During the Internet heyday of the year 2000, a child-sized Star Wars space ship hung suspended over the receptionist’s desk at the offices of ChannelAdvisor, then known as AuctionRover.

As 2002 begins, ChannelAdvisor does not expect profits for another three-quarters and relies on the deep pockets of its serial entrepreneur founders for part of its continued support. On Monday, the firm disclosed it had closed on $5.7 million in new venture capital.

“We’re convinced this is a billion dollar company,” says Scott Wingo, the company’s chief executive officer and co-founder.

But no one has forgotten the Star Wars spaceship. No longer a ChannelAdvisor office fixture, it was an apt symbol for the way the company rocketed from founding to funding to acquisition in less than a year.

Wingo and partner Ari Buinevicius founded the company in late 1999 with $1 million of their own money. They quickly acquired a modest $3 million investment form Draper Atlantic, the East Coast arm of Draper, Fisher, Jurvetson. AuctionRover then raced to an impressive exit, selling to Pasadena, Calif.-based GoTo for what was then $175 million in stock in May 2000.

“It was hard to believe, selling for so much so soon,” Wingo recalls during an interview with Local Tech Wire.

Working on number three

ChannelAdvisor is Wingo’s third start-up. He started the company with longtime partner Buinevicius, 32, and Mack, the black and white Border collie who used to greet visitors at the door. All are veterans of the two previous start-ups.

Mack, now 11, was only a puppy when Wingo and Buinevicius held their first positions at start-up software company Bristol Technology, in Danbury, Conn. They left Bristol and founded Stingray Software, which sold developer tools in $3,000 packages. Rogue Wave Software bought Stingray for $21 million in 1998.

The millions he earned from sales of his software companies help give his current venture stability as it heads toward profits he expects in a year.
Wingo, who regularly attends major Council for Entrepreneurial Development events, is known in the Triangle not only as a successful entrepreneur, but also as one who often mentors others.

A millionaire by age 30, Wingo, now 33, has authored programming texts and readily admits that he admires Bill Gates’ business acumen and occasionally borrowed his successful business tactics.

Wingo, who usually dresses in high-end geek – plain but high quality shirts and slacks – is also a Star Wars fan. His love of the film influenced his personal philosophy (“Do, or Don’t do, there is no try,” Yoda). It also led directly to the creation of his current company.

After Rogue bought Stingray, Wingo went auction-roving at eBay for Star Wars memorabilia such as the bigger-than-life models of C3PO, Darth Maul, and other characters from the film which decorated the AuctionRover offices. But most of the stuff he wanted lurked on smaller, little known auction sites. He thought, there has to be an easier way to find things. Shortly thereafter, AuctionRover, now ChannelAdvisor, was born.

GoTo sheds the company

As part of GoTo, the company took down the spaceship and moved the Star Wars figures to less visible spots in its 15,000 square foot offices near the Airport. Then, GoTo shed the company when it saw sunny profits on the horizon and ChannelAdvisor as a rain cloud.

ChannelAdvisor sells software that helps online auction merchants create a brand, track and manage sales across multiple sites, do customer service and integrates with existing billing and back office functions. Nowadays, integration costs are down to from $10,000 to $25,000, down tenfold from five years ago, thanks to XML standards, Wingo says.

ChannelAdvisor sells two versions of its product. The professional version, aimed at small businesses, goes for $20 a month or $180 a year. The Enterprise version sells for $2,000 to $5,000 a month and a percentage of sales of from 5 to 15 percent.

ChannelAdvisor has 50 Enterprise customers, including IBM, Kodak, Handspring, and Rollerblade, and 3,000 small business customers, Wingo says.

“We’re really far ahead of our competitors,” he adds. “We spent a lot of time on the Enterprise stuff. I think we’re at least 19 months ahead of everyone else.”

Part of the company’s early success stemmed from a deal it cut with eBay when other companies trying to link online auction giant kept finding themselves at odds with it instead. ChannelAdvisor has maintained and extended that alliance, recently adding five of eBay’s international sites to those it helps sellers use more profitably. (eBay also was one of the investors in the new round of financing.)

The company’s other strategic alliances and customers include Santa Clara, Calif.-based Ingram Micro, Watsonville, Calif.-based West Marine, Omaha Steaks, eBay, Amazon.com, and Yahoo auctions. Competitors include San Francisco-based CommerceFlow and AuctionWatch. Ingram Micro switched its auction management business from AuctionWatch to ChannelAdvisor in November.

Tony Gasparich, vice president of Internet Services at huge sporting retailer West Marine, told InfoWorld in September that the company began selling on eBay after its own Web site failed to draw enough customers. Gasparich said that eBay too had its drawback. “It takes ten or 20 minutes to post just one item on eBay,” he said. “Imagine posting 500 items a week.”

ChannelAdvisor accepts a certain number of units from its customers such as West Marine, then does all the work to post them, manage them, and send an email which redirects them to the company Web site, where Gasparich said, “They very well might buy something else.” He said the company is more than happy with its relationship with ChannelAdvisor and the results it helps produce.

Not all news has been good for the company. ChannelAdvisor slashed its staff from a high of 70 to 40-plus during the market downturn last year. “We want to get to profitability by the third or fourth quarter, so we have to minimize headcount,” Wingo says.

“We’re the market leader and continuing to grow that lead in this recession,” he adds. This is my passion and I don’t have much visibility beyond it. I’m a very focused guy.”

For LTW’s story on ChannelAdvisor’s new funding, click here:
http://www.localtechwire.com/article.cfm?u=73