Bootstrapping A 100M+ E-Commerce Company: OpticsPlanet CEO Mark Levitin (Part 2)

Sramana: How long did you operate as an importer and distributor of LOMO?

Mark Levitin: We did that for a number of years and grew the business to a point where it generated $10 million in revenue. It was a combination of product development and wholesale distribution. We never sold direct, which is very important to realize.It is similar to any what the German and Japanese companies used to do, and what the Indian and Chinese companies do today. When you come to the U.S., you establish a master distributor to handle your marketing and distribution. We were an independent company, but we had the licensing agreements for all intellectual property of LOMO, including agreements for trademarks, trade names and patents for Canada, the U.S., and Mexico.

NAFTA [the North American Free Trade Agreement] had been signed a few years before that, so we built a network of distributors and channel partners. We were purveying these products to a number of market segments. LOBO has a unique factory and they are one of the largest optical manufacturers in the world. In their prime they had 35,000 employees. They were a huge defense contractor for the former Soviet Union, and they are still a huge defense contractor for Russia.

We were present in all of the market segments. We felt that getting that foothold was important to allow us to understand the strengths and weaknesses of our model. One of the weaknesses we found was that we were at the mercy of distribution systems. That meant we needed to reach the user. These would be professionals in occupations or people who had a particular lifestyle. I wanted to know how hunters and birdwatchers pursued their passions. The products we sold would be connected to your hobby or passion. That was challenging to do with a distribution system.

In the late 1990s we saw the dawn of e-commerce as we know it. Amazon had just started selling books. We started OpticsPlanet.com as a direct consumer company that would offer us that channel. The LOMO North America model was a channel and partner company, whereas OpticsPlanet.com was a consumer company. We sold the same products under both companies. Pavel Shvartsman is the co-founder of OpticsPlanet and together we decided to build a completely separate business.

Sramana: What year did you make that decision?

Mark Levitin: That was in late 1999.

Sramana: So you built a $10 million wholesale business and then in late 1999 you developed a B2C business with the same product line. Did you do that to gain more control of the distribution system?

Mark Levitin: That is exactly why we did it.

Sramana: When you started OpticsPlanet, did you fund it using the profit of your LOMO distributorship?

Mark Levitin: We used our own funds. We did not have institutional investors and we did not raise any capital. It was financed personally by the co-founders. We never directly connected LOMO North America and OpticsPlanet.

This segment is part 2 in the series : Bootstrapping A 100M+ E-Commerce Company: OpticsPlanet CEO Mark Levitin
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