Bootstrapping to $55 Million from Rural Minnesota: Tom Fallenstein, CEO of Fun.com (Part 3)

Sramana Mitra: What next? What happened in 2006?

Tom Fallenstein: In 2006, we moved into a 10,000 sq. ft. facility and started the company. I hired my mom and two sisters to work full-time and started building out the websites.

Sramana Mitra: Were there other properties in 2006 or just those three?

Tom Fallenstein: No, we had more websites—superherocostumes.com, rennaisancecostumes.com and a few other exact match domains like that.

Sramana Mitra: In choosing those particular areas, did you have perspective into how much search volume there was or how much demand there was?

Tom Fallenstein: There were a couple of different tools at that time similar to how Google can show you the search volume. You can actually go in and find out how many people are searching for flapper costumes or flapper dress. Basically, I was able to see how many people were searching for all of those terms, ranked those terms, and looked at the competition. That led me down the path of which domains to go after first and which websites to build first.

Sramana Mitra: So you had five domains at that point?

Tom Fallensetin: Yes, five or six.

Sramana Mitra: How much did you do that year?

Tom Fallenstein: That year, we broke the million dollar mark.

Sramana Mitra: Which of these five or six properties was your most aggressive revenue generator?

Tom Fallenstein: Star Wars was the biggest one. There’s just volume for Darth Vader and Yoda. We were able to rank first on all those costume terms. That was when the new movies were coming out as well. 1999 was when episode one came out.

Sramana Mitra: I guess you followed the same strategy going forward. Are there other major strategic things that you did?

Tom Fallenstein: The next big change was in 2008 when we moved to a 50,000 sq. ft. facility and bought our first big domain name. In 2008 we acquired halloweencostumes.com. It was not being used by anyone, but it was owned by a wholesale vendor who wasn’t doing anything with it. We negotiated for a while and were able to acquire that domain.

Sramana Mitra: Was that a big driver?

Tom Fallenstein: Basically, all of our profits from that year went into buying this one single domain name. It was a giant risk and a giant scare at that time. We know how many people search Halloween costumes versus Star Wars costumes but at the same time, we didn’t know if putting all of the eggs in one basket would work out.

Sramana Mitra: How much did you pay for that domain?

Tom Fallenstein: The domain was $1 million.

This segment is part 3 in the series : Bootstrapping to $55 Million from Rural Minnesota: Tom Fallenstein, CEO of Fun.com
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