The Original Idea: benja
Ephecom, the original name of benja, was meant to describe the original startup idea: ephemeral ecommerce. While the name didn’t catch up, the idea did. The Tindr interface gave Andrew and his co-founder, Tommy Goode, the idea to combine the swipe-left/swipe-right feature with ecommerce. While the original mobile app still exists, benja has grown five more platforms to bring shopping solutions to its users.
The Entrepreneur: Andrew Chapin
Andrew is a New England boy through-and-through. He grew up in Connecticut and has lived in Vermont, New Hampshire, and Boston, Massachusetts. Both of his parents are small business owners, and he explains he always had an affinity for business. After graduating from Lyndon College, he worked for Microsoft. Quickly, Andrew discovered he didn’t want to work for a large corporation, and every successive job he took was at a smaller and smaller firm.
After Microsoft, Andrew worked for Color, a startup infamous in investment circles for raising $41M without fully explaining the product idea. Following that, Andrew worked for Feathr, helping them to grow from revenue zero to low seven figures in about a year. In 2014, he co-founded benja with Tommy, a senior developer he met while working at Feathr.
The First Steps to Building benja
Andrew recalls the first steps to developing benja being a series of conversations. He and his co-founder wanted to completely understand the problem they were trying to solve. As a subscribe to Groupon, Andrew was confused why, with a buying history and access to his Facebook profile, offers weren’t more selectively tailored to his interests.
Putting aside the first question of why Groupon and other weren’t tailoring their offers better, Andrew set out to answer a second question: why weren’t brands that he wanted to buy from on daily deal platforms? After speaking with a number of people, he quickly discovered that brands were often damaged by these sites and furthermore, companies were forced to pay commissions as high as 20%-60%, in addition to offering a customer discount.
Building benja with Incubators and Accelerators
Andrew feels fortunate to have been accepted and aided by a few awesome incubator and accelerators. benja received an Arch Grant in St. Louis, which made their MVP development possible. Arch Grants are $50,000 no-equity, no-debt grants for companies that commit to doing business in St. Louis for no less than one year.
Following that, benja worked with the Vegas Tech Fund and their incubator, The Mill, which Andrew recalls as being incredibly value-add for benja. The partnerships generated by the Vegas Tech Fund helped benja to land their first few big partnerships.
benja also went through programs with Blue Startups in Hawaii and XRC Labs in New York City.
The launch of benja was slow. While it’s awesome that a platform like iTunes allows anyone in the world to download any app by searching its name, Andrew admits the first downloads were driven by the novelty of starting a new company, and likely most of the first downloads came from friends and family.
After about 3 months, benja had about 200-300 daily active users (DAU), largely through word of mouth.
The Business Model
benja solved the problem that Groupon faced by creating an ecommerce platform that relies on impressions, rather than a commission structure. Every time someone views a deal, benja makes fractions of a penny based on the CPM (cost per 1,000 impressions) they charge companies.
At 300 daily active users, benja had a long way to go before it could expect to generate enough revenue to support the two founders, let alone trying to hire.
The Big Break: Product Hunt
Andrew remembers checking Product Hunt, to find benja as the number two product. Very quicky, benja went from near 1,000 DAU to over 14,000 DAU. More importantly, the users stayed and continued to use the app, rather than falling off.
Building Brand Relationships
The benja network sells a number of products from high powered brands like Nike, Patagonia, and MLB network. Andrews credits the incubator programs that benja participated in for establishing those relationships. Once a few big companies decided to come on board, Andrew noticed more would chase. Andrew also credits the ease of use for vendors to get onto the benja platform– there are no long-term commitments, the benja team will set up small tests for new vendors, and, most importantly, it works.
100 Million Offers Goal
In addition to its iOS mobile app, benja has innovated a new style of digital advertising for desktop ads, it’s curated a targeted email list, and has an SMS early discount list. Each month, benja currently displays about 80 million offers. Andrew’s next big milestone is to reach 100 million in a month.
The Almost Acquisition
About a year ago, a large ecommerce Chinese company showed interest in benja and its technology. With the raise of Alibaba as an ecommerce giant, those companies losing market position to it have become nervous. Andrew explains that this company in particular, without mentioning its name, was interested in a two way relationships– it had local brands it wanted to introduce to the US market, but also wanted US brands to sell in China.
After about 3-4 months, Andrew was spending three days a week working out of their San Francisco based office. Finally, they agreed to an acquisition price and details of a deal. Until the closing day came and the deal blew up. The final term sheet included aggressive claw back clauses that Andrew described as “absurd.”
In retrospect, Andrew says he would have been happy if the deal went through, but benja is still also going strong. He cautions other startups going through a similar process not to drastically change business operations, such as dumping extra money into marketing to improve short-term numbers.
Managing Expectations and Keeping Yourself Sane
Starting a business is always an emotional roller coaster. Andrew says that managing expectations is key to keeping yourself going. While entrepreneurs have been romanticized by the media– Elon Musk and Mark Zuckerburg have become de facto rock starts– not every needs to start a billion dollar company to be happy. You can have a company that makes $500 a year, you’re still an entrepreneur, and if that $500 contributes to your life in a good way then that’s the goal. Don’t think that a billion dollars is the barometer for personal success.
One $15,000 Loss Later- Personal and Business Intertwine
In November 2016, benja started to sell Uber gift codes at 20% off, a great item, especially around the holidays. In one day, benja sold $60,000-$70,000 of codes. Everything seemed to be normal, the sales went through, benja delivered the codes, and then the floor dropped out. A week later, almost all of the sales from that day are charged back (a process where a credit card holder disputes a charge made on their card).
While charges are in dispute, the card processor, in benja’s case they use Stripe, takes the sales cash back. To complicate matters, Andrew was on his way to India for a wedding and knew he wouldn’t have the best connectivity. In the end, a group of Chinese hackers used stolen credit card information to purchase the Uber gift cards that benja was selling and then resell them on Ebay and other platforms at full price. benja lost almost all of its charge back cases, resulting in $70,000 of lost revenue plus $15,000 of fees– all for something when Andrew feels benja did nothing wrong as a merchant.
Andrew has written about his views on the responsibility of banks and payment processors, but the event also motivated benja to develop their own internal solution.
Side Project: Tiny Cables
In addition to benja, Andrew has a few side projects to keep his mind busy. One of those projects is Tiny Cables, which sells, uh, tiny charging cables. Out of curiosity and to fill a specific need of Andrew’s co-founder, the two decided to see what it would take to start a charging cables company. And they decided to live blog the whole experience.
And so, Andrew and Tommy went through the whole process, from ideation to sourcing to packing to distribution. While not a huge money maker, the process of starting the company was an awesome learning experience. From start to finish, the company cost only $2,500 to start. Andrew explains how the bar isn’t all that high from a cash standpoint, but I quickly point out that the test is in curiosity, personal drive, and execution.
Advice to Young Entrepreneurs
For high school students, Andrew encourages getting out there and talking to people. Everyone has started from square one, so learn from other people’s experiences by asking questions. The only way to learn, whether its specific information or life lessons, is to ask. Don’t clam up and pretend to be in stealth mode, tell people your idea and get them excited to help you.