Iterate with Data, Create with Your Gut: A “Classic” Business Opportunity & One Founder’s Unconventional Approach
It’s safe to say wasting time isn’t something Matt Lauzon is familiar with. In 2006, while he was still a student at Babson College, he founded e-commerce jewelry site Gemvara, growing the company to 75 employees and raising $45.2M in funding before stepping away from his role as CEO in 2012. Since then, he’s served as an Entrepreneur in Residence at Boston-based Matrix Partners, founded and raised $1.8M for his new company Dunwello, and even found time to stop a local robbery in progress. Not bad for a guy who just turned 30.
We recently had the chance to sit down with Lauzon to discuss the founding stories behind both Gemvara and Dunwello, and the lessons he’s applying the second time around.
On Recognizing the Signs of a “Classic” Business Opportunity
- An industry in need of disruption: Looking back at the idea behind Gemvara, Lauzon says it became clear the the world of jewelry retail was begging to be disrupted. It was a $50 billion dollar industry that had essentially operated almost exactly the same way for decades.
- A crippling problem new technology can address: On one hand you had this massive inventory problem that was absolutely crushing brick & mortar retailers, Lauzon explains. An average piece of jewelry sits in a display case for 1 ½ – 2 years before it gets sold. In some cases you’ve got more jewelry collecting dust in a local jeweler’s shop than they’ll do in sales in a year.
- A new trend in customer preferences: The other part of the equation was the booming trend in customization. More and more people are looking for unique ways to express themselves. In terms of jewelry, that meant more non-traditional engagement rings, for instance. Gemvara provided a way to learn exactly want consumers wanted and then make jewelry that gives them exactly what they want and is made just for them.
On the Drawbacks of Starting without a Technical Founder
- You really need access to someone with technical DNA: Neither Lauzon nor his co-founder had a technical background, and in his experience, it was sub-optimal. They did their best to hire people who complimented them in that respect, but it’s really hard not to have that technical DNA from the start (for another take, see ExactTarget co-founder Scott Dorsey’s story, “3 Hustlers, No Hackers: Surviving Without a Technical Founder”).
- It’s critical to find balance by recruiting people who compliment you: Lauzon has been “maniacal” about that the second time around. It’s something he believes founders really shouldn’t compromise on.
On the Difficulties of Stepping Away from the CEO Role (and Why Sometimes it’s the Right Move)
- Sometimes you have to realize you’re not the best person for the job: In 2012, Lauzon stepped aside as CEO of Gemvara. “The reality was I was not the right person to be running the business anymore,” he explains. “An entrepreneur’s job is to make sure you get the absolute best person in every role at the company, and that includes the CEO role.
- “I had said if the time came when the board felt like it would benefit from someone else I wanted them to be direct and proactive about that.”
- The biggest challenges of handing over the reins: “No matter how you cut it, it’s a very emotional thing,” Lauzon says. “Some of it is personal – you wish you could go further. It’s also hard to wake up and not be all in running the thing you’ve devoted so much to. It’s a bizarre experience.”
On Taking an Unorthodox Path to Launching Dunwello
- Raising a seed round without a final product: When Lauzon raised the seed round for what would eventually become Dunwello, it was really an investment in the company rather than a product. At the time, they had 4-5 product ideas they wanted to test before committing to one direction.
- Zeroing in on the right opportunity to pursue: Lauzon is a big believer in data-driven decisions. “Create with your gut and iterate with data,” he says. After testing several options he came close to pursuing a HR product, but in the end the data lead him to focus on a particular feature in that product. The result is Dunwello, a solution designed to fill the gap between Yelp, LinkedIn, and personal recommendations.
On the Biggest Challenges of the Post-Seed Stage
- Being pulled in different directions: One of Lauzon’s current challenges with Dunwello is addressing product and marketing at the same time. As a startup, you often have to balance making sure you’re making killer first impressions with your product and keeping users happy with driving growth and accelerating demand at the same time.
- Chicken/Egg problems: For Dunwello, they need to have enough professionals on the platform for it to be valuable for users, but they also need enough users to make it valuable and interesting enough for the professionals to get on board.
- Tough decisions to make: Once you gain initial traction in one area, do you branch out into new categories, or try to replicate that success in other cities/markets? What’s the right thing to focus on and what’s the right speed to try to grow?
- Financial strategy: Dunwello is fortunate in that it has a good amount of runway and lots of VC interest. But determining the right point to pull the trigger and ramp up investment can be tricky. Dynamics change once you do that, so it’s something you can’t take lightly.