Technology | Entrepreneurship
Goodbye, my almost lover
Goodbye, my hopeless dream
I’m trying not to think about you
Can’t you just let me be?
So long, my luckless romance
My back is turned on you
Should’ve known you’d bring me heartache
Almost lovers always do
…I will miss you Lootmaar.
-Adnan
Yes, we were on a roll, but it was entirely self-funded with no semblance of revenue. When we started running Lootmaar, we faced 5 major issues:
1) Sellers just didn’t get it
Sellers were just unwilling to participate. Getting each retailer online took an enormous amount of personal effort by the founders (predominantly Noman). And these weren’t cold calls, as we were often referred to these vendors through friends or family. Even when they did agree to participate, it was on the condition that Lootmaar would manage all the logistics including maintaining their online inventory, listing items, responding to questions, coordinating with buyers – everything. We agreed to do this initially in the expectation that vendors would be more willing to manage their stores once they see steady sales, but that turned out not to be the case as most sellers were ill-equipped to take on this responsibility and the volumes weren’t enticing enough.
2) Viral marketing didn’t work
We were expecting small-scale viral activities such as charity auctions and 1-rupee auctions to multiply and produce the results of a conventional marketing campaign at a small fraction of the cost. This was very naive of us. Yes, these activities generated a hundred or so user registrations each, but then instead of building buzz, they just petered out. We were unable to generate any viral impact. We tried to rationalize our lack of success at viral marketing by assuming that viral networks don’t work in Pakistan. This is of course, utter bull. Truth is that viral marketing has the potential to work spectacularly well in Pakistan, it just requires consistent, focused attention. There are two types of viral campaigns: Those that are accidentally successful, like the million dollar homepage, and those that require experimentation, investment and nurturing. In hindsight, I see we were banking on the first type. Marketing is the key thing that we got wrong, because to keep sellers and partners (couriers, payment platforms) interested we had to rapidly build scale and this did not happen.
3) Technology cost too much
To launch early and test the market, we bought an off-the-shelf system and privately hired two moonlighting developers to customize the software. It was the cheapest way to do it, and worked well initially. Problem was that when we launched we did not have the capacity to respond to user feedback in a timely manner. The primary developer, well meaning though he was, just did not have time between his day job and family commitments. We got so badly burned by this experience that I did not want any unpredictability in tech dev and started looking for a reliable partner. After months of searching, we got into an agreement with Folio3 after Adnan Lawai offered us friends and family rates to support our fledging start-up. Given the professionalism of the Folio3 team, the rates were indeed a bargain, but for a tiny Pakistani startup (making no money) it was still a significantly amount monthly, and since the contract was dollar denominated the currency shock of 2008 added to the burden.
4) Technology hogged all the management attention
I’m a geek, Noman is a geek, and Maryam is a (quasi) geek. We spent a disproportionate amount of time building and refining technology. Sajjad, the Folio3 software engineer working with us was great, but the underlying code that he had inherited was complete garbage. Given how picky I was, each change, even the minutest one took days and even then I only grudgingly promoted it to production. Truth is that building technology is fun and easy and we consciously fell into the trap.
5) Execution. Execution. Execution
What it really comes down to is poor execution. None of the four points I have written about above came as surprises. Noman and I had expected these problems, and devised plans to address these. The problem was that we did not have the time and resources to execute. Soon after launch, when the challenges of building scale and generating cash-flows were starting to become apparent, I took up a consulting offer and moved to Dubai taking an “advisory” role in Lootmaar, leaving all operational responsibility with Noman. Even with very low volumes, Lootmaar was very resource and operations intensive requiring extensive manual coordination between buyers, sellers, couriers and banks. As if this didn’t keep Noman busy enough, he also had to manage some important aspects of his family business, so his hands were quite full. Hence, we obsessed about technology (at the expense of business) because it was the easy thing to do as it could be directed remotely, and performed asynchronously. Client facing activities, such as bringing retailers onboard, expanding the network of evangelists, integrating payment systems, partnering with media companies-all activities that required on-site face time-suffered.
So now the big question is: What’s next?
-Adnan
We got off to a great start. We organized a 1-rupee auction event at SZABIST and planned to replicate its success at each major institute. We also set up a network of evangelists at major universities, launched charity auctions, integrated tell-your-friends functionality and continued to generate a steady buzz.
Building a successful marketplace is a two-sided dilemma, in order words, the classic chicken and egg problem. You have to bring the sellers and the buyers onboard at the same time and in the right proportion to make it work. In order to give Lootmaar an immediate boost we convinced a range of different sellers ranging from Jogi’s, a retailing giant to GamesRus, a small corner shop in Malir, to put up their inventories on Lootmaar. In order to attract this segment, we built attractive store fronts that were easy to set up and configure.
We continued to develop the platform to provide services unheard of in Pakistan. We introduced a Buyer Protection program which protected buyers for transactions up to Rs. 5000, a dispute resolution system to help facilitate disputes, a flash advertising platform that could push live ads of real auctions, and a widget that a store owner could customize and embed into his website or blogs with 5 clicks. And ofcourse, we tied up with a prominent courier company to offer a version of Cash-on-Delivery to circumvent the ePayment issues in Pakistan.
On the technology side, we decided not to develop technology internally and handed over ongoing development to Folio3. Sajjad, our primary developer there, did an outstanding job despite inheriting messy, patched up code that had been tinkered with by half a dozen different developers before. Around this time, Maryam joined Lootmaar to take over technology management, freeing us up (in theory) to focus on business development. Anoushey became a key stakeholder.
To flatter us, a couple of imitators also hit the market, often with crass, plagiarised marketing campaigns. We were on a roll.
-Adnan
The last update made to our subversion log was in November 2008, which means that it has been exactly one year since we stopped active development on Lootmaar. I haven’t written about Lootmaar in ages, and the truth is I didn’t quite know what to say. Is Lootmaar dead in the water? Is Lootmaar changing its business model? Why aren’t there any items listed? Deep inside, we knew what the right answer to each of these questions was, but saying it out loud seemed like an admittance of failure and so we continued plouging cash in an attempt to convince ourselves that the business will take-off. We are the mere cusp of the hockey stick. Another five lakh rupees and we would made it.
We were going through a case of entrepreneurial delusion, or in management terms “commitment to a losing cause”. In the next few posts, with the clarity of hindsight I’ll tell you what happened, where we screwed up and what now.
-Adnan
