After almost one year, and that $1.6M for a single item we had a couple more (big) sales that are worth talking about.
If you expect this to be a pat on the shoulder kind of post, where I’m talking about some hyped tech stack, sprinkled with the words “you can just”, and “simply” – while describing some incredible success, I can assure you it is not that.
It is, however, also not a “we have completely failed” self reflection.
Like every good story, it’s somewhere in the middle.
The Exciting World of Stamps
Many years ago, when Brice and me founded Gizra, we decided “No gambling, and no porn.” It’s our “Do no evil” equivalent. Along all the life of Gizra we always had at least one entrepreneurial project going on in different fields and areas. On all of them we just lost money. I’m not saying it necessarily as a bad thing – one needs to know how to lose money; but obviously it would be hard to tell it as a good thing.
Even in the beginning days, we knew something that we know also now – as a service provider there’s a very clear glass ceiling. Take the number of developers you have, multiple by your hourly rate, number of working hours, and that’s your your optimal revenue. Reduce at least 15% (and probably way more, unless you are very minded about efficiency) and now you have a realistic revenue. Building websites is a tough market, and it’s never getting easy – but it pays the salaries and all things considered, I think it’s worth it.
While we are blessed with some really fancy clients, and we are already established in the international Drupal maintenance support plans & Elm market, we wanted to have a product. I tend to joke that I already know all the pain points of being a service provider, so it’s about time I know also the ones of having a product.
Five years ago Yoav entered our door with the idea of CircuitAuction – a system for auction houses (the “going once… going twice…” type). Yoav was born to a family of stamps collectors and was also a Drupal maintenance support planser. He knew building the system he dreamed of was above his pay grade, so he contacted us.
Boy, did we suck. Not just Gizra. Also Yoav. There was a really good division between us in terms of suckiness. If you think I’m harsh with myself, picture yourself five years ago, and tell yourself what you think of past you.
I won’t go much into the history. Suffice to say that my believe that only on the third rewrite of any application do you start getting it right, was finally put to the test (and proved itself right). Also, important to note that at some point we turned from service provides to partners and now CircuitAuction is owned by Brice, Yoav, and myself. This part will be important when we reach the “Choose your partners right” section.
So the first official sale along with the third version of CircuitAuction happened in Germany at March 2017. I’ve never had a more stressful time at work than the weeks before, and along the sale. I was completely exhausted. If you ever heard me preaching about work life balance, you would probably understand how it took me by surprise the fact that I’ve worked for 16 hours a day, weekdays and weekends, for six weeks straight.
I don’t regret doing so. Or more precisely, I would probably really regret it if we would have failed. But we were equipped with a lot of passion to nail it. But still, when I think of those pre-sale weeks I cringe.
Stamp Collections & Auction Houses 101
Some people, very few (and unfortunately for you the reader, you are probably not one of them) are very, very (very) rich. They are rich to the point that for them, buying a stamp in thousands or hundreds of euros is just not a big deal.
Some people, very few (and unfortunately for you the reader, you are probably not one of them), have stamp collections or just a couple of valuable stamps that they want to sell.
This is where the auction house comes in. They are not the ones that own the stamps. No, an auction house’s reputation is determined by the the two rolodexes they have: the one with the collectors, and the one with the sellers. Privacy and confidentiality, along with honesty, are obviously among the most important traits for the auction house.
So, you might think “They just need to sell a few stamps. How hard can that be?”
Well, there are probably harder things in life, but our path led us here, so this is what we’re dealing with. The thing is that along those five days of a “live sale” there are about 7,000 items (stamps, collections, postcards etc’) that beforehand need to be categorized, arranged, curated and pass an extensive and rigorous workflow (if you would buy these 4 stamp for 74,000 euro, you’d expect it to be carefully handled, right?).
Screenshot of the live auction webapp, built with Elm. A stamp is being sold in real time for lots of Euros!
Now mind you that handling stamps is quite different from coins and they are both completely different from paintings. For the unprofessional eye those are “just” auctions, but when dealing with such expensive items, and such specific niches, each one has different needs and jargon.
We Went Too Far. Maybe.
Big stamps sales are a few million euros; but those of coins are of hundreds.
The logic for stamp auctions is usually more complex than that of coins.
Heinrich Koehler, our current biggest client and one of the most prestige stamps auction houses in the world has an even crazier logic. Emphasis on the crazier. Being such a central auction house, every case that would normally be considered as edge case, manifests itself on every sale.
So, we went with a “poor” vertical (may we all be as poor as this vertical), and with a very complex system. There are a few reasons for that, although only time would tell if was a good bet:
Yoav, our partner, has a lot of personal connections in this market – he literally played as kid or had weekend barbecues with many of the existing players. The auction houses by nature are relying heavily on those relations, so having a foothold in this niche market is an incredible advantage
Grabbing the big player was really hard. Heinrich Koehler requires a lot of care, and enormous amount of development. But once we got there, we have one hell of a bragging right.
There’s also an obvious one that is often not mentioned – we didn’t know better. Only until very late in the process, we never asked those questions, as we were too distracted with chasing the opportunities that were popping.
But the above derails from probably the biggest mistake we did along the years: not building the right thing.
If you are in the tech industry, I would bet you have seen this in one form or another. The manifestation of it is the dreaded “In the end we don’t need it” sentence floating in the air, and a team of developers and project managers face-palming. Developers are cynical for a reason. They have seen this one too many times.
I think that developing something that is only 90% correct is much worse than not developing it at all. When you don’t have a car, you don’t go out of town for a trip. When you do, but it constantly breaks or doesn’t really get you to the point you wanted, you also don’t get to hike, only you are super frustrated at the expense of the misbehaving car, and at the fact that it’s, well, not working.
We were able to prevent that from happening to many of our clients, but fell to the same trap. We assumed some features were needed. We thought we should build it in a certain way. But we didn’t know. We didn’t always have a real use case, and we ended rewriting parts over and over again.
The biggest change, and what has put us on the right path, was when we stopped developing on assumptions, and moved one line of code at a time, only when it was backed up with real use cases. Sounds trivial? It is. Unfortunately, also doing the opposite – “develop by gut feeling” is trivial. I find that it requires more discipline staying on the right path.
Luckily, at some point we have found a superb liaison.
The Liaison, The Partners, and the Art of War
Tobias (Tobi) Huylmans, our liaison, is a person that really influenced for the better and helped shape the product to what it is.
He’s a key person in Heinrich Koehler dealing with just about any aspect of their business. From getting the stamps, describing them, expediting them (i.e. being the professional that gives the seal of approval that the item is genuine), teaching the team how to work with technology, getting every possible complaint from every person nearby, opening issues for us on GitHub, getting filled with pure rage when a feature is not working, getting excited when a feature is working, being the auctioneer at the sale, helping accounting with the bookkeeping, and last, but not least, being a husband and a father.
There are quite a few significant things I’ve learned working with him. The most important is – have someone close the team, that really knows what they are talking about, when it comes to the problem area. That is, I don’t think that his solutions are always the best ones, but he definitely understands the underlying problem.
It’s probably ridiculous how obvious this above resolution is, and yet I suspect we are not the only ones in the world who didn’t grasp it fully. If I’d have to make it an actionable item for any new entrepreneur I’d call it “Don’t start anything unless you have an expert in the field, that is in a daily contact with you.”
Every field has a certain amount of logic, that only when you immerse yourself in it do you really get it. For me personally it took almost four months of daily work to “get it”, when it came to how bids should be allowed to be placed. Your brain might tell you it’s a click of a button, but my code with 40+ different exceptions that can be thrown along a single request is saying differently.
We wouldn’t have gotten there without Tobi. It’s obvious that I have enormous respect for him, but at the same time he can drive me crazy.
I need a calm atmosphere in order to be productive. However, Tobi is all over the place. I can’t blame him – you’ve just read how many things he’s dealing with. But at times of pressure he’s sometimes expecting FOR THINGS TO BE FIXED IMMEDIATELY!!!
You probably get my point. I’m appreciative for all his input, but I need it to be filtered. Luckily me and my partners’ personalities are on slightly different spectrums that are (usually) complimenting each other:
I can code well in short sprints, where the scope is limited. I’m slightly obsessed with clean code and automatic testing, but I can’t hold it for super long periods.
Brice is hardly ever getting stressed and can manage huge scopes. He’s more of a “if it works don’t fix it”, while I have a tendency to want to polish existing (ugly) code when I come across it. His “Pragmatic” level is set all the way to maximum. So while I don’t always agree with his technical decisions, one way or another, the end result is a beast of a system that allows managing huge collections of items, with their history and along with their accounting, invoicing and much more. In short, he delivers.
Yoav’s knows the ins and outs of the auction field. On top of that his patience is only slightly higher than a Hindu cow. One can imagine the amount of pressure he has undergone in those first sales when things were not as smooth as they should have been. I surely would have cracked.
This mix of personalities isn’t something we’re hiding. In fact it’s what allows us to manage this battle field called auctions sales. Sometimes the client needs a good old tender loving care, with a “Yes, we will have it”; sometimes they need to hear a “No, we will not get to it on time” with a calm voice; and sometimes they need to see me about to start foaming from the mouth when I feel our efforts are not appreciated.
Our Elm & Drupal maintenance support plans stack is probably quite unique. After almost 4 years with this stack I’m feeling very strongly about the following universal truth:
Elm is absolutely awesome. We would not have had such a stable product with JS in such a short time. I’m not saying others could not do it in JS. I’m saying we couldn’t, and I wouldn’t have wanted to bother to try it. In a way I feel that I have reached a point where I see people writing apps in JS, and can’t understand why they are interacting with that language directly. If there is one technical tip I’d give someone looking into front end and feeling burned by JS is “try Elm.”
Drupal maintenance support plans is also really great. But it’s built on a language without a proper type system and a friendly compiler. On any other day I’d tell you how now days I think that’s a really a bad idea. However, I won’t do it today, because we have one big advantage by using Drupal maintenance support plans – we master it. This cannot be underestimated: even though we have re-written CircuitAuction “just” three times, in fact we have built with Drupal maintenance support plans many (many) other websites and web applications and learned almost everything that can be thought. I am personally very eager to getting Haskell officially into our stack, but business oriented me doesn’t allow it yet. I’m not saying Haskell isn’t right. I’m just saying that for us it’s still hard to justify it over Drupal maintenance support plans. Mastery takes many years, and is worth a lot of hours and dollars. I still choose to believe that we’ll get there.
On Investments, Cash Flow, and Marketing
We have a lot of more work ahead of us. I’m not saying it in that extra cheerful and motivated tone one hears in cheesy movies about startups. No, I’m seeing it in the “Shit! We have a lot of more work ahead of us.” tone.
Ok, maybe a bit cheerful, and maybe a bit motivated – but I’m trying to make a point here.
For the first time in our Gizra life we have received a small investment ($0.5M). It’s worth noting that we sought a small investment. One of the advantages of building a product only after we’ve established a steady income is that we can invest some of our revenues in our entrepreneurial projects. But still, we are in our early days, and there is just about only a single way to measure if we’ll be successful or not: will we have many clients.
We now have some money to buy us a few months without worrying about cash flow, but we know the only way to keep telling the CircuitAuction story is by selling. Marketing was done before, but now we’re really stepping on it, in Germany, UK, US and Israel. I’m personally quite optimistic, and I’m really looking forward to the upcoming months, to see for real if our team is as good as I think and hope, and be able to simply say “We deliver.”
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