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My company, Voodoo Ventures, is a two-man team based in the US, with eight full-time developers in Russia. I’ve known the lead developer, Oleg, for five years. Our relationship evolved out of meeting on eLance to work on the first website I ever built, BachelorBlowOut.com, a web-based travel agency for group travel, specifically bachelor/bachelorette parties. We grew this into a $500,000 a year company, eventually rebranded as Destination VIP, and were acquired two years ago by VegasHotSpots.com.

Following that acquisition, I decided I wanted to focus full time on Voodoo Ventures projects, and we decided to get active in what was just starting to be called Web 2.0. We didn’t really know what it was at the time, but we figured the websites that were being developed by the guys who were our gurus of Web 2.0, 37signals, were pretty neat, and we immediately took to Basecamp. It totally changed our lives as far as being able to collaborate with our developers in a distributed environment.

We started working on our first project about a year ago. Our first project was actually not Huckabuck, but a project called SiteMighty, which is going to be released in beta this October. We have been in development of this project throughout Huckabuck’s entire life cycle. It’s been slow at times, but that really owes itself primarily to the complexity of the project. But it will finally come out in October.

So, in November 2005, after Hurricane Katrina (we’re from New Orleans), we decided we wanted to work on another project. It really was a confluence of events.

1. I learned what a Huckabuck is, it’s New Orleans slang for a cross between a popsicle and a snow cone, so I registered the domain name
2. We saw the search engine Jux2.com sold on eBay for $100,000, and thought to ourselves, could we build one of those?

So we talked with our developers and decided to try to build a meta-search engine called Huckabuck, both as a test of their development skills, and a proving ground for our project management and marketing expertise. All the while, we have considered Huckabuck a project that is as much skill-building for our future applications as anything else. And, while this really has been what it has turned out to be, we definitely were handicapped by not focusing on the business model right from the get-go. In some ways, looking back, the project was destined to be more of an experiment than a company.

First Steps

So, Huckabuck was delivered to us as a meta search engine that aggregated the results from Google, Yahoo! and MSN in April of 2006. Meanwhile, Blake and I had spent the past few months developing a marketing plan for Huckabuck that was designed to deliver maximum consumer awareness within our budget of $25,000 (which was entirely self-funded). We developed a plan that combined a full scale awareness assault of the online world through community awareness in the blogosphere with a splashy marketing campaign here in New Orleans. We bought offline magazine ads, threw several parties, hosted a BrainJams unconference, hired street teams, donated 10 per cent of profits to New Orleans charities, sponsored events, signed on artists to sell their ring-tones through the site, and even actually hired a plane to fly around New Orleans Jazz Fest with a banner advertising Huckabuck.com. All of this coincided with the New Orleans Jazz Fest and we piggybacked on much of the publicity and awareness of New Orleans surrounding that event.

From an awareness standpoint, that campaign worked well. It felt like everyone in New Orleans knew who Huckabuck.com was for those three weeks. But, we realized that awareness doesn’t translate into users. We definitely had a jump in traffic, but that did start to tail off as users headed back to their old search habits.

So, following the launch campaign, we refocused our approach online, and started to assemble a team of community advocates who would get our message out. We set up Miss Huckabuck on MySpace, and had her contacting various blogs talking about us. We were very careful not to take a spammy approach, we read each blog before we contacted them, and sent messages that were tailored to the individual blogs. We genuinely wanted to be part of the conversation, and this worked very well. Through May, June, July and August we’ve probably averaged 5-10 blog reviews a week and some including Seth Godin, Lifehacker, and and interview with Emily Chang really drove quite a bit of traffic.

One of the plans from the start was to make sure that we had distribution into the way a lot of people search, so we placed prominent links on the homepage to downloads for the IE and Firefox toolbars as well as the Mozilla search plugin. These worked very well, we had a lot of downloads of these, and that has kept our traffic at a ratio of about 60 per cent return visitors and 40 per cent new traffic.

Making Huckabucks… Or Not

So, what am I forgetting, oh yeah, revenue model! Aha, now you have an idea of where we weren’t focused. We wanted to build traffic, and we felt like the PPC advertising model for search engines is pretty well defined, so at the appropriate point, we’d just plug that right in and be pulling in revenue commensurate with our search volume. Well, clearly we didn’t do enough due diligence in this regard. We signed an agreement with a third party company to feed us Google Adsense ads based on keywords in April. We were able to get them set up, but since it was a beta service of theirs, the ads were 90 per cent irrelevant. For any and every keyword search the ads would be for travel or furniture or something completely unrelated. So after battling with it for a while, including installing an iframe and trying a bunch of workarounds, we got them to switch us to their Yahoo! feed, which we still have and at least the ads work. But we’re still not raking it in yet, although I think with an increase in traffic, the advertising model will work for Huckabuck. I actually have our check for advertising commissions for June posted over my desk. It was worth more in motivation then it was to cash the $2.14.

To eBay Or Not To eBay?

We have always had it in our timetable to start to shift our resources from Huckabuck to our other projects by September. So, as August wore on, we had a decision to make, do we try to make something happen with Huckabuck, or try to keep on keeping on, knowing it will probably start to wallow as we shift our attention away from it? We knew it would come to this point, and our hope had been that it would be clicking away enough at this point to allow us to step away from it and have it bringing in a decent amount of revenue. Well, clearly the time we have been spending on it is worth more then $2.14 a month, so we decided we needed to wrap it up. And about that time, Kiko went up for sale on eBay. So we started thinking about the eBay option again, and I actually wrote two blog posts about this option prior to putting it on eBay. We watched as Kiko went for $258,000, and although we thought there’s probably a little bit of bubble behind this, we might as well ride those coattails! So we listed on eBay, made our rounds of contacting bloggers, and then even ended up putting up a couple of garish ads on GigaOm and BoingBoing. We paid $3000 to FM Publishing to run the ads for the week leading up to the auction. These attracted a lot of views, and we hoped they were worth the investment.

So what were we looking for? We really weren’t trying to ‘flip’ Huckabuck in the traditional and arguably negative sense of the word. We probably had about $40-50K invested into Huckabuck, including the $25,000 that we spent on the launch campaign. But make no mistake; we knew that was a sunk cost and that the buyer would be evaluating its present value, not what we put into it. In our minds we compared that value with how long it would take us to make anywhere close to its current revenue rate, combined with the effort required by us to get it there.

We really wanted to find Huckabuck a new home, as we still believed in it, and thought that there were probably people who were very well positioned to take it to the next level. The technology was great: we were the only meta search engine that combined Google, Yahoo! and MSN with the ‘Web 2.0′ new types of search such as del.icio.us, Technorati, and Digg. Our Ajax search tuner was really neat, and we had got a lot of good feedback on it.

The bottom line is that whoever ended up buying Huckabuck would be doing it to acquire the technology rather then having to develop it in-house. They wouldn’t be buying it for its current traffic levels or revenue; it was simply too young for that. We think that sale by eBay is a rather innovative channel for early stage start-ups to put themselves in the hands of companies with deeper pockets and more extensive resources. It wasn’t just a liquidity event for us, it was also a huge networking event, where we could shake hands with everyone in the room at a giant internet convention and let them know that we were for sale. If anything, selling Huckabuck on eBay was an experiment in the transparent and naked business evaluation and acquisition process. Sure, it’s nerve-racking letting the world know that you think you’re good enough to go up for sale, and knowing the world will soon discover if you succeed or fall flat, but that’s all about willingness to take a risk.

The Auction

I was fly-fishing in Virginia when the Huckabuck auction ended. Amazingly enough they had Wi-Fi access at the cabin where we were staying, so I logged on to watch the grand finale of the auction. The bidding had approached $10,000 in the days before the auction close, which was encouraging, because everyone knows that eBay auctions always have a nice run up at the end as the bidders battle for final position. Our reserve was $20,000, and we had started to publicize this so that people would know where they had to come in at. We also were starting to get great questions from bidders expressing interest.

Thirty seconds left… no bidding war seemed to be starting. I instant-messaged Blake to get his take. He wasn’t too optimistic. Then… nothing happened. The auction closed at $10,100 and my heart sank. I shut off the computer and headed out to the stream to decompress with my dad. This certainly hadn’t worked out according to plan. As we walked through the woods after an afternoon of catching fish and catching my breath, Jason, our guide, asked me what I did for a living. “I’ve got an internet company,” I responded. “The internet? I’ve never been on that,” he replied. That was just the perspective I needed.

A week later I was back in the office, and we had started getting emails from people expressing interest in the site. We had four or five interested parties. Back on track! We moved from negotiations to contracts to wire transfers and installing Huckabuck on a new server all within a few weeks. On Friday October 13th, we closed on the sale, and received the final payment for Huckabuck. Must have been my lucky day.

Epilogue: New Beginnings

So Huckabuck has been sold, our mission complete. We are very pleased to announce that the new owner of Huckabuck is Van Glass, the founder of JSCAPE, developer of networking and security software components. He is very excited about the site and has extensive plans to invest in the product, add new features and continue to move it forward. We really are excited to have found a new home for Huckabuck with an owner who is as excited about the site as we have been and who we all hope will take it to the next level.

Here are a few takeaways and things that we have already identified that we are going to do moving forward. Hopefully it will help those of you out there either embarking or already on a similar path:

• It’s all about the business model – I don’t even want to have the first discussion about technology or specs until I have fully researched and fleshed out the business model
• Online marketing trumps offline every time – our online strategies blew away everything we tried to do offline. As much as we in the Web 2.0 space think the world is right there with us, they are not yet, the best crowd is still online
• Acknowledge your risks and move forward, don’t let them scare you off – a lot of people we talked to brought up the risk of Google/Yahoo/MSN cutting off our search results. They could. They haven’t. If they do, we will adapt. It’s a risk, but this is the way most meta search engines have gotten off the ground. Don’t let the chicken and the egg problem stop you from trying.
• Move with the market – there is definitely a groundswell in the Web 2.0 space right now. I personally don’t think it’s a bubble… yet. But to be honest, this buzz is something that we hoped would contribute to the ultimate sale of Huckabuck
• Web 2.0 is about the way people are doing business as much as the business they are building – simply put, we could not have built this or any other project like it five years ago. The cost of and access to technology and distributed collaborative work environments is what have powered Huckabuck. These aren’t going away. We don’t need to be MySpace or even Kiko to succeed because we have done it all ourselves.

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