When Harry Schiff launched Agent Anything in New York City in 2010, he had money from family and friends who believed in him, but no customers and no idea how to get them.
Agent Anything lets clients post 'missions' for their agents. In other words, for a fee, people and companies can hire university students to complete small jobs, tasks and errands. Thus, Mr. Schiff needed to attract two distinct types of users: people who needed things done and people who wanted to do them. How could he get the word out and build both types of customer bases?
Mr. Schiff is a Canadian who looks for opportunities internationally. Raised in Montreal, he went to university in the U.S., has a British business partner and refined his business concept in an Australian startup accelerator program. The idea for Agent Anything came in his third year of university.
"My sister lived nearby," he recalls, "and it seemed like errands were taking up a disproportionate amount of time in her day. She preferred to do some errands herself (e.g. picking up the kids from school), but other stuff could easily have been handled by anyone, if only she had someone to ask to do it. But who has spare time in the middle of the day, and would be willing to do a small task for a few bucks? Then it hit me that this would be ideal for students. I was at university, and I realized that students like me constitute a potentially 24/7 workforce that wants to make money but also wants a very flexible work schedule that wouldn't interfere with classes, exams, or team practices."
Mr. Schiff started writing a business plan that summer, and through personal contacts, found a highly experienced developer from the UK to come on as a technical co-founder. His plan and partner were enough to convince people to invest in the business, but the marketing challenges still had to be overcome.
The first challenge was a chicken-and-egg problem; you can't get missions done if there are no agents, but you can't get agents if there are no missions to do. Mr. Schiff decided to start by recruiting students, figuring they would be more patient in waiting for jobs than clients would be if their jobs didn't get done. So with a group of friends, Mr. Schiff handed out flyers and T-shirts outside local university campuses, and posted missions of his own under various pseudonyms to give potential agents something to look at. These techniques were very successful, but when he tried the same tricks with clients – handing out flyers on the street and running missions himself to ensure they got done well – he saw that it wasn't going to be enough.
From intuition and market research , Mr. Schiff believed that just about everybody needed and could afford his service, so he decided to go for maximum exposure. He put most of the money he had raised into conventional advertising channels that would target everyone at once, such as subway ads.
He recalls, "That worked to a certain extent. We did get great exposure. Thousands of people signed on and the company caught the attention of investors. And everyone naturally assumed that this little startup selling a service no one had ever heard of was a much older, more established company than it was."
However, there was a problem. He found that his type of advertising is very expensive and, relative to that cost, the yield in actual clients was low, meaning that Mr. Schiff was spending hundreds of dollars to acquire each one. "I found out later that they call this 'premature scaling'," says Mr. Schiff. "I was throwing money into a funnel, but the funnel was full of holes. A year later, the money was gone and I was back to working a full-time job. I knew that if wanted Agent Anything to be a success, I had to do a better job of acquiring clients."
The solution was to target individuals who had a high potential of becoming clients in a much more focused manner. Mr. Schiff posted his own mission and hired a student to make up a list of upscale apartment buildings whose residents were well-to-do professionals that spent long hours at work. He and a few interns set themselves up in the lobbies of these buildings with posters and flyers, encouraging people to sign up. This tactic was much cheaper than subway advertising and the customer conversion rate was higher. But it was still too slow.
Mr. Schiff then started looking at the data on the hundreds of missions that had been completed and identified a few common types. For example, he discovered that "handing out flyers" was a frequently posted mission, and so he hired an agent to create a list of flyer-printing companies, and began targeting them directly.
As well, in mid-2011, Mr. Schiff discovered a company then called Twepto (now called GoChime) that searched the Twittersphere for problems or complaints from potential customers and tweeted responses encouraging them to "get an agent" to help solve it. He gave them a list of frequently posted missions, such as dog-walking, and whenever someone tweeted that wanted to find someone to, for example, walk their dog, Twepto would reply to their tweet and suggest that they post a mission on Agent Anything.
By the fall of 2012, this new targeted marketing strategy was working well. Mr. Schiff recounts, "Our revenue stayed constant, but we had cut our marketing costs by 97 per cent. Close to 5,000 missions had been posted, and new clients and agents were signing up every day." His experience shows the importance of targeting new customers in a very focused way.
With the marketing challenge understood, Mr. Schiff is now focusing on proving the scalability of his model – in new, international markets, of course.
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 Small Business website.
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