Entrepreneur Kevin Ryan, on VC, NYC, and…Becoming a Wedding Planner?October 07, 2011
by Connie Loizos
Internet entrepreneur Kevin Ryan is killing it — particularly when it comes to fundraising.
Ryan is the founder and CEO of Gilt Groupe, a popular shopping service that was founded in 2007 and has raised a stunning $236 million, including from Goldman Sachs, General Atlantic, and Matrix Partners since its 2007 founding — at what was most recently a $1 billion valuation. (Gilt booked roughly $500 million in revenue in the fiscal year ending July, though it remains unprofitable.)
Ryan, long the CEO of DoubleClick, is also the cofounder, with former DoubleClick CTO Dwight Merriman, of three-year-old 10gen, which offers enterprises a big, commercialized version of the open source, non-relational database platform MongoDB. 10gen has raised $31.4 million since its 2007 founding, including a $20 million round led by Sequoia Capital last month.
(Ryan claims 10gen, run by Merriman, is also worth at least a billion dollars. “If you compare MongoDB adoption to [open source database] MySQL, it’s faster, and MySQL sold for a billion dollars [in 2008 to Sun Microsystems].”)
Then there’s Business Insider, which Ryan and Merriman also cofounded, in 2007, and that has so far raised $13.7 million, $7 million of it coming in a round last month that included Institutional Venture Partners, RRE Ventures and individuals like Marc Andreessen. The widely read blogging property has become a must-read for the digerati as well as those on Wall Street.
That’s saying nothing of the other companies that Ryan and Merriman have founded and sold for “not big outcomes,” in recent years: Panther Express and ShopWiki, acquired respectively by CDNetworks and Oversee for undisclosed amounts. Together, the companies raised roughly $28 million from VCs that include Greylock Partners and Index Ventures.
“I’ve probably raised more rounds [of venture capital] than anyone you know – 15 rounds in the last five years,” Ryan told me recently from the New York offices of Gilt, where he now dedicates nearly all of his time.
We talked about what his secret is, as well as what else he has up his sleeve. Our conversation has been edited for length.
Why do VCs keep throwing money at you?
[It comes down to the right] people. At Business Insider, we hired two people and they just started writing a blog, and now the company has 65 employees and 12 million unique visitors a month. Great people are the building blocks to great products. At DoubleClick, the 10 people who worked for me on the business side are 10 CEOs now.
The secret sauce is a great recruiting team [because] when you hire great people, it trickles down. A people hire A people, and B people hire C people.
You might think, okay, it’s a big hassle factor to replace [this particular employee]. But a company is like a sports team. The Yankees don’t say, ‘This third baseman isn’t that great, but we should just keep him.’ You can’t win unless you have great people in every position. At an Internet company, all you have is your brand and people.
You’re at center of the New York tech scene, which has been on fire for a long time. Is that all good news or there a downside to its supercharged growth?
[The scene] is just so much bigger and deeper. In 1997, I couldn’t find a lawyer to take [DoubleClick] public in New York. There were no tech companies here. We didn’t have any infrastructure. Of the first 100 employees hired, not a single one had worked for a startup before. Today, the only downside is that it’s doing so well that it’s hard to get great technical talent. But that’s a reflection of success. Most [entrepreneurs] have stayed in New York, so we now have lots of second- and third- time entrepreneurs who’ve started and funded companies.
I assume newer entrepreneurs seek out your advice. What are some things you tell them?
They all sound like platitudes, but number one is having a great team. Is your CTO better than the CTOs of the 10 other companies in your [sector of industry]? Two is to raise more money than you think you’ll need. Don’t worry so much about dilution as being able to move quickly. And three, focus on product and not on advertising. I don’t think companies should advertise their way to success. People think, If only I tell people about my great product. But if it doesn’t work on its own [it won’t work]. Do you ever see ads for Facebook or Twitter?
You recently wrote a post about your willingness to pay more employer taxes, despite some Republicans’ claims that increasing taxes on entrepreneurs will cause them to be less entrepreneurial. Do you think more tech entrepreneurs should engage politically?
I think all of us are frustrated with what’s happening in Washington. The reason tech doesn’t spend much time there is that except for telecom, it’s not impacted directly. There’s very little legislation, for example, that impacts Gilt, whereas if we were wind powered companies or oil companies or financial services, we’d spend all kind of time lobbying. Because things in the industry are going so well, it pulls you out quite a bit. There’s nothing I need from Washington, but with my American citizen hat on, I do find that very frustrating.
Based on a bunch of conversations, and they’re mostly with Democrats, there’s frustration with the business community not being outspoken enough and not helping out on key issues. [What I hear is], ‘We don’t hear your voices pushing hard to offset passionate voices on the other side. Don’t just sit there and complain; try and help out.’
Do you think those politicians are right?
Businesspeople tend to be somewhat centrist. They tend to not want to take a position because it might alienate customers. At the same time, everyone wants a well-run economy, and businesspeople across the board were frustrated by the debt negotiations [last month]. I think people are just frustrated with a lot of decision-making that comes out of Washington, and with the fact that it’s so polarized.
I organize some events just so [politicians and] businesspeople can meet. But look, I think everyone is very busy, so if I spend a day in Washington, that’s a day I’m not meeting with people, meeting with brands, and everything else [for Gilt].
Gilt emerged as a flash sales company but recently made a big shift into full-priced items. What’s going on?
It’s not a huge shift at all. Let’s say you’re a customer and have purchased things over the years. If I go into your closet, do you shop only discount? Probably half of what you’d purchased has been on sale. All I’m doing is thinking of my customer and selling them more things. Our customers are saying, ‘I wanted to buy a white linen shirt, but then you sold out. So what am I going to do, go to Saks? Why don’t you just show it to me on Gilt [at full price]?’ I wasn’t planning on selling full-price, but our customers refer to us as a luxury brand. They don’t see us as an outlet mall.
Gilt now sells everything from high-end home furnishings to men’s and women’s clothing to travel packages to food. What’s next?
We’re not expanding into many more verticals, but bridal would be a logical one, mostly because we already do a ton of bridal without a lot of people [focusing on it]. What do you need? A big home business, because that’s where your wedding list [goes to shop], a big sales force in big cities, a great honeymoon business, and the ability to sell dresses, not to mention spas and manicures. And we already do all of that.