In 2010, Tara Hunt was living in San Francisco, breathing in the air of Silicon Valley and thinking that yes, indeed, the world did need another online shopping venture.
Her life was jam-packed with activities, and so she liked to shop online, but there wasn’t a shopping site that consistently let her choose the perfect item in minutes. More typically, she’d spend three hours going through a dozen shopping sites, only to buy something she didn’t love at a price that was higher than what she wanted to pay.
“It was crazy,” she says. “The online world has promised us a shopping utopia, but my online shopping experiences were often more of a pain than going to the mall.”
Ms. Hunt realized there were lots of busy, online-savvy shoppers like herself, and felt the market would welcome a new business to help people shop online.
The problem was figuring out what business model offered the most value to online shoppers.
Ms. Hunt had been working in the area of the social web since 1992. She was in San Francisco advising high-tech startups and writing a book, The Whuffle Factor: Using the Power of Social Networks to Build Your Business.
Once the book was published, she realized she wanted to return to Canada, so she moved to Montreal and started to develop her shopping venture concept. She teamed up with, Jérome Paradis, a software developer who had a provisional patent on a technology to parse receipt information, and Cassandra Girard, a consultant in the area of online retailing.
The three partners started by developing a shopping browser, based on the assumptions that a person’s own shopping history was valuable in subsequent buying decisions.
When someone bought something online, the tool took information from his or her online receipt, put it in a personal data base, and bookmarked the Web page of the product.
They released a test version to friends and family and watched how they used it, but the results were disappointing. “The people who were interested in the personal data piece were different than the people who wanted to share their shopping experience with other people,” Ms. Hunt says. “Looking at the analytics was depressing. Of the people who said they loved our system, only 1 per cent were coming back weekly and no one was coming back daily.”
Besides helping buyers, the founders wanted to provide value to the small stores “at the edge of the Web” that have interesting products, but are not visible to consumers. That wasn’t happening with the current system.
Given their own interests, they focused initially on clothing retailers. The team had several ideas to encourage people to visit the site more frequently – such as daily deals and price comparison engines – but these were already being offered by other businesses.
They renamed the business Buyosphere in hopes that it would attract more shoppers, but, as Ms. Hunt puts it, “this only moved the needle marginally.”
She describes these days as the “dark ages.” “We spent a lot of time, our own money and our family and friends’ money, and the system wasn’t doing what we wanted it to do. It still wasn’t a value-added aid to finding what I wanted.”
How could they turn the venture around?
By the spring of 2011, Ms. Hunt had been named one of the most influential women in technology and one of the 25 female startup founders to watch in Fast Company magazine.
However, she knew that she had reached an impasse with this venture and it required deeper thinking. She had to inject new ideas into the team’s deliberations.
She went to San Francisco to talk with people working in the online world. Everyone was helpful, and some great ideas were floated, but none really resonated.
On the last day, however, she met with someone who observed that her objective was similar to that of Quora, which is a social media-based, online question-and-answer site. Quora lets people pose questions, search for information, and follow particular topics and other Quora users.
Recognizing that Quora was an analogy for Buyosphere was a eureka moment. “When he said that, everything fired in my head,” Ms. Hunt says. “Why were we going in the data direction? People would have to accumulate thousands of purchases for it to help them. Why don’t we do a Quora for shopping?”
The vision was that people could input questions like “Where can I find shoes to go with this dress?” with accompanying information, such as a photo of the dress and a price range. The question would be sent to knowledgeable people in the Buyosphere community.
With this vision in mind, the co-founders developed a new business model, designed a new website and raised more money. Since Quora was two years ahead of them, they could even learn from its mistakes.
“Things are happening very quickly,” Ms. Hunt says. “We’re going to need a mobile app much faster than we thought because people want to talk about furniture on our site, and furniture is different than clothing, because it tends to be a local rather than an online purchase.”
Learning from Quora, they have introduced interest groups, to increase the propensity of people to ask and answer questions, and also gamification and reward points for answering questions.
Last month, the Buyosphere founders were named the most promising team at the 2012 Women 2.0 Pitch Conference in Silicon Valley. They’ve also been successful in receiving seed funding from outside investors.
“We needed a long runway with our previous data-based venture, and so we were looking for $750,000,” Ms. Hunt says. “But we can prove this model in eight months, and so asked for only $250,000. We pitched investors that had previously turned us down, and they bought into it. Real Ventures led the round, and it was over-subscribed at $325,000.”
Although Buyosphere’s most recent incarnation is still very new, and the jury is out on where it will be a year from now, its journey illustrates the importance of changing direction when your firm is not getting the traction you hoped for, of having knowledgeable advisers to kick ideas around with, and the power of a great analogy in deciding what your venture should look like.
Special to The Globe and Mail
Becky Reuber is a professor of strategic management in the Rotman School of Management of the University of Toronto.
This is the latest in a regular series of case studies by a rotating group of business professors from across the country. They appear every Friday on the Your Business website.
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