
Two-sided marketplaces are becoming increasingly popular in the e-commerce startup world. eBay and Etsy are some of the most obvious examples of two-sided marketplaces, but now we are seeing a lot of niche and esoteric marketplaces as well all over the world.
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I started one of the Internet’s first fashion e-commerce companies in 1999. It was very expensive to do so at the time.
Today, an online fashion business can be launched in an extraordinarily capital-efficient manner.
>>>Sramana Mitra: Did you launch with your own money?
Mike Rosenbaum: We made a lot of mistakes as well. We did okay. I put in some of my money. I had a new co-founder, Roland. He came from private equity background and had a very complementary skillset. He was more of a finance and strategy guy. We had met over the previous 12 months or so. We kept in touch. We put in some money. We raised some money from our network.
Sramana Mitra: Give me more specifics. What did you raise money with? Did you do an MVP?
>>>Sramana Mitra: What about customer acquisition? When you’re selling on eBay, eBay provides the foot traffic.
Mike Rosenbaum: It was the early days of e-commerce. There was a much smaller number of people shopping online. We had built this large database off eBay which we used to sell direct. We would send emails to them. Initially it was one email a week. Then it was two. Eventually it became one a day.
>>>Sramana Mitra: What was your business model? They gave you inventory on consignment and you sold it on eBay. What percentage did you take?
Mike Rosenbaum: I think it was about 15%. We’re talking about high-value goods. Our average item was a couple of thousand dollars.
Sramana Mitra: It was a substantial transaction size. You said you grew that to about $20 million in four years.
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Are you new to e-commerce or already scaling your business? Do you want to accelerate? This is a collection of courses that can help you save time and resources by teaching you how to avoid common mistakes through case studies.
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Have you started or are you stuck in your startup journey?
Many entrepreneurs think that they need a cofounder or a team to start, but it is really simple.
Sramana Mitra: You were finding all these levers at the right moment. Timing is really hard to get, but when you get it right, it works really well. What kind of revenue level were you at in 2015?
Stephanie Madesh: We would have been at $3.5 million.
Sramana Mitra: How many people now?
Stephanie Madesh: 12 employees.
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