David Kalt bought and sold instruments on eBay for the last three to four years and he hated it. “I experienced a lot of pain in the overall user experience. Pain in the lack of focus. Pain in the sophistication as it relates to instruments,” Kalt says. He was tired of paying 10 percent of the transaction fee to the marketplace behemoth, and he wanted a change.
He invested $500,000 of his own funds and launched Reverb in January to take on eBay’s instruments vertical. Reverb is an online marketplace for buying and selling old and new equipment: guitars, bass, drums, brass instruments, string instruments, violins, viola, pro audio mikes, and recording gear. It’s designed specifically for the music vertical — unlike eBay which “focuses on a lot of verticals, and is not doing a very good job of any one,” Kalt says. Reverb takes a 3 1/2 percent cut off transactions, seriously undercutting eBay’s fees.
Reverb’s website and iOS app have search functionality designed specifically for musicians, who can comb through listings characterized by make, model, color, year and other options. You can see it on the home page where they group by category, including weird options that instrument fanatics probably love like “Japanese Vintage” or “Rarest of the Rare.”
Every item on the platform is accompanied by a price guide as a reference point, that allows buyers and sellers to see in realtime what that instrument’s estimated value is. The price is automatically aggregated from platforms like eBay — that way, people don’t have to go hunting to compare and contrast the make and model with listings elsewhere.
Kalt is sitting pretty in a position straddling tech startups and the music industry. He made his money by starting, building, and selling two companies, one of which sold for $1 billion to Charles Schwab. In 2011 he dropped $7.5 million purchasing the 23-year-old Chicago Music Exchange, which regularly sees celebrity customers like Adele, Mumford and Sons, and Johnny Depp. Kalt’s passions are tech and music, and Reverb is the culmination of those two worlds.
The site launched in January and Kalt says it’s seeing 25-45 percent growth both in number of transactions and sales. “Last month $180,000 of gear sold through Reverb,” Kalt says. “This month we’re on track to do $330,000 in transactions.”
Kalt is in the process of raising $1-2 million from friends and family to grow the business, but he’s avoiding institutional money. “While I love the venture world and what it’s all about I’m not looking for a partner at this stage in the game,” Kalt says.
Reverb’s success is pegged to its ability to draw users away from traditional marketplaces like eBay. Since the site is cheaper for sellers to use and cleaner looking for buyers, its value proposition is clear. Now, Kalt just needs to put some money into marketing to get the word (sound?) out.