Capital Efficient Entrepreneurship: Bonanza Co-Founder Mark Dorsey (Part 6)

Sramana Mitra: Now we’re still in 2010. In the last six years, what has happened to the business? Where has the growth come from?

Mark Dorsey: In the past six years, we’ve attempted to rebrand ourselves into a fashion site. We kept Bonanza but we also created a second site for handbags exclusively. What we learned is that the fashion industry is a very difficult industry to succeed in. The people who are currently competing in that space have very deep pockets. That was one project that we tried and failed in. That didn’t work out well. We upped our focus into everything but the ordinary and what we were really good at. We continued to scale our business.

One of the biggest things that we’ve done was continuing to build tools to empower our sellers because the e-commerce space is not what it was like 10 years ago. You have to work for sales now. There’s a lot of people competing in the space. There are big brands, small brands, and individual professional sellers who are all competing for shoppers. We saw that as an opportunity to build tools to help our sellers succeed online. That’s where our focus has been.

For example, one of the tools that we’ve created is called the Background Burner. It automatically removes the background from images because we saw an opportunity when sellers upload high-quality images, it can result in a 10% to 15% in conversion. We created a tool to help them get studio quality images. It turns out this tool that we created has been wildly popular. It’s been requested by many industries outside of e-commerce such as Disney and Time Magazine. That’s one thing that we really concentrated on in the past couple of years.

Sramana Mitra: What scale are you at at this point?

Mark Dorsey: We’ve got approximately 25 million unique items for sale on our site. We have 5 million active users. We have 50,000 sellers on our site. We will have a GMD of nine digits this year.

Sramana Mitra: Where are you revenue-wise?

Mark Dorsey: We’re a private company, so I cannot disclose revenues.

Sramana Mitra: Can you give us a range?

Mark Dorsey: I would say between $75 million to $150 million.

Sramana Mitra: Are you looking at going public any time soon? You have a very capital efficient structure. You’ve diluted very little. You have full control over your destiny. If you wanted, you can even buy out your early investors and keep the company between the co-founders and the management.

Mark Dorsey: Right now, we’re really naive with that. We have our heads down in building a great product. Our goal is set on empowering entrepreneurs to succeed online. Building great products to help them with that goal is our primary focus right now. We’re not focusing on IPO’s.

Sramana Mitra: Do you have investors on the Board?

Mark Dorsey: We do. Geoff Entress is on our Board.

Sramana Mitra: That’s it? None of the other VCs are on the Board?

Mark Dorsey: That’s correct. We did have Dan Shapiro on our Board until 2011.

Sramana Mitra: It makes sense. If you put on the investor hat, they have very little money in the company. Taking one of the partners and having a Board feet for such a small amount of investment is not very time efficient of them. It’s actually good for you.

Mark Dorsey: Absolutely.

Sramana Mitra: I’m a huge fan of capital efficient entrepreneurship. I love your story. Thank you for your time.

This segment is part 6 in the series : Capital Efficient Entrepreneurship: Bonanza Co-Founder Mark Dorsey
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