Gene founded VacationBird, a marketplace for finding your vacation rental. It was an early version of Airbnb and a VRBO competitor. Having a misalignment of incentives between co-founders and poor planning were the main causes to shut it down in 2012.
Hi Gene! Who are you and what are you currently working on?
My name is Gene Maryushenko and I am an independent growth designer and consultant. I work with SaaS and e-commerce companies to find conversion opportunities and ways to grow their revenue.
I’ve spent most of my life living in the United States on the West Coast in California, but I currently reside in Japan with my wife and kids.
The bulk of my time is spent on consulting while I build out my info products on the side and explore various SaaS ideas. Currently, I sell two products that are closely related to my consulting - a SaaS swipe file and an e-commerce file. All of my products are focused on helping founders grow their sales and contain strategies to do so. I also started a paid community called Founder Circle that focuses on weekly self-accountability to get founders closer to their goals.
Vacation Bird was my very first attempt at a startup back in late 2011, early 2012.
The name Vacation Bird is a play on the word “Snowbird”. A snowbird is a person who migrates from cold weather to warmer weather typically during the winter months so they don’t have to deal with the cold and snow.
The website was a marketplace for finding your vacation rental. Think VRBO or an early version of Airbnb (back before there was an Airbnb).
Our business model, or at least the plan, was to charge for listings once the website became viable and to charge a booking fee for people who book through our website.
What’s your background and how did you come with Vacation Bird’s idea?
Before starting Vacation Bird I was spending all of my time on affiliate marketing. I did fairly well promoting other people’s products but you end up on a hamster wheel where the harder you work the more you enrich other people. This made me want to create something of my own.
When my promotional methods were killed off completely by the platforms I used to promote, this was the final nail in the coffin and a signal for me to shift to something new. I could have found new ways to stay in the affiliate marketing industry but by that time I had lost all motivation and desire to continue.
At the time, I had a partner in crime - a friend with whom I tagged along for pretty much every new project or endeavor. We’d always scheme together on what to work on next. We were friends from high school and at one-time roommates before going our separate ways.
I don’t know if there were any particular reasons why we thought a vacation rental website would be great other than the fact that once you got it going it could have huge potential. In late 2011, the biggest vacation rental industry players were VRBO and VacationRentals.com. We poked around to see if there is room for another player and thought we saw an opening. After all, we were both great at SEO and the plan was to get the site SEO’ed out and indexed quickly for organic traffic.
This was not a terrible plan considering we both ran multiple websites in the past that did well with organic SEO traffic. We thought we’d translate that experience into something bigger, more ambitious, and more fun.
I had some savings from my previous endeavors in affiliate marketing and decided to take a risk and try something bigger. The only trouble was that both of us were non-technical co-founders which would mean we’d need to hire out development - a costly activity.
How did you go from idea to product?
Once we had the initial idea, we started an extensive SEO planning session to figure out the best way to lay out the structure of the website for maximum footprint. This wasn’t very hard and we quickly moved on to designing the first version of the website with all the proper URL structuring.
Our plan to overcome the marketplace chicken and egg problem
We were facing a classic chicken and egg marketplace problem: you need listings to show to visitors, and you need visitors to book listings.
Luckily, finding listings wasn’t hard on Craigslist. We simply emailed the owners and asked them if it would be alright to list them on our website. Most agreed, but this was not a quick process. In hindsight, I would have asked someone to scrape all the listings and bulk emailed them to see which ones permit us to enable them live. But, since we were both non-technical, we decided to just manually add listings one by one for quality control.
To get the back-end set up, we hired out a developer that we knew from previous engagements. He had no trouble setting up a great functional backend. This, of course, cost significantly more than having to do it by ourselves if we had the chops.
The process of hiring out a developer, however great the outcome was not without issues. For one, I was not a great project manager at the time and did very little in terms of properly overseeing development time frames and getting a basic version shipped fast. Looking back, making a custom back end was a terrible mistake. We should have simply looked at existing options like WordPress. This would have saved a lot of time and money and allow us to start testing our ideas quickly.
The other challenge of building this out was a problem brewing under the radar. Having decided to go into business with my friend was a great mistake, but one I did not realize early on despite everyone saying “never go into business with friends”.
I had no idea what was happening with my friend at the time but noticed a lack of enthusiasm as the work dragged out over months. Despite onboarding some rental property owners, we had a hard time staying enthusiastic. Our monetizing strategy was to first seed the platform with listings, wait for SEO to pick them up, and then use other websites to acquire traffic (while SEO started heating up slowly).
The plan was for most of the money to come from property listers who would eventually see that the website had a lot of activity and the price could be justified by the number of visitors to the site.
This too was a terrible idea. Property owners do not care about your website traffic, they care about bookings. We could have just as easily charged per booking and hustle to drive traffic to their listings. We didn’t even need a website!
For some reason, the obvious solution just didn’t click. All we had to do was make deals with the property owners to get a cut from a booking if it came from us. Then use our affiliate marketing chops to drive traffic to their listings (via our landing pages). Instead, we took the long route that eventually went nowhere.
Building in public was not a thing at the time and we did little in terms of promoting the project. My daily routine was pretty dumb - scour Craigslist and email listers to get their properties on our site. It was a time-consuming process that eventually drained me of all my savings.
Which were the strategies to grow your business?
Technically, our business never took off because the entire time we made ZERO revenue. I know… shocking. Looking back at this time I would have slapped the younger me so hard that I’d need to reconsider everything I was doing.
Nonetheless, the main marketing strategy was hoping for SEO to succeed. To get listings I reached out on Craigslist and added them for free. I vastly underestimated the amount of time it would take for SEO to work considering our website had no authority whatsoever. You could say the startup fuel was hopium.
One advantage we had is that people were eager to be listed (well, it was free, duh!). I found that property owners or managers were mostly kind and fun people to talk to. Many understood our mission and were eager to be a part of it. Not being a larger company played to our advantage in terms of communicating with people.
I cannot underscore the gravity of just how bad we did during this time. At our height, we had maybe a max of 200-300 listings. For the organic SEO strategy to work, we’d need thousands of listings on day one to start getting aged in SERPs, assuming we did an amazing job building backlinks to the site.
When did things start to go in the wrong direction?
Many months into the daily grind of adding listings I started to question the whole thing. My friend was less and less engaged, at times not doing anything to contribute to “growth”.
My savings started to take a big hit and I did not see any reasonable timeframe that would allow for profits. Had I simply thought about this before starting, it would be apparent very quickly that the whole thing was a foolish idea.
I don’t recall our exact conversation or even the theme of what was said, but we decided to call it quits. In hindsight, I don’t think my friend was ever serious about it as I did most of the listing hunting. That’s not to say that I blame everything on him, the whole thing was a non-starter and we made the mistake of assuming it may go well. I wasted at least 6 months in the process and tens of thousands of dollars, with nothing to show for it. Just talking about it now is very embarrassing, but I hope someone reading this who is about to go down this path takes time to pause and seriously consider what they are doing.
Do I think the business could have been successful? Of course! However, this would require a very different approach. Unfortunately, I was burned out and didn’t want anything to do with it at that point.
Which were the causes of Vacation Bird’s failure?
Given our situation, I think the main cause of failure was the misalignment of incentives and poor planning. Here is a summary list of where I think things went wrong:
- Underestimating the amount of work required to build a website with thousands of listings.
- Undercapitalization. Technically, if money was never an issue we could keep going until the website was populated sufficiently to start generating organic traffic. But in reality, everyone has to make a living and you can’t work for free forever.
- Working with a friend. There is a very good reason everyone tells you not to work with friends. The big issue is that most people ignore this, thinking they are different because things are going great with their buddies. But, when you face tough times, it becomes difficult to have serious talks without ruining friendships.
- Focusing on building instead of selling. As I said earlier, we didn’t even need a website to generate traffic to listings. Technically we just needed one or two listings and find ways to get people to book them. This could have been paid ads, referral traffic, SEO, any number of ways. We could have charged per lead and slowly add those listings to our website. The entire approach was focused on building out the site and clearly, that was not the way to go.
- Working on grand ideas instead of doing something simple. They say when you’re young, go for the big ideas. I say, when you’re young, learn from the mistakes of people who were ahead of you and just avoid being stupid. If you have a grand vision, put in the work researching and understanding what’s involved.
The ultimate reason for shutting down was lack of traction and revenue - no visitors to the site, no money coming in for too long.
Which were your expenses? Did you achieve any revenue? In the end, how much money did you lose?
I estimate that we spent at least 6 months building out the site and acquiring about 200-300 listings if my memory serves me well. The web development cost at least 10k for the back end. The biggest expense was not earning any income in the process. I probably burned through 60K in savings before realizing the whole thing was a total mess. Why didn’t I freelance on the side? Who knows. Today I just refer to that period as “the time I was very dumb”.
If you had to start over, what would you do differently?
If I had to start over today, here are some things I would do differently:
- I would not start over ;) (on this project). Marketplaces are not easy businesses to pull off and you need a lot of capital or other connections to make it happen. Frankly, there are far easier things to work on than a marketplace.
- But let’s assume we start over. I would not spend a dime on any development. Instead, I would reach into the areas of my expertise and just start sending traffic to a landing page focused on finding cheap vacation rentals. No listings, no website. Once the traffic came in, I’d squeeze it through a search form and show sample listings with the ability to type in a desirable discount %.
- Once the visitor goes through the form and gives us their information, I would then use THAT information to find desirable properties and reach out to them with a hot lead. The property manager or owner would need to come up with the specified discount to get the lead and I would then charge them for it. In a way, this is just a lead-generating business, but it creates a significant upside - reputation and income.
- I would then use this interaction to build out a website of trusted and “hand-picked” listings. The property owner would know that I am capable of generating leads so I could start asking them to pay me a monthly fee if necessary. This would generate recurring income all without spending a dime on development. (I had sufficient skills to make basic websites).
- Then, as I was able to generate more and more leads, I’d start adding these listings to a marketplace website, which would give me a sufficient run rate to keep going without burning out or going broke.
- I would never partner with a friend. There’s not much to say here other than it’s a huge mistake and rarely works.
- I would set deadlines for revenue figures and leads generated. If I missed those deadlines I would start looking at possible ways to pivot.
- If necessary, I would freelance part-time to make up any lost income. I’m not sure why I didn’t do this other than “I was stupid”.
- I would seek outside critique and advice periodically. I think it is vitally important to get other people to give you honest feedback on your ideas and plans. Had I done this, the entire project would never take off the ground in the shape that it did.
Which are your favorite entrepreneurial resources?
I’ve read, listened to, and watched countless numbers of articles, podcasts, and videos. Honestly, I lost track of all the knowledge I’ve accumulated in the process. Some things stuck, some dissipated entirely.
It’s kind of funny when people see “overnight successes” while the entrepreneur in the room knows that it is the years before that lead up to the “success”. Nonetheless, here are some of the memorable resources I enjoyed:
- MicroConf videos by Rob Walling and Jason Cohen. There are a ton of golden nuggets in most of the videos.
- The Mom Test book by Rob Fitzpatrick.
- Mixergy interviews
- Indie Hackers community
- Indie hackers Twitter in general. There are a ton of great people on Twitter that if you just reach out and ask your questions, they’ll happily answer them for you and point you in the right direction. I think this is the most undervalued “resource” for anyone just getting started or looking for their next startup. By following people you can see their journey, their struggles, what they are doing that’s working and what’s not working - plus you’re building an audience and networking.
- The YCombinator YouTube channel - has a ton of very useful information.
Where can we go to learn more?
You can find me on Twitter @cogentgene or hanging out in our Founder Circle community.