Introduction
In a recent fireside chat hosted by Roy Baladi and tech entrepreneur Henri Asseily shared his journey of building BizRate/Shopzilla and offered valuable insights into entrepreneurship, fundraising, and the future of technology. As the co-founder and former CEO of Shopzilla, which was acquired for $569 million in 2005, Henri’s story provides actionable lessons for aspiring entrepreneurs and professionals navigating today’s dynamic tech landscape.
The Shopzilla Journey: From MBA to $569 Million Exit
Henri began by sharing how BizRate (later Shopzilla) came to be. In 1996, while finishing his MBA at Wharton, Henri and his business partner recognized the potential of the emerging internet and decided to capitalize on it. They created BizRate, a platform designed to help people shop online by providing merchant ratings.
“We started a company where, whose brand we first called BizRate, which was a concatenation of business ratings where we kind of wanted to help people shop online. And the idea was to walk people through, hold their hands while they’re trying to shop online. It was so complicated. It was so random. It was so dangerous at the time that it was a very valuable service.”
The company evolved over time, raising multiple rounds of funding: $4.5 million in 1998 at a $12.5 million valuation, $20 million in 1999 at a $120 million valuation, and $50 million in February 2000 at a $750 million valuation. Then the market crashed, and from 2000 to 2004, raising capital became nearly impossible.
Despite the market downturn, the company continued to grow. By December 2002, they became cash flow positive, making $20 million in revenue. In 2003, they reached $40 million, and after a significant technology transformation in 2004, they hit $67 million. By 2005, revenue soared to $151 million with $50 million in after-tax profits, leading to their acquisition by Scripps for $569 million.
Choosing the Right Co-Founders
Henri emphasized the importance of complementary skills:
“Find people who are as committed as you are, but complementary to you. You guys have to determine what the areas of responsibility are. We, of course, made a bunch of mistakes, we did things well, and we got very lucky. But overall, you got to have a founding team that starts by being able to do the gamut of what is necessary when you start a company.”
Henri explained that his co-founder was excellent at storytelling and understanding technology, making him ideal for the CEO position, while Henri focused on the technical aspects. He stressed that a founding team needs to cover various bases: building solutions, telling compelling stories, business development, and some financial knowledge.
Challenges of Being a Solo Founder
Henri cautioned solo founders about the challenges of managing both internal development and external operations. Henri advised either paying top talent or offering equity to bring in key capabilities, essentially forming a co-founding partnership in practice. “If you’re a solo founder, then you’ve got to hire and pay well somebody to do probably the inside job. So, either you outsource your inside work, or you find somebody you’re going to pay for it, but you’re going to pay top dollars for it. Because there’s a huge risk and it’s a startup.”
Fundraising in the Early Internet Era
When discussing his first fundraise of $4.5 million at a $12.5 million valuation, Henri provided context about fundraising in the early internet days:
“The four and a half at the time was truly a series A, a real series A. It wasn’t a seed as far as seed money is concerned. I think we put in about overall maybe half a million before getting the four and a half.”
Henri explained that his early fundraising success was rooted in telling a compelling, fact-based story. In the late 1990s, VCs were eager to invest in internet ventures, but startups still needed to validate their business models with real traction and clear value propositions.
Solving the Cold Start Problem for Marketplaces
Roy asked about the cold start problem that marketplaces face, needing both merchants and consumers to create value. Henri shared his approach:
“You start with one side. Generally, you start with the businesses because you don’t have that many of them, and they give you a lot more leverage. So, you start with a few businesses, you provide them with a service that goes over and above what you generally give to another business later on.”
For BizRate, they started with three types of merchants (small, medium, and large) and offered them valuable customer feedback. Once they had enough merchants, they could create a website with enough value to attract users. As the user base grew, they gained more leverage with merchants, creating a virtuous cycle.
Knowing When to Sell
On the decision to sell the company, Henri explained that multiple factors came into play:
“Selling is always tricky to know when you want to sell. And so it was a confluence of a number of factors. First of all, we had VCs that had been our business for seven years. And they went through a lot of hurt.”
The VCs were eager to sell at a good valuation after enduring difficult years. Additionally, Google was entering the shopping search space, creating competitive pressure. While some team members would have been happy with a $200-250 million exit, Henri knew they could get more, and ultimately everyone was satisfied with the outcome.
Launching a Startup Today
When asked how he would approach launching a startup today, Henri was optimistic about the opportunities:
“The Internet is around, and more than that, there are all sorts of new things that are being built on top of it. So, you’ve got many new layers on top. You’ve had the blockchain for the past 10 years. Now you’ve got the AI.”
He drew parallels between the internet bubble of the late 90s and the current AI boom, suggesting that while there might be hype cycles, the underlying value is real and substantial. He believes AI is as disruptive as the internet was, potentially multiplying productivity by 50-100 times.
However, he cautioned about the volatility in the AI space:
“What we’re seeing is that new algorithms, new LLMs or new techniques can literally wipe the value of anything coming before it. There is no incremental improvement. It’s very possible, and in fact it’s most probable that somebody, something is going to come in the next month or six months that is literally going to pull the rock from under your feet and bring down your revenues to literally zero overnight.“
Entrepreneurial Opportunities in AI
For entrepreneurs looking to capitalize on AI, Henri recommended:
“You want to find businesses or markets where there’s a lot of work, a lot of manual work that will be insanely automated by AI, I mean to a point of ridiculousness.”
He suggested looking beyond obvious technology applications to services with excessive bureaucracy and handholding. For example, he mentioned legal services:
“Start a paralegal company that is AI first. You will do the work of companies that have hundreds of paralegals, and you will price it for a lot less and will do a lot more work, and you’ll get so much more market share and profit margins.”
Future-Proofing Careers with AI
For professionals concerned about staying relevant in the age of AI, Henri’s advice was straightforward:
“Learn how to use AI a lot. Be an expert at AI tools, an expert, an absolute expert. Use them all the time. Practice it, use them as a developer.”
He shared that AI has dramatically increased his own output as a consultant and developer, allowing him to help in areas where he previously lacked knowledge. By becoming proficient with AI tools, professionals can enhance their capabilities and remain valuable in the job market.
Startup Funding: Less Is More
While acknowledging the value of funding for rapid scaling, Henri emphasized starting lean. Thanks to AI and cloud infrastructure, capital needs are lower today. He advised founders to avoid raising money unless strategically necessary and to build value before seeking external capital.
Adapting Traditional Businesses to AI
For traditional businesses facing disruption from AI, Henri suggested embracing the technology rather than fighting it. When asked specifically about translation services, he recommended:
“I’m not just a translator. I’m a translating business that uses AI as well. So, we have humans and AI, and we will give you the best of both worlds. Don’t use pure AI translation because you can never be sure it works properly. Pure human translation is too expensive. What I give you is the mix of the two.”
Similarly, for a vintage watch seller, he suggested using AI for marketing optimization to grow the business.
Conclusion
Henri Asseily’s journey from founding BizRate in the early days of the internet to navigating today’s AI revolution offers valuable lessons for entrepreneurs and professionals alike. His insights highlight the importance of timing, complementary founding teams, strategic fundraising, and embracing technological change. As we face the transformative potential of AI, Henri’s advice to become experts in these new tools while focusing on delivering unique value remains particularly relevant.
Whether you’re building a startup, seeking to future-proof your career, or adapting an existing business to technological change, the principles that guided Henri’s success continue to apply: identify growing markets, solve real problems, build value before seeking investment, and continuously adapt to changing conditions.