Wharton Journal: You launched OrderGroove two years ago. Tell us the story behind the company. How did you get started?
Greg Alvo: We actually got started in 2008 bootstrapping, as it was a challenging time to raise capital during the heart of the recession. The goal was to build a platform that enables eCommerce sites to maximize customer retention and lifetime value by identifying, interacting and deepening relationships with their most valuable customers. It was a bold mission, but felt like a massive opportunity given all the SaaS platforms focused on acquisition and conversion. We wanted to be the experts in amplifying these front-end efforts by generating more revenue per customers via subscriptions.
We initially built a prototype and launched it on a few sites before realizing it wasn’t scaling properly. However, the lessons learned were incredibly valuable.
In 2009 we raised a Series A round and in early 2010 I met our CTO who was able to take all the complexities and hard lessons learned to build our dream platform – the one we have today. From there, our terrific sales team has been laser focused on finding great clients – the ones that help you build your business. We were very selective of who these first clients were. It was – and remains – important for us to find clients that we could learn and grow with. By finding the right clients and building our business around them, we were able to build a platform and team that could service the mass eCommerce market that we’re proud to be serving today.
WJ: OrderGroove’s own success appears to hinge on the continued success of the subscription e-commerce model. How do you see this model evolving in the next couple of years, beyond the first wave of success led by group buying and flash sales sites?
GA: I think there will be some success stories amongst the consumer subscription commerce startups out there leveraging the subscription model as a differentiated means of building their brand. However, I think the true successes will lie with established brands and retailers looking to maximize the lifetime value of their most valuable customers via subscriptions. It makes sense. Retention and LTV are metrics that retailers have struggled with for years! The subscription model, when done right, can leverage the massive customer bases and marketing budgets established retailers already have in place to profitability grow spend per customer. Everything’s becoming a subscription these days and it’s a natural evolution of commerce to begin shifting towards this model. It’s more convenient for consumers and it’s certainly more valuable for businesses that are able to lock in their most valuable customers.
WJ: How does OrderGroove differentiate itself from a handful subscription billing vendors like Zuora, Aria Systems and Recurly?
GA: The difference lies in the target market and our respective products. Zuora, Aria Systems and Recurly deal with simplifying the backend complexities behind subscription billing for SaaS and service businesses, a significant opportunity. OrderGroove is focused on offering a subscription commerce platform for eCommerce sites and retailers. With the difference in target markets comes an entirely different platform full of different products and feature sets. Nailing a B2C customer experience requires wowing the customer throughout the entire subscription lifecycle. This is a challenging science that can mean the difference between a successful program and a lackluster program. Our laser focus on the eCommerce market has allowed us to streamline the demystification of these complexities for our clients.
WJ: Your customer base comprises mainly of top-shelf retailers like L’Oreal, Johnson & Johnson, Jockey and Lot18. Do you have any plans of going after the smaller retailers / online startups, or are you leaving that market up to guys like Magento (also a customer) to fill?
GA: We’ve been fortunate enough to partner with some terrific brands like the ones you mentioned. We also partner with smaller brands, including many on the Magento platform, if we feel we can make a real impact on their business and vice versa. It’s all about the partner for us! We look for partnerships where we can learn and grow together and where the economics make sense for both of us.
WJ: Congratulations on recently closing a $7 million funding round! What’s next for OrderGroove post-funding? What new and/or upcoming developments are you most excited about?
GA: Thanks! The two most exciting parts of building our business is partnering with fantastic clients that we can deliver exceptional value and service to, and recruiting an all-star team. Executing and innovating within our current opportunities remains our focus post-funding, as we’re just scratching the surface in terms of subscription commerce applications and innovation.
WJ: I understand that Wharton’s very own Prof. Peter Fader is in your advisory board. Can you tell us a bit more about your experience working with him?
GA: Professor Fader is fantastic! He is one of our biggest fans and a huge proponent of the subscription model. You’d be hard pressed to find someone that understands the true value of subscription businesses better than Professor Fader. He’s devoted much of his time to truly understanding the importance of customer retention and lifetime value, two metrics that we directly impact for our clients. As we continue to build out our models, working with Professor Fader to make sure we have a sound approach is key. In addition, making the most out of our data to maximize the value we deliver to our clients is a key area that we’re working with Professor Fader on.
WJ: Any words of wisdom for Wharton MBAs who are looking to launch a startup during their time in business school?
GA: Just do it! If you have the confidence in yourself and belief in your idea, you have a winning recipe. Most people will tell you it’s a bad idea; don’t listen to them. Listen to your gut. If deep down you truly believe that you’re onto something big, follow your gut. If I listened to all of the OrderGroove critics four years ago, we would have been out of business many times over.
Also, surround yourself with advisors that have been where you want to go. Dream big. Write down who your dream advisors would be and then go out and get them. Make sure they’re hands on and not just a big name.
In my opinion, the single most important key to success in entrepreneurship is persistence. It’s amazing what you can overcome and achieve through persistence.