Generation Y is the gadget generation, a charged group connected to social media, smartphones, computers and emerging technology all the time. They’re tweeting, tagging, blogging, posting cyborgs, and they’re worth billions of dollars.
In 1999, when he was 16, Volusion founder and CEO Kevin Sproles created a technology that significantly changed the way Generation Y interacts with retailers. He created the online shopping cart.
Volusion is an eCommerce company that provides online shopping cart software for retailers, allowing them to focus on their core business rather than the accounting and processing involved with online shopping. Capitalizing on the onslaught of mobile commerce, Sproles recently launched Volusion mCom-merce, allowing shoppers to browse and research products using their phones and social media. In 2009, Volusion processed more than $2 billion in online transactions for customers, accounting for 1 percent of all U.S. Internet transactions. Today, more than 20,000 entrepreneurs use Volusion software, and at press time, the company was on track to reach $33 million in revenue by the end of 2010.
Although Sproles has won several awards, including BusinessWeek’s Best 25 Entrepreneurs Under 25, and the San Fernando Valley Business Journal’s 40 Under 40 Leadership Award, he is reserved and far more interested in where his company is going than his role in its success.
SUCCESS: You started your career providing Web development services. Why did you switch to eCommerce?
Kevin Sproles: I started this business as a custom Web design development business. Then I realized I couldn’t really build a scalable business by doing services one by one. There was only one of me and quite a lot of potential clients. I looked at other successful business models like Microsoft—Bill Gates opened with one thing and sold it a billion times—and thought, how can I sell one product a million times? I came to eCommerce shopping software.
If you want to sell online, it’s very complex. When you’re running an online store, so much relies on product merchandising, taxes, shipping, invoices, and then, on the back end, you have to build out the invoice, process the order, etc. Our product integrates this for the retailer. It’s really .exible and became the core of our business.
How did you define your market?
KS: We narrowed our market to businesses that wanted their own online store. You can go to eBay or craigslist and sell one product, but for the business that’s serious about selling more than one product, they go to us as an online store solution.
Are newer technologies—iPhones, Facebook, Twitter, etc.—impacting your business? If so, how are you adjusting?
KS: We’ve had our social integrations for quite a while now, and we just started mCommerce [mobile commerce] and are offering it to all merchants for free. This gives consumers access to retailers through phones, Facebook, Twitter and other emerging technologies.
Can you pinpoint the moment when you realized your business was going to succeed?
KS: I’ve always been an optimist, so I always thought I would make it. I was defi nitely unsure when I was two to three years into the company. I had, like, $25,000 in debt for advertising, but I needed to get clients on board and get recurring revenue. I knew I would pay it off in the next 12 months. Once that was possible, I thought, “OK, I can do this.” I knew it would be a long-term business. Now the business has turned into an engine that’s profitable. I knew if I spent a certain amount of money that I would get clients. I’m always optimistic.
What advice do you have for new entrepreneurs?
KS: I think a lot of the time entrepreneurs underestimate the cost of advertising and marketing. The cost of acquiring new clients is a lot higher than expected, especially these days. The No. 1 thing they need to do is make sure they have a high enough margin with the products or services they’re producing. If they do, they will be more open to advertising and marketing opportunities because they will be able to afford them. If you’re only able to do a small amount, you’re really limited in how to go out into the market and find clients.
What advice do you have for entrepreneurs looking to launch a Web-based company?
KS: You need to focus on a niche. Do something and do it really well. If it’s too broad, it’s really hard to be successful.
For Volusion, doing customer Web development and shopping software was too broad. If you serve a massive market, it’s harder to become successful. Even if you’re a startup, you need to become a leader in some type of industry. Our clients do this as well. It’s easy to partner with people who have a clear brand. I think consumers narrow in on that.
Who are your top competitors and how did you adapt when they entered the market?
KS: When we started we did have competitors, but they were open-source shopping carts so clients had to build the product themselves. Our solution focused on support from the beginning. We’ll help you set it up and start to develop the product really quickly so you don’t have to find your own hosting, install your database and all of the other stuff business owners don’t know how to do.
Yahoo and eBay both have an offering. They’re major trusted brands so they get a lot of clients, but their solutions are not comparable to ours. They really don’t—as far as I can see—want to compete at our level. They don’t have as many features and functionalities.
Volusion now employs more than 200 people and has offices in two locations, with another one planned. How do you maintain that entrepreneurial spirit within the company as it has grown?
KS: We have talked to a lot of people in the corporate world who are realizing when they acquire a small company, one risk is killing the smaller company’s fast-paced, innovative style. We try to maintain that here. We try to give more free rein to our employees to really contribute.
Volusion’s Stores to Change the World program provides eCommerce for 10 nonprofits every month, and the Volusion Foundation devotes 1 percent of company time, product and revenue to support budding entrepreneurs and other individuals in need of assistance. Why is it so important for a company to give back?
KS: Morally, it’s important for me to help out other people. I also think that it’s great for employees to see and great for customers to see that the company really does care about other people, not just the bottom line.