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October 13, 2006 Vol. 77,
no. 9F
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| THE
BUSINESS OF HONESTY: RapLeaf cofounders, from left,
Auren Hoffman (B.S.’96 IEOR) and Manish Shah, a 2005 computer
science graduate of the College of Letters and Sciences. PHOTO
PROVIDED BY RAPLEAF
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Good ethics, good business
IEOR alum launches website for rating online buyers and sellers
More than 10 million classified ads are posted on craigslist
each month. Not all of them result in honest transactions between buyer
and seller, but a new website cofounded by an IEOR alum aims to make
online transactions more fair and square.
On RapLeaf.com, people rate buyers and sellers to produce a database
of reputations. (RapLeaf comes from rap sheet or reputation, and leaf,
signifying life.) The idea is that if you’re selling something
on craigslist, for example, and you know a buyer will rate you, you’ll
be more honest. In turn, if you’re a buyer, you can review a
seller’s reputation and avoid shady dealers. Honest behavior
is rewarded with more business; unethical behavior is shunned. In fact,
the San Francisco-based startup’s motto is “It’s
more profitable to be ethical.”
In May, Auren Hoffman (B.S.’96 IEOR) launched the site with Manish
Shah, a 2005 computer science graduate of the College of Letters and
Sciences. “If people are being rated and they know they’re
being rated, it makes the big, vast Internet a small village,” Hoffman
says. “Everyone knows everybody’s reputation.”
The website allows Person A to rate Person B on an online form. Positive
reviews are sent to Person B, who is encouraged to use the RapLeaf
emblem in further transactions as a sign that he or she has been rated
as trustworthy. Person B’s RapLeaf score is also tabulated based
on the number of positive and negative reviews. Visitors to the site
can look up someone and read his or her reviews.
RapLeaf traces its roots to Shah. In the spring of 2005, he was a student
in the College’s Center for Entrepreneurship and Technology
(CET) program. In his CET class IEOR 190A, he heard a guest lecture
on Silicon Valley entrepreneurship by Hoffman, a successful businessman
who has founded three companies. After graduating, Shah called Hoffman
and pitched him an idea for a system that would make people more ethical. “I
was always uncomfortable buying things off craigslist because I was
never sure what to expect,” Shah explains. “I was motivated
to do something about it because I saw it as a problem.”
“
I have a lot of people who come to me with entrepreneurial ideas and
normally I would say no, but his pitch was interesting,” says
Hoffman. “It was clear that Manish was a smart, aggressive guy.
I dropped everything, and we started working together.” Over
the next year, Shah worked on the website while Hoffman took care of
development, marketing and management. In June, the two received angel
funding to launch their operations, and today, RapLeaf has hired five
employees.
Hoffman and Shah hope their company will positively influence online
commerce on any scale, from hiring a plumber off craigslist to buying
a car from CarsDirect. Hoffman says he’s not sure how RapLeaf
will generate money, but he’s not worried. “We’re
100 percent focused on serving our members and the community.”
Visit
RapLeaf at www.rapleaf.com.
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