From Solo Entrepreneur to $65 Million in Revenue: Brazilian Entrepreneur Daniel Scandian, CEO of MadeiraMadeira (Part 2)

Sramana Mitra: You were targeting this business to customers in North America or in Latin America?

Daniel Scandian: Only in Brazil.

Sramana Mitra: Was it Google AdWords that helped you recruit the customers? What was working in terms of marketing?

Daniel Scandian: It was 100% Google AdWords in the beginning. I had this agency that had a few years’ experience. They did a turnkey project where they got a commission from us. They took care of the technology and marketing investment. Then a year later, we had a problem with credit card fraud. Again, I had to negotiate with my family. I proposed to sell my apartment and put the money in the company. We had a family meeting to decide about that. Everybody agreed to sell the apartment. It will pay 2% interest per month in two years.

Sramana Mitra: That’s risky.

Daniel Scandian: Then I created a blog again and advertised on Google. I sold that apartment in 15 days. Then I put the money in the company and went on for a year and a half. We achieved around $4 million in revenue in 2011.

Sramana Mitra: You sold the apartment in 2011?

Daniel Scandian: Yes, I started at the end of 2009. In 2010, I had this problem where I needed more cash for the company. We finished in 2011 with $4.5 million in revenue.

Sramana Mitra: Tell me a few things. This $4.5 million in revenue, was it entirely coming from Google AdWords-based customer acquisition?

Daniel Scandian: Yes, it was 100% through Google.

Sramana Mitra: What was your commercial deal with the suppliers? You were selling flooring. How much commission you could keep and what percentage of the sale was going to the supplier? You were not taking inventory at this point, right?

Daniel Scandian: I was not taking inventory. I was doing drop shipping. I would buy the product after I sold something. It was just-in-time.

Sramana Mitra: Zero inventory e-commerce.

Daniel Scandian: Exactly.

Sramana Mitra: What was the percentage split  between the manufacturer and you?

Daniel Scandian: I was charging around 35%. I’d buy at 100 and sell at 135.

Sramana Mitra: The other way to look at it is of the 100% revenue, you were taking 35% and the manufacturer was taking 65%.

Daniel Scandian: Yes, more or less. They send us an invoice. We send our invoice to the customer. The drop-shipping model allows us to send the product from the wholesaler directly to find a consumer. I had no warehouse at that time, and I had no inventory.

Sramana Mitra: I think this model is very well understood in e-commerce. Then what happened in 2012?

Daniel Scandian: We had an opportunity to sell other kinds of products. I decided to expand the categories to windows and doors and other house products. We grew a lot because of that. Then I started to talk to investors. The market in Brazil for home improvement is around $60 billion. No one was exploring that. Of course, they thought I was crazy. At the same time, I talked with some American investors, especially from New York. We did not have technology and marketing teams, so it was hard for me to get investment from the US.

This segment is part 2 in the series : From Solo Entrepreneur to $65 Million in Revenue: Brazilian Entrepreneur Daniel Scandian, CEO of MadeiraMadeira
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