Sramana Mitra: During that first 18 months, did you figure out that e-commerce was going to be your top segment?
Robert Moore: We did. E-commerce is a really good fit for what we can do because customers tend to come back and buy more than once. We always say that the best customers for us are people that sell pet food because every single month you buy more pet food. I think my co-founder tried to sell pooltables.com four different times and we always failed. The reason is when someone buys a pool table, they don’t come back and buy another pool table next month.
A lot of our analysis is around customer retention, customer lifetime value, repeat purchase rates, and cohort analysis. All that stuff becomes more relevant as people become higher and higher frequency buyers. E-commerce is just really a slam-dunk for that.
Sramana Mitra: 18 months in and you are now ready to move to Philadelphia and you’ve got 40 customers. What happens next?
Robert Moore: I love Camden. I love New Jersey. Camden has a bit of a rough reputation on a national scale. I think it’s pretty consistently ranked as the most violent city in America. Its prison population is quite high. It’s a city that is going through some troubling times, but there’s an area of Camden that’s under pretty aggressive urban redevelopment. That’s where our office was. We’re big supporters of helping build up the economy there but when we got to the point where we needed to hire employees to work at our office, we had a lot of trouble getting applicants.
We weren’t sure if it was because of some external factor that was related to the way we described the job or the salary we were offering, or whether it was Camden. It’s tough for a lot of people to potentially think about commuting into a city that has a reputation like that. We ran an A/B test on our jobs and we put the exact job posting out with one saying the job was based in Philadelphia PA. We got five times as many applicants for the Philadelphia PA job.
Sramana Mitra: So you got your answer.
Robert Moore: Yes. We started interviewing those applicants and looking for office space in Philadelphia on the same day. We moved to Philadelphia on January 1, 2011, and our first employee started on January 2. We made it there just in time to not have lied to that person.
Sramana Mitra: So that is when your hiring and team-building begins. What are the other major pieces of this journey during that timeframe?
Robert Moore: The next biggest step is when we started raising capital. Over the course of 2011, we got up to a hundred customers by the time 2012 rolled around. We started getting to a point where we had enough data that we could do analysis on the unit economics of our business.We were bootstrapped and weren’t spending that much money per new customer on marketing and sales. As the brand grew, we started getting a lot of inbound interest from venture capitalists. The owners of our customers who had accumulated some wealth started to take notice of us and expressed interest in potentially becoming angel investors.
At that time, there was a business called fab.com. At that moment, it was the darling of the e-commerce universe and the hottest story of the planet. The CEO over there took a personal interest in us and offered to invest some money. We were really grateful for that. Despite what became of Fab, I have a lot of respect for Jason and I owe him a lot because he was really helpful during this period of our history. Between him and a few other CEO customers of ours, we were able to put together a $1.2 million seed round at the very end of 2011.