This was published 7 years ago
How to build a $20 million company in four years
It stole the daily deal sites' thunder to achieve 338 per cent growth in 2015.
By Alexandra Cain
The really awesome businesses at the moment are the ones that don't require huge capital investment and instead provide a market through software – think Uber for taxis, AirBnB for hotels.
It's this business model that is responsible for the so-called disruption we're seeing in many markets and I think there's an opportunity for many parts of the economy to be transformed in this way.
Sean Senvirtne, founder of mydeal.com.au: "This is not the time for exit because we don't know what this thing is yet, what we have."
One business based on a similar business model is MyDeal.com.au, an online marketplace with more than 25,000 products from 1000-plus online retailers, everything from children's drones to furniture. The site receives a million visitors a month and is on track to achieve $100 million in sales by the end of 2019 at its current growth rate.
Launched in 2012 by Sean Senvirtne from his Melbourne apartment, the business is a conduit between small businesses that want to sell online – but don't want to have to manage the infrastructure to do this – and the customers that want to buy from them.
MyDeal.com.au was launched at the same time as businesses started to recognise the limitations of selling through daily deal sites.
"These sites attract the bargain hunter or people who will travel 30 kilometres to get a half-price restaurant meal and never come back," explains Senvirtne. He says greed was another problem: businesses were selling so many vouchers through these sites they could not meet demand, which ends up being bad for business.
"What we learnt was that companies want a turnkey solution to sell their products and services online on an ongoing basis," he adds.
It doesn't cost businesses to list their products, rather MyDeal.com.au takes a commission of between five per cent to 18 per cent of the value of the sale. Goods in a highly competitive market such as electronics attract a lower commission, products such as furniture are at the higher end.
So far the business has been self-funded, but Senvirtne is trying to raise $5 million in funding at the moment, after twice unsuccessfully tapping the market for funds previously.
"In 2012, when I tried to raise money for this model, people laughed at me. Some of the prominent venture capitalists, to my face, told me I'm crazy. These investors are not crazy to call me crazy because e-commerce is a highly competitive market.
"People think e-commerce is easy, but it's not. You have to be really innovative, work hard and know what works and what doesn't very quickly, and take actions. Persistence and perseverance pay off."
Senvirtne says his employees are an important ingredient in the business's success. He now manages a 35-person strong team and oversees recruitment. "It could be a customer service position or it could be a senior technical operator. I'm still involved as much as I can when recruiting people because the backbone of any company is its people."
In terms of the future Senvirtne is concentrating on continually increasing site traffic, improving processes to scale up the business and adding more suppliers and products to the site. He also plans to launch a new app within the next three to four months.
As for an exit strategy, Senvirtne says the business wasn't built with that in mind, but it's something he would consider once the company is mature within the next two to three years, or if the right buyer emerges who can continue to grow the company.
"Last August was our biggest month ever on MyDeal and last week was our biggest week ever again. From here until December, we expect to beat all the records we set in the last four to five years. We had offers to purchase our business from some of the players in the market but we thought about it very carefully and this is not the time for exit because we don't know what this thing is yet, what we have," says Senvirtne.
"Our model has no ceiling, we can continue to evolve and grow exponentially. If you build the right business, the right value, eventually someone will approach us and if it's the right deal then we will consider it," he adds.