Bootstrap First, Raise Money Later: Joe Speiser, CEO of Little Things (Part 3)

Joe Speiser: In 2005, we were a very profitable business and were scaling quickly. We had 50 to 60 employees at that time. This was my first large business, so I felt that we needed help. We needed some outside experience to guide us on how to scale this company. We brought on private equity. We sold half the company to TA Associates and Strikes Group. We started recruiting the grey-haired management team that you’re supposed to have in place. Things moved very quickly from there. We kept expanding. We went from $50 million to $200 million in revenue. It was on fire. That brings us up to 2010.

Sramana Mitra: The company was private equity owned from 2005 to 2010 and scaled to $200 million. You were still with the company at this point?

Joe Speiser: Yes.

Sramana Mitra: What happened to the company?

Joe Speiser: The company spun off into another company called Kinetic Social. That’s the surviving entity. After my partner and I left, they did a couple of poor acquisitions and mismanaged it.

Sramana Mitra: You and your partner made substantial amounts of money in the 2005 private equity transaction.

Joe Speiser: Yes, we did.

Sramana Mitra: In 2010, you left this company. What happens next?

Joe Speiser: For the past eight to nine years, all we were doing was building campaigns for advertisers to get customers. We were building a sales funnel with a huge call to action. That was the big focus of what we did. We were looking to figure out a way to leverage that skill set.

For the first time, we wanted to be the advertiser instead of the connector. We understood cost of acquisition and LTV so well that we could disrupt this space, which hadn’t been touched in a very long time. That’s what got us to e-commerce.

No one wanted to touch pet food online because of pets.com. That was the largest dot-com failure. We’re the crazy entrepreneurs, so we said, “Why don’t we sell pet food online?” We had to do it in a different way. What we came up with was a recurring scheduled type system. Just like Netflix, we built PetFlow to be a recurring delivery system. You pick out the food that you would normally get at the store except you pick it out with us. We’ll make sure it’s on your doorstep every eight weeks, two weeks, or whatever your schedule.

We launched that in 2010. It was bootstrapped. It took off. There was a huge demand for it. The penetration of Internet between 1999 and 2010 was significantly different. Using credit cards online back then still wasn’t as intuitive 10 years later. The adoption rate was fast. In our first six months, we did about $2 million. Shortly thereafter, the next year we did $12 million. The year after that, we did $25 million. Now, it’s $50 million.

Sramana Mitra: This company was bootstrapped as well?

Joe Speiser: Not entirely. It was bootstrapped for the first year. We realized that starting an e-commerce company is nothing like starting a media company. It’s much more difficult at least for our skill set because a lot of it has to do with things that incur a lot of friction. There’s always something going very wrong. Because the e-commerce model has extremely slim margins, there’s not a lot of room for error.

This segment is part 3 in the series : Bootstrap First, Raise Money Later: Joe Speiser, CEO of Little Things
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