Etailz is almost a too-perfect-to-be-true startup success story.
The company grew out of a college business plan competition at Gonzaga University, where Josh Neblett and Sarah Wollnick, now married, took first place in 2008. Soon they were running the startup as a two-person operation out of the office of Gonzaga entrepreneurship professor and former venture capitalist Tom Simpson, an advisor and early backer.
But things have changed over the years, and Etailz this week received huge validation when it announced that it was selling for $75 million to powerhouse entertainment retailer Trans World Entertainment. It was a significant outcome for the 30-year-old Neblett, and the rest of the Etailz team. Over the past eight years, they’ve built a successful group of five niche e-commerce sites —greencupboards.com; ecomom.com; coybeauty.com; everycasa.com; and vaultelectronics.com — as well as a services business that help companies expand their reach on online marketplaces.
Between September 2015 and September 2016, Etailz posted revenue of $116 million and a healthy profit, and now employs about 190 people. Not bad for a guy who started the business as a senior in college as a “glorified science project.”
“We were never looking to sell,” Neblett told GeekWire in an interview today, “we were looking for a partner that would enable us to exponentially grow our brand and our mission of what we’re trying to accomplish.”
“And it really came down to this mindset of 1 plus 1 could equal 4. They have stuff they’re really good at, we have stuff we’re really good at, and together it could be something much greater than it could be independently,” he said.
Neblett said the brick-and-mortar expertise of Trans World Entertainment, which owns entertainment retailer F.Y.E., and Etailz’ strength in digital commerce will compliment each other and help both companies to grow into new markets.
Keep reading for an edited Q&A with Neblett, and find more details on Etailz acquisition here.
GeekWire: Why was now the right time to sell?
Neblett: We were never looking to sell. Even through this process, we’ve always built with the mindset of being here 20 years from now, building for the long term, and if at the right time we emerge as an industry leader there might be a partnership that makes sense.But even through this process, we weren’t necessarily looking to sell, we were looking for a partner that would enable us to exponentially grow our brand and our mission of what we’re trying to accomplish. And it really came down to this mindset of 1 plus 1 could equal 4. They have stuff they’re really good at, we have stuff we’re really good at, and together it could be something much greater than it could be independently. And so that’s how we looked at it, and the timing was kind of irrelevant it was jus the right partner, the right fit.
GeekWire: You built the business with very little outside capital, just $1.56 million invested. What are your bootstrapping tips?
Neblett: Bootstrapping is a mindset not a weakness (or) disadvantage. Others who are bootstrapping should be focused on becoming an industry leader within their niche and not making decision to hopefully one day get bought out… Become an industry leader, build a sustainable business and you’ll be in a position of strength in the future.”
GeekWire: What changed your mindset from a partnership to an acquisition?
Neblett: Retail-to-retail is very difficult. In a partnership that wasn’t a wholly-owned subsidiary, which is what we’ve become, retail-to-retail is very difficult. So going into the conversations, the way that it made most sense business-wise was to become a wholly-owned subsidiary.
GeekWire: What advantages will the acquisition bring Etailz?
Neblett: We get to gain their expertise, their leverage, their talent, their resources. There’s all sorts of advantages of the relations that they have, exclusives that they have — just the overall fact that they’re the last man standing in their industry, yet there’s still real opportunity there. All of those things are things that we couldn’t replicate. And quite frankly, we know there’s a good business within brick and mortar, yet we (Etailz) were not great at that. F.Y.E. — Trans World — is. That’s their specialty. And so we recognize there’s a value there to the future, they recognize obviously the internet has a huge value, and combining those things made a lot of sense.
GeekWire: What has it been like taking Etailz from such a small operation to such a successful exit?
Neblett: It was a glorified science project early on, coming out of a classroom project. and raising a little bit of money, and most of the people I raised money from — it was tough — but the only reason, a lot of times, they gave us money because we were this college student and all that. I think they were expecting a glorified science project… I met with a lot of them yesterday, and they were all talking about how they wished they had put in more, of course.
But on the whole exit thing, we really don’t look at it as an exit. We look at this as, “I’m locked in, I’m not going anywhere.” I still think that our mission of what we’re trying to accomplish at etailz, we’re barely scraping the tip of the iceberg. And because of that I still have a lot to do to accomplish what I’m trying to do here, so we’re all here. There’s still this level of autonomy that we will operate, it’s just now tapping into these resources and tools so we can be something greater together. So the experience has been great for me, obviously, coming out of college bright eyed and bushy tailed fire in the belly, whatever you want to call it, to just be able to grow my role and myself and just continue to try to make an impact fo the employees and what we’re trying to accomplish. It’s just been very rewarding and fun.
GeekWire: You plan on staying in Spokane, correct?
Neblett: Correct. There’s an immense amount of talent here in Spokane, and quite frankly we get to be a big fish in a small pond with regards to the entrepreneurial scene here. So it allows us to recruit and retain talent compared to if we were in the bay area or Seattle — we would just be another cool startup. Whereas here we have a lot more clout.
GeekWire: How would you compare Spokane’s culture to Seattle?
Neblett: The quality of life in Spokane is unparalleled. No traffic, you’ve got 10 different lakes that are within 40 minutes of each other, you have the mountains during the winter, yet you have all the major stores and retailers and everything you could want access to right here. So all of those things really play heavily into the quality of life here. Cost of living is substantially less than Seattle and other places. So all these things play into our favor from a business standpoint. I grew up in the Seattle area, so I have a fond appreciation for Seattle. That said, now that I’ve been in Spokane and experienced all the things Spokane has to offer, I will likely — never say never — but I will likely be staying put for the future here.
Here’s some more bootstrapping advice from Neblett, who penned this column for GeekWire in 2013: 5 bootstrap dos and dont’s to cement and grow your business