The first item that Woot ever sold was a robot lawn mower. As the wholesale computer hardware business changed, Rutledge had taken Synapse Micro into consumer electronics and other categories. Like lawn care. When a Dallas company with hundreds of robot lawn mowers in its warehouse went out of business, Rutledge snapped them up. He tried to sell the mowers on eBay but found that he reached market saturation after selling just a few dozen. People were checking the previous day’s sales prices and bidding less, a feedback loop that would eventually make the mowers worthless. With Woot, Rutledge could set a market-clearing price for the mowers and blow them out in a single day.
Woot did something else that Rutledge learned at First Saturday. It drew onlookers. Most online retailers monetize products they own and therefore focus on conversion rate, how many visitors buy something. Rutledge threw that metric out the window. What if Woot were also able to monetize its audience, those onlookers? Now you’ve got something that starts to look like a media company.
To do that, Rutledge enlisted his brother, Dave. While Rutledge had gone down a path toward computer hardware, his brother had headed into software. Dave dropped out of college, too, and taught himself programming and design. In the early ’90s, he ran a popular blog, before “blog” entered our vocabulary, called Geeklife, which taught him the importance of posting new content daily, no matter how stupid. So he handled the content side of the operation from St. Louis, eventually hiring five full-time writers to populate Woot’s expanding universe of nine sites, which included subdomains such as wine.woot.com and shirt.woot.com. The team workshopped jokes like Saturday Night Live writers, coming up with product descriptions not solely intended to sell. The write-ups were also meant to entertain and entice people to return every day (which, of course, wrecked the conversion rate).
Here is part of a Woot write-up from 2008. Remember what happened that year, and please don’t be discouraged by the length of the excerpt. This is worth it:
“Good day American taxpayer, complments of the season to YOu. Please allow me to introduce myself I am Mr. Henry PAULSON very high official of United States Treasury of United States, Washington, USA. I please to be writing you this day because someone of our mutual acquaintance Mr. BERNANKE vouch for you as trustworthy and gullible individual of high moral standards.
“Through no fault of my own I am come to hard straits and although I am a proud man and father, I must beseech your partnership in resolution, an urgent and vexing matter. Through malfeasance and rascality, certain individuals of my close acquaintance have sabotage national banking system, hence an imminent disaster will befall if I am unable to secure the amount of $700,000,000,000 DOLLARS U.S with all utmost haste. This amount is currently being held by millions of fellow Americans but thus far these scoundrels refuse to release the money to me on grounds of that it is not mine infact.
“Therefore I must, find a partner who can assist in the collection of this funds with, advance fee of $179.99 DOLLARS U.S a nominal amount I am sure you will agree. In return for you cooperation I am authorized to release as a token of my good faith to you one iRobot Scooba Floor Washing Robot, can thoroughly clean a floor with FOUR (4) cleaning stages, prep,wash,scrub,dry,
and include one bottle of 8 OZ. (8 ounce) Scooba Juice cleaning fluid. This robots can follow walls and crisscroos rooms without need of human agency. Not to be use on carpet, laminate, stone of course I am sure you understand. for such price you would not expect to buy such Scooba but I, can assure you.”
With Woot, the point was to make people laugh. Amazon did not get it.
With Woot, the point was to make people laugh. Amazon did not get it.
Amazon, as a corporation, did not get it. Maybe Jeff Bezos understood the breakfast octopus, but that understanding didn’t trickle down the chain of command. Rutledge says the top-level Amazon executives are all geniuses, but there’s a quick drop-off, and none of the politicking middle managers were capable of understanding Woot as a content company. They kept asking stupid questions about the retail side. For Woot, it didn’t make sense to talk about a standard discount the company provided consumers. It simply sold stuff at market-clearing prices. Sometimes Rutledge would sell crap so cheaply that it didn’t make sense—except that he wanted to see how quickly he could sell out.
“They were big on generating reports,” he says. “The amount of information in those reports—there’s a level of expectation there. And our reporting quality was nonexistent.”
On the creative side, Dave says, the pressure to sell killed the writing. “There was such a huge emphasis on growth,” he says. “If you have a day when something doesn’t sell great, someone says, ‘What the hell happened?’ Well, it’s the easiest thing in the world for a buyer or manager of buyers to point to the write-up. So people were saying, ‘Hey, I’m told I have to sell every single one of these things, and I really need you guys to write a more glowing write-up for this thing that you know is a piece of shit.’ ”
Amazon’s fundamental misunderstanding of what made Woot great can be seen today on the site. It sells many items simultaneously. It’s a marketplace, not an event. The write-ups are cute, not subversively funny. Woot is no longer a bug-eyed beast with eight tentacles. It’s a pancake with two smaller pancakes for Mickey Mouse ears and a smile made of whipped cream.
In 2012, two years into his three-year deal with Amazon, Rutledge walked. He won’t say how many millions his early departure cost him, but his contract with Amazon included a three-year non-compete clause from the date of sale, and he was watching the clock.
Roughly two months prior to the planned late-June launch of his next big thing, Rutledge, wearing jeans and a t-shirt of obscure design, leads a tour of the standard-issue gray cubicles in his new office near Addison Airport, just a few miles from where Woot still has its headquarters. Within a year of his departure from Amazon, five other senior Wooters jumped ship to join him. All told, he has 35 employees now. He’s financing the business with his own money and jokes about his burn rate. The office space and the attached warehouse were once occupied by Heelys, the briefly red-hot company that made the shoe with the wheel in its heel. Remember it? No? Perfect closeout item for Meh.com.
Yes. It’s called Meh. The opposite of Woot. Hang on a second. We’ll get to that. First: Rutledge’s Mediocre Corporation operates Mediocre Laboratories, which will conduct a series of what he calls e-commerce experiments. The first one, concluded late last year, was called the Seligman Experiment. If you’re curious about the name “Seligman,” you are encouraged, in keeping with Woot’s founding concept of customer service, to Google it. For Mediocre, here’s how it worked:
Rutledge sent $20 Amazon gift cards to the first 1,000 people who signed up as Mediocre members (they’d seen a TechCrunch story about Mediocre’s launch and had signed up without even knowing what being a Mediocre member meant). He asked each recipient to use the $20 to buy stuff for the Mediocre office. The recipients could, of course, opt to keep all or part of the $20 gift. The response was striking.
About 75 percent of recipients used at least part of their Amazon cards to send something to A Mediocre Corporation, spending more than half of the $20,000 that Mediocre had laid out for the experiment. Six people pooled funds to send a $125 giant wall sticker of a lab rat that now greets visitors in
the Mediocre lobby. Mediocre also took delivery of a hamburger beanbag chair, 39 pounds of fertilizer (an actual bag of crap), 31 copies of the book Abundance: The Future Is Better Than You Think, and 15 wall clocks that made possible a meta wall clock made entirely of wall clocks (with three wall clocks to spare).
Rutledge proudly shows off the Seligman-generated office items and declares that the experiment was either utterly worthless or the most valuable thing he’s ever done. He’s not yet sure which is the right conclusion. In either case, he intends to press on. Which brings us to Meh.
It is unclear at this writing whether permission has been granted to reveal what Rutledge paid for the Meh.com URL, but if you guessed that the sum was more than 10 times what he paid for Woot.com, then you deserve an Amazon gift card, because Rutledge paid $100,000. “I call him Larry the domain guy,” Rutledge says of the guy who sold it to him, “because his name is Larry.” He lets loose one of those laughs. “He’s really eccentric. He was on the internet before it was the internet, and he’s always trying to sell me domains. I didn’t have to walk up and say, ‘How much is that domain? My name’s Matt Rutledge. Google me, bitch.’ ” Another burst of laughter.
Rutledge allows that some people will probably think that Meh sounds a little meh. “The cliché thing, the least exciting way to look at what I’m doing again, is that I’m a jaded entrepreneur,” he says. “You know, sold my company, didn’t like the large corporation, and I’m just doing it again.”
Judge for yourself: just after midnight every day, Meh will offer one new item for sale, the write-up for which should generate as many laughs as it does sales. Rutledge talks about running the site the way Trey Parker and Matt Stone run South Park, with as little lead time as possible, so that Meh can comment on current events. There will be no social media, no liking, no sharing, no email sign-up. He thinks email is a brand-damaging annoyance. The site should be compelling enough that people won’t need to be reminded to go to it. Repeat visitors who don’t buy stuff can click a “meh” button that will increase their prestige in the Meh community. He says, “Many people will be like, ‘But it’s a store. Why would you do that?’ That’s the fun part.”
After that experiment, others will follow. At a recent Mediocre Corporation happy hour, employees came up with the URL Crapwithfriends.com. Then they invented the business model. Each visitor buys an item for the next visitor, thereby receiving a surprise item from the previous visitor. And then there’s Spite.com, whose (even more insane) business model lies beyond the scope of this article.
“It’s important,” Rutledge says, “to retain the ability to say, ‘Fuck it.’ ” Then he thinks for a minute about how difficult it is to retain that ability given how much higher the stakes have grown since he started Woot. This time around, he won’t be some anonymous guy trying to unload a warehouse of robot lawnmowers. Google him, bitch. He’s Matt Rutledge, trying to unload a warehouse of robot lawn mowers, while making you laugh. If he’s a rock star to a certain community of geeks, then this is his sophomore album. There are expectations. Rutledge concludes: “It’s actually easy to say, ‘Fuck it.’ What’s hard is figuring out when it’s advisable to do so.”
In his conference room at Mediocre headquarters, Rutledge laughs like he’s got a yellow Porsche Cayenne Turbo parked out front, which he does. “If nothing else,” he says, “I will enjoy it.”