Building a Two-Sided Marketplace: LawnStarter CRO Ryan Farley (Part 3)

Sramana Mitra: Did you launch it in a particular geography?

Ryan Farley: We did it in one county in the Washington DC metro area.

Sramana Mitra: Is that where you’re from?

Ryan Farley: I’m from close by.

Sramana Mitra: That was your local county.

Ryan Farley: It was at that time.

Sramana Mitra: What about financing? Did you bootstrap? How did you get this off the ground?

Ryan Farley: For the first six months, we lived off our savings while we were working on it. Then we raised a total of $110,000 and invested some of our savings in February 2014. We didn’t hire anybody at that point. It gave us some money to put into customer acquisition and various costs. Then we did a beta test.

Next, we got into Tech Stars in Austin. That involved $118,000 in seed money. After that, we raised a million dollar seed round. A few months after that, we raised our Series A which was for $6 million.

Sramana Mitra: What metrics did you raise these rounds with? What did you have to show each time that you were raising money? Can you step us through the progression of the business?

Ryan Farley: The first round was definitely the most exhilarating and challenging round to raise. We had a couple of investors we had relationships with. We kept them up-to-date on our progress. We weren’t growing the business. We weren’t acquiring customers, but every month, we would send out an email saying, “Look at what we’ve built.” These investors that we ended up raising a round from could see us progressing.

We had a strong business case. When we raised that first round, we had proven that we could get supply onto the platform. We had de-risked that side of the business. We didn’t really have anything to show for other than the fact that we have suppliers. That was the first round. Getting into Tech Stars was also very qualitative.

Sramana Mitra: When you applied for Techstars, you had 100 or so customers or vendors?

Ryan Farley: 100 or so customers and then five or six lawn care providers.

Sramana Mitra: You had both sides of the equation coming together before you applied to Techstars.

Ryan Farley: That’s correct.

Sramana Mitra: How many months into starting this did you apply for Techstars?

Ryan Farley: It was right at Spring. We started working in August. I don’t remember when we actually submitted the application but we went through the interview process in April.

Sramana Mitra: Almost eight months into the process, you had both sides of the equation validated and now you’re going to Techstars.

Ryan Farley: That’s correct.

Sramana Mitra: What happens next?

Ryan Farley: We got down to Austin in June. Steve and I were self-taught programmers. We built just enough to validate this concept. With only two people and an intern or two, there was just so much to do. We could have probably taken it to the next level, but it would have taken 120% of our time just to learn the technology.

We had been working next to a friend of ours who was in college and he was just graduating. We were able to convince him to join us right before Techstars. His name is Jonas. That was one of those moments where if we had not been able to recruit him, I have no idea where we would be. We would probably not be here. We snagged him right before Techstars.

This segment is part 3 in the series : Building a Two-Sided Marketplace: LawnStarter CRO Ryan Farley
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