When Daniele, Marcelo and I started Faire, we knew we could build something big. We saw a massive opportunity to create an online marketplace that would help local retailers and makers break free from the inefficiencies of an antiquated wholesale model. We knew the shop local movement and the maker revolution were waves that would provide strong tailwinds to spur our growth. That said, we never expected we would get this far this fast.
Today, I’m thrilled to share some exciting milestones: $100M in financing from Lightspeed Venture Partners and Y-Combinator, with participation from new investors, partners of DST Global, and Founders Fund, as well as existing investors, Sequoia, Forerunner, and Khosla. In addition, we now have over 15,000 stores actively buying on the platform — more retail locations than Walgreens, Walmart, Sephora, and Nordstrom have combined — as well as more than 2,000 makers fulfilling orders. We’ve also reached $100M in run rate sales.
Along the way, we’ve helped retailers overcome the burden of inventory risk by bringing a data-driven approach to wholesale purchasing, increasing their sell-through rates by 75% over the course of the year. We credit a lot of this year’s growth to a first-of-its-kind viral loop among the SMBs on our platform, where we’re getting a high volume of referrals from makers who want retailers to join Faire so that they can have the benefit of invoicing, tracking retailers’ ordering history, and viewing analytics on their sales all in one place. We call it Elevate.
The most exciting aspect of this news is what it means for our customers. Our mission at Faire is to empower entrepreneurs to chase their dreams. We believe entrepreneurship is a calling. Starting a business provides a level of autonomy and fulfillment that’s become difficult to find for many elsewhere in the economy. With this in mind, we built Faire to help entrepreneurs on both sides of our marketplace succeed. With this additional capital, we will double down on the success we’ve had so far and create even more opportunity for our retailers and makers.
In light of today’s news and in the spirit of our mission, we wanted to take a step back to share the story of our own entrepreneurial journey and some of the biggest learnings we’ve had along the way.
Solve a problem that matters to your customers and to you
We worked through several ideas before we landed on the idea for Faire, from offering car insurance for low-income immigrants to reinventing payments in healthcare — we even considered becoming dental drill salesmen for about a month. Some of these ideas were just bad (low-income immigrants are pretty happy with their car insurance), and some of them didn’t feel meaningful to us (we just couldn’t get excited about dental drills).
We knew as soon as we started working on Faire that it was the right idea because it didn’t just solve a clear problem in the market, it also fed on our shared passion for creating products that help small businesses. The idea was to create a wholesale marketplace that took all the risk out of bringing on new products — one of the biggest pain points for small retailers. Within days of starting to talk to potential customers, the size of the problem we were trying to solve on both sides of the marketplace immediately became clear.
When we started talking to retailers about the concept for Faire, you could see from the way their faces lit up that we were onto something. They loved experimenting with new products, but the upfront capital and risk of getting stuck with unsold merchandise was holding them back. We could free them from that anxiety. With just a few makers onboard, we had orders lined up from multiple retailers before we had written a single line of code. All it took was showing them the line sheets, and they emailed me the orders.
More importantly, the idea felt right. We cared deeply about what we were doing because we identified with our customers as fellow entrepreneurs. Just like us, they left behind the security of their jobs to pursue their passions. We woke up excited to get to work every day. We left every conversation with a customer feeling energized. Everything was clicking and falling into place. These feelings only became stronger the more time we spent building out the platform.
As a founder, it’s important that you are solving a problem that matters to your customers because you will never get traction otherwise. But it’s just as important that you are solving a problem that matters to you because you will almost certainly quit otherwise. No matter how good the idea is, you’re still going to have moments of self-doubt. That feeling of existential dread needs a powerful counterweight to keep you going. Even as you wonder if your solution isn’t feasible, you need to believe you are solving a real problem, and you need to want to solve that problem desperately. You need to feel it in your bones.
Constant application of force
I once asked Mike Moritz, one of our investors from Sequoia, what separated the breakout companies he’d seen from those that didn’t succeed. He’s been on the board of Google, Stripe, Instacart and many other massive companies from their early days. His answer: “Constant application of force.” That stuck with me because it’s proven to be such a simple, yet powerful truth.
Once you’ve found a problem you’re passionate about solving for your customers, you need to build a business around that solution. That requires tenacity, urgency, and focus. You will face an unending stream of obstacles. There will be fires burning all around you. You are going to be more stressed than you’ve ever been — sometimes unbearably stressed. You need to channel that stress into whatever the most important problem your startup is facing, and you can’t get distracted by anything else. You must be relentlessly steady.
Despite the early positive feedback from customers, we spent much of our first nine months questioning whether we were onto anything at all. Getting a marketplace off the ground is uniquely difficult. It can be challenging to determine whether a lack of traction is due to a lack of supply, or lack of demand, or the lack of a market at all. We iterated on half a dozen versions of our core product offering until September of last year, when we found our way back to the original idea of offering Net 60 payment terms and free returns. At that point, with 200 makers onboard, suddenly it started to work. We opened up the marketplace out of our invite-only pilot — and it exploded. In just three months, we went from doing $100K per month to $1M per month in GMV.
Then, January arrived. A shocking percentage of the products we’d sold got returned, and an even more shocking number of retailers never even paid us. We’d done scenario planning heading into the holidays. This was worse than the worst case. We were losing serious money on every order we received, and the growth wasn’t slowing down. I’ll never forget the look on the faces of our board members when we told them the news at their first board meeting. They were thinking, “what have I gotten myself into?”
That’s when we got to work. We broke the problem down into all its component parts. What types of retailers are returning the most? Who isn’t paying? What types of products are driving the most returns? We tweaked some of the rules of the marketplace, imposed credit limits on retailers, re-ranked makers and products, and made it easier for retailers to pay their invoices. Within six months, our team had brought return rates down by 75%, cut defaults by almost 90%, and made other changes to get the marketplace to profitability.
Finally, we were set up for growth again. And grow we did.
Founding a company will challenge you in ways you never knew you could be challenged. It’s an emotional rollercoaster. You have to find meaning in that struggle, and in addition to the mission, the best way to find meaning is to learn. You will constantly be forced to reinvent your company and to reinvent yourself.
But through it all, the reward is humbling. You’ll wake up each day with a driving sense of purpose that makes you excited for the day’s tasks, however stressful or tedious they may be. I’m so proud of our incredible team for the long hours they continue to put in to help the people who have grown to rely on our marketplace. But the truth is, we’re just getting started. There’s a lot more work to do, more learnings to gather, and more change to create. I’m grateful to those who believed in us since day one as well as those of you who are new to our journey. Like us, soon you’ll see that the future is local.