How Material Retail CEO Elliot Djmal grew to $9.9M revenue and 200 customers in 2024.

shop teaks was launched back in way back in 2010 they helped merchandise or sell online one of those merchandisers was Elliot's company called dorlador nyc.com uh they that company does five to ten million top-line Revenue but eventually he said you know I like the software and I like shop teaks more let me start Consulting over there before you know it he's now running it as co-ceo of the platform they make money in three ways they'd have a take rate on Revenue that goes through shop teak they sell software we call material retail that folks pay 125 bucks for again these these brand boutiques use it to grow their business and lastly they actually ship POS systems and they actually take a smaller percent uh flowing through those systems 72 million in gmv through those systems last year hoping to grow their revenue their total revenue not not like some big GMB number but their actual Revenue to about 1.5 million this year with a small efficient team which we love with four full-timers hey folks my guest today is Elliot digimel he's an experienced entrepreneur successfully LED an independent retail business with eight locations for eight years he's now the co-ceo of a dynamic startup called materialretail.com they build software services for independent retailers Elliot you ready to take us to the top definitely definitely all right so what were you using material retail when you were running those eight retail locations like as a customer yeah definitely so material retail has a lot of uh parts to it the main one which uh most people know is called shopgeeks.com it's a Marketplace for independent retailers and stop what shoptiks.com t-e-e-k-s like uh t-i-q-u-e-s like Boutique shopping so uh we as independent retail we were putting our products on that Marketplace and it was super successful um we kind of went two routes for e-commerce one we launched our own website um and the other one we started selling on shop peaks in the marketplace and we had much more success on the marketplace we'd have to worry about the you know the tech the logistics the marketing and we just kind of posted the good product and got orders and fulfilled so it worked really well what year did you launch those independent locations so we launched uh door the door is the name of the retail company in 2010 2010 sorry door to door.com door La door so the website's door Ladora nyc.com so door La door no d-o-r-l-t-o-r-n-y-c.com to our door La door okay nyc.com okay interesting and what was your main product what were you selling so it's like Fast fashion for a uh 25 to 35 year old girl um definitely like going out clothing and things you'd wear to a club called disposable fashion like a step up from forever 21. okay well I know obvious question people are going to look at you here and thinking why the hell is this guy selling clothes to like you know you know teenage girls well so uh you know it's in my blood to be honest um my grandfather was in Fashion retail my dad was a Fashion retail and we all just kept doing it um and yeah my dad worked my grandpa I worked for my dad and uh yeah so so we learned and we look at you know there's definitely a lot of ways to look at Fashion retail so if it's by like what's fashionable the others looking at numbers and see what's selling and the end of the day of style is just a number and a spreadsheet and see what's selling and you go after that good vendors good things like that that's wild okay so you you get door-to-door going door ladore nyc.com in 2010. uh is that so is it still operating to age you sell it or what yeah no it's still operating there's uh eight locations my family still runs it um and yeah interesting so okay so there are eight locations so do you rely more on Virtual Marketplace Revenue through shop teaks or actually physical people walking in your eight locations definitely the eight locations are the majority of the revenue but um we were able to use the a locations and leverage you know all the inventory and all the stuff we have there to have a profitable e-commerce we don't have to add really any expense um or any inventory any overhead light any overhead and just you know have incremental sales interesting so how many how many like unique people bought at least one thing from door La door last year um in store I'd say in the five tens of thousands uh online in the you know one to five thousand people oh what's going on there YouTube good to see you guys now imagine this you love watching these interviews with SAS Founders but imagine if we took all of the valuation data out from over 2807 interviews I've done manually saves you a lot of time well we've done this we've built the into the beautiful interface inside of founder path check this out I'll show you how you can access this in a second but you log in you connect your stripe account you see your valuation real time you can see what it changed over the past 88 days and even set goals for evaluation this year now 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hope to see you there all right let's jump back into the interview interesting and can you give us a sense of Revenue size are we talking like one to five million five to ten where were you guys generally yeah it's like five to ten five to ten wow okay so I guess why leave that and go deep into door oh sorry I can go deep into material retail so it was uh it was just called a slow transition so I was uh very involved in shop teaks material retail as a customer really kind of spearheaded that in Doral door um so made a lot of friends at the company um and you know over time slowly got involved started Consulting there two days a week in 2018 actually so did that for two years two years I was there two days a week and really kind of fell in love um with just helping if they pay you for that are you just doing it because you it helped door the door grow yeah no they paid us for that paid me for that I definitely uh I wish I could work for free we can't do it uh one day um and uh yeah so it was like a slow transition it made it really easy because I knew what I was getting into you know after two years maybe two days a week I really knew the business I knew what I can add to their business um and then also what I could bring to the boutiques to help the boutiques be more successful using their products um and what year was that so the Consulting started what year 2018 2018. okay then so so I guess fast forward when did you realize oh maybe the founders want to leave or they're getting forced out and you're going to jump in as co-ceo so it was like 2020 early 2020 right when covert was happening kind of happened really really quickly me and uh my co-ceo Mark um were kind of put in place by the Oto and founder and the board and uh we hit the ground running kobit was a very busy time where definitely e-commerce focused business um yeah interesting so you mentioned board had they raised a bunch of money yeah so shopping story history it's uh launched in uh 2012 wait sorry just to be clear are we talking about shop teaks or material retail so shop teaks uh we rebranded material retail in 2022. oh same company so yeah shop Peaks is uh the marketplace that material retail owns um shoptix.com was the only business that we had for about eight nine years and then we launched a software suite which is material retail in 2019 and uh slowly over time a lot of the focus um moved towards the software suite as opposed to the marketplace so now shopgeeks.com which is the marketplace is a subsidiary of material retail I see when you look at total revenue like last year what was a split between shop teaks versus the software material retail so the software is like 70 of the revenue oh wow yeah but a lot of the economic activity happens in the marketplace the marketplace is not really like profitable for us we use it as a yeah marketing funnel and we also use it to add um value to the boutiques like the boutiques use our software it's one of our biggest differentiators like why would use material versus Shopify it's because you come in and you start getting online sales right away without having to pay you know Google or Facebook for ads that makes a ton of sense how many unique website hits a month to shop teaks get so it gets like 200 000 unique hits a month that's not easy how did you learn how to do SEO and content marketing and get traffic so uh a lot of it was I'd say luck that I was put into the position in 2020 because a lot of it was done for us but a lot of it I think I would attribute to the network effect so we have like 500 boutiques selling on the marketplace um so with that comes a ton of recognition from the owners the employees their customers things like that and then there's a ton of product listing so we have 60 000 active Styles and you know we have everything from a no-name brand you've never heard of before to Big Brands like Birkenstock or you know cool Brands like Queen of Sparkles and Buddy Love and things like that and to really rely on like the boutiques to do all the merchandising and the product descriptions and things like that help me understand I mean why did the the founder of the company like not want to be involved anymore or what what happened there yeah so she um has a family now and uh she was going on her third kid I think at that time and uh I think she gave it 10 years and just I think it was like Mutual interesting yeah this is Olga so I mean she she I assumed own 100 of the company until she sold some to VCS well it was BC backed um for a while so I don't know the exact splits or anything but she definitely had investors seed round Thursdays at that how much total have the company raised it was like 19 million in total oh wow have you raised any more since you've come in as co-ceo or no we have not okay we kind of shifted to profitability and we got there which was great that's great when did you hit profitability do you remember so last year congrats it's like you don't seem very excited it's exciting but it definitely changes the game a little bit right we went from this call it like high growth like aspirational startup going for let's get to Wall Street as quickly as possible like all right let's have a sustainable business where we know we could continue to grow sustainably a little more slowly but still sustainably for years to come as opposed to you know let's just go for a grand slam and hit it or Miss basically that's awesome what so give me a sense of how merchandisers are paying um the software arm of shop so material retail today what what are they paying on average per month and what do they get so for like the you know base plan call it which gets you access to the full platform to the marketplace Inventory management employee management some marketing tools a website and all that stuff it's like 125 a month um and then I don't know 125 125 a month and then we also have um with that it's the the centerpiece that's the POS system where they're running transactions in store um so the boutiques you're shipping a physical yeah so it's iPad base so like everything's done on iPad we'll ship them a credit card terminal you know get a receipt printer Barcode Scanner and you know you go to a retail store you pick up address the cashier scans it into the system you know she tells you it's 80 bucks you insert your credit card or CeX printed that's all us how much does that cost you just hard Goods cost up front to ship that stuff a thousand bucks interesting that's the shipping cost plus the actual Barcode Scanner card reader or the whole thing yeah and most of the time Boutique pays for it um a lot of times also if the boutique is coming off of another POS at Shopify or Square they'll have some of the hardware ready because it's iPad base a lot of us use the same stuff as long as as it can be as long as it can be connected with Bluetooth it'll probably work um so we also get a cut of the credit card Revenue what percent which is nice so it depends on the on the boutique but it's a minimal amount let's say a quarter of a percent to a half a percent but the beauty is we also have a deal with our credit card partner that they beat the merchants current rates so it's like a win-win they switched our POS um they save some money on their credit card rates whether they're coming from square or like uh Global Payments or whatever um so we'll save the money the credit card rates and we'll also be able to cut so win-win there interesting that's that makes a ton of sense and how many boutiques are paying for material retail today so we have like 200 boutiques who are using the like full software suite and then like another call it 300 on top of that who are selling on the marketplace um we do also have a Services Army but those 300 are not paying the 125 a month no interesting why don't you require that why don't you require they pay the software in order to get the marketplace um you know we tried that a lot of different times it just doesn't work um yeah we definitely give better we give better uh economics if you're a POS user versus not POS user on the marketplace lower commissions um people see your products more and things like that so the 300 that sell only on the marketplace what what like what do you take from them like 10 of sales or how do you make money there so we charge uh usually a 30 Commission on Marketplace sales we do pay for shipping and things like that so we end up making like call 10 to the bottom line um for Boutique on the mark on POS we'll charge them 25 and we you know probably break even our most orders um yeah that makes a lot of sense and then can you give me a sense of obviously with any Marketplace The Big Numbers gross merchandise value right volume right over a period of time what was yours is gmv last year so it was uh called two and a half million okay and would you consider that successful year not successful year so it's a consider a success because again we shift it to profitability it's really easy to burn money on the marketplace especially when you're working on a commission you don't have high margins we could very easily raise that gmv the trick is like how do we raise it without burning cash um so it's hard a little bit hard for us because you know we don't have the same economics as a lot of other e-commerce players so we can't go out and just do you know the standard stuff because like let's say like a revolve or another big fashion brand um they're gonna work on let's say 50 60 margins where we're working on 25 at the most um before any of our expenses I'm sure they'll have the same expenses when it comes to shipping and things like that um but they're working on called double the margins they could have double the ad spend so just put that in a sentence shop teaks is your Marketplace you make money there off 30 cut um you did 2.5 million of gmv last year there so what does that work out to like 750 000 of top line revenue there and you'll take you know 10 of that to the bottom line yeah or 30 30 of the 750k to the bottom line yeah but we have you know we pay for all the shipping costs credit card fees things like that is it then you know discounts we give it a 10 discount on the website we pay for that so our 30 turns into 20 yeah um it's definitely not as uh pretty as it sounds yeah I know you're all in one it makes a lot of sense um I didn't say it sounded pretty by the way I'm just trying to understand the margins I hate this business because I had to I don't like dealing with multiple skus I don't like dealing with Hardware I don't you know but takes quite a business all the time um but you're uniquely positioned to do it because you eat your own dog food you came from that world so it makes tons of sense um does that gmv model also include in-store sales or just the virtual shop teaks just the the virtual shop teach in-store sales much higher so including like the whole ecosystem it's like 75 million oh wow okay so you do the majority I mean you do 70 72 million in in-store volume each year yeah we don't get anywhere near you know the 30 cut of that obviously um and that's just you know the the gmv that we like the process through our system yep yep that's the one where like we could multiply 72 million times would you say point five percent or something like that yeah 0.2.5 I mean yeah so on the low end 0.25 that would be what is that 18 million something like that and and and you're cut and I don't know 0.25 not 25 oh oh oh oh oh got it got it sorry 180 Grand yeah way different 100.25 172 million would be 180 Grand of Revenue there interesting where so when you think about expanding the business this year can you increase your percentages or is it all about just getting more gmv so it's all about getting more gmv and Merchants um and we're definitely we have a Services part of the business that came in a little bit after and basically we you know again we take what we're good at and we kind of layer it on top of our existing products so we're really good at web design and call it e-commerce marketing where our boutiques are not so we offer very basic called design email marketing and web design for those boutiques and um you know we charge them for it um so we've been doing that for years but what we're doing now is we're kind of trying to partner with a bunch of our boutiques and take their websites to the next level so let's say you know in my example Dorado nyc.com like shop teeks takes it over runs the website for them all design all the marketing all that stuff they're so responsible for the merchandising the product sourcing and that stuff and can we grow their e-commerce and in that case we take a bigger you know cut and there's no expenses behind that which is we're not going to pay for shipping or anything like that it's just the revenue share so I guess what percent of your last year's Revenue would you attribute to your services arm call it uh 15 20 percent okay so I mean that's not I mean that's not small that's getting up there is that generally decrease or increasing your rear it's increasing year over year but it's uh kind of bittersweet because you know we really want to grow the software because you know we install and as long as the boutique doesn't churn we offer them good support and it's really profitable whereas Services you got to do work every month yeah and we have it down to a science but it's not uh it's not sexy that makes sense how many folks are full-time at the company today so we have um an interesting team we have four full-time in the U.S and then 14 full-time in the Philippines and uh a few Parkers in the US also interesting what functions do you have in the Philippines so customer support graphic design and uh you know other call it random tests interesting interesting all right whatever what do you wish I asked you about that I haven't asked you about something you wish you could talk about but no one ever you know asked about you know I think like why why material retail versus Shopify okay why mature retail versus Shopify so you know what I'd say and what I really believe you know I actually do this my own life is Shopify just one size fits all right it's e-commerce first brick and mortar second it's like kinda jump in and figure it out for yourself whereas material retail is a very specific set of tools or a very specific customer so brick and mortar first e-commerce second everything's gonna be you know I don't want to say handed to you but it's designed specifically for you so you come in you customize it to your liking and it's just ready for you super easy to set up someone will really help you along the way as opposed to shopifying just we really take uh we really take um we take pride in a boutique success because that's where we make more money right when a boutiques grow when a boutique grows we make more money and we can increase the boutiques Sales Online that's where we make our money what's your goal this year Elliot why do you hope to grow Revenue to so we want to end the year with a million five in revenue and um in real Revenue not gmv or anything and we want to uh and 2024 with hopefully 2 million now is that aggressive growth based off my map you make about last year about 750 000 on shop teaks 300 000 on your software business that's 200 customers paying 125 a month that's 25k of monthly recurring Revenue that's 300K there so we're at a million and then you make another 180 can your in-storm volume so 0.25 of 72 million gmv so you are didn't last year you do about 1.2 or 1.3 million already yeah so why not be more aggressive on I mean can you grow faster if we want to take more risks and burn a little bit of money probably so you can grow faster without spending more money there's no way to use creativity to grow faster there's definitely ways to be creative and grow more but we are a very small team right so we really have to be very focused and methodical with what we work on and um we definitely set 2023 at least the first six months we set the table um for the next call two years we did a big re-platform of our Marketplace we did a couple big Integrations for the POS um and now we gotta just take that to Market basically yeah we're rooting for you we appreciate you teaching us about your model and who you're serving uh let's wrap up here with the famous five number one favorite Business book drive by Daniel pink number two is there a CEO you're following or studying um yeah Toby uh loot guy from Shopify sure number three what's your favorite online tool for building material retail um I don't know number four how many hours of sleep do you get every night seven eight hours all right in situation married single kids uh married three kids under five um oh my gosh you're a busy guy how old are you I'm 31. oh you got plenty of energy all right that's fair I don't feel as bad anymore uh what's something you wish you when you were 20 Elliot um just jump in right away it's whatever you believe in just jump in and just pour yourself into it and it'll work out it doesn't work out just keep going at it shop shop teaks was launched back in way back in 2010 they helped merchandise or sell online one of those merchandisers was Elliot's company called door lador nyc.com uh they that company does five to ten million top-line Revenue but eventually he said you know I like the software and I like shop Peaks more let me start Consulting over there before you know it he's now running it as co-ceo of the platform they make money in three ways they'd have a take rate on Revenue that goes through shop teak they sell software called material retail that folks pay 125 bucks for again these these brand boutiques use it to grow their business and then lastly they actually ship POS systems and they actually take a smaller percent uh flowing through those systems 72 million in gmv through those systems last year hoping to grow their revenue their total revenue not not like some big gmv number but their actual Revenue to about 1.5 million this year with a small efficient team which we love with four full-timers we'll see what happens Elliott thanks for taking us to the top thank you it's great meeting one more thing before you go we have a brand new show every Thursday at 1pm Central it's called Shark Tank for SAS we call it deal or bust one founder comes on three hungry buyers they try and do a deal live and the founder shares back-end dashboards their expenses their revenue our poo CAC LTV you name it they share it and the buyers try and make a deal live it is fun to watch every Thursday 1 p.m Central additionally remember these recorded founder interviews go live we release them here on YouTube every day at 2PM Central to make sure you don't miss any of that make sure you click the Subscribe button below here on YouTube the big red button and then click the little bell notification to make sure you 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