Zulily CEO Darrell Cavens built an online retailing powerhouse over the past four years, driving massive growth while keeping a relatively low profile.
But now that Zulily is trading on Wall Street — emerging today on the Nasdaq with a spectacular IPO that values the company at about $4.5 billion — how will the culture of the fast-growing company change?
“I think there is a small change there, but I don’t think it is dramatic,” said Cavens in an interview with GeekWire shortly after the stock started trading this morning on Nasdaq under the ticker ZU. “I don’t think it changes our focus on the customer or mom being number one.”
While there is an added layer of work associated with being a public company, the 40-year-old CEO doesn’t think being public will impact the company’s fast-moving culture. “It doesn’t really change how or what we are doing as much as it puts us on a slightly larger stage,” he said. “Our focus very much remains on the consumer … and this really doesn’t change what we are doing. If anything, this allows us to tell our story broadly. This really only works if we keep that focus. If we get distracted by seeing our name in the newspaper, that is not good for mom. That is not good for our customer, so we are going to stay laser focused on that execution.”
Here’s more from our Q&A with Cavens, which included some answers to great questions from readers we received via Twitter.
On taking Zulily public and talking to investors: ”The road show has been an interesting experience, and it is such a fun story to tell. I very much believe that we’ve built a very special business here, and out telling that story over the past couple of weeks has been great. Our first 10 employees who joined us came out to the Nasdaq here in New York, and opened the stock. And that was fun to have them here, and allow them to participate in this milestone along the way.”
On operating as the CEO of a public company: “Not much changes. If you look at Mark (Vadon) and I, having experience in the public markets with Blue Nile, and that team has done a phenomenal job there, and I don’t think it is any different than what we’ve been doing for the last 10 years.”
How were you and Mark Vadon able to retain so much control of the company, 21 percent and 31 percent, respectively? “When we were fundraising, we spent time with great partners, and we think over time we were able to drive strong returns for the partners there. A piece of it comes back to experience, and lessons from prior experiences, and as we went into this with the mindset of building a big business from the beginning, and strong partnerships. We had a strong partnership with the team in Seattle at Maveron, and as I look at our investor from Maveron to Meritech to August to Andreessen Horowitz to Trinity — these are incredible partners for us. And as we went out and told the story to them as we were building this, they bought into that vision, and allowed us to raise money at prices that allowed us to keep enough that over time we felt like we could focus on building a great business.
On the company’s Northwest retailing roots: “It has been interesting as I’ve been in New York talking to people — I love as I sit in Seattle and think about brands like Costco and Starbucks and Nordstrom. Coming out of the Northwest, our hope is when people talk about the Northwest retailers and brands, Zulily is right there amongst them…. The model, as I talk to our team and I talk to investors, from day one Mark and I have said … that we are really trying to build a long-term unique business here, and I think those are great models out there in the marketplace that have done phenomenal and I am excited to kind of stand alongside those people, and what they’ve built. I hope that people will look at Zulily over the long term like they look at those great brands.”
Talk about the stock jump here. Are you surprised by the reaction? “I am excited to see the investor reception. Over the last two weeks on the road show, it has been a fun story to tell, and I think what we saw is investors understanding it. I think that’s what you see in the stock today. There are set of people out there that see the long-term value of what we are creating. I have never been one to predict what the markets will do, and I am just excited that we are seeing such a warm reception.”
On deciding to price at $22 per share, which raised $140 million for the company: “We wanted to make sure we put the right amount of money on the balance sheet. But, as you see us going into this from the S-1, we already had more than $100 million in cash on the balance sheet, and we wanted to make sure we had the right amount, but we didn’t overcapitalize the business…. We felt it was the right price to come out at, and I think we priced it appropriately.”
Where do you plan to use proceeds from the offering? “I just see a tremendous amount of opportunity for us to invest, so in areas like our technology and efficiency there. Really, focusing on the core in many ways. I look at categories like kids apparel and we have a phenomenal business there, but we have categories like tweens, for example, that we have not done a lot in and we continue to expand our offering there. If you look at our international business today … and we have been excited about the transaction we are seeing over there… We are going to focus a lot on hiring. In Seattle, if you go to the jobs page, you will see that we have a lot of job openings. There are an incredible amount of things that I’d love to see. We have a strong platform here, and we have an incredibly passionate user base, and my goal is to just keep making that experience better every day.”
On his vision for retail: “It may not be a glamorous way of saying it, but I believe that a retail business is a detail business. And it is that execution every day that makes us great, so you are going to see us invest in that detailed execution … This is not a time where you are going to see us say: ‘Hey, here’s an interesting right turn and chase that.’ We are going to focus on the core, and I believe strongly there is a lot of growth potential in the core … in making that experience better and better and better.”
On the potential of acquisitions: “If you look at my history and Mark’s history, we have not focused on building businesses via acquisitions. We are always open to listening and see if there are things that make sense, but as I look forward, I don’t see that being a core strategy of ours. But we are always looking to see what is out there.”
On the most important characteristic of a Zulily employee: “The number one thing we look for is people who are comfortable with a fast pace of growth and comfortable with change. We are in a fast growth business, and a business that is changing our site every single day. And while that sounds like a small thing, it is a really big deal, and it is a really big part of who we are that we are launching a new site, and new offering every day. Folks who look at that and say — ‘Wow, that is amazing’ — are the folks we are looking for…. That model of daily differentiation is very much like the (news) business in that you have to publish new content every day to make those readers come back, and that’s how we view things. We look for people who are eager and excited about that, and that’s across every area.”