Silicon Prairie News

Zaarly adds Arrington to investor list, sets sights on seven core cities

Kansas City June 15, 2011 by Danny Schreiber Only 13 days until Big Omaha. Get your tickets before they sell out!

TechCrunch founder and now Zaarly angel investor Michael Arrington, right, interviews Bo Fishback backstage at TechCrunch Disrupt New York on May 23. Screenshot from techcrunch.tv.

Less than a week after its national rollout on May 19, Zaarly CEO Bo Fishback sat down with TechCrunch co-editor Michael Arrington in a backstage interview at TechCrunch Disrupt New York.

"Full disclosure," Arrington said at the end of the May 23 interview, "I asked you if I could invest and we're trying to work something out there. So nothing's done yet, but I may be conflicted at some point in which case we'll have other writers covering you, but I'm obviously genuinely excited about what you're doing. And just hope it grows like crazy."

Midway through Arrington's statement, Fishback responded: "For sure, that'd be awesome."

According to a TechCrunch article by Alexia Tsotsis yesterday, that "for sure," is now official. Arrington has invested an undisclosed amount in Zaarly, and in speaking with Fishback by phone this morning, it was learned that he's also joined Zaarly's list of advisors. Other Zaarly advisors include LeVar Burton and Demi Moore (wife of Zaarly investor Ashton Kutcher) – two celebrities who have already lent their Twitter power to the startup – as well as, Fishback said, "a roster of people you haven't heard of but who are rockstars."

On the involvement of Arrington, who recently announced on TechCrunch that he's become a more active angel investor, Fishback said: "He takes it really seriously, he really views his relationship with entrepreneurs and founders as something really special that they don't abuse."

Seven core cities

Last Monday, June 6, when Michael Stacy and I stopped by the Zaarly Kansas City office, we sat down with Ian Hunter, co-founder and CTO (left, photo from ianesque.com), and Shane Mac, director of product (right, photo from twitter.com/shanemac), to learn more about their May 19 platform release and what lies ahead.

"Basically what we did is we turned on the platform," Mac said. And while they're hesitant to call it a launch – this would've actually been their third "launch," in addition to Startup Weekend Los Angeles and SXSW – they did speak to the strategy behind it:

  • Available to the whole U.S. – Instead of limiting it to larger metropolitan areas, they were looking to see if organic communities would rise without their local marketing power
  • Locked it down to serve just the U.S. – While it received a couple postings overseas, they locked it down as they were uncertain about the foreign market and want to first focus on the U.S.

Going forward, Mac said: "We want to focus all our marketing efforts on our core cities, which right now are Seattle, San Fran, LA, Chicago, Boston, D.C. and New York City." From there, they'll try to figure out the concoction for a successful Zaarly community and work to replicate that model in the next 30 cities on their list, the "NFL markets" as Mac said. After those cities, they have a list of 150 more.

In our conversation this morning, Fishback said they haven't started their initial marketing yet. "That's what this summer is for," Fishback said. "We've been super fortunate to have so much inbound interest up to this point." At release, he said he had aimed for 1,000 to 2,000 early adopters, but that at this point they've signed up "well more than a 10x of that number." Now, he said, they have a pretty clear road map for what they want to build and roll out for the rest of the year.

$1 million in jobs posted

According to yesterday's TechCrunch article, Zaarly has surpassed the $1 million mark in the amount of jobs posted. This means that in total, users (buyers) have offered to pay more than $1 million for goods or services from the unknown seller market – such as washing a car for $35 or a flat screen TV for $1,500.

When we spoke with Mac on June 6, he wasn't able to supply any stats other than that at that point they had surpassed $500,000 (a stat now outdated). Mac said that while some offers may have skewed the numbers, such as a user posting $1,500 for a $10,000 car, the fact that these dollars were committed to paying for a good or service is the real importance of this milestone. This is a sign that the "new market" that Zaarly is focused on tapping into actually does exist.

Verified accounts and revenue

Zaarly has been bringing in revenue on a portion of the transactions made – those made using "verified" accounts and paid using the connected credit card via PoundPay. When the connected card is used, Zaarly takes a 9.95 percent transaction fee off the top of the seller's amount received. For example, if someone with a verified account Zaarlys a picnic for two for $100 and the then pays the person who delivers it through their connected card, the person who delivered it would receive $90.05. The $9.95 that Zaarly takes – which Hunter called a "finder's fee" type of cost – includes a convenience fee they pay to PoundPay.

When deciding on a fee cost, Mac compared Zaarly's platform to TaskRabbit, a similar platform but more focused on services, which charges an average 15 percent fee to the seller. Ultimately, however, it'll be up to the seller to choose the form of payment, and if it's cash or outside of their verified model, then Zaarly won't take in any revenue from the transaction.

In addition to Zaarly's benefit, Mac said a verified account benefits the users, as well. Included in that verified transaction is a dispute resolution guarantee from Zaarly – when a buyer offers to pay for something, Zaarly puts that amount in an escrow account, and if the buyer is dissatisfied, Zaarly will work with the seller (with leverage through the escrow account) to settle any issues. Furthermore, Mac said they're taking a cue from AirBnB, who made transactions between consumers an efficient process and took the "wheeling and dealing" out of it.

15 seconds to post, 30 seconds to take down

There's an automatic screening process on the backend that's getting more robust by the day, Hunter said. The goal to get a listing posted in 15 seconds, and if it's not first caught by the automated system, which runs off an internally-created algorithm, the goal is to take it down in 30 seconds.

"We look for certain known patterns in listings … we're working with some people who have done this before, and they definitely helped us in identifying who's reputable," Hunter said.

Mac said: "Every listing is automatically flagged on three different levels of security by the terms or phrases that we know of, and then if not, every single listing is manually reviewed by the team that is a support team, that basically looks at every listing and if it has certain phrases, keywords or anything … is flagged."

If a user is denied once they'll receive an automated email telling them why, but if they're denied again, they could get banned from using the system. Mac said they're watching the transactions very closely – for example, in fear of providing to a minor, they've removed all alcohol postings for the time-being.

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