Talking tech since 2003

I recently sat down with Sahil Lavingia, the founder and CEO of Gumroad, a startup that is really at the center of payments and consumer technology. It’s a fascinating startup, one that I was really excited to learn more about. We met at Sightglass Coffee in San Francisco, a unique coffee shop, which I learned that Jack Dorsey used to visit quite frequently at one point in time.

Its been a little over a year since the initial launch of Gumroad, and the company has raised money from some very notable people and venture capital firms, including Max Levchin (PayPal), Ron Conway (SV Angel), Kleiner Perkins, and others. And they recently opened Gumroad HQ, a 3000+ sq ft space that currently is home to a team of seven people, and likely to expand to 20+ by the end of the year.

So how is Gumroad doing one year later? Quite well, apparently. As we waited for my cappuccino to be created, Sahil mentioned that about 20 to 25 percent of people using the service are repeat sellers, which is a metric he and his team are really focused on. Retention is important at Gumroad, they want people to continue to use the service to sell digital or physical goods (provided you can handle the physical good distribution). And it’s clear why focusing on obtaining repeat sellers makes sense — the more people who continually use the service to sell things to their communities, the more people who find out about Gumroad and perhaps more importantly, the more people will start to trust Gumroad as a brand and a payment service.

Having people trust Gumroad is something very important to Mr. Lavingia. As a service that facilitates payment transactions, it’s important that people trust the name Gumroad, the same way people trust American Express or Mastercard in order for the service to really take off.

While Gumroad is working hard to retain people using its service, Sahil informed me that the company isn’t looking to expand its merchant tools, because he views Gumroad as more of an enabler. A payment system that allows people or companies to sell items online easily, without the need to setup an e-commerce platform.

I asked Mr. Lavingia about the possibility of a Gumroad mobile app in the future, he said that we should expect one. It’s definitely something he’s thinking about. However, he envisions the potential use cases for a Gumroad mobile app to be different than the use cases on the website. And speaking of use cases, I also asked if there have been any particular use cases of Gumroad that he didn’t foresee taking place when he launched the service, the response? People are using Gumroad as a way to settle one-off payments, for example, paying someone back for a concert ticket they purchased for you.

Currently, according to Sahil, about half of all the items for sale on Gumroad are content pieces, such as ebooks or digital publications. But it’s not just ebooks that are becoming more popular, musicians have also taken a liking to Gumroad, something Mr. Lavingia is very excited about. While he realizes, it’s tough to get exclusive deals with musicians, especially when competing against iTunes and Amazon, he’s driven by the idea that that type of model is eventually going to fall by the wayside as people move towards a direct to market/consumer approach. And that’s where he sees Gumroad really shining.

So what’s planned for 2013? “Lots” says Sahil. The company is working on putting together its on-boarding process as it plans to start filling that 3000+ sq ft office space and also continuing to work on improving the service. I’m excited about Gumroad, it’s definitely worth checking out if you haven’t already.

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