Gurley says Thomas Layton was interim CEO for six-and-a-half years, taking OpenTable from $100K monthly to $20M run rate.
“a guy on the board, Thomas Layton, agreed to come in and be interim CEO, which he held for six and a half years.”
Gurley recalls OpenTable was doing $100K monthly revenue while burning $1.1M monthly when 2000 crash hit.
“When the wave crashed, we were doing 100 ks a month in revenue and burning 1,100,000 a month. And all of a sudden capital availability looks like non existent.”
Gurley notes that OpenTable's two venture-backed competitors went bankrupt during the 2001 downturn, enabling OpenTable's success.
“And as a result, you know, I think there were network effects, but nowhere in the history of OpenTable success story does anyone read two companies went out of business, but that's what happened.”
Gurley recalls OpenTable's CFO wanted to quit because his model capped market share at 17 percent.
“And one day I showed up early for a board meeting and and the CFO comes to me and he says, Bill, I'm I'm gonna quit.”
Gurley explains OpenTable unlocked parametric search for restaurants that was previously impossible without calling each restaurant individually.
“Before OpenTable, you could not do that. You'd have to call each one of them, and so it unlocked a consumer value proposition that didn't exist.”
Gurley backed OpenTable with only three restaurants on the network based on network effect thesis.
“we invested when there were three restaurants on the network and had a theory that a network effect could take place where it could tip towards winter, take most.”
Gurley says OpenTable had the most intellectual appeal because Benchmark invested at three restaurants with a network effect thesis.
“The one that had kind of the most intellectual appeal was probably OpenTable because we invested when there were three restaurants on the network and had a theory that a network effect could take place where it could tip towards winter, take most.”
Gurley told OpenTable CFO they would reach 99% market share, not 17%, due to network effects understanding.
“And he said, oh, no one gets more than 17% market share, all the businesses I've worked with. Because I believed in network effects, I was like, we're gonna get 99.”