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One Kings Lane Coffee Table
One Kings Lane, an online home furnishings retailer, netted less than $30 million in its recent sale to Bed Bath & Beyond, according to three people familiar with the deal. The purchase price marks a huge discount from the $900 million valuation the startup secured when it raised more than $100 million from investors in early 2014.
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The disappointing sale, which was announced in June without a purchase price, doesn’t come as a complete surprise to those who have followed the once-hot startup in recent years. Recode reported in January that the shopping site had been unsuccessfully looking for a buyer, amid multiple layoffs and a business that had been failing for some time.
Following Dollar Shave Club’s $1 billion sale to Unilever and Walmart’s upcoming $3.3 billion acquisition of Jet, One Kings Lane’s outcome is a reminder of how brutal the e-commerce industry can be for many startups.
The online retailer, co-founded by Ali Pinkus and Susan Feldman, burst onto the scene in 2009 with limited sales — known as “flash sales” — of luxury furniture and home decor at deeply discounted prices.
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As Gilt Groupe did with the fashion industry, One Kings Lane initially benefited from the effects of the Great Recession; businesses were desperately trying to find new ways to offload expensive goods as the economy tanked and shoppers shunned full-price discretionary items.
Over time, the company secured $225 million in investments from firms such as Greylock, Tiger Global, Kleiner Perkins Caufield & Biers and Mousse Partners, and at one point saw hundreds of millions of dollars in annual revenue.
However, as the economy recovered, it became harder to find excess inventory for flash sale sites around the world. Traditional retailers and brands have also started running their own versions of these sales on their websites. In short, it was really difficult to keep the merchandise selection fresh on a daily basis.
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To make matters worse for One Kings Lane, the furniture and home decor categories are much less seasonal than the fashion industry, meaning there wasn’t as much unsold merchandise coming in organically on a quarterly basis as there is for discount clothing sites.
The startup tried to accelerate growth through new initiatives like Hunters Alley, a site that was like an eBay for high-end home decor. But that project was scrapped less than a year after launch.
One of the first red flags seems so obvious now in hindsight. Within months of raising $112 million for his company in early 2014, then-CEO Doug Mack stunned insiders and outsiders by leaving for the same role at Fanatics, an online retailer of licensed sports apparel.
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There is much more to the story of what went wrong at One Kings Lane and what e-commerce entrepreneurs and employees can learn from it. That includes the hard lessons some employees learned after spending thousands of dollars exercising stock options that became completely worthless after the sale of Bed Bath & Beyond.
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