If AMZN goes into misc. retail, they may see competition from Value America.
( valueamerica.com - plans to go IPO soon )
The Daily Progress Charlottesville, Virginia
Saturday July 11, 1998
$25 Million Invested in Value America
Microsoft C0-founder Allen Among New Partners of Online Retailer
By BRIAN ROOT
Daily Progress staff writer An investment group led by
Microsoft co-founder Paul Allen has put almost $15 million
into Value America - the Albemarle County-based online
retailer that is enjoying exponential growth.
Value America, which sells brand-name goods strictly through
its Internet site, began operating in March 1997 with a
handful of employees. Now, the firm employs about 160 people
and is valued at close to $300 million, according to Craig
Winn, founder and chief executive officer.
Earlier this year, when Allen first expressed interest in
buying part of the company, Winn said he journeyed to
Allen's Washington state home to meet the one of the
nation's richest men.
"It was amazing to meet him. He is very much a developer -
always interested in the next big thing in bringing people
and products together," Winn said, smiling at the memory.
"He told me that when he and Bill Gates started Microsoft,
they envisioned companies that do exactly the kind of thing
Value America is doing now."
Winn envisoned a business like Value America more than 20
years ago, when he wrote a corporate strategy that called
for selling goods via an as-yet-unknown method of
transmitting sound and pictures. He put the plan aside - to
wait for technology to catch up to his imagination - and
worked in conventional areas of retail. He and his family
moved to the area from California in 1996 and got the store
off the ground.
Allen's Vulcan Ventures Inc. bought a 5 percent interest in
the company - for slightly less than $15 million. Other
investors, including former Democratic National Committee
chairman Charles Manatt, bought an additional 3 percent of
the company. In all, Winn said, the private equity transfer
brought about $25 million to the company, all of which will
be spent on advertising.
William Savoy, president of Vulcan Ventures, called Value
America a company "that isn't just spinning its wheels [but]
already has traction."
A prepared statement released Friday quotes Allen as having
a desire to make Value America "the Microsoft of
[electronic] commerce."
"Value America has created the most effective online
experience I have seen," the statement quotes Allen as
saying.
Savoy also invested $500,000 of his own money and now sits
on the Value America board of directors.
In just more than five months, the company has spent a
dizzying $100 million on advertising alone - including a
slew of full-page ads in major newspapers and magazines and
spots on cable television networks.
Winn called the private equity transfer - unlike a public
stock offering in that the company has the option of
selecting who can buy a stake in the company - a success,
but only the first step in the process of raising enough
capital to keep the company growing.
The next step is a public stock offering. On July 2, Winn
said, the company notified the federal Securities and
Exchange Commission that it intends to go public. Federal
regulations prohibit Winn from saying much about the stock
offering, but he said he expects to begin pitching the
company to financial experts in the fall, as a precursor to
the stock offering.
"Going public is really the only way to raise the kind of
capital we need," Winn said.
The Value America site on the World Wide Web now pitches
more than 100,000 products from more than 500 brands,
according to spokeswoman Susan McCulley. Winn said he
envisions one day offering more than one million products -
including Value America-brand computers that could be
ordered, built and shipped to customers in a matter of days.
Winn estimated the company now sells about $1 million worth
of goods every three days.
The market for electronic commerce, according to recent
studies, is considerable and is getting bigger. The federal
Department of Commerce has estimated that consumers
worldwide will spend as much as $34 billion per year by
2005.
To take advantage of that market, the company is close to
completing a deal with Proctor & Gamble to sell the myriad
products offered by the conglomerate - everything from
diapers to toothpaste - Winn said.
Also in the works, he added, is a deal with Yahoo! to offer
links from the popular Web browser home page to the Value
America site.
"It's a pretty amazing time for us," Winn said, smiling.
"There's a lot for me to keep track of."
The company's growth over the last several months has taken
a toll on office space. The firm, which has long since
outgrown its 9,000-square foot building on Commonwealth
Drive, has rented five office buildings in the Hollymead
Office Park, McCulley said. The search will continue for a
permanent home, she added. |
