Bootstrapping a Two-Sided Marketplace to $10M: Sal Akbani, CEO of Gateway Classic Cars (Part 3)

Sramana Mitra: Your site operates as a two-sided marketplace except you store the inventory.

Sal Akbani: Yes, and we have currently 14 plus 1.

Sramana Mitra: What does that mean?

Sal Akbani: We have 14 active ones [warehouses] and we have one more coming up in Denver on June. We’re currently also working in Scottsdale to open our 16th [warehouse].

Sramana Mitra: These are your warehouses that you call showrooms. So if people want to see the cars before buying, they can do that.

Sal Akbani: You can do that. We have a network of inspectors. That’s the majority of the cases.

Sramana Mitra: The seller side of the marketplace was mostly through referrals. What about the buyer side of the marketplace?

Sal Akbani: It’s also the same thing. Initially, a few people from Chicago bought from us. We were also placing print ads in Chicago. They would then call us and buy. Initially, we took the position that we were only going to sell high-quality, high-value vehicles. The product that people were receiving became the source of us getting new business.

Sramana Mitra: You said in one year, you ran out of capital. What were the metrics of your business in that one year that you burned through the capital? What kind of revenue level did you reach?

Sal Akbani: I would have to do some research on that, but I don’t think we did more than a quarter million the first year.

Sramana Mitra: Is that gross merchandise value?

Sal Akbani: Yes.

Sramana Mitra: But you were starting to get a little bit of validation that your model could work because there were actual transactions happening?

Sal Akbani: Right.

Sramana Mitra: You ran out of capital. You got a little bit of validation one year into the business. What was your next move?

Sal Akbani: My next move was to take the last penny that I had in my savings account without telling my wife and continue on.

Sramana Mitra: How far did you have runway just based on your own savings? How much time did that buy you?

Sal Akbani: I bought myself about 60 days of survival, which started turning things around. In April, we got cash flowing. It was another six months before I could take a paycheck. I was a volunteer all this time.

Sramana Mitra: That’s very common in bootstrapped startups. That means you are now coming to the end of 2000. That’s when you start to be able to pay yourself a little bit.

Sal Akbani: By August and September, we were pretty well-entrenched. The business had established itself in the sense that there was credibility in the seller’s market. That was a big thing. You had to have inventory. If you start selling for people, they would gladly bring their cars to you and encourage their friends to do the same.

We had avenues to sell these cars much further than just St. Louis. That’s what put us apart from others. We could go out there and find buyers 300 to 500 miles away all the way up to Minneapolis for a car that, in the past, would not sell not more than 50 miles from St. Louis market. The accessibility due to the Internet helped us grow in a very rapid manner.

This segment is part 3 in the series : Bootstrapping a Two-Sided Marketplace to $10M: Sal Akbani, CEO of Gateway Classic Cars
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