructor
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we like serve poutine Selen deon's
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playing in the background and we'll have
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like tegs of molsen beer and it we'll
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just throw a party and these people that
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come to these parties all over the US
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become like huge brand ambassadors for
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us you know some people say you may buy
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a grief Pond but you join Living Social
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we're building local experiences and I
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think our our adventurous product is a
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big part of that Living Social instance
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something we were first to Market with a
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few a couple months ago it's realtime
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e-commerce right so you you're walking
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down the street you pull out your iPhone
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you say where do I want to go to lunch
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today if Chipotle is on one side of the
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road and California tortillas on the
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other wouldn't it be cool if they
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actually fought for your business that's
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the Living Social instant product sort
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of like looking into the
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future you know let me talk about some
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of the Lessons Learned um how how we've
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grown this business and how we've
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scaled um execution matters and ideas
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don't so what's the first social
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network um is it six degrees.com is it
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frster has anyone ever heard of Myspace
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I think that's an interesting thing to
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think about it's really important to
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take an idea and to execute on it and to
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build upon it and to grow that idea um
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culture matters spend time on it if the
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folks see our t-shirts um a little Live
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Hungry on the top some strong moves in
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the middle surpris and Delight your
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customers and your merchants and some
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bourbon on the bottom that's just the
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engineering team but that's
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okay um when you're Building Technology
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teams I'm a strong believer in less of
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the right people can do more if you have
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hundred of developers or 150 product
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people it's very different if you have a
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core group of people that you that are
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awesome and that you love working with
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every day who can really contribute um
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you know just a couple months ago our
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team was only 10 folks we've since done
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some great Acquisitions recently brought
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some really amazing people onto the team
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um the team itself matters a
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lot uh know your metrics Dave McClair
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500 startups acquisition activation
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retention referral Revenue
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are um know these stats know this data
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understand a lot a lot of where we came
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from as a company was Facebook
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application so it was about metrics it
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was about tweaking viral coefficients it
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was about growing user bases this
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supplies even more so in e-commerce
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really important to understand this and
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to live and breathe
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this uh be nervous or you aren't trying
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hard enough if you're not making
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decisions at some point every month in
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your company that that aren't scaring
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you to death you should go work for
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someone else this is about like making
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hard decisions I'll tell a story of you
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know in in mid or late September October
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no in 2009 our company you know had
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money in the bank for a 12-month Runway
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we had just built this prototype and we
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took our Runway to five weeks we believe
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that we were willing to make a bet on
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this um since then we've raised about
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$630
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million so it it came
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back build your toolbox um we were able
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to build the Living Social instant
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product or the living social escapes
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product we had a platform that was
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malleable that was that we could take
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and build into new things we had scaled
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applications in the past you know our
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our PI five apps had had billions of
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hits a month so having an Amazon day
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meant we could stand up to that traffic
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um and that's not a simple thing to do
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unless you've had the experience of
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scaling applications take software and
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and iterate um don't ever throw anything
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away
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JS just it out if you're an early
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startup
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get it on the internet don't ask your
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mom don't ask your friends don't ask
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your buddies if you have two ideas do
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both of them don't talk build get it
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done the only thing that matters is you
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have users that play with your stuff
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this matters a lot when you're
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early and don't ever be satiated um I
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think we as a company have had a lot of
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plateaus but as an entrepreneur it's in
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my DNA I'm never happy with anything I
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build I always believe I wake up in the
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shower and I think about how can I make
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that thing better um don't ever be happy
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there's something next there's something
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next that you can achieve you know one
00:12:01.680
million in Revenue a month is great but
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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
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up and thanks say
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hi there's a handful of folks wearing
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these shirts and others as well come by
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say hi um thank you