Building a Two-Sided Marketplace: LawnStarter CRO Ryan Farley (Part 5)

Sramana Mitra: Did you raise funds at the Techstars demo day or did you raise funds afterwards?

Ryan Farley: Most of it was afterwards. We pieced together a round of a lot of individual angel investors. We didn’t have any VC funds in the million-dollar round. One of the 20 angel investors came from demo day. The rest came from our network or the Tech Stars network. Demo day is a great event, but it’s not like when you do your presentation, investors come running to you. That’s when the work begins; not when it ends.

Sramana Mitra: How much did you raise at this point?

Ryan Farley: That round was for a million dollars. We had set out to raise about $600,000. It’s funny. David Cohen of Techstars told us the two-thirds rule. Once you get to the two-thirds mark of your round, the rest will fill itself. That was absolutely true. We left the round open up to about a million. We got to $600,000 or so. The remaining filled in on its own. That process ran from October to January of 2015.

Sramana Mitra: When did you close the million-dollar round?

Ryan Farley: It’s either January or February of 2015.

Sramana Mitra: Let’s go to the next phase. After you closed the round, what was the next thing that happened?

Ryan Farley: We’re a seasonal business. We had to ramp up for spring. That involved hiring a Director of Operations, a Head of Support, and maybe four or five customer success representatives, a couple of inside sales representatives, and an engineer.

Sramana Mitra: Your inside sales representatives mostly worked on the supply side.

Ryan Farley: 100%.

Sramana Mitra: The consumer side was all online customer acquisition?

Ryan Farley: Yes.

Sramana Mitra: In terms of the consumer side, what was working?

Ryan Farley: We had a trickle coming in from PR and word of mouth. People don’t really start getting their lawns cut until March or so. We had a short period of time to try everything. We did Google AdWords. We still do. We did a lot of direct mail and door hangers. We were on some review sites such as Yelp. For a while, we tried going door-to-door with moderate success. We also did some Living Social group early on. That’s how we got off the ground.

Sramana Mitra: Did you hit upon something that was going to become a repeatable customer acquisition strategy?

Ryan Farley: The thing that are repeatable like AdWords, direct mail, organic search were slow but caught up. Then we had referrals. That is great because it grows proportionally to your customer base. We get referrals also by just pure organic word of mouth. We also have a Give 20, Get 20 program. That was our second biggest acquisition channel behind search.

Sramana Mitra: Great. By the end of 2015, where were you in terms of metrics that you would like to share?

Ryan Farley: We had opened three markets because of seasonality. We launched Orlando in February, Austin in March, and DC in April. It gave us a little bit of time to experiment and learn. Around April or May was when we were starting to get approached by venture capitalists. We had over a thousand customers at that point. We were growing very fast. Orlando was just a test market, to be honest.

We ultimately ended up raising a $6 million round, which we announced in June 2015. Then we started focusing on two things. One is how do we scale the team to be ready for the following year. Two is how do we make sure that this experience is stellar for everybody. We raised a round and poured a bunch of it into trying to grow. We actually took a step back and focused on nailing customer experience. That was June 2015.

Sramana Mitra: This is the million-dollar round?

Ryan Farley: That was the $6 million round.

Sramana Mitra: You raised money twice in 2015?

Ryan Farley: Yes.

This segment is part 5 in the series : Building a Two-Sided Marketplace: LawnStarter CRO Ryan Farley
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