How To Make It as a
First-Time Entrepreneur

How to Make it as a First-Time Entrepreneur

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Vinicius Vacanti is co-founder and CEO of Yipit. Next posts on how to acquire users for free and how to raise a Series A. Don’t miss them by subscribing via email or via twitter.

It was February 2010. We were noticing that a company named Groupon was taking off and a whole new industry was booming along with it.

Our idea for Yipit was simple, aggregate all these daily deals being sold by different companies and put them in one email. Plus, you could specify categories so that your emails were personalized.

The only issue was that we were working on a different product. The idea of trying yet another concept was exhausting.

So, we compromised by giving ourselves 3 days to build it.

In the first two days, we quickly built an email capture, sign-up flow to collect preferences and a script that would send people an email with the deals that matched their preference.

But, how would we get the deals in our database and categorize them correctly as “restaurant” or “concert tickets”? We would have to build a crawler to parse the deals from HTML from various sites and write a classification algorithm. Not a daily task for us.

So, we took a shortcut. Instead of building a crawler, my co-founder and I would crawl out of bed at 3 am and manually enter the deals into our database. Plus, when you’re doing it yourself, classification was easy. We did it all manually.

Within 3 days, we released Yipit and it took off. We got press and became known as the leader in the industry. Three months later we raised $1.3 million and a year later another $6 million. Today, we’re 25 people, over a million people have signed-up and we’re on a path to profitability.

The funny thing is that within a few months of our launch, several competitors emerged and they all had crawlers. But, from our users’s perspective, we were more advanced since we had categorization which was definitely no easily automated task.

We didn’t actually build a real crawler for the first 9 months and just kept scaling manually by hiring more data entry professionals. Instead, we were able to focus our resources on improving the product and user acquisition.

It’s now clear to me that not building that crawling technology early on was one of the reasons our startup succeeded.

Taking this “manual-first” approach was our secret sauce.

Many Startups Take the “Manual-First” Startup Approach

We’re not alone in our “manual-first” approach:

  • AngelList started with Nivi and Naval manually collecting startup applications and manually matching them up with potential investors. I know because Yipit was one of the first startups to use AngelList to raise funding
  • ZeroCater, a Y Combinator company, started with just a big spreadsheet trying to connect companies with restaurants that would cater
  • Groupon started with just a WordPress blog and manually sending PDFs with the first vouchers
  • Grouper, another Y Combinator company, also started with just a spreadsheet trying to match groups of people on dates

Benefits of the “Manual-First” Startup Approach

There are many benefits to taking a “manual-first” approach to some of the trickier technology challenges including:

  • Fastest way to get to the “moment of truth”. Having your potential customer evaluate your product and see if it addresses their need is the moment every founder is trying to get to and doing things manually allow you to quickly get there.
  • Easy to change your solution if it doesn’t work. There’s no code to re-write, there’s no sunk cost. You just have to change how you’re manually doing something.
  • Will really understand what to automate with tech when you’ve been manually doing it. When you’ve been manually providing the solution, you’ll know exactly where the pain points are that you should be automating.
  • Can really wow your potential customers. When you do things manually, you can try different things that really wow the customer and see which ones are worth trying to scale.
  • Customer doesn’t know how your product works behind the scenes. They won’t judge you for your manual approach because they don’t know that’s how you’re doing it. All they will care about it is that your product works.
  • Your product will “just work”. Because you’re manually providing the solution, the product will just work. When trying to implement a solution with technology, it can be very hard to make sure that it just works.
  • Helps you focus your time on the problem, not the solution. It’s very tempting to fall in love with the technology behind your solution only to painfully realize that the problem you set out to solve isn’t a real problem.

Next time you’re building a new product, I hope you’ll consider a manual-first approach to some of the trickier aspects of your solution.

Reid Hoffman, founder of LinkedIn, once said: “If you’re not embarrassed by your first release, you probably spent too much time on it.”

I also think it’s true that: “If people don’t laugh at how you first implemented your product, you probably spent too much time on it.”

Vinicius Vacanti is co-founder and CEO of Yipit. Next posts on how to acquire users for free and how to raise a Series A. Don’t miss them by subscribing via email or via twitter.

  • http://300.mg MarkK

    love it! more companies should be started this way

    • http://viniciusvacanti.com Vinicius Vacanti

      I think many more will.

  • http://twitter.com/DreWeathers Andre

    another good example is klout…the scores were initially computed manually by hand

    • http://viniciusvacanti.com Vinicius Vacanti

      Wow. Had no idea. Makes perfect sense.

  • MHensley

    Thanks for sharing… I’m pretty sure Grouper’s url is http://www.joingrouper.com

    • http://viniciusvacanti.com Vinicius Vacanti

      Thank you! Fixed.

  • http://twitter.com/michaelhoglund Michael Höglund

    Yahoo started manually with paid surfers – what a gig.

    • http://viniciusvacanti.com Vinicius Vacanti

      Another great example. Thank you for sharing.

  • vickytnz

    Apparently there was also a startup that let you scan a biz card and it ‘auto-magically’ be OCRed in a minute or two. That ‘magic’ was sending the cards out to people on Mechanical Turk! It got bought up by some big company for their ‘technology’.

    • http://viniciusvacanti.com Vinicius Vacanti

      Great example though I bet the company that bought them knew what they were doing and that it was a great business model.

      • Sachit Gupta

        CardMunch? They were bought by LinkedIn.

        • shivaas

          yes, it was cardmunch.. I think they were still using that approach when they got bought by LinkedIn

          • http://viniciusvacanti.com Vinicius Vacanti

            Once your company is up and running, you realize that automating that part of the business is much less important than figuring out user acquisition and making the product better (as long as costs remain reasonable).

          • http://twitter.com/AeroSuch Nick Such

            Startups should be painful to the founders, but helpful to the customers. As long as you’re bearing all the pain of lack of automation behind the scenes, taking the burden off of your customers, they’re happy.

            We’re experiencing this right now with http://foodshoppr.com. It’s ugly and painful behind the scenes, but our customer experience is still better than waiting in line in a grocery store, yet smoother than traditional “personal shopper” methods.

            Thanks for the tips, wish I had learned this years ago!

          • http://viniciusvacanti.com Vinicius Vacanti

            You should be proud of how painful and ugly it is behind the scenes. That’s how it should be.

  • http://twitter.com/mirceagoia Mircea Goia

    I am doing the same for a website I am building now: http://www.romanianstartups.com
    Gathering manually all the data needed.

    • http://viniciusvacanti.com Vinicius Vacanti

      That’s great!

  • judderman

    This is a little like how business software started – people had manual systems that they understood inside out, writing stuff in ledgers etc, then along came IT & took the hard work out of it. Then the people who knew it inside out left – those who remained only knew ‘the system’, the business logic had disappeared, so changes can easily become ‘Can we just have a button to…’ (unless you are very careful).

    With a start-up, there is no business process, so nothing to automate, nor any existing system. It’s difficult to work out a business process when there is no business, so this manual approach is like early, very thorough analysis; putting the company in the same status as the businesses at the start of this message.

    • http://viniciusvacanti.com Vinicius Vacanti

      Great point. Lots of lessons to be learned from the past.

  • Alan

    Ah so that’s how Shazam works maybe? Room full of music geeks!

    • http://viniciusvacanti.com Vinicius Vacanti

      Ha. Would have been a good way to initially test for demand.

  • http://www.crystalmd.com/ Shadab Farooqui

    At the Yelp of India (www.mouthshut.com) – we had a team of 10+ people finding and categorizing products and places manually. Many competitors came and died, but the high quality and quantity of our categories gave us the edge with consumers and search engines, versus guys who took the scraping shortcut.

    • http://viniciusvacanti.com Vinicius Vacanti

      Nice! Thank you for sharing.

  • http://twitter.com/ewiesen Eric Wiesen

    Maybe the best example of all – Craigslist. In the early days Craig manually reviewed every submission to keep out spam.

    Runner up? Yahoo!

    • http://viniciusvacanti.com Vinicius Vacanti

      Great example.

  • Ashish Aggarwal

    Thats really interesting and workable.. focusing too much on automation from day1 generally delays the launch too much that the passion is lost on the way.