Two Steps Forward

One year later, yerdle's founders share their insights on sharing

It’s a no-brainer to write about sustainability tech start-ups: They’re full of potential, even disruption, as their founders set out their vision, their team and their path to fame and fortune.

Taking a second look is another thing altogether. A year down the road, things happen -- some good, some less so. The breathless reports about the emergence of the “cleanweb” and the sharing economy give way to the hard-knocks reality of creating and executing on a business proposition that people actually like and respond to, then scaling it to the masses. Oh, and finding a profitable revenue model along the way.

That’s why my recent conversation with Adam Werbach and Andy Ruben, co-founders of the stuff-sharing platform called yerdle, interested me. Aside from knowing both Werbach and Ruben from their previous positions -- sustainability execs at Saatchi & Saatchi and Wal-Mart, respectively -- I was curious to know how their company was faring since my first report, on the occasion of yerdle's public roll-out, on Black Friday 2012.

The company was interesting for more than its founders’ pedigrees. As I described it at the time: “Yerdle sees itself as a new kind of retailer -- a budding, next-gen Wal-Mart, if you will -- but rather than storing things in warehouses and stores, like Walmart and others do, yerdle’s warehouses are your friends’ closets, attics and garages.”

It’s now a year later. During the past 12 months, the company raised money from several venture capital firms -- it’s now amassed $1.8 million from investors, including some earlier “friends and family” funders. It's rolled out its technology platform to facilitate the ability of individuals to give away things they no longer need to people they know. It has garnered its fair share of publicity.

So, how’s it all going? I recently talked with Werbach and Ruben to find out. Herewith is our conversation, edited for clarity and length.  

Joel Makower: There’s an old saying that if your business ends up looking like your business plan, you probably did something wrong. I’m wondering how things have changed from over the past year from what you originally envisioned yerdle would be or do?

Andy Ruben: There are three changes that we’ve gone forward with lately that reflect exactly those learnings. One is moving to mobile. A year ago we launched on the Web. We’ve now moved 100 percent to mobile and that has made it easier for people to get notifications real-time, to take pictures of items, to use location intelligently.

The second has been this idea of credits. When you join yerdle you get 250 credits right away. That’s good toward an item that you are looking for. And when you want more credits you give items or post items to other people. It has really driven the idea of engagement and getting people to come back and use product.

The third was opening up the marketplace. A year ago, when you posted an item it was available only to your Facebook friends and your friends of friends. Now, when you post an item now it’s available to anybody. It turns out that our members really appreciate when their items go to somebody who really wants it and can use it well, so having that open marketplace has been a third major change that has really taken the business in a much more engaged direction.

Makower: What have you learned about the peoples’ willingness to share their stuff that you didn’t expect?

Adam Werbach: I think Andy's third point is the critical one: that people want to give things away to anyone. It was beautifully surprising to us because we spent a long time listening to people and looking at everybody else that was in the area. And the feedback that we heard initially was, “You know, I really want it to only be my closest friends who see my stuff. I only want to give it to people who I really know well -- people in my moms’ group, who are in my club or on my team or my band." So we built yerdle initially on the Web for that.

And then we quickly learned that actually, peoples’ highest priority was to get the thing out of their house and into the hands of someone who would use it and enjoy it. It was very much secondary that they actually had a preexisting relationship with that person. It’s really made me believe in humanity. We’ve had almost no pushback since we’ve opened it up. In fact, we’ve seen a 300 percent increase in the number of activities and engagements in the 7 or 8 weeks since we’ve launched the 2.0 version. People have said they’re comfortable with being more open.

Ruben: From Day 1, the concept -- that we have a lot of underutilized things sitting around, and that people want them to be used and go to a great place -- was totally right on. The learnings continue to be how that happens. So the openness is a really good step forward in a more effective way to get there.

Makower: A year ago, you talked a lot about creating a magical experience -- that was your term. That seemed to be a key part of yerdle, just as much as the whole idea of sharing stuff. How has that gone?

Werbach: That’s an interesting question. The simple answer is that we built an incomplete product experience in yerdle 1.0, where people came in with a huge amount of enthusiasm and interest. But we’d only engineered it for the first experience. All the things we had built hadn’t continued on to the second, third and fourth experience. People liked the idea, they wanted to participate, but we basically didn’t have the tools for them to continue once they got engaged.

With yerdle 2.0, we set out to make sure that it was a 360-degree experience, where they would get in, get engaged, find something that they wanted, get it delivered, post something themselves, have that thing liked by someone else, have that thing wanted by someone else, have that thing gotten by someone else. And then begin again.

In yerdle 1.0, we found that essentially we’d get about 10 percent of people who would actually express an interest in getting something on the site. They weren’t seeing a lot of things because they were only seeing their friends’ things. Now we’re seeing numbers closer to 30 percent of people who have found something they’ve wanted on yerdle and expressed interest in getting it. We’re getting an even greater ratio of people who are posting items themselves, so once they get something we have this sort of cascade of reciprocity, as Andy refers to it: they get something, then they respond by giving something.

Makower: One of the things that I’ve heard about yerdle is that the process breaks down at the point where I have to get my stuff to somebody or they have to come to me. That is, the logistics of it all. Has that been a challenge?

Werbach: It’s definitely one of the things that we work on. We’ve got two things going on right now that make that a little bit easier. The first one is a simple shelving unit that we’ve got here in the office. It’s a place where anybody who works near the Montgomery BART stop [in San Francisco] can drop things off and can pick things up. The comment that I often hear is, “Wow, now that I know that this is half a block away it’s so much easier to look for things because I know I’ll be able to get them here.” The other experiment that we are launching soon is a mobile truck -- a 1980s ice cream truck. We’ll be in neighborhoods to physically pick things up and drop things off.

Makower: So, how much closer are you to seeing an actual business here — one that is someday profitable?

Ruben: The first piece is the mechanics -- in other words, how many people are coming back to give things, how many people are coming back to shop for things. Gosh, I feel like every day gets better. I continue to be blown away by the improvements. We make a lot of mistakes but the whole process of breaking into the space is figuring those things out. So I’m feeling really good about the mechanics and there is no profitable business model unless the mechanics are working.

As we talked about a year ago, there are tantalizing ways to have yerdle support itself and to continue to do more of this. For example, I just got three games for the Wii that I got from someone who was done with them. I would’ve bought those games -- and they are expensive -- but I didn’t have to do that. So there is clearly a business so long as we can get the mechanics to work, which are getting better.

Makower: I’m not sure I heard any reference to revenue in your answer.

Ruben: There are a number of ways and we’re experimenting with a few. For example, there are ways to ask people to take a little bit of the savings to pay for some of that. It’s too early for us to get into exactly how we will do this. There’s still learning to be done. But I think just the basic understanding is that we are talking about a large part of retail in a lot of items, and there is a way to monetize that. I feel very confident in it.

Makower: A year ago, you were also talking about providing services to companies. I don’t know if they were consulting services or other things to help them learn what you’re learning, but I think about GoodGuide, where the real value proposition turned out not in rating products but in providing data to companies. Is something like that in your future?

Ruben: It’s just too early. We don’t know. We are focused right now on the true model of what we’re doing as opposed to the consultancy side. Of course, we’re excited to work with brands.

Makower: Tell me how you’re doing that.

Werbach: We’re launching a partnership with Patagonia this week. We’ll be in front of their store on Fisherman’s Wharf on Black Friday. We have all sorts of product integrations with them as we begin to promote products that they have that last longer and work better. We’re celebrating with them the fact that products should be rated by how many great experiences they have for you over the years, not just how much it costs at the shelf. That’s emblematic of the type of deeper and longer partnerships that we’re building with a number of premium brands that you would know.

Makower: If we have another conversation on the cusp of Black Friday 2014, one year from now, what do you think we’ll be discussing about yerdle?

Werbach: A year from now we’ll see this all across the country -- not just in San Francisco. Starting in January, we’re partnering with companies like Patagonia to take this to their stores across the country, so this won’t just be something here -- it’ll be all over the place. We see a lot of partnerships with companies that are very interested in creating share spots in the middle of their corporate campuses as a way to build community. Think of it as a yerdle store that will be in the middle of lots and lots of locations. We’re building the footprint of yerdle out so that it’s everywhere, not just on your phone but down the block.

Makower: Are you still as optimistic as last year?

Ruben: As Adam mentioned, there have been a lot of mistakes and learning on the back of those. And those are to be expected. But I feel really good about where we are one year since we first talked. Actually, I feel phenomenal about the traction and the changes that have been made. This is not as crazy as it was a year ago. This is happening and will continue to be more accepted as a way to get things. This train is moving forward.