Sramana Mitra: Not only did you have the platform but you were also offering the integrated consulting services to implement it.
Ruslan Fazlyev: Yes, that was the X-Cart approach but it was not good enough for some customers. Some customers asked, “Is there any way to integrate my store into my site without ever having to hire designers or pay any consulting services?” The answer back then was no. Even though there were some cloud platforms that enabled you to avoid all of the software hassle, but the problem was this store would have a look that was different from the rest of your website.
There were these investors that I like to work with, but these investors insisted to split the company into two. Ecwid, as a cloud widget, would be a separate entity. We did that. Since then, I’ve been the CEO of Ecwid. We hired a different CEO for X-Cart. It’s interesting to see how these two companies go side by side with a completely different approach.
Sramana Mitra: What year did you start Ecwid?
Ruslan Fazlyev: It was released in late 2009. The commercial operations started in 2010 when we added paid plans.
Sramana Mitra: What scale did X-Cart reach at the point that Ecwid came on to the scene?
Ruslan Fazlyev: X-Cart had about 160 employees. They processed $2 billion worth of gross merchandise.
Sramana Mitra: What was the revenue of the company?
Ruslan Fazlyev: It definitely wasn’t in the billions. It’s part of that cultural tradition in Russia that privately-held companies don’t disclose revenues. Because it was a software model, it was not in the billions of dollars. It was in the millions.
Sramana Mitra: $10 million, $20 million?
Ruslan Fazlyev: Around $10 million.
Sramana Mitra: Then you decided to go raise money for Ecwid. Where did you go out to raise money and why did you want to raise money? If you had a $10 million revenue company, why did you do decide to go outside and not just finance through the profits of the other one?
Ruslan Fazlyev: That’s a good question. I started my first company with my friend. I have spent all of my life building this company. For me, friends, family, and company were the same. My company and my friends were the same thing for me. I don’t have other friends than the people I work with. I grew extremely attached to that company and I would never be able to sell it. In a way, it makes you a slave to the company.
I decided that in order to understand how to build a company that could eventually exit, you need to have some stakeholders who are interested in eventually selling the company. The intent of bringing on venture capital was not to have any financial resources because we had all of that. It was more about making sure that the company is structured in such a way that the company itself can be a product that could eventually be sold.