Gumiyo (www.gumiyo.com) is a recently launched startup based in Woodland Hills, which has developed a service that connects cell phone users with online classifieds. The service alerts users to new classifieds items on Gumiyo and other online classified sites like Edgeio and Google Base. Unlike other startups in the space, Gumiyo has focused in squarely on a highly mobile optimized space, which adapts to ways people want to use their mobile phone--and is very geared around alerting people to new items and presenting a optimized mobile connection between buyers and sellers. We spoke with co-founders Shuki Lehavi and Rich Abronson about the company's services and plans for the business. Ben Kuo conducted the interview.
When did you start the company?
Shuki Lehavi: We actually founded the company in November of 2006. We've been seven months in business so far, spent the first quarter of 2007 building the product--the technical side of the product and technical partnerships. We're geeks in mind so we were the first live application on Amazon's EC2, their Elastic Computing cloud. We're still being showcased by them. We started looking at the Google Base API and we've contributed a lot in back and forth with these companies, and showcased by these companies. We use Verisign's mobile messaging arm, which donates the mobile messaging infrastructure. You might be familiar with Jajah, a web activated telephony service--we are their first users of their web services API to anonymize communication between the buyer and the seller. We have a pretty nice conversion rate of our users to Jajah users. And we use PayPal mobile for mobile payments.
So it looks like you're a Web 2.0 API company?
Shuki Lehavi: Pretty much. Let's call it Mobile 2.0. Then as we started building the product, and saw that classifieds was a mature industry, and e-commerce is a mature industry, we understood that we are about to expand the traditional e-commerce use case into the mobile space. This is really how Gumiyo started. We started looking at being more product and customer facing, rather than technology facing. In the second quarter we started building a user base, a seller base, and dealing with companies that already had established web fronts -- for example Google Base, Edgeio was there--Google Base has 820 million listings, Edgeio with their 120 million listings, Oodle -- almost every player in the classified market. So we asked ourselves--how do we convert that into the mobile space? It's not as simple as putting a WAP page in front of your web site. It's really a different behavior. It's really where we wanted to play, in that area.
Gumiyo actually started when I was driving here on Valley Circle, and saw this car parked on the side of a road with a for sale sign on it. I was looking at it, and thinking, when a buyer and seller want to communicate, the thing that ignites it all is this little plaque--where you just disclose the price, a few words, and a picture of an item. That's all. That's all that is required to have the buyer decide if they want to call in. What we started thinking about was how simple it would be to capture this information, and transmit it. Then we started coming up with this whole notion of alerts, where you can take this information -- and for example, I'm not next to my PC right now, but I'm actively looking--I'm looking for a laptop for my kids. If I could just go ahead and get alerts from Gumiyo for these particular items, and I could click once and load alert and get everything I want about the item. That's about it, in order for me to decide in interested in connecting with the seller or not, or look for similar items. This simplifies the use case--fast on a mobile phone, a three second experience of if I'm interested or not. That's a very different experience from a traditional web site which just takes the web experience and crams it into a 164x320 screen.
Almost everything we do--from pushing information to the seller, and blocking spammers, to deciding which sellers are suitable, and those who are not. The whole concept is that translating this properly to the phone is very different. That's really what we're trying to focus on. When you're in front of a PC, three to four minutes, four times a day, you have time to absorb the information. When you're shopping through Gumiyo, and you know your destination is the mobile phone, you want to delegate as much as possible to Gumiyo.
When did you guys decide to make this a business?
Shuki Lehavi: We've been talking about starting a business for about ten years.
Rich Abronson: Since 1998. We would meet maybe three times a year, and we'd ask each other what ideas we had. And finally came up with something.
Shuki Lehavi: Once we understood the potential here--both from posting items as well as receiving items from your cell phone, pretty much both of us dropped our jobs and started the company. The first dollars were our dollars, and we did an initial round in November, friends and family. We only took very sophisticated investors with VC backgrounds. So, we knew they had access to capital, they knew what they were getting into, and were smart money.
Rich Abronson: And they also understood what was involved, and understood what it took to make the company successful.
Shuki Lehavi: The board has been incredibly supportive, and just let us do what is right. We've also been very surprised from the market. The fact that well established sites with 7, 10, 15 years in the business are not looking at us as a nuisance, and think that what we're doing is the right thing to do.
How do you compare with the online classifieds services?
Shuki Lehavi: Our positioning to them is this, You are well established around your web traffic. You don't have a presence on the mobile traffic. From a business perspective, we are an add on, though again a good portion of our site is organic listings.
Rich Abronson: Gumiyo itself is an end-to-end solution, but for them we're an add-on.
What's your revenue model them for the business--do you charge for the service?
Shuki Lehavi: Here's how it works. At this point, we said let's charge where the value is. No upfront costs, don't ask the consumer to trust us. Let's just prove ourselves first, and ask them to pay for the value they got from us, or dispute it if they don't agree. So our business model is incredibly simple. Lead generation and pay-for-performance. You can post as many items on Gumiyo as you want--no insertion fee, no transaction fee, no signup fee, no any fee. As soon as a connect comes into a seller -- through a SMS message, an email, or Jajah phone call, we know we have an interested buyer. Our prices vary depending on the asking price--under a thousand dollars, under fifty thousand dollars, and above. And by the communication method--the more immediate the communication method, the higher we charge. If the buyer just left you a message, you pay nothing. If you get an email, you get something, SMS or a phone call, it's more and more. It ranges from $0.25, where you're selling an item under a $1000 and you are getting an alert through email, all the way to $4.99, which is you're selling an item above $50,000 like you are selling a house and someone just called you. Let's compare that to existing prices, car dealers pay $25 - $40 a lead. On Gumiyo, they'll play $2.49 or $4.99. Real estate agents are used to paying $250 - $400 for a lead, on Gumiyo they'll pay $4.99.
How are people hearing about your services?
Rich Abronson: When a seller creates an ad, they're giving us some keywords about the ad, keyphrases, based on the title, and so we can actually purchase on behalf of that seller keywords and keyphrases at a very low rate. We're automatically optimizing for that. In addition we've actually hit the pavement and done some direct sales, and gone and people we thought would be interested in selling and in our value proposition.
What's next for the firm?
Shuki Lehavi: We've been in startup mode--small, incredibly low burn rate, small team of professionals--but if you look at technical challenges we have encountered, with EC2, S3, and all the integration--we know our technology. We've started understanding there is a huge opportunity out there, and it's time to build up a little bit.What we've been doing in the last three months, four months is to start building a marketplace of products and to very carefully analyze patterns and to build our business model and revenue model according to these patterns. We want to understand the flow and build our business model in prepare for our next round of growth, which we are very interested in right now. I think we're going to have to go and aggressively pursue growth in July and September. We've got enough money in the bank for awhile, but we're seeing more and more opportunities to go to the next level.