Capital Efficient Entrepreneurship: Bonanza Co-Founder Mark Dorsey (Part 4)

Sramana Mitra: Help me understand the timeline now. When did you create this member program so you could keep the servers going? What year did you switch to being able to charge final value fee? What year did the membership program really start generating significant revenues?

Mark Dorsey: We launched the beta in June of 2008. The article came out in September of 2008. The membership program to buy more servers was launched in December. We started to realize significant amount of revenues a week after we started the program. To us, being able to buy another server was significant. That was significant revenue to us.

The program was launched in December of 2008. That gave us enough runway to get to June 2009, which was our one-year cutoff to where all transactions on the site would be charged a final value fee. That gave us the runway that we needed to get to that point. It also gave us the runway to continue and further scale the business. 

Sramana Mitra: What is the next major strategic move and what is the next major inflection point?

Mark Dorsey: From 2009, we started to build out a model. When we first started, our main target was trying to be a different Craigslist. We saw Craiglist as this fantastic platform but they were not very transparent. Like I said earlier, it’s important that people have a platform where they can tell the story of their product because that’s when you really connect with other people who are like-minded.

That was our initial goal but what we found when we first launched the site was that a tremendous amount of people from eBay were coming over to our site. When we first built out the platform, it was built out with small sellers in mind. We thought that we would never really have people list more than 50 items per person. We started realizing that we were attracting a lot of original eBay sellers who were selling 10,000 items.

Our strategy, from that point forward, was starting to change our site to start thinking about the medium to large sellers. We had to start looking at our tools and looking at what these sellers wanted and build out tools for them. At the same time, it was very important to us to be able to provide a customer service that felt personal and that made them feel like they were being heard. It made them feel important. That was something that was always a goal for us from day one. It still is, to this day.

Our strategy at that time was to change our site focus from small sellers to small to large sellers and to build tools for that. we were also scaling a customer service team to continue to be able to serve the people who were coming on to our site. We were working on that from about 2009 to 2010. That was our primary focus.

This segment is part 4 in the series : Capital Efficient Entrepreneurship: Bonanza Co-Founder Mark Dorsey
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