Wigix: An Idea Whose Time Has Finally Come
Wigix is launching its public beta today and the world of online auctions, indeed the world of "stuff" in general may never be the same. As an early investor in Wigix and an avid fan of its team and concept I want to congratulate the Wigix team on all the hard work that has gotten them to this point!
What exactly is Wigix? Wigix is, at its heart, an ambitious attempt to bring online auctions into the 21st century by applying modern market technology to everyday items. In essence, Wigix creates a stock market for your stuff. Into this stock market Wigix then weaves a deep sense of community and persistence which then enables people to track, discuss, and share information about their stuff.
The ultimate, rather immodest, goal of Wigix is to create a complete record of every item in existence, who owns it and what it's worth, as well as a platform that enables people to track, discuss, and trade all of those items.
Ever wonder how much your stuff was currently worth? Or what other people paid for their original iPod? Or what owners of the PS3 think is its worst feature? Or what interesting things your friends just purchased and why? Wigix is a platform that can provide answers to all these questions as well as an online auction experience that is light years ahead of what's available on the Internet today.
Despite just entering its beta launch, Wigix is already an incredibly rich site with a huge amount to see and do. It’s still a beta though, so there a few features left to add and a lot of content still to come. I could go on and on about Wigix and why I believe it’s one of the most interesting web platforms that has launched in a long time, but you’d be better served by just jumping over to the site and taking a look around for yourself.
Top 10 Things to See and Do On Wigix
Before you go though, let me give you my list of the Top 10 things to see and do on Wigix as a way to highlight some of the most interesting aspects of the site:
- SKUs: Wigix does not have listings, but rather SKUs. SKUs are kind of like a pre-built listing or a stock ticker for a specific item. Users simply indicate which SKUs they own by placing these SKUs into their portfolio. Once in their portfolio, a user can track the value of that SKU and then decide to sell it at any time in the future. Once you see a SKU and compare it to a listing at a traditional online auction site, you will never want to go back. For example, check out the SKU for the iPhone and look at the all the rich detail and information that is available.
- Catalog Browsing: At the heart of Wigix is a catalog of SKUs, roughly 462,000 and growing. These SKUs are necessary to enable trading, but they also create what is in effect a huge catalog of stuff. Try browsing through the catalog. It is a very cool and visually appealing experience thanks to some nifty programming by the team. I think Wigix’s browsing and search features have set a new standard for product catalogs on the web.
- Persistent Portfolios: Wigix does not charge listing fees but rather encourages all users, not just buyers and sellers, to build and maintain portfolios of their stuff, similar to stock portfolios. These "stuff portfolios" persist over time allowing users to not only track market prices for their stuff but to track the stuff accumulated by friends, family, and fellow collectors. Try it out by registering and adding a few things you either own or want to own to your own portfolio and you’ll immediately how easy it is. Here is my public portfolio of stuff (you need to register to view it), feel free to make a bid if you see something you like!
- “Ask the Owners”: Ever have a very specific question about a potential purchase but have been unable to find the answer on the product’s website or in product reviews? Because Wigix keeps track of who owns what, it’s possible for any user to ask the owners of a particular product a specific question. If they want to, the owners can then respond with an answer. I did this when I wanted to know what Wii game I should I buy for my nephew. Check out the responses on the Wii SKU page under the “Ask the Owners” tab. Very cool.
- Bid/Ask Trading: While the NASDAQ uses a bid/ask trade system to trade stocks, Wigix uses a bid/ask trade system to trade stuff. In comparison, EBay uses what are called "English Auctions". Wigix's bid/ask system enables instant trading, continuous historical data, and is not subject to "shilling" or "sniping", two problems that are endemic to EBay. It’s interesting to note, that many stocks and bonds were also once traded using English Auctions, but once bid/ask-based exchanges opened, the purveyors of these English Auctions quickly disappeared.
- Community : Wigix has woven community and social networking technologies directly into the main features of the site. This makes it possible for people to keep track of what friends, family, and fellow collectors own or want to own. It also makes it possible to interact with the owners of a particular item and join groups of like minded individuals. If you register, make sure to add me as a friend (my user name is “Bill”) to get a sense of the community features.
- SKU Owners: In the same spirit as Wikipedia, Wigix’s catalog of SKUs can be expanded and enhanced by any user. Wigix rewards SKU contributors with a small share of the revenues generated by that SKU. Try adding your car or cell phone (if they aren’t already in the catalog).
- Category Experts: Manging all of the SKUs in a particular category is the responsibility of category experts. Who are the category experts? Pretty much anyone who has the passion and inclination to apply. Like a guide at About.com, Category experts get a small revenue share of all the revenues generated by the SKUs in their category. From a technical perspective, what’s cool about both SKU ownership and the category experts is that to enable those features Wigix has had to create to what amounts to a massively distributed database that can support thousands of what are, in effect, DBAs. I am the current Category Expert for Audis, Digital Media Players and NAS Drives. If you are really passionate about a particular category of stuff, apply to be an expert. It’s not much work and it’s a lot of fun being master of your own little corner of the database.
- SKU Trading: Once you add a SKU to the catalog and your submission is approved by the appropriate category expert, you own the SKU and not only are entitled to a share of the revenue it produces, but you can actually trade ownership of the SKU, in the same way that you can buy and sell a domain name. Now the value of a SKU is very speculative at this point because they won’t have any value until they start generating revenues, but in the meantime it is fun to speculate and trade them. In fact I picked up the Blackberry 8700c for $1 this morning although someone just bid $30 for the iPhone SKU (I had bid $1), so it looks like I won’t be getting that one…
- Facebook Apps: Yes like any good start-up these days, Wigix has its own Facebook apps. My favorite is the MyWigix application which allows me to display my portfolio of stuff on my Facebook profile and automatically creates new Facebook feed items when I get new stuff.
Anyway, as I said before, I could go on and on (and to some extent already have), so to keep this post managable I will end things here. I think I’ll write another post in the future that points out from a business model and technology perspective how Wigix differs from today’s King of online auctions, EBay, but today I just want to congratulate the Wigix team for reaching this milestone.
4 Things to Do After You Get Your First Term Sheet
I’ve recently been involved in helping a couple companies with their first major round of VC financing. It’s actually been pretty interesting for me because I have histroically been on the other side of the table. In addition to generating several stories worthy of “The Funded” and getting a better appreciation of the trials and tribulations that entrepreneurs must go through when trying to raise money, I also gained a better appreciation for just how important it is to properly manage the “end game” of a VC financing.
What is the “end game”? The End Game generally takes place after you have gotten a term sheet, but before you actually sign it. How well you manage this process can make a big difference in the actual terms and pricing you ultimately get, so it pays to approach this process as thoughtfully and diligently as you do any other part of fundraising.
With that in mind I present 4 things that you should definitely do after getting your 1st term sheet:
- Get a second term sheet: It may sound flip, but this is the single most important thing you should do upon getting your 1st term sheet. Nothing loosens up a VC’s purse strings or makes them more flexible on a particular term than the threat of competition. Without competition (real or perceived) you have very little leverage against a VC. Now getting one term sheet, let alone two, is tough enough, but getting two must be your goal and you must not waiver in pursuit of that goal even you after you get the 1st one. The biggest problem most entrepreneurs have executing on this strategy is that they have mismanaged the sequencing of their fundraising. Many entrepreneurs make the mistake of pursuing an “in order” fundraising process whereby they take one meeting, run that process to its logical conclusion and if that doesn’t work out try to get a meeting with another VC. VC fundraising must be pursued concurrently! You must put as many irons in the fire in as short a time as possible so that all the firms start the process at roughly the same time. As firms progress through the process, you should do your best to try and “herd” them along by trying to slow down the ones pushing ahead and speed up the ones lagging behind. The ultimate goal is to ensure that when you receive your first term sheet you have several other firms that are very close (within a week or so) to potentially issuing their own term sheets. Proper sequencing ensures that you are not forced to take an inferior “bird in hand”.
- Ignore term sheet “expiration dates”: Most VCs put “expiration dates” in their term sheets (usually at the end). In almost all cases these are artifices that are inserted into the term sheet in order to put pressure on the entrepreneur and to try and prevent them from “shopping the sheet”. The reality is that as long as you are negotiating in good faith with a VC they are not going to pull a term sheet. That’s not to say that VCs won’t pull a term sheet if they feel like you are being dishonest with them or have no real interest in taking their money, they will, but as long as you deal with them professionally and explain to them why you need more time to consider their offer, they will extend their phantom “deadline”.
- Do some due diligence of your own: One of the more unfair aspects of VC fundraising process is that VCs are allowed to take months probing every orifice of your company, but entrepreneurs are expected to make one of the most important decisions of their life in a week or two and often with little or no information. There’s no good reason for this and all entrepreneurs would be well served by taking some time to do some basic due diligence on any investor who has offered them a term sheet. I suggest, at a minimum, talking to at least two entrepreneurs that the VC has funded and then talking through with the VC A) all the deals they have done and what happened to them B) the current status of their fund and partnership. Doing your own due diligence has 4 main benefits 1) it may help you avoid making a bad decision 2) it will create the perception of a competitive process 3) it will make you appear more savvy and diligent to the VC 4) it can come in handy when you are trying to stall while you get your second term sheet. Don’t go overboard and act like a VC by asking lots of annoying questions and drilling to the center of the earth on irrelevant/tangential questions; just ask for a few reasonable pieces of information and be very gracious about it.
- Negotiate: By the end of the fundraising process most entrepreneurs are so fatigued and shell shocked that when they finally get a term sheet they are loath to do anything that might upset the apple cart. This situation generally leads to some pretty one sided “negotiating” sessions in which the entrepreneur meekly asks to eliminate the triple participating preferred, the VC says “NO!”, and the entrepreneur quickly retreats. The reality is that VCs expect some negotiating and their first offer is never their best. That means you should, within reason, feel free to push back on their initial offer. Of course, if you have a second or even a third term sheet you can push back even harder, but even if you only have one term sheet you should still push back. As they say, it never hurts to shake the tree.
If you follow these four pieces of advice you will put yourself in position to get the best possible outcome. The most important thing to remember is that once you get a term sheet, the whole dynamic of the fundraising process changes and the ball is now in your court. How you “return serve” can make a big difference in the outcome as I've seen VCs increase their initial offers anywhere from 25–50% when these principals are applied. Your mileage may very, but its definitely worth a shot.