Cover Story: Atlanta Startup Q&A: Michael Tavani
Scoutmob's co-founder shares his two cents about what the city's startup community needs to do betterThursday October 10, 2013 04:00 am EDT
Scoutmob, an online deals site that competes with Groupon and LivingSocial, typically ends up on the short list of the city's best consumer startups. That point is difficult to argue considering how the company's taken the generic concept of a discount and transformed into a tool that the smart phone-wielding masses use to explore their cities.
Michael Tavani, one of the company's two co-founders, happens to be one of the more opinionated members of Atlanta's startup scene. Inside Scoutmob's 40-person Westside headquarters, he shared his thoughts about his company, co-working spaces, MailChimp, and David Cummings.
Before we dive into Atlanta's startup scene, tell me about your journey through it. How did Scoutmob start?
The short Scoutmob story is there are two founders, Dave Payne and myself. We started another company called SkyBlox and were putting Wi-Fi in local businesses. That business, while decent on paper, didn't take off. We tried to expand in some other cities and it flatlined.
During the summer of 2009, we convinced a friend of a friend to invest a small amount. We had the idea for Scoutmob and that's what we pitched him. We convinced him to invest in Scoutmob. That money allowed us to launch in January 2010. We kind of took off like a rocket ship when we launched and that allowed us to raise more money.
What was the idea based off of and how has that changed since you started?
We always appreciated strong local content. We wanted to incorporate that in some way. We had heard of Groupon before they launched in Atlanta. They did some really fascinating stuff. They screwed up their brand, but they created a lot of value. ... We thought the biggest hurdle with Groupon was that you had to pay up front. It hurt the ability to be spontaneous. I don't know where I'm gong to dinner tomorrow night. I don't want to make that decision six months ago; I want to make it tomorrow at 6 p.m., not way in advance.
We flipped the model on its head. ... With Groupon or LivingSocial, the consumer is paying money and that is going to a third-party business, which is splitting it with those companies. With us, it was a different flow of money. The consumer never pays anything. They go into a business and check into a business. The business pays us for driving that person in. That model grew virally because the consumers shared it like crazy since they weren't paying anything.
Have you worked at your current offices here the whole time?
Our original office was in Castleberry Hill in my co-founder's loft. We were very much under the radar. We liked it that way. ... There's this phenomenon in the startup world, I heard the term "wantrepreneur" the other day ... a heavy percentage of the startup community in any city, especially Atlanta, is people talking about it, but not actually doing anything. I can't even point out companies doing really cool stuff. There's less than a dozen.
Which ones are you a fan of?
I'm biased toward consumer-facing startups. I think Atlanta is lacking well-known, high-profile consumer startups. ... The obvious one is MailChimp. What's interesting is that they're a B2B startup, but they've created such a good brand that they've kind of become a consumer brand. They have billboards and sponsor events. They're an anomaly. They've never raised money.
Dave Payne and I advise a company called Gather and they're doing private dining for events. They just launched, but one of the reasons we advise them is because they're smart guys. They're thinking about the right problems and trying to create something delightful. I rarely come across those types of ideas.
There are plenty of people in Atlanta's startup scene who think businesses should stick to what the city does best with mobile technology, health IT, and other marketing automation. What's your response to that?
I think that's factually correct, but yet Cummings wants Atlanta to be a top-five startup scene. I agree with all those points and I think they make good points. But no one's going to give a shit about Atlanta Tech Village unless an Instagram, at some point, comes out of them. ... That's the opposing point I'd make. In order to get Atlanta on the map, it needs more of these companies.
Why not co-working spaces?
I think co-working spaces are kind of B.S. ... If MailChimp sold right now for $300 million and those guys started new companies, that'd potentially be better for the community than starting a co-working space. They would hire people and start other companies and incubate. It doesn't need to be a co-working space to create a community, just really good companies.
I enjoy those environments, but I like going to Octane, being a part of it, and coming back here. But if I could pick who was in my co-working space, then I'd do one in a second. ... One thing we're considering is adopting a couple of small companies to come to Scoutmob, work here, and use our space. These would be companies that align well with our mission.
What else does Atlanta need besides more consumer startups?
Scoutmob is raising money right now and we were in San Francisco last week. You realize very quickly when you're there that Atlanta is in the minor leagues. We're part of it, but it's the minor leagues. It's just the small ball of what's happening. We don't have a ton of successful companies. For us to get to that level, it's not going to happen in five years. It might never happen. It's a different game out there.
You need more people like David Cummings.
There's not many and it's kind of frustrating. He's definitely been the most recognizable one that's done it. ... He shot from a guy who ran a successful company in Atlanta, with great timing and an awesome exit, now he's the king of Atlanta startups. ... If you had 20 David Cummings a year, Atlanta would be a top five startup city