Sramana: Did you build your entire company through debt financing, or did you eventually take equity?
Roger Hardy: We did eventually take equity. In 2004, we did a small IPO on the Canadian Venture Exchange. We raised $6 million at that time based on a $30 million valuation. Our revenue at the time was $24 million.
We raised that $6 million primarily because we wanted to do an acquisition in Europe. At that point we realized we were not the biggest player in North America, but we felt that the global opportunity was enticing because it had not been developed as much as the North American market. We wanted to be the gorilla in the other markets. We decided we needed a platform in Europe. We went over and met with four companies at that time. We selected the one we felt was the best fit.
Sramana: You found four companies in Europe selling contact lenses online?
Roger Hardy: There were four companies selling them, but the one we bought was more of a mail order business. We felt that was a better acquisition because we would bring the Web-savvy team, and they would bring their expertise in the catalogue space. We felt if we could mesh the two, we would get some good synergies that would make us stronger.
The timing was good. We bought that company in late 2004, and their revenue was $18 million a year. We focused on marketing and really cranked up the Web presence. The next year it did $36 million in sales. By 2006, we were in the $50 million-plus range.
Sramana: What was the North American competitive landscape like?
Roger Hardy: The scenario in North America involved online and offline competitors. Mature businesses like Lens Express had been around for a while selling mail order contact lenses. There was a more developed North American startup landscape. One of my biggest competitors announced that they had signed a line of credit for $40 million. When they did that, I had a Visa card with a $20,000 limit. For all the entrepreneurs out there who have had that day, they can relate.
Sramana: The trick is to not get intimidated by large players.
Roger Hardy: That is where you have to get creative and start thinking about what your strategy is. There were definitely a number of competitors. In early 2002, there were hundreds of identifiable competitors selling online.
Sramana: Can you name two things you did extremely well that helped you shoot past the other hundred companies?
Roger Hardy: I think the first thing was that we made sure we invested in inventory here. That allowed us to serve customers better. We came from a logistics background. We were naturally inclined to put in place an inventory management and predictive software system to allow us to serve customers better.
The other thing we did was generate customer referrals. We would include cards for customers to share with friends. We thought that it would be easier to generate business through referrals versus via straight customer acquisition.