From 0 To 31 Million Dollars With Search Engine Marketing & Inventory Financing: Kim Pedersen, CEO of 1000 Bulbs (Part 2)

Sramana: What was the first thing you did with the $5,000 you had in order to start your own business?

Kim Pederson: I spent $3,200 of it on a computer. Even at that time, I don’t think my brain stem was connected to my cerebral cortex yet. It was a bad mistake but it worked out to my advantage because if I had not done that, I may not be talking to you today. This computer I purchased did not have software. I did not know that a computer needed software, I figured they all had software in them already. When it did not work, I went down to the local grocery store and bought a computer magazine so I could figure out what kind of software I needed.

During that time I would go knock on doors daily and sell my light bulbs. Around noon I would go purchase the inventory I had just sold. I was brand new and I did not have any money, so I convinced the distributors to let me have a 30-day billing cycle. I would pick up the light bulbs in the afternoon and I would deliver them the same day or the next morning.

I did not have a printer for my computer, so I would get a typewriter and type out an invoice for each account I sold that day. The first software I bought was QuickBooks, but it had only a checkbook. There was no billing system.

Sramana: What year was this?

Kim Pederson: It was the summer of 1994.

Sramana: How much revenue were you able to make working off of 30-day terms with your suppliers?

Kim Pederson: The first year I did around $180,000.

Sramana: What were the margins in this?

Kim Pederson: My margins at that time were around 50% to 65%. That is the norm for the lighting business.

Sramana: So you had a little bit of room to reinvest in the business?

Kim Pederson: The only problem was that I had to wait to get the money in. I would wake up at 3 a.m. six days a week and sell until 11 a.m. I was growing the business on a daily basis, so the more I sold the more money I needed. I had to pay all of my suppliers every 30 days, but my client was on a 30-day billing cycle as well. I had to convince them to pay me on time or even a couple of days early because I did not want to be late paying my vendors. I did that for the first six months by myself.

In 1995, the computer magazines all started talking about the World Wide Web. I called my nephew, who was in the Air Force, and asked him about the Internet. He encouraged me to get a website going and put my products on the Web. He helped me do that, and I paid him a commission for each product that was sold off of the website.

Sramana: Where you originating and completing orders all on the website?

Kim Pederson: No. In those days I did not complete the transaction on the website. It was just lead generation.

Sramana: How were people finding that website?

Kim Pederson: In the very beginning there was no competition. We did not have search engine optimization. There were so few lightbulb websites out there that any time a search was done, my website was always the first one listed.

This segment is part 2 in the series : From 0 To 31 Million Dollars With Search Engine Marketing & Inventory Financing: Kim Pedersen, CEO of 1000 Bulbs
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