From 0 To 31 Million Dollars With Search Engine Marketing & Inventory Financing: Kim Pedersen, CEO of 1000 Bulbs (Part 7)

Sramana: How big is your search engine optimization department today?

Kim Pedersen: There is just one person there, Jeremy, who manages the marketing campaigns. He manages the entire portfolio of keywords. I give him free coffee every day, too!

Sramana: We just went from 2004 to 2010 from the marketing point of view; now, let’s look at it from the operations point of view. How did your operations headcount change over that time?

Kim Pedersen: There were drastic changes. I focused on bringing high-quality workers into the company. I empowered some key people in their individual departments. I unloaded a lot of my daily, weekly, and monthly tasks onto key people, and I gave them responsibility for those tasks.

We hired an operations manager, and he took over all of the inventory purchasing. He ran the entire department, and I did not manage that process at all after that. I also hired a CFO, and he took care of all of the financial issues and reported directly to me. That was a major move for our company. Those two hires had an incredible impact for our company.

The other problem was that we found ourselves running out of warehouse space. We were in 13 suites with 35,000 square feet and we were still busting at the seams. I knew we had to make a move soon, but right before making a move I hired a sales manager. The sales manager came in and improved the sales department, and that really enabled me to make a move into a 90,000 square foot facility. The warehouse portion had a dock, 40,000 square feet of space, and 32-foot ceilings. The rest of the space was excellent for our offices. Last year we kept about $1 million of inventory on hand. This year we have kept about $4.5 million of inventory on hand. We are now negotiating for an even larger warehouse.

Sramana: Were these warehouses in a small town in Texas?

Kim Pedersen: In 2008 we moved to Garland, Texas, which is right next to Dallas.

Sramana: What is the role of salespeople in your business?

Kim Pedersen: The sales orders we received off of the Internet have typically gone directly into our ERP system. I have 14 salespeople, and they answer phone calls and take orders from people who call in from the Internet. They have a headset on and respond to 1,800 inbound calls every day.

Sramana: In 2010, you will have $13 million in sales. What kind of margins are you doing?

Kim Pedersen: Our gross profit is around 30%.

Sramana: What are your plans for the company?

Kim Pedersen: We expect to grow next year by 30%. We will detach our warehouse from our office and get a larger warehouse.

Sramana: Do you want to keep the company? Have you thought about going public?

Kim Pedersen: I don’t have any children, and I suppose that when we get to between $80 million and $120 million in revenue, we will think about something. I am not sure that I really want to take the company public. Whatever the decision, it is very important to me that our employees are protected. I am not keen on going public at this point.

Sramana: What is your market share?

Kim Pedersen: We have less than 1% of the U.S. market. There is a huge opportunity for growth in the next few years. We don’t know what percentage of the U.S. bulb market is online, and our largest competition remains brick-and- mortar stores.

Sramana: There is certainly a tremendous opportunity for you to grow into a much larger company.

Kim Pedersen: We think that in five years we will be doing over $80 million in sales.

Sramana: I really enjoyed your story. I look forward to following your success!

This segment is part 7 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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