“…ultimately I invest in the people, more than I do the actual idea…”

Interview by Mike Sullivan


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Mike:
Hey, everyone. I’m Mike Sullivan and thanks for joining us today on MO.com, where we feature small business owners and entrepreneurs and then bring you hints, tips, insights, and perspectives on what it takes to be successful. Joining us today is Doug Feirstein of uSell. uSell is the leading cash commerce platform that allows consumers to trade in their used or unwanted cell phones for cash. Doug, thanks for joining us and as I usually like to kick things off with, can you tell us a little bit about your background and what kind of led you up to where you are today?

Doug:
Yeah. Well, it really started probably when I was 11 years old and I would stay home sick from school and I would be addicted to watching infomercials and direct response TV. Then it moved on to being enamored by classified ads and just anything that was advertised and that garnered instant response that could be analyzed. I think it just has to do with my genetic makeup of being sort of half analytical and half creative, and this gives me a way of sort of combining both, and leveraging that to build businesses.

So out of school, I started working for some small mail order companies. My goal was always to be an entrepreneur and start my own companies, but I felt like I had to sort of go to the school of hard knocks to really learn how businesses operate from the ground up. I started working for some small direct marketing companies, doing everything from packing and shipping, answering phones, basically any job that they would give me. I sort of moved up into bigger direct marketing companies. I started getting involved a lot in the catalog companies, and then after that I started doing consulting and ended up working for a direct response TV company that was selling products and services on TV.

Interestingly enough, one of the services that they were advertising was the Kenny Kingston Psychic Network, which had all these people working from home, answering calls for all these infomercials advertising psychic readings, and that really gave me the idea for my first company. That was LiveOps, which was one of the first virtual at-home call centers that initially was taking calls for the direct response industry, and it sort of leveraged the idea from the fact that these psychics would work at home and answer these calls for psychic readings that were generated from the infomercials. As the Internet became more prevalent, I thought is there a way for us to leverage that same concept, but have them answer calls for really anything advertised on TV, such as products, and that was sort of the impetus for my first company.

Mike:
I really love the idea behind uSell. I mean, I have three or four cell phones laying around myself that I no longer have any use for, and technology is changing faster than I can keep up with it. Where did the idea for uSell come up?

Doug:
So the idea for uSell really has been an iterative process, but it started with this initial vision back in 2006, when I tried to sell some stuff on eBay, but really trying to sell your own stuff is hard. Initially, the vision was to make it easier for the general consumer to be able to sell their stuff and get cash for that, without having to deal with all the hassles of sort of the traditional, or at least the ways that existed back then in the peer-to-peer selling, like eBay. At first, we started it was every product, and like with any business, as we sort of hit different challenges head on, we realized that we kind of had to narrow our focus into products and services that we had a clear secondary market and there was high demand. That is sort of how we ended up focused in the consumer electronics vertical, because everybody has phones, like you said, you have three or four phones. Virtually everyone I talk to says the same thing, and it was a great way for us to really leverage mass marketing through direct response to drive demand for the service, but there is also a clear secondary market for it. That is really where the idea for uSell came from.

Mike:
What do you do with the phones that you receive? I realize not all of them are still of value. What do you do with the different types of phones that you get?

Doug:
There are really sort of three avenues it can go down. For the high end phones, that are in good condition and it’s still in high demand, the more current technology, they are going to go back directly into e-commerce, so we’re going to do all the hard work of selling it directly to consumers through eBay, Amazon, through our own direct consumer sites. Then there’s the next tier of phones, which maybe need some refurb or need to be sold in bulk to big companies, that use refurbed phones for replacement phones, companies like Escehrion, or it can be wholesaled into other countries, if they are on GSM network, non-CDMA phones. Then the last channel is for the real low end phones that really have no value, but we offer to recycle them responsibly, and those are bulked up and go to companies that break down for parts and in environmentally friendly ways discard the waste materials.

Mike:
You have also formed an angel investing fund. Tell me about your inspiration for doing that and some of the companies that you have invested in.

Doug:
I had a tremendous amount of success with LiveOps. I was also very familiar with building successful a startup as a young entrepreneur and what the challenges are as far as legal formation of the company, having partners and raising capital. Sort of as my give back, I wanted to help up and coming new entrepreneurs sort of handle those challenges as well as probably the biggest challenge as a young entrepreneur is how do you fund that business? So that was the inspiration. Some of the companies that I’ve invested in, some of them were successful ones. A company called Mojiva, which is a mobile ad platform. A company called Pixazza, which helps tag images across big publishing sites, so that people could roll over them and see what type of handbags or clothing different actors or actresses are wearing in a picture and then lead them into e-commerce sites. Another successful company, Ignitor.com, which is now one of the largest group dating sites in India, and another company ReadyForce, which was founded by one of my co-founders in LiveOps and they are basically changing the way people staff and leveraging technology to sort of disrupt a sleepy staffing industry.

Mike:
Tell me what characteristics you look for in startups when deciding whether or not to invest.

Doug:
Right. I think the most important characteristics I look for are the founders. I think they have to have an idea that potentially can make money, but ultimately I invest in the people, more than I do the actual idea, because it really comes down to executing on that idea and do they have the capabilities to do that.

Mike:
You have a strong record as an entrepreneur. What are some of the challenges you’ve faced along the way?

Doug:
I think probably the biggest challenge as an entrepreneur is focus. As an entrepreneur, you are constantly thinking of new ideas and ways to take advantage of opportunities. So its being able to pick and choose the right things to focus on and then executing them in a disciplined way.

Mike:
Doug, I enjoyed the conversation. Thank you very much.

Doug:
It was great meeting you. Thanks, Mike.