Capital Efficient Entrepreneurship: Bonanza Co-Founder Mark Dorsey (Part 2)

Sramana Mitra: What year did Bill start coding the product?

Mark Dorsey: That was in 2007. He started building Bonanza from the ground up. At that time, there were a lot of eBay alternatives. The opportunities were obvious. There were a lot of programs that allowed you to create an e-commerce marketplace by just filling out a form. These were website templates. He decided early on that he was going to build it from scratch.

Sramana Mitra: Was Etsy on your radar at that time?

Mark Dorsey: Very much so. We viewed Etsy as a really great site. To this day, we absolutely think they’re fantastic. They’re really doing a lot of great things. We went on Etsy and reviewed a lot of things that they were doing right and expanded on those when we created Bonanza.

Sramana Mitra: You said you were bootstrapping this venture.

Mark Dorsey: We were. It’s actually some of the more fonder times that we have of creating Bonanza because we were very much bootstrapping the company.

Sramana Mitra: Two-sided marketplaces are one of the trickiest things to do. Talk to me about how you get both sides of the equation to come and play on your site.

Mark Dorsey: That’s a really great question because it’s one of the famous chicken-and-egg challenges. In the marketplace back then, eBay was this huge Goliath. eBay was starting to switch from their model of focusing on sellers and unique items, which brought them to where they were at.

They were starting to attract bigger brands to their platform. Also you have to understand the landscape of the time. The marketplaces that had traction were all very buyer-focused. We saw an opportunity. We were going to become a seller-focused marketplace.

When we first started, we made a decision that we were going to focus on the sellers. We were going to build a product that was going to help them succeed and create win-win propositions so that they really felt supported. We felt that if we could do that and concentrate on our product and listen to sellers, they were going to organically come to our platform and want to see us succeed. When the sellers come to our platform and they want to see us succeed, they’re going to bring their products and great customer service. That’s going to attract the buyers to our site.

Sramana Mitra: Did you launch the site in 2007?

Mark Dorsey: We did a soft launch in January of 2008. Then in June of 2008, we did a beta launch. It was a very controlled launch because it was just Bill and myself. Bill would be programming the site, and I would go out and do guerrilla marketing. I would literally go out with postcards on foot throughout the Seattle neighborhood and convince people to come to the site and let them know what we were building.

We would cap it at a certain level of people because we were working on one server. It was important that we didn’t flood the system with too many people. As time went on, that number grew.

This segment is part 2 in the series : Capital Efficient Entrepreneurship: Bonanza Co-Founder Mark Dorsey
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