Plopped in the middle of Zulily’s Seattle office is a colorful cardboard rocket ship marking the entrance to the company’s HR and recruiting department. It’s a popular destination.
The daily deal site for baby and children’s products has already outgrown three office buildings and mushroomed from two co-founders to 240 employees since it was founded 22 months ago. And now Zulily is putting a little extra rocket fuel in the tank.
Zulily today is announcing a whopping $43 million venture capital round led by Meritech Capital Partners, the same folks who scored big when Seattle’s PopCap Games sold to Electronic Arts for up to $1.3 billion. Total funding in Zulily now stands at $53.6 million.
Meritech, along with existing investors such as Maveron and August Capital, obviously think that Zulily has what it takes to become the next big consumer Internet brand in Seattle. A source tells GeekWire that the valuation on the company in the most recent round was about $750 million.
That’s a jaw-dropping number, topping the market value of publicly-traded Seattle tech companies such as RealNetworks, InfoSpace and Blue Nile. It would also put Zulily in the ballpark of Zillow, which went public last month and is now valued at $736 million.
Zulily CEO Darrell Cavens, who co-founded the company with former Blue Nile CEO Mark Vadon, declined to discuss the valuation. But the 38-year-old father of two tells GeekWire that the company is “very pleased” with how things work out. As a result of the deal, Meritech Capital’s Craig Sherman (no relation to Seattle attorney Craig Sherman) is joining the board.
“When you’ve got a solid business with real revenues and growth, I think there is money willing to invest in that,” Cavens tells GeekWire. “From day one, we’ve had the vision of building a real retailer focused on driving revenues, driving engagement, driving member growth. And all of those things are the foundations of a great business.”
Cavens declined to provide specifics on the company’s financial metrics, but a source says that Zulily is on a path to do more than $150 million in revenue this year.
That’s an absolutely astonishing growth curve, considering the company wasn’t in business two years ago. And it’s even more impressive giving that Zulily, amazingly, has been able to fly under the radar even as daily deal sites like Groupon, Living Social and Gilt Groupe grab headlines.
“We are not out looking to see our names in print necessarily, as much as we are trying to build a great business,” says Cavens.
But there’s one group of folks who’ve certainly discovered Zulily. And that’s Internet-savvy moms.
Zulily’s morning email blast — containing massive discounts on everything from toys to books to baby clothes — now goes out to four million members. That’s up from just over a million members last October, Cavens says.
Unlike some daily deal sites where vendors struggle to get repeat business once the coupon fades away, Cavens noted that baby and children’s products are a bit different. That’s because parents often fall in love with a specific brand, returning for repeat orders on other gear or recommending the items to friends.
Cavens has seen that behavior manifest itself on Zulily, telling the story of one woman who said she substituted her daily newspaper habit for Zulily’s morning emails.
Visitors to the company’s new 80,000 square foot office space — located in a four-story brick office building just south of Safeco Field — are struck by a couple things.
First, is the ever-expanding employee photo wall which features headshots of every employee (a throw-back idea to Cavens’ time at Starwave where he worked in the late 90s). The photo spread has now consumed the better part of the wall, and some placards are absent a photo. (Presumably because the company has yet to keep up with its amazing growth).
Secondly, is the wide open space, complete with photo studio and production area. In some respects, the Zulily offices look more like a fashion studio than a technology office. (A photo studio includes a small Thomas the Train toy and baby models are frequently seen being carried in their mother’s arms in the offices).
And those offices are about to get a little more crowded. Cavens notes that the new financing will be used to accelerate growth, with much of the cash going to hiring of new employees.
Even as the company undergoes hypergrowth, Cavens says that the mission remains the same.
“We feel like we can be the best in the world at being the children’s retailer of choice for these moms,” said Cavens. “The kids’ market in the U.S. is close to a $60 billion category, so that little niche is bigger than most other retail categories.”
Follow-up: Zulily CEO Darrell Cavens talks to GeekWire about competition in the daily deal space; his strategies for growing the business on “Zulily time” and more. Read the entire interview here.