Sramana Mitra: $110,000 to $6.9 million! Explain to me how that happened? What were the strategic levers?
Azim Makanojiya: We were all new to this industry. We didn’t know what was going on. The only reason that this could happen at a very fast pace, from my point of view, was because we had the drive. We were working full-time at this business. The second and probably the most important thing is, if you really understand the AdWords engine, it translates into instant traffic. We were going really aggressive at this and probably marketing at the first to second spot constantly in a majority of the keywords.
Sramana Mitra: Was it a timeframe when the price of those keywords was really low and the competition for those keywords was really low?
Azim Makanojiya: The beauty of this was the demand was high but the competition at that point was not very high. The keyword competition was not much, so we had great leverage then in the sense that we could bid higher on the keyword and still make a good profit out of it. The customers really wanted this and you can see the volume of people doing this but not many competitors were there. There wasn’t much of a bidding war.
Sramana Mitra: You got into the business at a time where it was possible to really take advantage of the lack of competition in terms of keywords. There was demand but there were not a lot of competitors bidding for those keywords. So you were really able to harness the AdWords angle well.
Azim Makanojiya: People always ask how we grew this fast. I think that’s the only explanation that I can provide.
Sramana Mitra: It’s a very reasonable explanation. I’ve heard this story many times. If you can catch AdWords at that state where there is demand but not enough bidding war, you have a winner.
Azim Makanojiya: If you understand that aspect of it, you’ll understand how we had such a significant growth.
Sramana Mitra: Was the Chinese factory able to keep up with you or did you have to find other sources? How was the manufacturer side working?
Azim Makanojiya: They were able to keep up. They were excited to work with us. However, they would start the production only after receiving payment. This added an extra two-day delay in the process. This delay was an issue for us because we sometimes had to work on tight deadlines. So, we took that barrier out by paying them every week. That helped us in the sense that once an order goes through from our system to their system, they could go ahead and process that order immediately.
Sramana Mitra: Are they your sole fulfillment factory now in China?
Azim Makanojiya: The funny part here is since we started sourcing in China, one of our biggest competitors actually started sourcing from the same company rather than building here. We didn’t have any exclusive agreement with the factory. The other company was pretty big and had a market share of 70% while we had only 30% share.
When both companies started sourcing from the same factory, the other company told our factory, “We need you to stop working with this company or else we’re not going to give you our orders.” However, the guy in charge, by the name of Chandler, didn’t agree to that. He told them, “This company has been with me for a while. I’m not going to do that.”
The way he executed this whole process was amazing. Hats off to him! He is probably the most honest and ethical guys I’ve ever met. The funny thing is I’ve never met him until maybe three years into the business.