At 4:00on a breezy Tel-Aviv Wednesday morning, I spent one hour on Skype with David Daneshgar that made me forget the exhausting trip I had just taken and the deep cavity search I've went through at the borders.
We've talked about his interesting background; great win of the World Series of Poker in 2008 and his thoughts on the game, his newest business venture, Bloomnation, Venture Capitals, business school, and amazing shouting matches with his two awesome partners.
Our conversation was flowing, David is very easy going, very passionate, and this is what he had to say:
David, tell me a little bit about your background
I finished undergrad at UC, Berkley and got interested in poker. I started playing a lot and got quiet good. Given that Berkley is very liberal, students were allowed to teach classes if they demonstrated strength in a particular subject, so I started teaching probability and statistics of gaming.
Upon graduation, I worked as a financial analyst for one year and then decided to try my hand professionally at this poker thing. I was quick, great at math, and had a deep understanding of psychology, which helped me a lot.
My parents are very conservative Persians and thought I will play for a little while and stop, but I kept going for a few years to finally win the WSOP in 2008. I Started developing my own poker website (www.dcdpoker.com) and a couple of years into it, I decided that I want to attend business school as I was being told by very successful people that my skills are easily transferable into other businesses.
I got accepted at Booth School of Business, University of Chicago and I was very aggressively pursued by Trading and Sales recruiters from prestigious firms and banks but I knew this was not what I wanted to do, I knew I wanted to be an entrepreneur.
Is this where bloomnation started? How did the idea come about
My best friend, at Booth, and I were brainstorming for ideas after we had decided we wanted to take the entrepreneurial route when by chance, a relative of his, who is a florist made it very clear how disastrous and chaotic the [floral] industry is, at that point we decided to create a market place , the Etsy for florists. After doing our homework,(www.bloomnation.com) was born.
Why do you think the industry is so chaotic?
You as a consumer buy something (a bouquet, arrangement, etc..), the wire service (online front, like 1-800-flowers) gives suppliers 50 % of the proceeds and you don't know who you are buying from because you only deal with the wire. There is always some sort of a problem with the flowers, the delivery, or the price.
How did you start the business?
I would say we didn't have a conventional start. Booth has one of the biggest business competitions in the country, and we were among the winners, so we gained a lot of traction with our already signed up 500-600 florists.
How has your experience been with pitching and funding the business so far?
We tried the two pitch strategies: The cold lead and the warm lead and by far, warm leads have been more successful and fruitful. My networks has been of a great help, a lot of my colleagues at Booth worked in Venture Capital and they were of great help in connecting me with the right people as well as their partners.
Has it been an exciting journey with VCs?
The online flower industry is one of the largest consumer industries on the Internet, but it is so backwards and there is a lot of potential there. So far we've had great responses and reactions from some of the biggest VCs in Silicon Valley.
I've noticed that there is a huge difference between West Coast based investors and the ones located in the Mid-West; the ones in the Mid-West like Chicago are much more conservative. You must show revenue numbers, you must have X,Y,Z and it seems as though they are looking for businesses that have taken the proof out but haven't found investors. While on the west coast they are willing to put in money because they understand that you have to put a million or two in to get your product out there.
I think the conservative approach works, but when you're trying to disrupt a major five billion dollar industry that has three major publicly traded players only, with a new business model, I don't think it's the best light to operate under.
What is one question you get asked by all investors?
"I want to dig more into your customer acquisition strategy". I've been told this by almost everyone we have spoken to.
What is your response to that?
On the contrary of other online florists, we acquire our customers organically, customers are frustrated and florists are frustrated and they are happy to find a place that allows them to connect directly. Our SEO strategy is proving effective in promoting us, we are trying to be positioned as the "yelp" of your local florists. On the other hand merchants are pushing the platform because they get better gains by using us while our technology platform promotes them individually.
What is one question you haven't been asked nearly enough?
Not enough of them ask me about our long-term strategy. The ones who asked us were the ones who "got it", the ones who are passionate about the market and dug deeper in the industry, they ask questions like: What is your POS system, what is your inventory management system, what are your operational strategies if one of the elements was to be removed, and so on.
Was there a question or a concern that was raised that took you back by surprise and made you question what you're doing?
In a bad way? Not yet. But when I found out how expensive inorganic customer acquisition is, I realized that if I were to adopt the same approach it would be very difficult to beat the already established online floral business at their game, even if our product is much better. This made me feel very strongly about our model and approach and enabled me to sell it from this angle.
On a scale from exciting to scary, how would you rate your experience up until now?
Very exciting. I thrive in a high-risk-high-reward environment, I can see how this could be a kind of scary venture for someone with a traditional background, say, from banking or consulting, but I have been under a lot of pressure in games I've been invited to in USA, Latin America and Europe and risked and handled a lot of money.
Was there ever a time when you thought to yourself: I can't do this?
I question this every day. We did NVC (New Venture Challenge) a few months ago and we placed third which was a disappointment to us, if we didn't win at our own event, then how realistic are we being?
We've spent month in the beginning wondering why has anyone never thought of the idea before and we spoke to a thousand florists and questioned them about the usefulness of our website and whether they have heard any similar ideas. Their answers and responses solidified our belief in our idea.
Do you have partners?
Yes, I have two partners and they are my best friends, Farbod Shoraka and Gregg Weisstein.
How does your friendship affect how you do business?
It is polarizing, it either goes very well of very poorly. I am very difficult to work with, my co founder says there are a few things I have done that would've have got me fired from any respectable corporation. We work together well because we understand each other.
A few days ago we got into a massive shouting match, and it's great that you don't have to hold back. The reason was that our business development partner was insisting on motivating the florists to take better pictures and lower their prices while my point was that technology is the root of our products and we have to make the platform as easy and inviting to both florists and customers alike. In the end we realized that our differences compliment each other.
What is your biggest mistake with your business so far?
When we first started we thought we were hot shit and burned a bridge with the main partner at a major VC only to realize how stupid we were. We've learned since from our mistake.
What is one piece of advice you could give us here at WSO?
Entrepreneurs work because they want to. It isn't so much that flowers are my passion or interesting (they are), but that business itself is my passion and it makes me very happy to speak to people about it and nourish it, so my advice would be find something you love, be passionate about it, and do it.
Take a look at bloomnation.com and go buy some flowers.
Tune in next week for a deeper look into David's poker times and how he can teach you how to be a great player.