How One Ecommerce Company Got Started

Many freelancers start their one person business with the idea that someday they’d like to expand and become something more. Some freelancers go on to start a full design agency, while others prefer to make their own products to sell to clients.

I’ve know the company SumEffect software for over a year now and they make an awesome product called CoreCommerce. SumEffect software is an excellent example of a company that makes their own products.

I’d heard stories that the two owners Nick McDuffie (bottom middle) and Matt DeLong (bottom right) used to work for a regular design agency before starting their business from scratch. They were able to bootstrap the business together until they become a full-fledged small business, and one of Nashville’s best businesses.

I know that a lot freelancers dream about becoming a bigger business so I asked one of the owners, Matt DeLong, to take some time for an interview for us. If you’re thinking of transitioning from freelancing to a small company, stay tuned and I’ll share what I learned from Matt. (We already know that many great businesses start with freelancers.)


Getting Started in Ecommerce

Here’s my interview with Matt:

1. Please give a short summary about SumEffect. Roughly how many employees and customers do you have?

Matt: We provide an affordable way for you to start an online store. As of 2010, we have about 15,000 customers and will complete 2010 around $1.4m and expect close to $2m in 2011.

SumEffect currently employees 15 employees, with seven working in support, three in sales, three programmers and two designers.

2. What did you do before SumEffect?

Matt: I was a web designer for Interaccess/eBiz America in Nashville. Nick was a sales guy for the same company.

3. How did the idea for creating the company come around?

Matt: I noticed a lot of clients asking for ecommerce and there weren’t any good solutions back in 1999 to offer them.

4. What did it take to start the company? Did you have to take out any loans or find any investors?

Matt: $8k on a Visa to get us through the first several months.

5. When did you hire your first employee? How did you decide you could afford one?

Matt: Nick was selling more programming than I could keep up with in a month, so we hired a programmer. We figured we may be losing out on business because our turn-around times were getting longer and longer.

6. Do you ever hire freelancers or outside consultants? How do you know whether to outsource or to hire?

Matt: Yes, we’ve done both. We use contractors for temporary help with projects and hire full-time staff when it’s a more permanent need.

7. What was one of the biggest mistakes you made when starting up? How would you have avoided it if you could go back?

Matt: Too many to chose from. LOL.  After we started accepting credit card payments online around 2002, we had so many people ordering and downloading digiSHOP using stolen credit cards that our credit card processor at the time (card service intl) cancelled our credit card processing account and we were dead in the water for a few weeks. We should have implemented some of the anti-fraud tools that we use today back then.

8. Would you sell the company if Google offered to buy it for millions of dollars? If so, what would you do after the company sold? If you wouldn’t sell, why not?

Matt: I guess it would depend on how many millions. $3 million–No! $50 million–yes. Not sure what I would do with myself. I’d assume Google would require us to sign a non-compete agreement, so it would require us to walk away from everything we know how to do–our experience–everything…so it would have to be enough money to make it worthwhile.

9. What is it that you do every day?

Matt: No day is the same. We pay a lot of attention to our competitors and review our monthly progress towards our goals every week. This week, we are finishing up our 2011 planning and scheduling some events we may sponsor in the next 12 months.

10. What was your first cart as a company?

Matt: digiSHOP

11. What’s the difference between the two carts?

Matt: digiSHOP is a downloadable eCommerce shopping cart written in PHP/mySQL that starts at $349/license.

CoreCommerce is a hosted eCommerce shopping cart that starts at $19.99 / month.

12. What’s the most important thing SumEffect prides itself on?

Matt: Our 93% customer satisfaction ratings with our customers.

13. What do you do to set yourself apart from the competition? How do you keep track of your competition?

Matt: Besides the 93% customer satisfaction, we also release new software features every 3 weeks. Most companies do this once or twice a year. Google has a lot of tools to help us keep up w/ our competitors.

14. Do you ever read any business books or go to any business functions?

Matt: We read a lot of books, but haven’t done much with seminars or conferences. Do you know how many books you can buy instead of going to a $2500 conference? Experience is always the best teacher anyways.

15. What one piece of advice would you give to someone wanting to start their own company?

Matt: Make sure your concept is proven before committing to it full-time. We’ve seen too many people quit a full time job to pursue an untested idea only to discover that no one wants it–this can be mentally and financially devastating to entrepreneurs.

16. Is there anything you wish you could change about the company?

Matt: We make a lot of changes all the time, but wish we would have started CoreCommerce about five years earlier.


I’d like to thank Matt for taking some time to let us get a peek at how a software company works. If you’d like to learn more about CoreCommerce, you can visit their site at www.CoreCommerce.com

Your Turn

Do you have any questions for Matt about starting your own company or building software? Ask them here and he’ll answer!

Comments

  1. says

    Thanks, always great to read some experiences of those who have bit the bullet and taken the risk to stake it out on their own.

    In this case, I’m really interested in the sales aspect. Any details on how what approach they used to generate so many sales so quickly?

  2. says

    Drew:

    We currently have a large marketing budget to generate our current leads, however, it didn’t start that way back in 2001. We had to attend events and make lots of phone calls to make some contacts–to generate business. It was a slow process, but unless you have a marketing budget, there aren’t alot of choices.

    Think about it–the difference between a hobby and a business — is marketing!

  3. says

    @Matt, thanks for the response — I should have addressed the question to you if I knew you would be checking along.

    I can totally relate to the bootstrapping of initial marketing. That’s always something I wonder about — what cost-effective sales & marketing strategies have startups used before a marketing budget ever existed?

    Nowadays I take advantage of some networking, social media, and SEO to get “something for nothing” from the get-go, which works well. But I’m interested to hear what others’ experiences have been, too

    As you said, “we’ve seen too many people quit a full time job to pursue an untested idea only to discover that no one wants it.” On the same note, it can be a shock to go all in behind a good idea, only to discover that no one knows they want it.

    Anyway, keep up the good work!

  4. says

    @Drew:

    You will need to put some thought into it. Maybe you can subcontract some work through local webdesign/SEO firms (make some contacts). As a SEO company, can you not generate traffic through your own SEO efforts? That’s something you have in your favor, that we didn’t have back when we started.

    MD

  5. says

    @Matt, Yes, I’ve had success using those approaches for the SEO biz. But what I really wonder about are sales and marketing applications for the more back-burner projects that don’t lend themselves quite so well to the same type of marketing ;)

    I enjoy hearing about others’ approaches because, as you’ve mentioned, marketing budgets can be virtually nonexistent at the onset of a startup. So, to waste one’s efforts with a particular approach that isn’t successful can be a devastating misuse of time, energy, and capital.

    By hearing what has and hasn’t worked for particular entrepreneurs, myself and others are able to make more informed decisions about how to spend our marketing efforts — before there are resources for a bigger budget. Thanks!

  6. says

    @Drew, in terms of marketing. You don’t need to have a huge marketing budget. What is most important is to try things incrementally. Once you find out what works then start expanding that marketing effort. A lot of what you can do for marketing depends on the size of your accounts. If you are trying to close $50,000 deals, that is much different than $30/monthly. Make sure you know where you clients will be. For example, if you sell seo services to small businesses, then perhaps going to a tradeshow where small businesses would be attend would be more beneficial vs going to a pure technology tradeshow. Best of luck!

  7. says

    @Matt I tested coreCommerce and has great features. I couldn’t help notice that for multilingual sites you don’t offer different urls, so if we need to link directly to a Spanish version for example, it is not possible.
    Is this a feature you ever plan on including?

  8. says

    the article is really awesome. In this case, I’m really interested in the sales aspect. Any details on how what approach they used to generate so many sales so quickly?
    Quite interesting with very good examples and facts.
    Read the article and love it….

  9. says

    @ Matt

    I used to spend a lot of time on the phone with you guys back in 2003 and 2004 while working on digishop customizations. I mainly spoke with Nick, but you were always available for support. I hope I didn’t drive you guys crazy.

    I have a project I am working on now that I am trying to sway in the sumEffect way. I will have to check out core commerce.

  10. says

    Very positive article! Our company has the similar start-up story. It wasn’t easy to start up, and we didn’t earn lots of money at the beginning but now we are offering our services almost for two years and have lots of orders and work. Don’t afraid to start your business if you are a professional and can provide high quality service.

  11. says

    Have you ever thought about publishing an ebook or guest authoring on other websites?
    I have a blog centered on the same suubjects you dicuss and would really like to
    have you share some stories/information. I know my visitors would enjoy your work.
    If you are even remotely interested, feel free to shoot me an e-mail.

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