Sramana Mitra: I got it. How many people did you have in the company that you were essentially renting out?
Michael Sikorsky: It was very fast. It went from 0 to 65 people in nine months.
Sramana Mitra: Then you sold the company to whom?
Michael Sikorsky: To my business partner. It was almost like an accident. Again, you can almost see the pattern. I was like, “I don’t want to be at this company. I don’t know what I’m going to do. How about I try this idea?” I just wasn’t super passionate about it.
Sramana Mitra: It’s a very common idea that these various offshore firms are doing. You can put a little lipstick on that but it is not a great business.
Michael Sikorsky: No, it’s not. >>>
According to Inside Mortgage Finance, non-banks were responsible for 37.5% of US home loans in 2014, up from 26.7% in 2013. PwC expects non-banks to grow at a 33% annual rate to $150 billion by 2025. Social Finance Inc. is one such online lender that has seen its valuation triple in six months after it joined the Billion Dollar Unicorn Club. >>>
Sramana Mitra: Give me the chronology of it. You didn’t mention raising money at any of these points.
Michael Sikorsky: I raised right away as I started the company.
Sramana Mitra: In Alberta?
Michael Sikorsky: Yes, in Alberta. I presented to 11 investors when I was 22. Just to tell you a neat story there, the presentation I had given was horrible. I didn’t know that it was horrible. I realized as they asked me the questions that I didn’t have answers to any of the questions, and I didn’t have the thinking that they wanted me to have. Just their questions were enough for me to reflect.
Sramana Mitra: Why did they give you money?
Michael Sikorsky: I asked them that exact same question. We had sold the company to an American firm. Everyone was getting their checks at the end. I actually pulled aside one of the guys that I had the best relationship with and I said, “I just want to ask you. That was the worst >>>
Sramana Mitra: Talk to me a bit about the business model, both from what you are doing as well as trends in this kind of marketplace business model. How does this work? How much does the seller get? How much do you get?
Philip Rooke: We have a basic charge. Depending on the product, there is a charge for printing and delivering of T-shirts. The seller can add their own commission on top of that to set their own pricing. Sometimes, people add only 50 cents because they’re not really worried about making a profit. We have other people who have used T-shirts as entry to get into an event, and they’ve added $50. They can govern how much they want to add.
Sramana Mitra: Your basic charge is flat or is that variable?
Philip Rooke: It’s flat. There’s no minimum commitment. You don’t have to pay anything upfront. If somebody buys one of your ideas, we print and we then send you the commission. A T-shirt in the US will be about $9 to $10. People very often add $7 to $8 as commission. If somebody >>>
Sramana Mitra: You are a venture-funded company, yes?
Alex Terry: That’s right.
Sramana Mitra: What scale are we talking? Have you raised a lot of money? What size are you at right now?
Alex Terry: The business was originally founded in 2007, I believe. The venture money came in 2013. The company has raised $22 million to date. I joined the company four months ago. I was brought in by the private equity investors.
Sramana Mitra: It’s about a $10-million company?
Alex Terry: A little higher than that. We are between $10 and $20 million right now. >>>
Sramana Mitra: This is a very common scenario in technologies trying to start their first ventures. They end up building technology, which essentially turns out to be a solution looking for a problem to solve. How did you maneuver out of that situation?
Michael Sikorsky: As you’re in that situation, you can feel it but you can’t connect. Whatever you have, people just don’t want, but they’re willing to keep talking to you because they somehow can sense the value. They can somehow sense that you have some expertise. Through that, all of a sudden, opportunities emerged where essentially, people who were working with us who were business owners were then giving me feedback like, “What you really need to do is say that this part of the framework is for e-commerce engines. This is how e-commerce engines can plug it in.” Another would say, “You need to take this piece and this piece and chop it out of the framework, and call that X.” I would say being phenomenally open and phenomenally coachable was important because I think of it as just swimming in the ecosystem. You start to hear which way to go.
Sramana Mitra: Who coached you through that transition? >>>
According to a Euromonitor report, the baby and child-specific products market has seen double digit growth in China due to the comparatively big number of newborns and rising disposable incomes. Over the period 2009 through 2014, China’s annual childbirths have reached an average of 15-17 million. The recent relaxation of the country’s One-Child Policy is only going to add to that number. Niche commerce player Beibei is already leveraging this high-growth market along with the rising Internet adoption in the country to achieve the Billion Dollar Unicorn status.
Sramana Mitra: This is a concept that is not new. We have seen this concept from a variety of different players. We’ve seen generic ones. We’ve seen specific ones in different categories where various jewelry makers, for instance, come together, in a market place. I’d like to hear from you on what trends you observe in these kinds of marketplace businesses?
Philip Rooke: The number one trend that I’ve observed is the global trend. The things that people are interested in are global. Are you familiar with a game called Goat Simulator? It’s a very niche game. The world market is not huge but the goat game has players in over 150 countries. We are the only provider who was able to service that. What we see happening through social media is the expectation of the consumers all over the world to be able to buy anything anywhere. I have seen some of our YouTuber T-shirts being worn in Bangalore. I’ve seen them in Australia. I’ve seen them in Brazil. These are American YouTubers.
Sramana Mitra: Both your merchants and customers are global or the merchants have a concentration and the customers are global? >>>