Brad Feld has a behind the scenes venture capital perspective on how AuctionDrop went from five local stores to 3,400 locations nationwide over night without franchising:
Within a year of being founded, AuctionDrop had five stores and had run over 14,000 auctions. AuctionDrop had focused obsessively on pleasing its customers - which is one of the keys to success on eBay - and had a superb rating. This has enabled it to be the first (and currently only) eBay Drop Off Center to receive Titanium PowerSeller status.This wasn’t nearly enough for Randy. We all agreed that this was working and wanted to go national. Randy wanted to go national. eBay wanted us to go national. We wanted to swing for the fence with this investment and go national. Randy had two approaches - build out a national footprint ourselves or create a franchise model. For a variety of reasons, neither of these were compelling - building a national footprint was incredibly expensive (”That’s a scary as shit amount of money required,” said one of my partners) and would take too much time; a franchise model seemed marginal from a financial perspective and lacking from a quality control perspective (which we continue to believe is key to success on eBay).
About four months ago, I got an email from Heidi saying “Randy is talking to UPS about doing a deal where all UPS stores will be AuctionDrop enabled. We’d be national overnight and it’d be a huge deal for UPS since they want to continue to expand services through the stores.” This is the essence of the kind of thinking a VC wants. Goal = be national. Overcome all barriers - figure it out - then do it.
A month later Randy had a signed deal with UPS.
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