Rolling Up Professional Networks: Dan Serfaty, CEO of Viadeo (Part 3)

Sramana: What did you do after you sold the tourist business in 1991?

Dan Serfaty: During the second year of that company, I started another company from scratch with a friend of mine. The frontier in Europe opened in 1993. Up to that time it was difficult to import goods from one country to another. I had a friend in the UK who was a big importer of clothing. He was importing clothing from China, Bangladesh, and Vietnam.

We took luggage to the UK, filled it up with clothing, and took it to a market in Paris and showed the retailers samples. We started taking orders right there. That is how we built a clothing import company. In 1993, the frontier opened so these retailers were able to go to England and do this themselves without our services or margin, so we had to move towards retail distribution channels and did so with the equivalent of Walmart and Target in France.

We have grown to over 100 people, a 20 million euro run rate, and have always been profitable. We have made a deal with financial investors which allowed us to acquire a retail channel for plus-sized women. Plus-sized women in France had a hard time finding clothes. The U.S. market for this demographic is much larger than that of France.

Sramana: So, you had a retail business and an import business?

Dan Serfaty: We imported very basic items such as men’s shirts. We did not carry risk in terms of fashion. We focused on material and design that we could furnish at any time. Our value proposition to big retail chains came when they had a big event, such as Fathers Day. They would not have time to import from China, whereas with us they could choose what they wanted and have it in stock in three days.

We also acquired other shops and sold them. We had a lot of fun for eight or nine years. The first deal we made with this company is a good lesson. We went with a shirt that we were paying 15 francs for and we were showing it to prospective customers. A lot of clients were haggling over the price, making offers of around 16 to 18 francs. Then someone offered us 25 francs for that shirt, but he wanted 10,000 shirts. We figured we could make a lot of money off that deal, so we ordered the truck. It got stolen. We opened a letter of credit with our English supplier backed by a bank. We went to the transporter, who said that he had insurance but it would take two months to process.

I told him I would not leave the office until he gave me my check. I needed the money back to pay the supplier enough to re-order the truck. In three days I received the check from the insurance, re-ordered another truck, and delivered it to the customer. That is when we found out they were the crooks.

We were inexperienced. We were 23 years old. If you earn too much money on a deal, think twice. If it sounds too good to be true, it likely is. We then had three months to pay the supplier. We had to fight to be able to pay that.

This segment is part 3 in the series : Rolling Up Professional Networks: Dan Serfaty, CEO of Viadeo
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