Lean Startup: Saja Online Auction
Grasping Human Nature, Seizing the Day
Squatting in a university library for a year to make use of free Internet access and utilities, three college friends had a rough start. But soon they achieved a revenue stream, and broke even within a month. How did they do it?
Grasping Human Nature, Seizing the DayBy David Huang
From CommonWealth Magazine (vol. 464 )
A dozen or so young people in their 20s and 30s are busily loading and unloading boxes along Taipei's Fuyang Street. They are employees of local Internet auction website Saja, and they're busy both stocking their shelves with merchandise in anticipation of the coming Lunar New Year holiday shopping season, as well as packing up the office to move. Saja is expanding and they have already outgrown the 80-plus square-meter digs they currently rent for less than NT$20,000.
"We waited until the need arose before taking the next step and investing [in a bigger office space]," says Jeff Yang, Saja's 35-year-old founder. After just 18 days of online operation, the Saja website succeeded in creating an operating revenue stream and managed to hit the break-even point by day 31. Behind that success lies experience, creativity, and simplicity in the extreme.
This isn't the first time Yang has tried his hand at a start-up. In 2001, prior to the widespread use of MSN and Skype, Yang sought to apply video technology in developing an online consulting website, even heading off to South Korea to procure more than NT$2 million worth of gear. The market failed to pan out, however, and the endeavor ultimately failed.
He came up with another idea in 2005 as online shopping websites were gradually coming to the fore. He had observed that while plenty of consumers liked the idea of haggling over prices, most were a little bashful about actually doing so. He subsequently decided to create a website where shoppers could engage in unbridled haggling. And the site would have to be built around creativity.
An iPad for Less than NT$100
Whereas at other online auction sites the goods go to the highest bidder, at Saja the person who makes "the sole lowest bid," i.e. the lowest bid no one else has made, gets to take home the merchandise. Each time a member makes a bid, they must first pay a bidding fee. In the case of the hot-selling iPad, which currently sells for just over NT$20,000, a member took one home with his winning bid of NT$96.
"Online shoppers are not a particularly loyal bunch, so with the usual format of going to the highest bidder, we didn't see much of an opportunity," Yang says. "You need to satisfy the latent desires of the consumer to have a shot at success of a different kind."
In the world of Internet business, innovation soon breeds imitators, so Yang has simultaneously applied for patents on Saja's auction haggling methodology in Taiwan, the United States and China.
Having failed once before, this time Yang was exceedingly cost-conscious. He sought out Kuo Wen-huei, his old partner from his first venture. Initially, they held their meetings in coffee shops, but discovered that this was fairly costly. Then they remembered the library in the fourth-floor basement of their alma mater Chinese Culture University's School of Continuing Education. Utilities and Internet access would be free there.
"We saved thousands per month," Yang says.
Even their first employees reported there on their first day of work. By the time Yang's patents were approved in 2009, the two had been squatting in the library for a year.
"To date we have yet to spend a dime on advertising," Yang says with pride. "It's all been done through social networking websites and word-of-mouth from people who've haggled in our auctions."
Saja definitely seems to be on to something innovative here, as their "fans" group has grown to more than 10,000 in less than 10 months.
"The notion that ‘consumer access is king' may need to be rethought," Yang believes. "Whoever can inspire the preference and loyalty of consumers will be the winner in the online shopping game."
Translated from the Chinese by Brian Kennedy