EcommerceBytes-Update, Number 135 - January 23, 2005 - ISSN 1528-6703     4 of 7

AuctionBytes Industry Profile: Rajesh Navar, Founder and CEO of LiveDeal

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AuctionBytes is running a series of interviews with people who have had an impact in the online-auction industry in order to get their views on the current state of the auction world. In today's Industry Profile, we interview Rajesh Navar, founder and CEO of LiveDeal, the Internet's leading marketplace for buying and selling goods locally. As an original member of the engineering and management teams at eBay and other successful Internet companies, Rajesh is a pioneer in the ecommerce space.


Rajesh Navar, Founder and CEO of LiveDeal

AuctionBytes: Tell us a little bit about yourself. What did you do before you became involved in the online auction industry?

Rajesh Navar: I've got a strong technical background with a Masters in EE (Electrical Engineering) from Iowa University and over 12 years of high-tech software development experience. Early on, I worked in building Internet technologies. After working at a couple of startups I joined another startup in May '98 called eBay, where I was the 70th employee. I worked as the first search engineer and founded and built eBay's search team. Search is the most critical component of any ecommerce site and, fortunately for me, I got to play that role.

During my time at eBay, I scaled the site and technology more than 100 times. After four years at eBay, in June 2002, I left the company to attend Stanford University's MS in Business Management degree program, which is the Sloan Fellow Program, a one-year mid-career executive program.

While I was at Stanford, I realized a major inefficiency in the current marketplace. For instance, at one time or another in our lives, we all need to sell furniture. What do you do? You can list the item in the newspaper classifieds, which costs between $50 and $150 if you want to list it within a 50-mile radius, often covering two to three newspapers. Or you can give it to the Salvation Army, or just put it outside the house and hope somebody hauls it away. None of these options are ideal.

This problem is not solved by the current ecommerce players, and in fact, is only escalated in a college town. In July, everybody's leaving campus, everybody's trying to sell, and nobody's buying and, come September, everybody's trying to buy, and no one is there to sell. So there's inefficiency created.

There's something called the "Escondido Village" sale at Stanford. Stanford's student housing is called Escondido Village, and each of these houses has a yard in the back, and during the sale, they open up everybody's back yard, so there's acres of land, and effectively everybody's trying to sell stuff in their back yard. You see a lot of furniture, computers, cars, etc. for sale, and these guys are leaving campus the next day, either leaving campus or flying out of the country. It's amazing, and they all are having sales, hoping that people from the nearby towns come by and pick it up, and nobody in town knows about it, because it's so inefficient.

At one of these sales, I asked somebody who was selling a car seat how much it would cost? It would cost around $100 - $150 at Toys R Us or Babies R us, and this person said, please take it away free, because if you don't, I'll have to probably pay tomorrow to haul it away. That is the story behind the birth of LiveDeal.

After refining the business plan and then refining it some more, I began to set up a company. LiveDeal was incorporated in April 2003; I hired my first engineer in May, and I graduated from Stanford in June. That's when I started working full time on this. We had an Alpha launch in August of 2003, a Beta launch at the beginning of this year, and a full launch a few weeks back. At the time, we were covered in The Wall Street Journal, Washington Post, San Francisco Chronicle, San Jose Mercury News and several other national media outlets.

With more than 600,000 visitors per month, we believe the idea has really taken off.

AuctionBytes: It's interesting that eBay did some things to make your job easier, probably, because journalists are more aware of online classifieds because of Craigslist, so that worked in your favor. I'd like to ask you, did you learn anything at eBay that helped you figure out how to structure things at Live Deal, whether from a marketing point-of-view, or a technology point-of-view?

Rajesh Navar: Even though I was in engineering, I was always interested in the business side as well. I come from a business-oriented family, back home. With ecommerce, there is a lot of transparency between business decisions and engineering. You do something on the business or marketing side and you see the cause-and-effect in the form of traffic to the site, which is on the engineering side. I was in the middle of everything that was happening during the four years at eBay, and, of course, when I went to Stanford business school, I concentrated on the marketing, the strategy, the finance, all of the usual components. Bringing together these components of my experience is what has enabled me to create a successful business at LiveDeal.

AuctionBytes: When you say your family has been in business back home, where is back home?

Rajesh Navar: Bangalore, India

AuctionBytes: Do you mind sharing what kind of business?

Rajesh Navar: Right now my dad is winding down, he's retired, but he's a self-made man. His parents passed away when he was very young, and effectively he had no money to go to college. You can imagine this 40, 50 years back. He would have to work hard, being a bus conductor sometimes, to save money. He would then quit the job and go back to college, and when he needed more money to continue his education, would go back and work. So he went to school on and off, because he had nobody to help him out with his education. He worked himself through and eventually became an electrical engineer. Then he worked at a public firm in India and reached senior management. Later, he started his own company refurbishing and manufacturing alternators and motors. It was an electrical engineering company, because that's his background.

AuctionBytes: What an inspiring story.

Rajesh Navar: Yes it is. My dad is a great role model for me, and in the end he proved you can work hard, be successful and at the same time keep a great family, and that's what I'm trying to do in my own life. In addition to LiveDeal, I have a wonderful family - a wife and two lovely children.

AuctionBytes: That's really interesting, thanks for sharing that. I wanted to get back to eBay, and ask you, when you worked there, did you buy and sell on eBay?

Rajesh Navar: Me personally, I'm not one of the auction folks. I believe in fixed price.

AuctionBytes: When eBay started, it started in Pierre's living room, and I think it's interesting you have exposure to some of the technology issues eBay went through. You were at eBay during incredible, phenomenal growth, and you were working on search. Was there a lot of pressure?

Rajesh Navar: The pressure was always there. Because when a company is growing at such an extreme speed, you need to execute. Effectively, the growth rate is doubling month over month, and whatever technology issues you have, you fix that, you get there and boom - you have to scale it twice the amount the next month. So the pressure is more because of the growth that is experienced, and it's a good problem. In the end, would I do it again? I would do it.

AuctionBytes: What are some of your most memorable experiences in the industry?

Rajesh Navar: One is, of course, being part of eBay, during its early days. You always think it happens only to other people until you experience it. When you are there, when you are given the role and are given the responsibility, the IPO - the entire four years was wonderful.

But then the other component is the human component. It is a great feeling when you touch people, the folks out there and make a difference in their lives. We are doing the same at LiveDeal too. We get emails from our members on a daily basis saying things like, "I wanted to sell this furniture, and I thought I'd get nothing, and guess what, I got $300, and thanks for making a difference in my life."

So eBay was great and exciting. And LiveDeal has been wonderful, because we are making a huge difference in people's life by creating an efficient way to buy, sell and connect with other people within a local community.

AuctionBytes: How has the online-auction industry changed since you first became involved?

Rajesh Navar: I believe the online auction industry at that point was defining itself. It was creating a new marketplace, the auction industry was growing, more Internet users were coming online, people were not used to using credit cards online and there was nothing called Pay Pal. So there was a lot of new things being built in the industry.

Now the online auction industry has stabilized, has done well and it's great for shipping-based items. One major concern is fraud as it is growing faster than ecommerce in general. So, especially with online person-to-person auctions, fraud will be a huge issue, a huge concern going forward.

AuctionBytes: Do you think that online sellers are in a better position now than they were 4 or 5 years ago?

Rajesh Navar: Yes for sure. There are more buyers online and people are more comfortable using the internet and purchasing online. There are services like Pay Pal and online credit card payment systems that make accepting payments online easy. However at the same time, there are many more sellers online, and many of them are very sophisticated sellers. So competition is also immense and sellers really need to understand the marketplace to sell effectively. Things like, what is likely to sell, pricing, adding appropriate pictures, titles and descriptions to their product, etc.

AuctionBytes: What kind of overlap is there between say, a seller on eBay and a seller on LiveDeal? There are a lot of business sellers, as well as people who are selling one time or as a hobby on eBay, what's it like over at LiveDeal, and is there overlap?

Rajesh Navar: What is common between eBay and LiveDeal is that both are building person-to-person marketplaces. eBay has done very well on a national scale for shippable items. LiveDeal connects buyers and sellers locally and sellers who are selling heavy, hard-to-ship items such as autos, furniture, pets, real estate and garage sales. All of these categories are doing very well on LiveDeal.

But then there are other sellers on LiveDeal who are selling shippable items as well. Their pain-point on existing sites is high listing fees. So for them, we have free listings, free stores and free for life. I believe LiveDeal will grow tremendously next year, because sellers will come in and the buyers will follow and vice-versa. It's the chicken and egg problem and that will get solved. But we need to give this guarantee and comfort level of "Free Listings for Life" to sellers who really adopt LiveDeal as their home and start selling aggressively.

AuctionBytes: It's so early on, I'm sure there are lots of good surprise in the future about what people are doing on the site. I think even eBay is still going through changes where new categories are coming on, and I'm sure the same will be true for LiveDeal. You have a lot of presence in college campuses, I'm sure as the company becomes more well known, you'll probably have a few surprises about what people are using it for.

Rajesh Navar: Yes, that is part of the challenge. Let me comment about colleges. About 10 percent of our user base is college students. The history of LiveDeal is we wanted to connect colleges and surrounding communities. Now we've gone beyond that, and it's more zip-code based, because every college is in some city with a certain zip-code. Unlike other local sites that are just City/State based, LiveDeal is based on zip code. So with any zip code across the U.S., people create a local marketplace within a 50-mile radius of that postal code. Effectively folks all over the country, whether in a big city or small town, can use LiveDeal to connect with others within their Local community.

Yes, the surprises are always going to be there. Since January, and we have dramatically grown all the categories. Then we said, hey these local categories are really doing well, for instance, 50% of items listed in categories like autos, furniture, etc. get at least one interested buyer the first month. That 50% mark is an amazing number, especially with free listings. Where else can you list a car for free? With classifieds, you have to pay $60. eBay-Autos $40. AutoTrader, $25. Combine no cost with the fact that there's traction and it's taking off through word-of-mouth, and I believe these hard-to-ship categories will be the first we'll capture. But as we go along, we will always listen to people, and make the changes necessary to make it easy to buy and sell locally on LiveDeal. In the case of unexpected surprises, we'll need to learn fast, be nimble and execute well to be successful.

AuctionBytes: Where do you see the online-auction industry and person-to-person ecommerce industry headed?

Rajesh Navar: I think the P2P marketplace in general is huge. Auctions is just a pricing format- It can be auctions, it can be fixed-price, it can be negotiated, as long as you make it easy for people to price items and connect. Auction is just one way of pricing; fixed-price is the other one, which we do. Even at eBay, I think 44 or 45% of transactions really are called Buy-now- which is fixed-price. So I think fixed-price sales are going to be bigger than auctions. Having said that, I believe we are satisfying one segment- The local marketplace and solving a huge pain-point. But in the end, the market is so big that there's room for more than one player for sure. eBay has done extremely well, and I believe LiveDeal can also co-exist on that scale.

AuctionBytes: What are some of the biggest challenges facing online sellers in the next 5 years?

Rajesh Navar: I think in shipping-based models, it's going to definitely be fraud prevention. With phishing activity,... every fraudster has somebody else's credit card with three-digit code, so any security you put out there is not good enough. I think that is going to be the big problem.

The other challenge is the cost and hassle of shipping itself. This does not exist with LiveDeal. If LiveDeal is able to connect people locally and buyers can pick up items directly from sellers, they will not have to pay 20% more for shipping or deal with breakages and returns. They can inspect, touch and feel before they pay for the product.

The sellers are very smart, and I believe they'll adapt, because they are the ones really feeling the pain of fraud and shipping hassles. But giving them a marketplace that allows them to solve these problems is what is critical, and that's what I believe LiveDeal is doing right now.

AuctionBytes: Are you working on any projects or any new features for the future?

Rajesh Navar: Yes, several features. As I said, we are constantly developing new features, some of which we will be rolling out early in 2005. However, there's nothing I can announce at this point, but it's a constant development effort. All the features are developed based on member feedback.

AuctionBytes: I think you are in a unique position where you have the engineering background and the business background. Do your engineers ever find that frustrating, like they can't pull one over on you because you understand how things work?

Rajesh Navar: Like anything in life, there's the good and the bad. But in the end, can the leader of a company surround himself with the best and the brightest? Yes. I cannot do everybody's job, and the company is bigger than any one single individual.

Number one, I try to be a good delegator- get the smartest people I can find and work with them to get things done. When we started, even though I didn't code anything, I was architecting and helping on the engineering side because initially we started out with 3 people: two engineers and me.

Later we hired Ajay Bansal as the VP of engineering. I worked with him before at eBay where he was the Director of Product Development. Ajay has a lot of experience in building stable, scalable systems. As I have worked with him before, I have a lot of confidence in him and he's running the engineering team. I brought him in so I could move on and do other things. Of course I'm still involved in some of the engineering meetings, and am transitioning what I know to a new engineer we hired recently.

We have other things I need to focus on to make LiveDeal successful- Marketing, business operations and development, customer support and other components.

AuctionBytes: How did you get featured in Wall Street Journal, the Washington Post, and other places?

Rajesh Navar: Everyone I talk to says, "Wow, LiveDeal is a great idea, but you have to get your name out. I wish I had known about LiveDeal six months back." Eventually it comes down to awareness and we are working hard to reach the right influencers in the industry and the media to help spread the word.…

It is very easy for people to understand our business because members buy and sell practical items or consumer goods and we are solving a pain-point by creating a Local marketplace. And my background, having done eBay, Ajay's and Steve Harmon's backgrounds, having been in the Internet field for quite some time- It's a real validator. People not only see the site easily as it is online, they also see our background, and I believe all those put together makes the LiveDeal story come out the way it's been, and I'm very excited.

AuctionBytes: Where do you see your business in 5 years?

Rajesh Navar: We believe we will coexist with the other market players, the tier-one players. Amazon, eBay and LiveDeal will be top players in the ecommerce space like the way you perceive Google and Yahoo in the search engine space. LiveDeal's potential is that big.


About the author:

Ina Steiner is co-founder and Editor of EcommerceBytes and has been reporting on ecommerce since 1999. She's a widely cited authority on marketplace selling and is author of "Turn eBay Data Into Dollars" (McGraw-Hill 2006). Her blog was featured in the book, "Blogging Heroes" (Wiley 2008). Follow her on Twitter at @ecommercebytes and send news tips to ina@ecommercebytes.com.


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