Ultra-Light Startup to $20 Million in Revenue: WatchUWant CEO OJ Whatley (Part 5)

Sramana Mitra: You said in 2006 you were doing $6 million?

OJ Whatley: Yes, $6 million – $500,000 in receipts per month.

Sramana Mitra: What was the inventory situation at that point?

OJ Whatley: I probably had closer to 50 to 80.

Sramana Mitra: That’s still out of your home?

OJ Whatley: It was still out of my house.

Sramana Mitra: The built-in closet was where you were storing all these?

OJ Whatley: Yes. The reason I moved into an office was not because I wanted to expand the business. It was because I couldn’t get insurance working out of my house. That and I needed a phone system. I really needed to build a real infrastructure.

Sramana Mitra: When was the first time you added employees into the business? You said until 2006, you were alone.

OJ Whatley: In 2005, I brought on an accountant who would come in once a week and help me with my books. Then when I moved into the office, he became my controller. Then I brought on a sales associate.

Sramana Mitra: What was the role of the sales associate?

OJ Whatley: Helping to put watches on eBay as well as to help us buy and sell watches.

Sramana Mitra: Is the business still an eBay only business or has it gone beyond that?

OJ Whatley: It’s definitely beyond eBay. eBay is still an invaluable showcase for our watches. We have a website where we have substantial traffic as well as our offerings get taken and get aggregated to other watch sites.

Sramana Mitra: What year did you move beyond eBay?

OJ Whatley: In 2007, I was told that I could no longer sell watches on eBay.

Sramana Mitra: Why?

OJ Whatley: To this day, I still haven’t gone to the bottom of it.

Sramana Mitra: That sounds very odd, doesn’t it?

OJ Whatley: It’s extremely odd. It’s unheard of. I had to sue them to get back on to eBay and I was reinstated on eBay in November 2008.

Sramana Mitra: I assume you were a huge eBay power seller at that point in 2006. Why would eBay cut you out?

OJ Whatley: It’s still an unanswered question to this day. I literally had to sue them over the course of a year to get reinstated.

Sramana Mitra: While you were shut out of eBay, what did you do?

OJ Whatley: I started building my own website and I started allowing dealers to represent my inventory.

Sramana Mitra: Did that generate commensurate business as you did on eBay?

OJ Whatley: I don’t think it generated the same level of business because it took us six months to get our website up and going. Even then, you still had to start growing traffic. It was enough to survive. In a world where I thought the sky was falling, it was enough to survive.

It goes back to my philosophy that I had when I started this business. When I started this business, it wasn’t about profit. It was about cash flow. It was about as long as you’ve got watches, and you’re not taking money out of the company, and you need money, so you need to sell those watches. It’s not about what you can sell those watches at. It’s that you need money, so you need to sell watches. As you long as I had inventory, I was able to sleep well at night.

Back in those days, I wasn’t looking at gross profit margin. I wasn’t looking at average cost per unit or average profit per unit. I didn’t have that kind of business intelligence or metrics. For me, it was how much cash flow did I generate? How many watches do I have in my safe? How many did I sell last week? What are the watches that I can buy? Much of my selling activity was generated as a function of buying opportunities more so than having any kind of sales goals, per se.

Sramana Mitra: At the end of 2007, you got reinstated on eBay?

OJ Whatley: No, in November of 2008.

Sramana Mitra: So 2007 to 2008, you had to operate with your own website?

OJ Whatley: Yes.

Sramana Mitra: It sounds like this also forced you to look outside of eBay and start building your own site, which at the end of the day, turned out to be a good thing.

OJ Whatley: That’s diversification, right? When we got kicked off of eBay, I had registered the domain name WatchUWant.com but when you went to WatchUWant.com, you would basically see a hyperlink that said, “Click here to view our watch collection.” That would take you directly to our eBay store. That’s how devastating being kicked off eBay was, especially not knowing why and not having anyone that you could talk to about it. To this day, I still don’t know why. I believe it was pressure put on eBay by the manufacturers. For what reason, I don’t know because I’ve never knowingly sold a counterfeit or fake watch in my life. I’m the biggest fan of the manufacturer there is. Like I said, it’s one of those mysteries that will probably go to my grave unsolved.

This segment is part 5 in the series : Ultra-Light Startup to $20 Million in Revenue: WatchUWant CEO OJ Whatley
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