A Serial Entrepreneur’s Playbook: ChannelAdvisor CEO Scot Wingo (Part 4)

SM: When you realized that large enterprises were willing to sell on eBay, what impact did that have on your strategy?

SW: We decided to rethink our approach. We took a very small business application and stripped it down to the metal. We kept the architecture that interfaced with eBay that managed and scheduled auctions. We then built an enterprise software application on top of that architecture. We then started asking ourselves strategic questions. What if somebody wants to sell 100,000 items on eBay? What does that need to look like? We built our solution around questions such as that. We experienced rapid success because we signed up IBM, Nokia, and a few other enterprises. We were experiencing some success in terms of revenue when Overture decided they were not interested in our part of the business. In 2001 we were able to take the intellectual property and some employees and pull out of Overture as a separate business via a management buyout. That is how we started ChannelAdvisor.

SM: Had the Yahoo! acquisition of overture happened?

SW: This was before Overture acquired AltaVista, Fast, and a couple of other companies in their foolish bid to compete with Google via direct traffic sourcing.

SM: Tell me more about how you achieved the structured buyout.

SW:  It was a bit of a Br’er Rabbit situation. We had to make ourselves enough of a pain that they wanted to get rid of us, but not so much so that they would just shut us down. We executed on that strategy fairly well. We offered to buy the business back from them and provide them an offer.

SM: You sold your company for $120 million. What was your buyback offer?

SW: It was $2 million. We didn’t buy back everything that we had sold to them; we just bought back a small piece that we had been working on for a year.

SM: So out of that you created ChannelAdvisor. What year was that?

SW: 2001.

SM: How did you go about building ChannelAdvisor?

SW: When we were talking to retailers about selling on eBay, we noticed that retailers really needed a lot of help in the form of information and software to allow them to sell online. Everybody knew that e-commerce would be a big game changer, but a lot of people were too focused on building their sites. They were surprised that people didn’t come to their sites once they were up and running. The very early days of e-commerce was a “Field of Dreams” scenario where companies built sites and nobody came.

When we started ChannelAdvisor, we started asking retailers if we could help them with all their channels. We showed them paid search through services such as Google which were beginning to become popular. We wanted to be more than the search shopping engine for eBay. We believed then, and we continue to believe today, that there will be more and more channels built online for retailers. They need someone to help them understand the future of e-economics. That’s why we chose ChannelAdvisor as our name very carefully back then. We didn’t call it OptionAdvisor or something vague. We have been working with that singular focus for the past ten years.

This segment is part 4 in the series : A Serial Entrepreneur’s Playbook: ChannelAdvisor CEO Scot Wingo
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