Bootstrapping a Global E-Commerce Company SmartBuyGlasses CEO David Menning (Part 3)

Sramana Mitra: What was the first year that you started selling? Was it 2006?

David Menning: Yes.

Sramana Mitra: What transaction volume were you able to reach in the first year that you were selling?

David Menning: When talking about growth, one has to put into perspective how one attains growth.

Sramana Mitra: Absolutely.

David Menning: In today’s environment, growth is a very hot topic. The private equity and financial markets are really a part of that growth story. A lot of people think that the most important thing to do is to raise money and to use that money to grow.

Sramana Mitra: There’s a big myth that entrepreneurship equals financing. Entrepreneurship equals customers, revenues, and profits. Financing is optional.

David Menning: That’s exactly right. We still wholly own our business 100%. We haven’t had the need to raise equity ever. We’ve been growing organically. If you go back to the first year, we were able to generate those sales, and then the margin from the sales is what we were able to put back in the business to grow it.

Sramana Mitra: If you don’t mind, I would like to discuss metrics. This is a case study. It’s easier for people to follow case studies when there are metrics and milestones that are part of the story.

David Menning: Absolutely. The first year was quite slow in the sense that it was probably about $600,000 to $800,000 in revenue.

Sramana Mitra: For a bootstrapped business, that is an excellent revenue growth.

David Menning: In the first year, there was a lot of challenge. We started selling on eBay. Then three to six months into the year, we launched a website and we started pushing traffic to the website. As the website started growing, we realized that we spent too little on the website. It was a relatively poor quality website.

We had to reprogram another website, which launched in the second year. It was a lot of learnings and a lot of mistakes made along the way. That’s also a key to our success; the fact that we were able to make these mistakes and do them cheaply. We hadn’t gone out to raise $10 million. We made humble small steps and used money in a smart way. We applied that agile mentality and as a result, we were able to continually improve.

Sramana Mitra: Through that first year of revenue, what conclusions did you draw going into 2007? What did you learn in terms of customer acquisition? What did you learn in terms of what you needed to put in place for the next year?

David Menning: Keep in mind that at that point in time, Internet and e-commerce was still in its infancy with respect to today. All these amazing buzz words and channels that we talk about today didn’t exist.