When I co-founded Handshake.com in 1998, consumers could use our service to get customized price quotes and book online appointments for a variety of service providers – plumbers, house cleaners, physical therapists and many others. Unfortunately, Internet penetration was in its infancy and small businesses were way behind the consumer. Upon launch of the service, we faxed the job request to the service provider! Nonetheless, Handshake raised over $20M in capital, had a partnership with a major Yellow Page company, a killer team of 30 and, at the Series B round, a $100M valuation. I thought I had made a lot of money (paper money I quickly realized). By 2001, the company was shuttered. While I had gone off to business school, I mourned the loss of my first entrepreneurial experience.
Bill Gates famously said “People overestimate progress that will occur in a year and underestimate what will occur in a decade.” It’s the truth. Over the past few years, I’ve been asked several times to evaluate companies similar to Handshake. I’ve been skeptical given the challenges facing such a business (e.g. small business aggregation) but I always felt that I might be biased by my experience in the late 90s. Today there are many such services including Groupon Scheduler, ZocDoc, RedBeacon (acquired by Home Depot) that seem to be thriving. I’ve reflected often on this wondered:
Did we have the right idea but were too early?
Given the recent successes of services similar to Handshake, I’ve started to believe that we had the right plan. However, we tried to scale faster than the market would allow. No one can control external factors like market euphoria for Internet companies or slow uptake by small/medium size service businesses. But one can try to be mindful of external factors, while keeping perspective on business realities (like revenues and profits). Unfortunately, we had built up a set of expectations among investors, employees and consumers that was difficult to back off (at least it felt that way).
What could we have done differently?
Focus and prepare for the long haul. Seamless Web (now just Seamless) initially focused on providing food ordering for law and financial service firms in NYC. Their approach enabled them to build restaurant relationships before going to the mainstream consumer. Likewise, OpenTable built out CRM functionality for restaurants as a way to establish value prior to having significant numbers of consumers booking online reservations. At Handshake, we tried to fight too many battles at once (aggregating consumers, signing up merchants, building a brand, etc) – a death trap for start-ups. Perhaps had we taken a go-slow, focused approach, the company would be quite valuable today. Back then, as today, it seemed like a large company could be built almost overnight. And while some companies reach escape velocity in just a few years, most do not. Companies like Service Magic (acquired by IAC), stayed the course over a decade, and proved successful in the end.
My learning …
Have a strong point of view on where the market is headed, but be willing to adapt as market realities change. Not all business germinate at the same rate, so stay focused, committed and enthusiastic about the entrepreneurial journey, no matter how long that may be.