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Building the Foundary – Part II: The Future

November 17, 2010 by

Hayneedle’s Doug Nielsen, left, sits among products that have been or will be sold on the Foundary. Joining him are Steve Dee, middle, and Jason Goldberger, right. Photo by Danny Schreiber.

This is the second article in a two-part series. To read the first article, see: Building the Foundary – Part I: The Backstory.

In less than six months, the Foundary has gone from a proposed idea to a successful home flash-sale site standing alone but also shining a light on another former startup company, Hayneedle. There are distinctions between the two sites and looking forward, the team at the Foundary hopes to keep the Foundary content fresh and unique from Hayneedle.

The main goal right now is getting the Foundary on its feet and up and running. The team will continue to examine customer responses in sales and make decisions on where to go from there. In one month, the site has seen an increase in signups to total over 50,000 users. Compared to the number of users on Hayneedle, the Foundary seems incomparable. However, Hayneedle began as a small startup and now has over 1 million customers, most of whom are active users. However, there are some overlaps. About 60 percent of the Foundary’s content is exclusive to the Foundary.

The balance comes from utilizing Hayneedle’s resources while still maintaining an independent Foundary site. Everyone that works at the Foundary also works for Hayneedle and balancing that infrastructure is a continuing task the team faces.

“Because it’s the same team, we can take all of the learnings we have on the Foundary and take them over,” said Steve Dee, chief information officer for Hayneedle and co-founder of the Foundary. “The Foundary is a separate entity and not a test bed for Hayneedle.”

Expansion has and continues to occur within Hayneedle and the Foundary. The customer call center recently relocated to a new location in Chalco, Nebraska and a new distribution center opened in Ohio. Plans are also in place to build a new building in Omaha to house Hayneedle and the Foundary.

Competition is also a factor the Foundary faces. The Foundary does have similar sites (One Kings Lane and Overstock) to compete with but the team hopes that as the site continues to grow, it will further establish its own independent name and expand. Eventually, Jason Goldberger, senior vice
president of marketing, merchandising, and site for Hayneedle* and co-founder of the Foundary, said he would like to see a site where there are so many products to choose from that the team has to make hard choices on which ones to feature in daily events.

“The goal is that we have so many exciting products that we’re making hard decisions,” Goldberger said. “We’re starting to see that now.”

Another goal is continuing to target the right customer. There currently isn’t a customer response section or comments section on the Foundary site. Dawn Block, vice president of merchandising for Hayneedle, said by the time customers could comment on a particular item, the item may no longer be available. For a site that moves quickly, feedback through comments and similar customer responses didn’t seem logical for the Foundary.

While the Foundary has advantages and resources to gain from Hayneedle, Hayneedle also has benefited from the Foundary. Doug Nielsen (left, photo by Danny Schreiber), CEO of Hayneedle, said one of the ways Hayneedle is benefiting is they’ve taken an entrepreneurial project with a strong startup mentality and see how it works into the development and growth of Hayneedle. He said the Foundary was going back to Hayneedle’s roots of being a startup itself.

Nielsen believes that although the Foundary is an independent site, it can play a role in Hayneedle as Hayneedle becomes a larger company.

“Hayneedle’s going to be a pretty significant company,” Nielsen said. “Early on, the Foundary is going to be a very small part of what we do but we’re really bullish that it can be a significant part over time if we make the right investments.”

The Foundary has a pretty stable product base since it brings up new vendors every day and the Foundary benefits from that newness. Nielsen said while Hayneedle is benefiting from the Foundary’s entrepreneurial drive, the Foundary gained expertise from Hayneedle that will make it possible to bring over Hayneedle customers to the Foundary.

The Foundary’s focus on networking will continue to shine the spotlight on the flash site, Nielsen said.

“We definitely see the landscape has shifted the last few years,” Nielsen said. “Having a social business model is sort of baked into the Foundary’s way of doing business.”

Hayneedle and the Foundary continue to grow and one of the things they continue to benefit from is the increased opportunities in jobs.

“We hope that our current employees are able to take opportunities like this and step up,” Nielsen said. “In the previous nine years, it’s all been about launching new stores. We’ve always had this entrepreneurial culture of how to create a store out of thin air.”

Nielsen said because of the continued expansion of both Hayneedle and the Foundary, there are no immediate plans to raise money for funding.

“We have no plans to currently raise money,” he said. “We’re a fast growing company. I don’t know what the future will hold but we don’t have any plans to raise money right now.”

The Foundary’s success shows how a startup can thrive in the Omaha market, Nielsen said. He hopes more businesses will continue to establish themselves in Omaha since he believes there’s a need for more local companies to make a name in Omaha.

“The biggest thing to us is to make sure that as we launch this big initiative that we don’t take our eye off the Hayneedle ball,” Nielsen said. “I think we need some proof points in town (Omaha) here.”

*Update 9:30 p.m. – When published, article incorrectly stated Goldberger’s title, it should be “senior vice president of marketing, merchandising, and site.”

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