Building a New Online Fashion Brand: Combatant Gentlemen CEO Vishaal Melwani (Part 1)

I am a big believer in new, highly focused online fashion brands that can be built with a purely digital strategy. Combatant Gentlemen is a case in point. The company bootstrapped to $700K in revenue, followed it up with a $2.2 million financing round, and is on track to deliver $15 million in revenue this year. The market is large, and hence the opportunity to scale exists.

Sramana Mitra: Vishaal, let’s start at the beginning of your story. Where are you from? Where did you grow up and in what kind of background?

Vishaal Melwani: I am a third-generation tailor. I grew up in Las Vegas, Nevada, believe it or not. My dad was a second-generation tailor. My parents came to America in 1976 from Hong Kong. The goal was to basically have the American dream and focus in on what they knew. >>>

Starting Unicorn Companies: Tableau Software

Last November, Aileen Lee with Cowboy Ventures wrote a post on Techcrunch titled Welcome To The Unicorn Club: Learning From Billion-Dollar Startups. In it, she offered a list of companies that have had billion dollar exits, and analyzed some of the common threads.

In this series, I would like to look at some of the ‘unicorn’ companies that she identified, as well as some others that I know well, and one by one, explore their early stage entrepreneurial journey. The case studies we explore are all from the 1M/1M Entrepreneur Journeys series of interviews.

We begin with Tableau Software, currently trading in the public market under the symbol DATA with a ~$3.5 billion market cap.

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YCombinator’s Further Evolution Into A Seed Fund

YCombinator has just announced that it will replace its $17k for 7% pre-seed equity investment with a $120k for 7% seed investment deal. From the WSJ:

Previously Y Combinator’s standard deal was about $17,000 for 7% of the company, plus an $80,000 note from a group of venture investors and firms eventually known as YCVC, which most recently included Andreessen Horowitz, General Catalyst, Maverick Capital and Khosla Ventures.

So, startups will now get $120,000 from Y Combinator, instead of $97,000 from a combination of Y Combinator and select venture firms. That means the implicit valuation for YC startups rises to about $1.7 million from the previous $1.4 million (YC might deviate from the standard deal “in exceptional cases,” presumably for an ultra-hot startup that merited a higher valuation).

The $120,000 will come directly from YC and a fund it manages that has limited partners, though the accelerator itself has no limited partners, Altman said.

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Identifying Customer Pain Through Consulting Services: Tealium Co-Founder & President, Ali Behnam (Part 7)

Sramana Mitra: What is your pricing model? Is there enough deal size to do field sales?

Ali Behnam: We have deals ranging anywhere from $15,000 all the way up. Average deal size is five figures.

Sramana Mitra: So talk to me about your business model and pricing model a bit.

Ali Behnam: Right now, we’re still selling to a lot of Fortune 2000 companies. These are companies that do a decent amount of business online. Our pricing is based on site traffic. The more traffic the website has, the more they’re paying for a service like this. With us going after the top echelon of customers, you can imagine the deal sizes are typically five digits. >>>

Harvard Business Review Series on the Seed Capital Gap

Identifying Customer Pain Through Consulting Services: Tealium Co-Founder & President, Ali Behnam (Part 6)

Sramana Mitra: What was the sweet spot that emerged out of all these? Where were you finding traction?

Ali Behnam: This is where I’m starting to see the web analytics space all over again. I was in WebSideStory in 2000. That was the early days of web analytics space. The early adopters of web analytics were typically e-commerce sites. They were followed by a lot of media or publisher sites and then some B2B or Fortune 500 websites. We see that same exact pattern with the tag management space. The early adopters were, for the most part, e-commerce sites because they have the most to gain or lose from this technology. They were followed by publishers and media sites and some of the other demand generation websites.

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Identifying Customer Pain Through Consulting Services: Tealium Co-Founder & President, Ali Behnam (Part 5)

Sramana Mitra: If this is not too much proprietary information, what were the keywords that you were able to get a lead on? You said that buyers were the same with the web analytics buyers. Were you then advertising on the web analytics keywords?

Ali Behnam: No, we weren’t. By 2012, which is when we started doing marketing, people were starting to look for tag management solutions.

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Identifying Customer Pain Through Consulting Services: Tealium Co-Founder & President, Ali Behnam (Part 4)

Sramana Mitra: How long did it take you to get the product to market?

Ali Behnam: Probably about a year. We had an early version of the product that we released in January 2011 but didn’t do everything we wanted it to do. Another six months later in July of 2011, we finally launched Tealium IQ which is the basis of the product that we’re still selling today. If you take the development from beginning all the way to the launch of Tealium IQ, we’re talking about a little less than a year.

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