Putting A Price Tag On Your Dream?

Can you put a price tag on a dream?  If you’re Woot, a Carrolton, Texas based online retailer, your answer is “Yes.”  And probably also “Yippee!”

For those of you in startup mode, you may take some inspiration from Woot’s example; in six years, they were able to turn their quirky style and entrepreneurial vision into big bucks.  About a week ago, Woot was acquired by Amazon for $110 million in cash.  You may also take note of some other important points about Woot’s example.

If you are raising funds, or have done so in the recent past, you’ve probably been asked to put a price tag on your dream.   Venture funding is based on either an explicit or implied valuation, and that valuation probably revolves around your own pro forma financials, but also on comparable companies.  So Woot, and Zappos (who was bought  ten years after founding for a higher price in to the Amazon fold prior to Woot), can provide some grist for your valuation discussions.  But Woot provides other interesting facts to ponder.

Woot’s quirky (and often, in our opinion, hilarious) style and its unique premise “one deal per day” probably didn’t resonate with everyone.  But the one deal per day concept was successful has now been adopted by many other companies such as WhiskeyMilitia and Ideeli (though the latter is a members only online retail store).  Each day, Woot puts out a product each day with finite stock.  Visitors to the site, if interested, can buy the product at wholesale prices, for less than buying it at a store. Woot has copied the model in other product lines selling wine, shirts, and kids’ necessities.

Woot began its business in 2004 with a grand total of $2.3 million in revenue; by 2008, it had grown exponentially to $164 million (that is not a typo).  The Founder and CEO of Woot, Matt Rutledge, was a successful wholesaler before he started the website; Woot very likely built on the experience and contacts the founder had in the industry.

For Woot employees, the best part about the acquisition is that Woot will be an independent subsidiary of Amazon, like Zappos and audible.com.  So the organizational culture, which has produced innovative ideas and productive employees, should remain in place. Or, put another way, they’ll still get to create videos like this:

On the social media and marketing front, Woot provides lots of ideas and case studies relevant to other businesses; among their various initiatives, they put out special offers to their Twitter followers, called “Happy Hour.” During “Happy Hour” a product is offered for an hour exclusively to Woot’s Twitter followers.  As a result of innovative practices like this one, Woot’s Twitter account is among the top hundred followed.

So it may very well be true that you can put a price tag on a dream.  Or you can temporarily borrow Woot’s until you get there…just steer clear of the monkey.  That’s taken.