Y Combinator Challenge #10 – Auctions (Celebrity Guest Post!)

Hi, my name is Charles Ju and I’m answering Kevin’s call for help. I am also an unabashed fan of Y Combinator (submitting a plan this year), and thought that I’d share some of my ideas with the community.
Please visit my blog at www.charlesju.com. If you want feedback on your ideas, a review of your startup, or just to meet a new friend feel free to e-mail me at charlesju[at]gmail[dot]com.

10. Auctions. They are a major foundation of internet revenue, eBay posted $7.5 billion USD in revenue last year. While this is not all from auctions, I think it’s fair to say that a large portion of it is. With the inclusion of sites like Craigslist and FB marketplace, it becomes clear that finding a new way to monetize this market will be enormously profitable.

My Idea – Mobile Auction Tweets
The pain with auctions is that it is not tailored for the casual user. If you want to auction off an item on eBay, for example, you need to take a picture of it, find a description, and make the page attractive. This takes too long.

My idea is to create a mobile application, preferably starting on the iPhone to streamline the auction process. Similar to the concept of microblogging, auctions need to be simplified. All it will take to create an auction using my application would be a picture from the camera of the iPhone (or video), a short description, starting bid, and duration of the auction. This application will exponentially decrease the amount of time it takes to auction off casual items. Ideally this application will be able to plug into different auction sites; Facebook Marketplace, Craigslist, eBay, etc.

There are a couple of benefits to this business model:
1. There is an actual business model. Each user will be a paying user and you won’t have to fight the constant battle to make sure your ads are paying more than your server costs. By selling an actual product with a price you’ll be cash flow positive from day 1.
2. Mobile auctions are already a big thing in Japan. So this model has been proven to work. http://www.dena.jp/en/work/mobile.html. Having a proof of concept in a foreign country will greatly decrease the inherent risk in starting the venture.
3. Avoids the problem of critical mass. Normally when you start any site that depends on the interaction of users you’ll have the critical mass problem. You need users to get people to use your site but no one will use your site until you get users. By tapping into existing networks like eBay and Craigslist, you’ll already have a full set of users ready to go.

Some risks off the top of my head to look out for are that big auction sites will not allow your application to use their API, a big auction site might take your idea and do it themselves, and there will be no demand for casual auctions.

Thanks to Charles for posting this great idea – feel free to post any comments below.  Also, be sure to check out Charles’ blog, he’s new to the blogosphere but already has some pretty good stuff.  If you have an idea you’d like to post, go ahead shoot me a mail at kleneway@hotmail.com.

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One response to “Y Combinator Challenge #10 – Auctions (Celebrity Guest Post!)

  1. Thanks for letting take up a guest spot. Just a small revision, eBay made $7 BILLION not trillion last year in net rev.

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