Analyzing Seeing Interactive's YC Application (W2010) - Building Local Business Directory Platform
Company Overview
Progress at Application
Founder
Lloyd Armbrust
Co-founderGrew newspaper web department traffic by 850% and revenue by 400%, won national awards
Full-time
Jason Novek
Co-founderAutomated entire daily routine with cron jobs and shell scripts within 9 months
Full-time
Key Strengths
Seeing Interactive's application demonstrated deep understanding of local newspaper industry problems with a clear path to modernization, combined with existing revenue and strong founder commitment.
Application Deep Dive
If you have a demo, what's the url?
Our first product was a print-to-web conversion system that immediately generates revenue for small newspapers: http://newspaperdemo.com We are currently working on our next product, which is an online directory system. We do not have a demo for that right now, but we will by the time YC interviews roll around.
Revenue Focus
Emphasis on immediate revenue generation even with first product
What is your company going to make?
A local business directory sold through small-town newspapers. The goal is to integrate hyper-local community and business information into a format that users can trust in their small towns. The directory will be branded as the newspaper's own, allowing businesses to update their information, add photos, news, and daily specials. Consumers will be able to comment and review. Eventually businesses will be able to pick a domain name and template to have a full-fledged website with the ability to sell their products on the internet. Think the Yellowpages plus Yahoo! Merchant Solutions divided by Angie's List.
Clear Market Position
Leverages existing newspaper relationships to create trusted local business directories
Please tell us about an interesting project that you created together.
High school produces much that is sub-impressive. One result for us, now 12 years in the running, was the creation of an international holiday. Mind you, it is only celebrated by about 100 people--but we have met people outside of our influence, and even from other countries, who celebrate the day. Observed on Dec. 27th and known as the "twenty-seventh" or "the new day". We created the day in response to the nonsensical notion of people being over-excited about the new year, when in fact it is just another day. Festivities include your standard revelry on the evening of Dec. 26th, followed by the collective singing of Louis Armstrong's rendition of "What a Wonderful World" to bring in the day
Long-term Partnership
Shows 12+ years of successful collaboration and creativity
Please tell us something impressive that each founder has built or achieved.
While running the web department for a small daily newspaper, lloydarmbrust grew page-view traffic by 850% and revenue by 400%--during that process he built a web presence that won several national awards and accomplished goals that he was told would never work at a small-town newspaper. Nine months after starting his first job, jnovek had to ask his boss for a new set of responsibilities because he had replaced his entire daily routine with a collection of cron jobs and shell scripts.
Complementary Skills
One founder shows business growth expertise, other shows technical automation capability
Please tell us about the time you most successfully hacked some (non-computer) system.
Our very first customer wanted a contract. This customer is notoriously picky about contract terms, and a bolierplate off the internet wouldn't work. We had just spent about$3k on the incorporation process, and didn't want to drop another $2k on additional lawyer fees. Instead, I spent twelve hours scouring the web for example web-service agreements, random contracts, and a few forms purchased from Legal Zoom. It turns out that lawyers use code just like hackers -- it felt a bit like learning PHP. Being an English major at heart, it was actually pretty fun. At the end I had a 15-page contract. I paid the lawyer $300 to look it over, he said: "Nice. Well written. Where'd you get it?"
Resource Optimization
Shows ability to solve complex problems with limited resources
How long have the founders known one another and how did you meet?
14 years and we met in high school. Lloyd is a Libra and Jason Pisces--we both enjoy long walks on the beach, and the gentle sound of the mandolin.
Strong Partnership
Long-term relationship with shared humor indicates strong working dynamic
If we fund you, which of the founders will commit to working exclusively on this project?
Both--we don't want to become butchers or bakers, we want to be start-up founders. When we're 80 we both hope to be starting-up something . . . we love this crap.
Full Commitment
Both founders show long-term dedication to entrepreneurship
Do any founders have commitments in the future?
Paying for food and shelter is the only thing on the table. Our commitment is to this company--we aren't some kids out of school who want to flip a start-up for quick exit and fast cash. We are serious about saving the newspaper industry and we will succeed with or without funding.
Clear Mission
Strong commitment to industry transformation over quick exit
Who are your competitors, and who might become competitors? Who do you fear most?
Not Google or Yahoo. They've both tried to partner with newspapers, and never thought big enough. Facebook is a definite possibility: their biggest growth right now is coming from baby boomers. Thankfully Facebook hasn't figured out how a local online community should look, as they seem to think that business information should be displayed in the same way as profile information. Like many YC applicants, we're most worried about other start-ups. Right now there are other start-ups working on this problem -- and they're not married, have no social life, and have been doing it for a lot longer.
Clear Market Understanding
Shows understanding of both big tech limitations and startup threats
How do or will you make money? How much could you make?
We are already making money. Our current product grosses several thousand dollars per month in revenue. Our most immediate source of revenue is direct from newspapers. Each newspaper pays us between several hundred and several thousand dollars for services. In the future, we will also present products directly to small businesses through newspaper ad reps in a tiered pricing scheme. For example, the local directory product that we are currently developing will sell directly to businesses for between $20 and $200 per month and we get a cut. The customers who are buying these services are accustomed to paying $40 just to place business-card sized ads in the paper once a week, so if they are interested in marketing via the internet, this purchase should be a no-brainer. Really though, it doesn't matter what we charge: $n 6,000,000 small-business is a number we can live with.
Clear Revenue Model
Multiple revenue streams with proven market willingness to pay
When will you have a prototype or beta?
Our first product is nearly ramen profitable. Although our current product is in a market that is rapidly losing value -- print to web ad conversion -- it still helps us build relationships with these newspapers and makes them money (adds about 5% to their bottom line). Our second product is weeks away from its first release. We are launching at one of our partner newspapers on November 9th--they have already pre-sold about 50 customers to the online directory so we will have immediate revenue from that, and several of our other papers are anxious to launch as well.
Revenue First Approach
Already generating revenue and pre-selling next product