Anger over being scammed out of $400 helped Woda, 37, launch buySAFE in 2003. Three years later, the Arlington-based company, which has raised more than $17 million in venture capital, has a little more than 40 employees and is seeing double digit revenue growth. The company’s clients are small and medium sized businesses that sell products through online marketplaces like eBay, but there are plans to start offering a service that will guarantee purchases through company web sites. Woda grew up in Washington, and after graduation from Florida Southern College in 1991 worked for eight years as a surety bond underwriter in DC for Aetna and others. He then got an MBA from Wharton.

Tania Anderson, for Bisnow on Business: What inspired you to launch buySAFE?
I was at Wharton in 2000 and working in Silicon Valley during my summer internship, and I got burned in an online auction. I thought, this is not a great thing. This can’t be great for buyers and certainly can’t be good for sellers. I went back to school my second year and decided I wanted to try to find a way to make e-commerce safer.

How did you get burned?
I went on eBay and I tried to buy a small PDA. I did all my homework, I looked at the seller’s feedback rating. At the end of the day I did not get the product. As a starving graduate student, I didn’t have the money to lose on the transaction of that size. I spent a couple of weeks really stewing about this problem. How can you buy something and not get it? This can’t be good for buyers, but this has got to be a great opportunity, too. Turns out after a couple of weeks of thinking about this, it struck me that a surety bond would be an ideal way to eliminate the risk for buyers. If folks can guarantee $40 million construction contracts with a surety bond, why couldn’t we guarantee $20 e-commerce contracts with a surety bond?

So much of eBay and any other online transaction really relies on the honor system.
And that’s nice and important, but it’s not fool proof. We’ve started our business on eBay and other online marketplaces. We believe it’s a problem that extends far beyond marketplaces to all of e-commerce. When you go to a Google search and you click on a keyword on the right-hand side, you go to some Web site. Who are these folks? Are they a small professional merchant from Des Moines, Iowa, or are they are a Russian crime ring posing as a small professional merchant? And that’s the challenge. The important thing is to help verify who these folks are and to signal to people that they are experienced professionals. The other thing we do, which is critical, is we back it up with our own pocketbook. We say to buyers, ‘You can trust doing business with this merchant, and we’re so confident that you’re not going to have a problem that we’re willing to pay for the problem if we’re wrong.’

How did you as a young graduate student get the company launched?
We raised our series A financing and officially got going in the summer of 2003. As you know 2000 and 2001 were very difficult times to raise money. But when I graduated from Wharton I decided this is something I really wanted to do and set off working on it full time for the next year. It was myself and by then I had recruited Jeff Grass who serves as our CEO today. Jeff and I raised the series A.

How does the company make money?
Small and medium sized merchants out there on the Internet have a problem, which is how do they attract people to buy from them when they don’t have national, trusted, recognizable brands. What they do is come to buySAFE, and we put them through this rigorous screening process where we look at their experience, reputation, and financial stability. Once they’ve been accepted, we’re willing to vouch for them. The idea is that, by having a trusted third party such as buySAFE and financial institutional partners such as Liberty Mutual vouch for them, they’ll be able to attract more buyers. In return, they give us 1 percent of what they sell. People are willing to pay more when there’s less uncertainty involved. Not unlike investing. If you’re an investor, the greater the level of perceived risk in the investment, the greater the level of return you’d like. When somebody is buying something online, when they perceive a higher level of risk, they want a lower price. If you can eliminate or mitigate the perception of risk buying from this unknown party, you will be willing to pay a fairer price, so it pays for itself pretty well.

As a consumer, how would I know that buySAFE is a trustworthy brand itself?
We’re not Coca Cola. We’ve made a point of partnering with very large and well respected financial institutions that actually guarantee the transactions. Liberty Mutual, the Hartford, and a number of others. Over time we’ll build our brand and build our own following. How can this be useful for buyers? On the merchant’s listings on eBay, we give the merchant a buySAFE seal that signifies that they are who they say they are. They merchandise the heck out of that just like if they were giving away free shipping. We’ve also created a comparative shopping site called buySAFE Shopping. That comparison shopping site has millions of items being sold for bonded sellers.

Why didn’t you want to be president and CEO of your company?
I’m a young guy. I really felt like you can’t start a company on your own. You’ve got to start it with other talented people around you. I’d known Jeff for a long time since undergraduate school. He had already been there and done this. He had a been a founder of a venture-backed company [PayMyBills.com, an idealab! company]. It works out extremely well for us; we’ve been partners a long time. We tag team on things around here.

What got you interested in business, particularly tech?
I’ve always been pretty entrepreneurial. In grade school I used to find a way to make it over to 7-11 after school and buy some grape Bubble Yum gum so at the next day of school I could turn around and sell it for a quarter each. As long as I didn’t get in trouble for bringing gum into the school, I was fine. I’ve done a number of entrepreneurial things in my career, none of which were substantive, venture-backed things. The Internet is something that even for someone who is not a technologist, for someone like me I could understand certain consumer concepts. For me not being a technologist, not being an engineer, that was something I felt I could get my head around.

What’s the most interesting thing you’ve done in the last year professionally or personally?
Every day is pretty fascinating. This whole journey as an entrepreneur, it’s hard to describe for folks how personal and yet how exciting the journey of seeing something go from your little idea in your one bedroom/office to all of a sudden, there’s a bunch of really bright folks walking around. It’s pretty humbling. Whether it goes well or doesn’t go well, it’s still humbling to see something grow and to see folks so committed to your idea. The most interesting thing I’ve done this past year, once we raised our series B round of financing, was that we were able to put together a terrific management team around us and I’ve been able to have a little more personal time with my wife.

Was it hard to trust others with your idea?
That’s one of the very personal challenges for an entrepreneur who founds the company. Over time your baby starts to grow up. There’s not a job in this company that I haven’t done. I’m sure I’m not alone. One of the great personal challenges that you have is to let go and to find really good people. Hopefully they’re better than you can ever possibly be and if you do that you build a great company. If you don’t do that, it’s very hard to build a great company. For me, I’d like to be an entrepreneur and do this again. For me this is the first step in the journey and hopefully it goes extremely well and I can do it again. And if it doesn’t, hopefully I’ll learn a bunch of lessons and I can do it again. I’d rather get the thing right and own all the credit than get it wrong.

[This interview conducted by Tania Anderson for Bisnow on Business.]