Zulily: Fresh, Fast, and Worth $1 Billion
Darrell Cavens co-founded Zulily in 2009, and just three years later, the company had achieved a billion dollar valuation. As part of a series on start-ups that have achieved this milestone, Inc's Jeremy Quittner spoke to Cavens about investors, e-mail, and grass stains on his son's clothes.
As dads of young kids, [co-founder] Mark Vadon and I knew first-hand what it was like trying to buy kids' clothes. When I dropped off my daughter at daycare, she had the same character on her t-shirt as some of the other kids. The shirt just was not special. I could go to a boutique store, and spend $50 for a pair of pants for my son, but an hour and a half later there would be grass stains and holes all over them. So we saw a white space between the big box and the boutique stores.
That was the fall of 2009. We launched the site on January 27, 2010.
It has been an interesting three years. We are in our fifth office space, and every time we move, I walk into each space and say, "It is so big. Do we really need a place so big? It seems crazy." And now, as I look around, I see that each time it was the right decision. We have about 600 employees now.
We've had to change a lot: how we work, how we hire and how we manage, and we've had to think anew about the types of folks we are recruiting.
But a lot has stayed the same. Since the beginning, we have had a weekly company meeting. I tried to cancel them and there was an uproar. Now we're at a scale where we record and videocast them. But there's still a sensibility that being a startup is who we are.
I believe a start-up is a state of mind. You can be a bureaucratic, difficult painful company to work with at 15 people, or nimble, fast moving company with 4,000. I have always tried to keep things moving fast, and to keep people comfortable with failure. I have spent a lot of time trying to keep the culture this way, and trying not to let mediocrity set in.
Valuation is Validation
From day one, Mark and I had a vision of building a great consumer retail brand. A fundraising event is just that: a fundraising event. For our employees and teams, the valuation means we can bring money in that looks forward and lets us scale bigger and faster than we have. Our vision is to be known as a great Northwestern retailer over the long-term. The [valuation] allows us to keep that go-big mentality.
The valuation is validation for what we've built. We have a grand vision for how we get this company to the $10 billion number. At the end of the fundraising, there was an element of, "Gee, this is great--extra capital that will help us drive to the next place, but this is not the destination." It helps validate us externally. When we recruit and talk to candidates, it gets a lot of attention.
We launched in Europe in April of this year. It was a big endeavor, with 30 people in London. You have to have the capital to invest ahead and to go after this, because it is not profitable out of the gate.
Technology is an enabler for this business. We have over 10 million people signed up for our e-mail and our goal is to deliver 10 million e-mails in 15 minutes in the morning. When we talked to the top e-mail providers, they said we can't do this. We don’t think it can be done. But we have done it, and when you do this, a lot of people come to the site very rapidly. When we open the doors it is like Black Friday every day.
We spent a lot of time talking to investors about what we are trying to do and making sure they are on board with this vision. Most venture investors have a seven to 10 year time horizon, and our company is three years old. Most investors are very excited about this and our momentum and vision of what this business can be. Some of the feedback I get from them is to make sure, as we grow, that we can continue the success we have had in great customer experience, and stay obsessively focused there. Investors are pushing for growth and making sure we do this well and build a sustainable long-term business.
What drives these valuations is a forward-looking view of the potential of what these businesses can be. Five to 20 years out, what do these businesses look like? Much of that is driven by growth.
Our company is about delivering freshness and newness every single day, and moving at a pace that others in retail have not seen. In traditional retail models, you work today on product that will be in the store 18 moths from now. We are adopting about 1,500 styles of product every day and 5,000 SKUs. As I give retailers tours and explain this, they look at me like I don't know the number. That's more than they do in a season, and we do it every day.