Bootstrapping to $27 Million from Arizona: Jeremy Young, CEO of Tanga (Part 7)

Sramana Mitra: Given that you know nothing about me and you’re showing me something that doesn’t work for me at all, how do you take a prospect like me and turn me into somebody who can actually find useful things on your site?

Jeremy Young: You would have to give us your email address and create an account. The way we’re doing it is through our proprietary engine. It is our strategic focus for the year and you’re going to see some amazing things come out of it over 2016.

Sramana Mitra: Why, as somebody landing on your site, would I want to give you my email address?

Jeremy Young: A lot of our traffic comes from affiliates and partners that are pushing you to a specific deal. When you come, you are already looking for those particular deals and you want to buy it.

Sramana Mitra: So your primary customer acquisition strategy is affiliates and those affiliates get you the context on those deals.

Jeremy Young: Correct. I wouldn’t say it’s the majority. Email marketing is our biggest. We do a lot of affiliates and retargeting. We also do SEM and social. There are a lot of ways that we get people to come in to the website.

Sramana Mitra: What else is interesting and strategic in your journey?

Jeremy Young: The way we’re able to take a bootstrapped company and have the best of web customer service. I haven’t looked at the customer service ratings for the past few weeks, but at times, our reseller rating is higher than Zappos. Being a small startup company, I think that’s commendable for us to be able to provide that level of service.

Another thing that we do is we have the Dun & Bradstreet Best of Web scores for our business credit rating. I think that’s commendable for a small startup when you have a lot of other companies that are missing payments with their vendors or going out of business. We’ve been able to build amazing relationships with our product vendors so that we can have access to products, sometimes even before Groupon. Those are the types of relationship that have really helped us build our company.

Sramana Mitra: I actually believe that the Groupon model, which is essentially the model that you’re running, except it doesn’t scale to the extent that Groupon or LivingSocial wants to scale it. They were trying to go too fast and it didn’t work. In your case, you’ve bootstrapped it. You’ve grown very well and you’ve built a very nice company, but you haven’t had to become a billion-dollar company in five years. I think that’s a much better way to build this type of a company.

Jeremy Young: Yes. You’ve got to hand it to Groupon. They grew super quickly, but now they’re struggling.

Sramana Mitra: It’s a disaster actually. The company is a complete disaster—so much financing. You are doing this company out of Phoenix, Arizona?

Jeremy Young: Correct.

Sramana Mitra: The entire team is in Phoenix?

Jeremy Young: I have a few people that are scattered around United States but 95% are in Phoenix.

Sramana Mitra: How many people do you have?

Jeremy Young: I have about 50 employees now.

Sramana Mitra: What’s the distribution? It’s a pretty sizeable scale to get to 50 employees.

Jeremy Young: I would probably say 15% to 20% are on the tech side. These numbers are not going to add up because I’m not doing it in my head. Maybe 15% are customer service. We have a sizeable accounting and operations team that makes sure inventory gets to where it needs to go. We have probably seven people in sourcing and buying. We’ve got probably five people in marketing and email, affiliate, SEM. We have a number of people to do publishing.

Sramana Mitra: You have a warehouse staff also?

Jeremy Young: It’s a 3PL that we use. We actually don’t count them as employees. We also do a lot of drop-shipping as well. People will drop ship on our behalf.

Sramana Mitra: What do you want to do with the company? Is this something you want to sell? Do you want to grow it?

Jeremy Young: I’ve always been a bootstrap guy and there are quite a few reasons for it. One is the negative experience I’ve had in raising money in the past and what the investor did. Obviously, I’m in the tech space. I’ve been in the business for a long time. I’ve got lots of friends and heard lots of horror stories of deals gone bad.

My preference is to continue to bootstrap for as long as we can. At some point, it may be impossible to continue growth as a bootstrapped company as the numbers get bigger. It that happens, I don’t know if we would go for a strategic sale or if we do raise money, that money needs to be very strategic. They need to allow us to run the company and to really add some value to the money that they’re bringing.

Sramana Mitra: So you want to continue to run and build the business much further.

Jeremy Young: Correct. We’ve got so many cool things happening right now. I think that it’s just too way early to even think about a sale at this point.

Sramana Mitra: You’re having fun, which is great.

Jeremy Young: Yes, it’s super fun. I can do my work from anywhere. Right now, I’m in Mexico for the Super Bowl weekend.

Sramana Mitra: Is it easy to find the kinds of people that you need to staff this organisation?

Jeremy Young: Great question, and the answer is no. Phoenix is difficult in terms of hiring really strong experienced people in tech, programming, and even marketing. We’ve actually had to bring people from out of state. It’s difficult when you’re competing with Silicon Valley. It’s difficult to find the right people. We’re not super fast to hire, which slowed our growth a little bit. We want the right cultural fit and we want the right talent in here. We’re constantly looking for programmers. Every single day, we’ve got resumes coming into our inbox. It’s a constant process.

Sramana Mitra: Is there any particular type of people who may be wiling to move to Arizona?

Jeremy Young: We have found some buyers who are willing to move to Arizona who have lived in New York or Florida. We have had, in the past, people working in other states as programmers just because they didn’t want to leave California or Seattle. We have done independent contractors in the past and we have done some overseas contracting. We have done all of that.

Sramana Mitra: It was a pleasure talking to you. It sounds like it’s a fascinating company. Good luck!

This segment is part 7 in the series : Bootstrapping to $27 Million from Arizona: Jeremy Young, CEO of Tanga
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