Built to Enjoy in Utah: Jana Francis, Founder, Steals.com (Part 7)

Sramana: I think what you have done is fantastic. Our ecosystem has created a talent war for the same people. There is talent everywhere and there are different niches and lifestyles. Being able to carve out a niche like you have is a fantastic HR strategy.

Jana: Two of employees had a goal of working part-time only, but they applied for a job here because they were interested in what we do. Suddenly, they had full benefits, which previously were only available [to them] through their husbands. That has in turn allowed their husbands to go chase their dreams of becoming entrepreneurs because their wives now have health insurance. It is hard to maintain when you are self-employed.

Sramana: How do you evaluate the venture capital opportunities when they are presented to you? I am sure they pitch you on the ability to grow faster and make acquisitions. You probably also get acquisition offers. How do you process those opportunities?

Jana: I do respond to every inquiry. I have learned a tremendous amount talking with these people, and it has helped me understand the market better. They talk to my competition and a lot of people in the industry. I take every phone call. I also know that the time to ask for money is when you don’t need it.

The relationships that I am fostering now may very well pay off in the future. I already have an idea who would be the best fit for us and what arrangements would be best for us. The research that I have done just by taking calls and listening, as well as telling my story, has really helped me understand that venture capital is not right for our business because of what they would require in the next three to five years. Those requirements will not be met if I am doing more than two sales a day, and I know that if I process more than two sales a day, consumers will get tired of us. I have seen that in our competition. They do 6,000 deals a day and we have eight.

I have even created a pitch deck and gone out and pitched to VC firms just because I wanted to know the process. I was very clear about that up front, and they all knew I was not necessarily interested.

Sramana: That is a great method to clarify your own thoughts and understand your options and the limitations of your business model. That is a very smart way of processing the issue.

Jana: Thank you. It really did reiterate for us that we are still excited about our business model five years in. They ask very hard questions, and when you are the owner of your company, you don’t have employees asking you those questions. It is really cool to get those questions. They push you a little bit.

Sramana: If you have a $10 million to $15 million business and you make a 30% to 40% profit, then you have a fantastic situation.

Jana: As long as I can keep it rolling. The Achilles heel of our model is what happens when you don’t sell what you have invested in advance. Every day I feel like I am sitting at a roulette table in Las Vegas eight times. We put all of our eggs in one basket. If it does not go well, we can’t put it up again. We have had to create other departments in the company to handle those dogs that don’t do well.

Sramana: How do you handle those situations? Do you partner with Overstock.com?

Jana: We partner with Overstock.com, but we have not seen much success with them. Believe it or not, when we don’t sell it half price we sell it for full price on Amazon. We have an Amazon store where we sell leftover inventory. It will eventually be a full-price boutique online, but for now it is an Amazon store that sells our leftover inventory. It does not work all the time, but it earns a couple of hundred thousand dollars each year. Our feedback rating there is phenomenal because they get the same support that our Steals.com customers get. The reality is that we usually have $2 million of unsold inventory at all times.

Sramana: This has been a fantastic story. Congratulations on your success. I look forward to following your story.

This segment is part 7 in the series : Built to Enjoy in Utah: Jana Francis, Founder, Steals.com
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