Not many startup companies boast a $1 billion valuation — especially after just three short years in business. But that’s the hefty value that venture capital powerhouse Andreessen Horowitz just placed on Zulily, the Seattle daily deal site for busy moms that today announced $85 million in funding.
It’s a whopping deal, one of the biggest in the Pacific Northwest in recent years. (Outpacing the $50 million that T. Rowe Price sunk into Apptio earlier this year at a $600 million valuation. The company is also now bigger than publicly-traded Zillow, now valued at $781 million).
But Zulily CEO Darrell Cavens, while excited about the new cash infusion, tells us that not much will change at the 600-person company.
“This gives us a little bit more gas in the tank to continue to stay focused, but you are not going to see us after this take a right turn and go do something else,” said Cavens, whose company now boasts more than 10 million members.
Here’s more from our conversation with Cavens.
On raising money from Andreessen Horowitz: “I am just really honored to be working with the team at Andreessen (Horowitz). They have a phenomenal reputation. Look at the set of companies they’ve invested in, and it really is a great group.”
On how long the deal took: “It was a pretty straightforward process from beginning to end, and it probably was four weeks or so.”
Does this put you in the billion dollar club in terms of privately-held companies? ”I don’t know if I’d use the word club. If you look at the last round, we talked to you about it, but we are now coming out at a billion dollar valuation. Just before this morning, I was just trying to look around Seattle … and see who has gotten there, but I haven’t been able to dig in and see that…. It is really an honor to have Andreessen come in, and do this at this level.”
What sort of internal pressures, if any, come along with this amount of funding and this $1 billion valuation? “I don’t think anything really changes with it. From day one … we really had a vision of building a great speciality retailer focused on moms. And we thought that something special could be built here, and this validates us on that path. But we really feel like we are in the starting stages. The business is less than three years old since we launched, and there is just so much more here. This gives us a little bit more gas in the tank to continue to stay focused, but you are not going to see us after this take a right turn and go do something else. We are going to stay obsessively focused here — we think this is what we can be best at the world at. You saw that before with us at Blue Nile. Focus breeds a lot of great things. You can build a great business being best in the world at something, and we think that this sales and e-commerce for moms is really what we are best at.”
Could you carve out new categories to go after? “It is pretty much staying focused here. We did launch in the U.K. and Europe in April of this year, and we are excited about the momentum we are seeing there. But, again, still early days…. This allows to stay focused on growth, and focus on mom. There are no plans right now, for any change to that.”
Is Zulily profitable? ”We are not talking revenue or profits, other than sharing the valuation and the size of the round.”
Is an IPO that’s in the cards? Do even want to go down that path? “With this funding, it gives us an awful lot of of runway to keep building the business. The thing that is hard for folks to see — being less than three years old — we are still really in the early days. I am here to build a great long-term multi-billion dollar business. We are not out thinking about public markets. This round gives us the runway to build a really great, long-term scalable business. And, we will stay focused on that. No plans in the works, or really at this time any thoughts of that.”
Living Social and Groupon have each had their problems. So, the space you are in, some of the comparable companies don’t look that hot. Why do you think that Zulily is able to command a $1 billion valuation and get this excitement from the investment group? “If you look at great businesses with core economics, that’s what the Andreessen folks saw in us. And we’ve from day one been very focused on building a sustainable long-term business, and that’s where we’ve been focused. As you look at driving members and getting moms to sign up, if you look at working with our vendors, or if you look at scaling our fulfillment and logistics capability, which we’ve talked about before, all of those pieces come back to building a great business. And from day one — whether it was our 10th employee or 100th employee or 500th — I spend time with new hires talking about how we are building something great. It is exciting to sit here with great brands like Starbucks across the street and Nordstrom downtown or Costco across the water — the Northwest has such great retailers, and that’s our vision of what we are building…. I don’t tend to look at others in the near-term view of what they are doing, so much as I am just focused on: ‘How do we look like those great retailers 5, 10, 15 years out?’ And I think that is one of the things that Andreessen got excited about. They are in the business of partnering with entrepreneurs that have a big and bold business, and are looking long-term scalable businesses. In talking with them, that got me really excited.”