Bootstrapping to $55 Million from Rural Minnesota: Tom Fallenstein, CEO of Fun.com (Part 4)

Sramana Mitra: Wow! It must have been very scary. How long did it take you to recover that $1 million from that domain?

Tom Fallenstein: It paid for itself in nine months.

Sramana Mitra: Awesome.

Tom Fallenstein: We bought it in January. By the time we made it through October, about 30% to 40% of our sales came directly from that website became 30% to 40% of our sales.

Sramana Mitra: Now we are in 2009, what is the revenue level?

Tom Fallenstein: Probably around $5 million in 2009.

Sramana Mitra: What’s next? What other strategic moves did you make?

Tom Fallenstein: The next major move was at the end of 2010. We continued to expand halloweencostumes.com product-wise. Earlier, I was only able to buy Star Wars-specific costumes or superhero-specific costumes. Now that I have the domain, I could buy any type of costume I wanted. It quickly expanded. The next couple of years was just a great collection of inventory to a point where, in 2011, we grew out of the 50,000 sq. ft. facility and moved into our current 200,000 sq. ft. facility.

In 2010, we tried to look at how to diversify a little bit, because we have a giant peak from selling halloween costumes. We sell a little bit in the off season but 70% of our sales happen in October. We’re looking at how to take advantage of the infrastructure that we built because we can handle 30,000 orders a day but in January we handled a thousand orders only. The next acquisition was tshirts.com and the reason we looked at that was its peak seasons are August and December. Obviously, summer times as well.

Sramana Mitra: What was tshirts.com’s business. Was that just a domain acquisition?

Tom Fallenstein: Yes, that was a domain acquisition as well.

Sramana Mitra: How much did you pay for that?

Tom Fallenstein: I bought that for $1.2 million.

Sramana Mitra: Is this a custom business t-shirts business or pre-designed shirts?

Tom Fallenstein: For now, it’s both. You can design your own shirt but we also carry every licensed product you can think of—Star Wars shirts, NFL shirts, or Sponge Bob shirts.

Sramana Mitra: A lot of it is licensed merchandise.

Tom Fallnestein: Yes.

Sramana Mitra: How big did that become?

Tom Fallenstein: That’s already been a few years. This year, we’ll probably hit $4 million to $5 million.

Sramana Mitra; Now you have $4 million to $5 million in shirts. How much is the Halloween business?

Tom Fallenstein: Last year, it was close to $50 million.

This segment is part 4 in the series : Bootstrapping to $55 Million from Rural Minnesota: Tom Fallenstein, CEO of Fun.com
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