WE HAVE A PERSON FOR THAT

Clay Neigher

January 8, 2012 · 12 minutes read

Uncategorized

AN AQUATIC COMPETITOR AND COMPETITIVE LAND MAMMAL, Erdem took lessons learned in an Olympic size pool in his hometown of Oakland California and applied them to every challenge he faced on land. When he was 16, Erdem took 7th place in a swim meet that knocked him out of contention to make the Junior Nationals, he told the naysayers ‘I’ll see you next year”. They didn’t believe him. Erdem, with the help of a loyal friend trained all summer and silenced the naysayers by making the Junior Nationals the following year. All of his homework had to be addressed during tiny breaks between his busy class schedule. The swim team taught Erdem discipline, teamwork and focus. All of the skills Erdem learned in the pool would prove to be transferable to a land environment.

“You’re on a team with 15 people and you’re all friends. You all hang out. All the pool time is social time. We were competitive with each other, too. You develop this culture where if you slack off, if you start slowing down, if you don’t try your hardest, you’re letting down your teammates. It was a simple and powerful lesson. If you start falling behind, complaining about the pain or how tired you are, people make fun of you, and don’t take you seriously. You end up trying your hardest every day.”

“Once I realized I was not going to be an Olympian, I changed focus to academics and worked hard on that. In middle school I was just getting by, until I went to our graduation ceremony and saw everyone but me deliver a speech on stage. Then in high school, I got A’s every semester and became very competitive. It became a game. I just wanted to be the runner ranked as a top speed.”

” I always knew I only have myself to blame. If I screwed up because of something I did, I would be upset. If somebody else screwed me over, it never bothered me. I could only screw myself over. My parents never pressured me. They never said, ‘If you don’t get these grades you have to do this or you have to do better in school.’ There was never any of that. It was just a big game to me and I love to compete.”

HIS BROTHER WOULD DESTROY HIS LEGOS, Erdem would destroy his computer disks. That was the language the two brothers would communicate in during their competitive upbringing. His brother already showed symptoms of a becoming a computer wiz at the early age of six and Erdem’s father contracted the entrepreneurship bug in his fifties. Needless to say, Erdem caught both viruses.

“My brother and my dad are both engineers. My dad ended up in the United States via Turkey to do his Ph.D. after he finished his undergraduate work. He did his Ph.D. at Berkeley in civil engineering and then went back to Turkey for two years. He met my mom and they got married then moved back to the Bay area. He worked at Bechtel until he was 52 and then he quit and started his own two-man engineering company.”

“I was 17 at the time when he launched it. I was excited because I knew it meant he was going to be home a lot more. I admired him for taking the risk because I knew he still had to pay for my brother’s college tuition, and mine was coming up. He just said, ‘I’m tired and I’ve always wanted to do this.’ He never expanded beyond two employees. His company has a great reputation as being the best in its category and always highly ranked in magazines. He’s a really talented civil engineer and software developer, which is a rare combination in one person. He was never into being a big business guy. He didn’t have a desire to build a huge company, he just wanted his own business.”

ERDEMS GUMBALL KIOSK would have made his father proud. “My earliest experience as an entrepreneur was when my friend and I had a little store in elementary school. We set up a table and we would sell gumballs and trinkets and little things. The kids would skip their lunch and buy stuff from us. We would go to Costco and buy the giant size. It was so easy. We would put five gumballs in a cup and sell them for ten cents a piece. I don’t know how many gumballs were in a jar but we sold it for $8. It was a huge mark-up on each gumball but the kids would come to us with a quarter or two quarters, whatever they had for lunch money. It was great.”

“Then during the dotcom era I was in my senior year in high school, and there were all these websites doing pay-per-click. You’d set up a website, take ads and put it on your site and if you got clicked on, you would get one dollar per click. It was a recipe for disaster because it was all pay-per-click and it was generous. You would get a dollar just for someone signing up. So in my conniving thinking back then – now integrity would stop me from doing such a thing – I would set up my computer in my room while I was in school, dial in, the thing would click the ad, go to the website, drop in a text file, put in fake information, submit, go back, click again, submit fake information, then repeat. The first month I made $440. The second month I made $2,500, and then the company went out of business. My thinking then was this is crazy, but I’ll take advantage of it while I can. That $440 funded my trip to go to the Junior National Championships in Texas later that summer.”

ERDEM ALMOST BELLY FLOPPED, his application to MIT. “I had already applied to Harvard, Stanford, and Berkeley, and my parents said I should apply to MIT just to see what would happened. I ended up turning in my application incomplete. MIT called me and said, ‘Hey, you’re missing some pieces here.’  I said, ‘Oh, don’t worry, I’m not done with the application. I’m going to send you the rest of it later on the final application’. They get the final application and called again to say, ‘We still don’t have certain pieces of your application. You haven’t taken the SAT II.’ They told me the deadline to sign up for the last testing session had past. They told me if I showed up to the test, they might still let me sign up right there and take it. I’d only studied some biology but I figured, what’s the worst that could happen? I took the exam and did well. The whole time I didn’t seriously think about going to MIT but for whatever reason, I pursued it and finished the test. I got a good enough score and got accepted. So that’s where I ended up going, making it by the skin of my teeth.”

“At MIT I swam competitively and joined a fraternity. Back then everybody had to pledge. I started off pre-med to follow in my family’s footsteps: my grandfather was a doctor, my great uncle is a doctor, my cousins are doctors, so lots of people wanted me to be a doctor, too. So, I was pre-med but I didn’t like biology too much. A buddy of mine suggested I try electrical engineering. It was one of the best programs at MIT. I took some introductory classes and liked it. So I kept doing it and ended up with a degree in electrical engineering and computer science.”

BAILING WATER ON THE S.S TITANIC.COM, Erdem interned at a procurement company, Areba, in Silicon Valley during the summer of 2000. It was one of the biggest boom-and-busts of the “dot com” era. A friend and I were living in the South Bay, saving every penny and living off of rice and beans. When we weren’t working we amused ourselves with cheap thrills like joining the YMCA at a discount, playing old Nintendo games and just hanging out.”

“Then I started working on a mix of finance and software development, so that next summer I got an internship in London at UBS working as an IT developer for the foreign exchange desk helping traders calculate certain rates and spreads. London was exciting. During that summer, I discovered that I wanted to be more on the trading and investment side than on the computer science side. In a banking environment, the software developers are not the hot shots.. So, from my perspective as a 19-year old kid, it was more exciting to be on the front end. The trading and investment side of it was interesting to me and not totally unfamiliar since I got my first stock account when I was 12. I had bought Unicom, a company in Berkeley that was installing wireless modems on telephone towers. They were way too ahead of their time, but it was awesome technology that enabled me to carry my desktop anywhere and get Internet connection. They were just so brilliant and it was fun being in on it from the start before everyone else.”

“Then the summer after my junior year, after not getting an internship at Goldman Sachs, I started another internship at the lab for Financial Engineering at MIT where they were research testing trader decision-making in emotional/high stress situations. That same summer, I reconnected with my old boss from Ariba and launched a company called Accelovation. It was important that the name of the company start with the letter “A” so that whenever we got listed, it would always land at the top of the list. The idea was that all these companies like IBM develop technology and file patents for everything, but some are off-the-wall things or for specific things that no one knows how to apply to anything and they just end up being filed and never used, and never monetized. Companies like DuPont and Dow Chemical have all these patents, a small fraction of which is used for anything. Intel files 3,000 patents a year or something crazy like that. We wanted to see if we could connect all this technology with solutions to problems people were having and automate the solutions somehow. We got in touch with a woman at DuPont whose job it was to just sift through patents and figure out what to do with all of them. She really had no tools to do anything but read something, figure it out, and then brainstorm about how it could be used. That’s difficult.”

“We talked to her about how she did her job and how we could do it better. We did an alpha project for DuPont for free where they gave us a portfolio of 30 patents they thought were interesting but weren’t monetizing. We thought our technology could be very useful to patent lawyers and people were trying to find new uses for technology even for science fiction writers who were trying to figure out new uses of technology. It really worked, but it was laborious. We had to filter through the results ourselves, and probably half the results were total junk.”

“Then I came to a decision at the end of my senior year that my partners had more experience than me and were moving the business ahead while I was contributing less to the process. I had done all the software development to build the system and now they were busy running the business. I felt I couldn’t do as much for the business as a 33% stakeholder would warrant. At that point, I didn’t have the experience needed to help push the business further. I think it was the right decision. Plus, I still own a small fraction of the company so the better they do, the better it is for me.”

“So I left to join this hedge fund in Chicago, and I didn’t know what an income statement, balance sheet or a cash flow statement was. I didn’t know much accounting. So, I went through a summer training course where for two months they brought in professors from Chicago to teach quick classes. It was like a quick and dirty MBA program. I went through that and came out the other side ready to do some financial analysis and was put into their rotational program. I learned to be really creative about using all sorts of resources, like talking to top-level management at all these companies. I got to know all of these CEOs of various companies in a wide range of industries and learned how they founded their companies and how they got to the point where they were. Some of them were the children of the founder. I learned to spot which companies were and weren’t good. I got to study commonalities and what made a good business model. This began to inspire me to start my own company again.”

SWIMMING SOMEONE ELSE’S LAPS seemed just as silly as working for someone else to Erdem. “The idea of working for somebody never appealed to me. So, I saved as much of my bonus and salary as I could. They were good bonuses. I was hoping to bootstrap the whole thing and never need outside capital. At that point I was talking about launching something with my friend Kale McNaney. He grew up in Buffalo and also went to MIT, did a bunch of engineering computer science, and had interned at Merrill Lynch.’

“I was still working at the hedge fund when we launched our new company called OddJobs. It quickly became clear that our business wasn’t going to go anywhere if I stayed full time at my job where I was working from 7:00 a.m. to 8:00 p.m. I was trying to work with Kale from 8:00 p.m. to midnight but my mind just wasn’t there. So I waited until my last bonus check cleared and by March 16 I said that’s enough, I’m ready. I’m going to go off and do this full time. That was just over nine months ago, and Kale came on full time in August.”

“Our company was based on the idea of a text messaging network where you could text a message to anybody within a certain distance and ask them to run errands for you. You could say ‘I need flowers delivered here.’ Then somebody who was walking by a flower store would receive that text message with an offer like ‘For $10, will you pick up these flowers and bring them to me?’  And that person would reply yes or not reply at all. I was interested in this idea of making ‘local human labor’ more efficient. It made sense, but the logistics were difficult. We thought a lot of our competitors were interesting, so we did some research on one of them and found out that over the 12 months that they’d been in operation they had made about $10,000. We knew from the marketing we had seen and the staff they had that they were spending way more than that. We didn’t know immediately what they were doing wrong. It just made us question the whole market, how big it really was, no matter how much money they were raising from VC funding. We lost that excitement of errand running being this huge future financial opportunity. So we switched focus from local, neighbor-to-neighbor services to professional services like Service Magic, Angie’s List, Yelp, and Google to see how they worked at attacking technical challenges. (We try to avoid using the word ‘problem’. I try to stay strict about that. I don’t like the word ‘problem.’ I like ‘solutions’ and ‘challenges’.)”

ERDEM GOT THE DIRT ON ENTREPRENEURSHIP AT A CLEANING INDUSTRY CONFERENCE in Phoenix. Erdem didn’t expect much excitement, but he ended up learning a lot more about entrepreneurship than cleaning. These entrepreneurs had never worked for anyone else in their lives. Some had high school or college degrees, but all had built their business from the beginning with revenues anywhere from $300,000 to $10 million. They were all passionate and interested in how to grow their business. Erdem was anxious to talk to these guys about his ideas and ask them what they thought of all those products like Yelp, Angie’s List and Service Magic competing for SEO, social media and advertising, local ad networks. He just listened to what they had to say.

“We wanted to do it differently. We first started out with a business model based on 10% commission but that constrained our growth.   We had to collect a credit card from every business before they offered a quote on a job. At this point we figured out that we had two options. We could work harder to recruit businesses to pay us in a certain area as soon as the job was posted. For instance, if someone posted a job in San Francisco, and we had no plumber in San Francisco, for the next 24 hours we could call plumbers trying to find people to sign up and pay us 10%. Or we could make the number of businesses in our system independent of the consumer experience, which is what we ended up doing. We decided that it didn’t matter if we had businesses signed up or not, we could just connect the customer to the business. So we got rid of the commission. Everything was free. But at the same time, we went from being able to handle only half our jobs in Chicago to being able to handle any job anywhere, which was great. Now we can handle most anything. We even had an actress ask for headshots and she got six quotes in a day. It’s totally seamless for businesses.”

We’ve recently reinstated a commission structure so that businesses can choose to pay a commission but we let them choose what they pay.  We figured no one knows a business as well as the business owner so now we just ask them to choose a commission they feel is fair.  Then we do our best to deliver them more customers within those constraints. We operate on the honor system, we figured if we can’t trust businesses to pay us what they promise, how can we expect our users to trust them either.”

GETTING UP IN THE MORNING IS EASY when you look forward to your workday as much as you look forward to playing your favorite video game. “It’s a lot of fun. I’ve been looking for that feeling, you know, like when I was seven or eight years old and I got my first Nintendo. We got the Super Mario Brothers and all I wanted to do was wake up as early as possible to play for an hour before school and play an hour after school. That was all I wanted to do: play Super Mario Brothers. I was looking for that feeling of excitement, that all I wanted to do was cut my sleep short, go to sleep later, or skip lunch to do more of this. I actually have that feeling now. That’s exciting.”

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