Gumroad isn't a new kind of pavement or extra-strength epoxy. And it's definitely not a piece of candy. Rather, it's a service that allows content creators to sell directly to users wherever they are--a company website, email newsletter, tweets, Facebook messages, or even within a YouTube video.
If this sounds like Etsy, eBay, or Amazon, your confusion isn't unwarranted. Like these industry giants, San Francisco's Gumroad aims to help independent business owners, or "creators," sell their wares online. The difference is, Gumroad is fine with letting you take all the credit.
"We're excited about providing creators a way to own and build their own audiences and sell directly to those audiences, whereas eBay and Etsy are more about browsing and discovery," says Sahil Lavingia, who was Pinterest's founding designer before he launched Gumroad in 2011. "We should not be between the product and the consumer. It's really more about empowering creators to take control of the relationships that they have with their audience."
Unlike third-party providers, which take users away from a seller's site when they want to make a purchase, Gumroad allows its users to sell directly to customers with services such as payments processing, file hosting and sharing, and online streaming. And should you want to sell something from within your own social-media messages (a.k.a. social commerce), that can be arranged too.
Buy where you want
Gumroad was one of Twitter's first Buy button partners, when it began testing the service last September. It's also on a short list of sites to which users can link from within a YouTube video. Gumroad takes 5 percent--and 25 cents--on each transaction.
Popularized by companies like Warby Parker and Beats, this brand of bypassing traditional retailers is often referred to as "disintermediation"--that is, the removal of intermediaries, or middlemen, in a supply chain.
"That world of going to a destination to peruse things is becoming much more decentralized," says Mike Abbott, a general partner at Kleiner Perkins Caufield & Byers, a Gumroad investor. "If you're a writer, and you go directly to your audience with your work, you're 'disintermediating' some of these choke holds."
That's not to say doing so will be easy. Not only are Amazon, iTunes, and the like still dominating e-commerce, but in addition, the world of online business transactions has grown tremendously since eBay's PayPal was virtually the only game in town. Jack Dorsey's payments company, Square, began offering online business transactions services to customers in 2013. Last July, Twitter snapped up the payment startup CardSpring for an undisclosed sum. In May, Intuit picked up Check, a Palo Alto, California-based mobile bill-paying service for $360 million. There are a variety of independent upstarts too--from Dwolla to Stripe to Shopify Payments.
What's more, since launching in 2011, more than 10,000 users have sold more than 150,000 products on the site. (Gumroad refuses to disclose revenue.) By contrast, in February, eBay reported that PayPal's volume had increased by 27, with 19 percent year-over-year revenue growth, reaching $1.3 billion for the year.
Poised for growth
But don't count Lavingia out. In December, Gumroad inked a deal with Hachette to offer its authors use of Gumroad's Twitter integration. The publisher made headlines last year in a battle with Amazon over the bookseller's throttling of Hachette's titles after contract negotiations between the two broke down. That's helped Gumroad snag big-name clients like Amanda Palmer, who wrote the bestseller The Art of Asking. Gumroad also recently began offering rentals, which has helped lasso filmmakers like Desiree Akhavan, the Girls actress who directed and starred in the recently released indie film Appropriate Behavior.
Gumroad has raised $8.1 million from backers including Kleiner Perkins Caufield & Byers and First Round Capital, as well as angel investors Ron Conway, Chris Sacca, and Max Levchin. "He hasn't needed to raise additional capital because the company has been making money since day one," says KPCB's Abbott.
And it's just the beginning, adds Lavingia. "Today every musician, filmmaker, artist, and author--to varying degrees, all have a means to communicate to the people who care about them and their work. We think that social commerce is the next step."