How Whiplash CEO James Marks grew Whiplash to $9.6M revenue and 400 customers in 2019.

just got done editing this interview you guys are gonna love it before i do that though i want you to know that i'm going to be in the comments for the next 30 minutes or so answering your questions if there's additional questions you want me to ask the ceo next time i interview them leave them below or if you're just loving the data points i get ceos to share click the thumbs up button below that's your way of telling me you're loving this stuff and i'll get you more of it additionally again i'll be in the comments answering any questions you have all right for 30 minutes enjoy the interview hello everyone my guest today is james marks he's a serial entrepreneur with multiple successful exits focused on the intersection of design music and commerce now building whiplash james ready to take us to the top i am let's go all right so the website is getwhiplash.com what's the company do whiplash is an e-commerce order fulfillment solution so people put their products in our warehouses we pack it up and ship it out when they need to when they need it ordered are those warehouses on your balance sheet they are not so originally we opened those warehouses ourselves and we owned and operated them and then we switched to a network platform after a few years when we realized companies were already doing a great job on the physical side and what they needed was good software to kind of bridge that gap okay so you own and operate so how many warehouses did you own and operate for a period of time i think we were up to three when we got out of that part of it and we pivoted to the network model and today we've got about 18. okay and how many how much square footage were those warehouses all together yeah so ours were relatively small i think we started we the first one was like 500 square feet and then they grew and then we were up to about 16 000 square feet when we crossed all three yeah the largest was 16 000 so we was about 20 000 in total and that's when we realized it wasn't our game okay and so with the network partners and now we've got you know like 800 000 square feet right well so what'd you do did you sell off those three warehouses yeah we so we sold them to a they're basically friends from one of my previous businesses and said hey why don't you guys set up a llc and you'll operate these as part of the network model uh that was maybe three years ago it's gone pretty well okay so now you have 18 partners you're not responsible for physical locations repairs property taxes etc what's the relationship like with these partners so that was the surprising thing is that the partners are in the business to sell fulfillment services and so they look at us like a customer and so we're actually just buying those services from them um we're known for having a good software and being a little bit more in tune with what the e-commerce needs so we've got you know integration already built to shopify we already know how to use the right shipping methods and so it's actually fairly positive they see us as making them relevant as the switch happens to e-commerce but what do you do do you do you buy x percent of their warehouses every month it's a fixed fee or is it variable or yeah it's variable so we kind of go into it together so we're going to bring our software and our customers and usually record an office session of the warehouse to do a trial and then we uh it's it's all you know percentage of revenue based oh interesting okay so i guess let me role play with you i'm your friend who bought those 20 000 square foot of space you say hey friend i want the back left corner it's a thousand square feet to run a test in i can't pay you anything up front but i think i'm going to put a million dollars of gmv through this part of the warehouse every single month and i'll give you one percent of it you promise that or that sounds good but then you don't do any gmv for whatever reason demand's not there what happens so those relationships where you know maybe we miss the opportunity um we would end up closing that section and you know it's like a failed failed launch basically we've had relatively few of those but you know because warehouses have the space already and it's not like we're saying okay commit this to us for a year and maybe we'll do something down the road it's you know two months and you know we get a small experiment companies are you know we find the right partners who are hungry to do that kind of thing okay and did i get it right i mean is it is it one percent of gmv typically is it a percentage gmb model it's not a percentage emv so fulfillment works on usually you've got like a fixed handling fee that's you know we have like a retail rate that we charge our customers and the wholesaler that we're going to pay to the warehouse partners so it's and it's reflective of you know standard things in the industry like how many orders are in and how many items are in an order um it doesn't get into gmv and it's it's more of a you know we set those rates based on tiers for how large the customer is so you might have you know a customer that's shipping 100 packages a month is going to pay one set of rates where a customer that's shipping you know 50 000 packages a month will pay a different set of rates yeah so let's look at your medium plan right in the united states a thousand orders per month per package is 2.25 and then if you go up to you know add seven items to that order it's only 19 cents per additional item that's what you mean by the variable pricing yeah exactly and then it's tiered per per customer category yeah interesting you know the price that you see on the site it's really great to start a conversation and it sort of anchors things you know the reality is that e-commerce companies are all a little bit different you often have you know some regional player who maybe doesn't have the tech but they're hungry and they're trying to you know put together some special pricing package so we do end up tuning those to a degree and you know we play that there's a little bit of a as a platform we can choose you know what warehouse the product is going to go into we can choose who's a good match for where the products are coming from and going to and so we can load balance it a little bit and sometimes provide a little bit of tuning on the pricing to to win the deal for us and the partner can you throw your weight around because you have so much volume to get better economics so i guess the real question i should ask is over the past 12 months how many total items have you shipped so the total items we've shipped over the last 12 months you know it's multiple millions is we can throw our weight or we don't really throw it around we we look for things that work for everyone and say hey you know if we could do this together we'd win this deal together and it's more opt-in we're not going to bully somebody and say you know you have to do this if if you want this other thing to happen okay when you say total item shipped you're talking like you're talking like 3 million over the past 12 months or more like 10 million i'd say off the top of my head i think it's probably in the 3 million range okay that's good and across how many i guess unique brands or customers like beta brands yeah so our list right now is probably around 400 customers okay so pretty good there's there's some beta brands in there there's you know some some smaller folks and then you know some of my favorites are um the smaller folks who don't necessarily push crazy volume through but they're really great brands like the moth podcast right where we're doing their their merch and the numbers aren't going to blow anyone's doors off but it's it feels great to be a part of their story there's there's a lot of brands out there so what are they what are they sending them off podcast uh i haven't looked at their account in a minute but it's t-shirts coffee mugs tote bags the kind of you know the kind of stuff you'd expect from a radio show interesting do you see power laws in your customer base so does your like your top customer how much do they send annually through you yeah it's i don't want to break it down exactly but there's something like the 80 20 rule where the people who can drive volume really drive volume and when we've had to we've had to back off from some of the smaller customers a little bit there's an inversion where the less volume you have the harder customer you are there there's something about i don't want to get too diminutive about it but there's something where small customers are sometimes small for a reason and it's because they're maybe they're not e-commerce pros maybe they're better at something else and so they tend to have more support more more handholding through the process and just becomes literally expensive for us to support it and then you bring somebody else who's you know maybe shipping 50 000 orders a month there's a lot more ability on their side yeah they're saying james just shut up and get it live let's go yeah exactly and they've got you know developer resources on their side to actually spend stuff up um you know so through the network we're working with you know companies like figgs for example they're they're doing um tons and tons of scrubs and doing it very very well and so they've got a lot of skill on their side to...