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When CustomMade co-founders Mike Salguero and Seth Rosen bought the custom craft company’s URL from a Maine wood worker in 2009, the site had 325 makers and saw a fairly strong amount of traffic.
Today, the online makers’ marketplace powers more than 12,000 artisan profiles and sees over one-million organic visitors each month.
The stock market had just epically crashed when the committed pair of co-founders were finally able to convince the original owner to sell his business and the well-worded URL, www.custommade.com, that had been registered since 1996.
After three months of over 150 meetings, Salguero and Rosen cobbled together a round of $500,000 in one of the worst economic climates in American history.
“People thought we were nuts,” Salguero, now CustomMade CEO, told BostInno of his and Rosen’s friends, families and investors’ reactions. Salguero and Rosen, both of whom had vast experience in real estate, lacked even the slightest bit of technology background and were working on the company out of Salguero's apartment.
“But we thought that, in a way, it was like real estate. We called it ‘a shack in Manhattan,’” Salguero reminisced. “It was this site that had existed for years, that a ton of people were going to, but it was just static.”
For over a decade, the owner running the site had been individually uploading each makers' photos to the site. Makers would pay a flat rate to have their goods displayed on the site.
“We spent the first three years running a subscription business, which is exactly what we bought, but we added a whole lot of bells and whistles to it,” explained Salguero. For example, the co-founding duo decided to pass the reins to the makers when it came to managing their own profiles and content.
Once this change was implemented, more and more makers flooded to CustomMade to create and personalize their profiles. They were allowed to directly sign up for the subscription access, which was tracked annually with recurring billing.
However, in November 2011, CustomMade transitioned into a new transaction-based business model. Rather than charging makers an annual fee of a few hundred bucks, Salguero and Rosen would take a 10 percent cut from each sale a maker secured.
Salguero remembers the day. “I sent out an email to everyone on CustomMade and said I was taking over the site and announcing the new system,” said the CEO. “Very quickly we had a very impassioned maker group that wanted us to realize that, as a company, we couldn’t just focus on making money off of them.”
Out of the 3,000 makers selling on the site at this time, 30 left, admitted Salguero. “They didn’t like the feeling of having to work for someone else,” he explained. Additionally, a small portion of makers on the site were bringing in big money – around $45,000 monthly, said Salguero – and were worried about the fee cutting into their profits.
While some makers found the new system unfair, the company ultimately found that the new transaction system went smoother and evened the playing field among makers.
“It’s ‘don’t pay us anything upfront, but when you get a job, we’ll take a fee’...because some people were making nothing who we were charging hundreds of dollars a year,” explained Salguero. “We wanted to partner with them, not profit from them.”
Since rolling out the new business model two years ago, CustomMade has gone from registering one-million visitors annually to scoring one-million visitors per month – and that’s without marketing or advertising campaigns, said Salguero.
“We get a tremendous amount of organic traffic,” he explained, referencing the company’s strong URL name and age of domain, both key factors contributing to Google’s search result rankings.
Despite the company’s success, CustomMade continues to tinker with how best to improve the interface between customers and makers.
“We’re combining buyers who want things custom, and makers who make things custom, and those two people don’t speak the same language,” said the co-founder. “We have to build an experience on both sides that makes so much sense that it’s as easy as clicking a button on Pottery Barn to buy something.”
CustomMade added internal payments to the site in August after raising an $18 million Series B, led by Atlas Venture and previous investor Google Ventures, earlier in the summer. To date, the company has raised $24 million. The company currently has over 40 employees working out of its more than 9,000 square-foot space in Cambridge.
“I think that there is a huge opportunity in the market for someone to become the marketplace for anything custom,” noted Salguero. “I think we can be that provider, and a true marketplace for anything custom.”
