Scoutmob co-founder shares startup advice with MBA Jackets

Michael Tavani, co-founder of the group-buying site Scoutmob, says ideas aren’t worth much.

“Even the best idea in the world is worth about $10 because everybody has a million dollar idea. Trust me, the idea is not the part you really need. You need to execute for the next year after the idea. That’s the real struggle,” Tavani told the MBA Jackets during the Alumni Association affinity group’s evening program on entrepreneurship in November.

“A lot of people wait for the perfect opportunity, the perfect idea, and they’re not going to jump fully into starting a company until they have that perfect opportunity,” said Tavani, who has a law degree rather than an MBA. “I think ideas are overrated. I think the execution after the initial idea is the real magic.”

The initial idea three years ago was for Tavani and his business partner to launch SkyBlox, an Atlanta Wi-Fi marketing company that began morphing into Scoutmob in the summer of 2009 and offered its first deal in January. Dressed casually in a plaid shirt and jeans among the Jackets, Tavani revealed he wasn’t a fan of business plans either. “This whole group-buying, flash-commerce space that Scoutmob is in wasn’t even in existence three years ago.

“Scoutmob is one of the most unique businesses because it is a 100 percent measurable return on investment, and it actually makes for a pretty easy sale to these local merchants because they know that, first off, they don’t spend anything up front. They know whenever they pay us anything it’s for a customer sitting in a seat, which is kind of the holy grail of local marketing,” Tavani said.

Scoutmob’s 150,000 e-mail subscribers and 77,000 iPhone and Android users in metro Atlanta receive daily offers, usually 50 percent off food and drink at a restaurant. It costs nothing to receive the deal. Scoutmob makes money through a flat fee paid by the business owner when a patron produces the e-mail or text message code.

“There are literally 200 or 300 group-buying copycats … across the U.S. There will probably be, if I had to go out on a limb, 10 a year from now,” Tavani said. “Only a few will pull it off.”

He hopes Scoutmob is one of those few. “This is with literally zero dollars marketing spent. It’s about as viral as a product could be,” Tavani said, noting that the business expanded to New York City in July and San Francisco in September and plans to be in every NFL city by the end of 2011.

Scoutmob found an angel investor providing about $200,000 by making it to the finals of a Technology Association of Georgia business launch competition.

“I really think the first six to 12 months you can’t be concerned about finances. When you’re worried early on about trying to make revenue as a company, it alters your product, it alters your decisions,” Tavani said.

“For the first couple of months of Scoutmob, we had no billing team, we had the ugliest billing system of all time. We had driven so many customers to local restaurants and businesses, and we hadn’t gotten paid for it. We weren’t that concerned about it. I think some of the investors were concerned about it, but we weren’t that concerned because we always knew that if we were actually driving local people to businesses, then there was going to be some value at some point down the road,” he said.

Scoutmob initially went after the “in-town, tech-savvy, creative types,” Tavani said. “But we get way more e-mails and love letters from suburban moms than we do from those types.”

He said the Scoutmob team works hard to “delight customers” with its wit, including the e-mail address for more information: [email protected].

“If you don’t have good content, if you don’t have good deals, if your e-mail doesn’t look great, if your site’s average, if your app’s not fun, then no one’s going to share no matter how many share buttons you have, no matter how many ‘follow us’ buttons you have,” Tavani said.

“Seven out of 10 [startups] are going out of business. Two out of 10 are maybe breaking even. Maybe one is going to hit it,” Tavani said. “But there’s nothing better than being in the game.”

Poised to play, several of the MBA Jackets in attendance took note when Tavani said the e-mail address for job applicants is [email protected].

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