Hezi and Gabby Leibovich were already running highly successful daily deals site Catchoftheday when they entered into the services space and launched Scoopon. In this exclusive extract from their new book, Catch of the Decade, the e-commerce entrepreneurs recall the conversation that sparked the idea, and how Hezi secured the site’s first deal with little more than an A3 piece of paper.
Here’s the conversation that launched Scoopon—one of Australia’s greatest disruptors of the service sector—and the story of how we moved quickly to get the idea to market. We both remember the discussion that took place at Nando’s chicken shop* just after Hezi spotted Groupon, a US-based website that pioneered the group-buying concept.
What Groupon did in the early days was group a bunch of buyers together to source a great offer from a local service provider. It was just like Catchoftheday, but for services. It worked on the same FOMO element of offering a great deal for a limited time on the premise the deal will most likely sell out.
By mid-2010, Catchoftheday was flying high. Things were going from strength to strength, so we could afford for Hezi to leave the room and take responsibility for the launch of Scoopon.
We lived by our motto, ‘Idea by midnight, execute by midday’, so by noon the next day, we were ready to go. Our mission? Let’s turn Scoopon into the Catchoftheday of experiences and activities. There was no time to waste. After we agreed to pursue it, we spent the next hour brainstorming a great business name and settled on Scoopon (scoop + coupon. Genius!). The name was catchy, stood the test of time and it’s (still) as good as ever.
Some of the services we sourced for Scoopon early on included deals like:
- a massage for $39 instead of $79
- a great meal at a local restaurant for $49 instead of $99
- discounted entry to an event, a conference or a park at 70 per cent less than the normal price.
It’s hard to believe that this juggernaut, which would take the country by storm and spawn a plethora of copycats, began in a dilapidated shed out the back of the Catchoftheday offices. There was no room in the main office (it was already buzzing with 15 staff members) so this little ‘side hustle’ was banished to the back shed until it could pay its way. If WorkSafe inspectors had popped in, they’d have taken us to court. The room had no windows, no air and so few chairs that we had to wait for someone to get up to go to the toilet so we could sit down and check our emails at their desk.
How we launched Scoopon
I love the early days of a start-up: the buzz generated when you think you’ve come up with a great idea; the down you feel the next day when you start wondering if it’s perhaps the dumbest idea in the world and someone tells you that it can’t be done.
Catchoftheday was growing nicely and was very profitable, and while we could have afforded to hire teams to develop the sales channels for Scoopon, I wanted to run it lean and mean to see if the idea had legs before we invested more into it. I truly didn’t know if the idea would work and I wanted to do my own homework to see what we were up against. The only way to do that was to pound the pavement, knock on doors and see what challenges awaited.
I reasoned that if I could make a dent and get a good reaction from the suppliers, then it meant that I could send a sales team into the field and have a reasonable expectation they’d succeed too. If I didn’t do those hard yards at the start there would be no way of knowing if it was the business model, or the person selling it, that was flawed. Like Catch, sourcing suppliers for Scoopon was ridiculously hard, especially in those early weeks.
Here’s what I did to get it off the ground.
I hired a junior graphic designer to create a replica of the Scoopon home page and I stuck it on an A3 piece of paper. (They call this an MVP now. I just called it a mock-up.) I got in my car and I drove around from car washes to massage parlours (the therapeutic ones, I may add!) in the area. I’d walk in, introduce myself as a sales rep for Scoopon, deliver my prepared sales pitch to the receptionist and promptly receive a polite but firm ‘no’.
No matter how hard I tried and how many fancy marketing words I used, I couldn’t get past the receptionist to speak to the owner.
I intentionally didn’t introduce myself as the owner of the business, nor did I mention Catchoftheday, because in order to push through the door, I needed to see if the business model could stand on its own two feet.
After numerous knockbacks, I started to doubt whether this business model was going to work. It seemed no-one I spoke to could see the benefits of this product. I seriously contemplated giving it away but wanted to give it one more go. So, I decided to do something different. I flipped the pitch. Instead of spruiking how many eyeballs their business would get by being on the website, I said, ‘We are looking for 500 massage vouchers for our members, and I’m scouting some different massage clinics in the area to see what’s suitable. I’ve got $15 000 to spend.’
Boom! The floodgates opened.
Now I got put through instantly to the owner and the receptionist would go to great lengths to find the boss as no-one wanted to be the one who lost a $15 000 sale.
I’ll never forget the first deal we featured when Scoopon launched in April 2010. I managed to convince an Endota Spa franchisee in South Melbourne to run a deal with Scoopon. I expected to sell 20 vouchers or, if we were lucky, maybe 50. In just three hours, we sold 873 massages for $40 each, half the normal price, making around $20 profit on each one. Do the maths. We made $17 000 on our first deal. We were all blown away. We had just discovered our next Catch! It was time to press the gas and hire a team.
I’ve always believed that when it comes to building a new business, you should never build the chimney before you build the house. Why would you? It’s a risk and why waste money on something you haven’t tested? Once we’d signed up 50 suppliers to the site across the three major cities of Melbourne, Sydney and the Gold Coast, I knew we had something, and only then could I justify investing in an expensive website and hiring teams of people.
* Gabby had the quarter chicken with peri peri sauce. Hezi had the burger and chips.
This is an edited extract from Catch of the Decade by Gabby Leibovich and Hezi Leibovich, published by Wiley, RRP $29.95.