Zeek launched in Israel as a peer-to-peer marketplace where people could buy and sell unwanted gift cards, coupons, and vouchers at discounted prices. The company raised significant venture funding and expanded rapidly, acquiring competitors and entering new markets in Europe.
Company Data
- Founded: ~2014 — Israel
- Failed: ~2017
Problems emerged when users reported that purchased vouchers didn't work or had already been redeemed. The verification system for digital coupons was inadequate, and fraud ran rampant on both sides of the marketplace. Customer complaints mounted. The company burned through funding trying to build better verification technology, but couldn't keep up with the fraud.
Key Lesson
Marketplaces for digital goods need robust verification systems before scaling. Fraud on either side of a marketplace destroys trust, and once trust is gone, the marketplace dies.