It’s been a wild past several days for Zulily. As we’ve reported, the online retailer is shutting down three offices, including its Seattle headquarters, and laying off more than 800 people. The company, owned by private equity firm Regent, announced a “going-out-of-business” sale this past weekend.
The collapse has shocked and saddened longtime employees, many of whom describe their time at Zulily as formative periods in their careers. It’s a stunning turn of events for a business that was once a cornerstone of Seattle’s tech industry, valued at more than $7 billion.
Over the weekend, we caught up with Mark Vadon, the veteran tech entrepreneur and executive who helped launch Zulily in 2009 with Darrell Cavens, his former colleague at jewelry retailer Blue Nile.
Vadon left his day-to-day work at Zulily following its $2.4 billion sale in 2014 to QVC parent Qurate (then known as Liberty Interactive). He sat on Qurate’s board until June 2022. Regent acquired Zulily in May of this year.
Vadon, a former chairman at Chewy, declined to comment on Zulily’s current state or theorize about what may have led to its recent downfall. But he expressed disappointment.
“More than anything, I just feel bad for the people who worked so hard to build something that I think was truly special,” Vadon said.
Asked if he would consider buying back the Zulily brand, Vadon said he’s “happily retired.”
“I’ve got four daughters and I’ve kind of moved into a different life stage,” said Vadon, who is on the board of Rad Power Bikes and AG1. “Building businesses is not my future.”
Here are some other takeaways from our conversation.
How it all started
Vadon recalled meeting Cavens for a beer at a Seattle pub in 2009. The tech vets wanted to build something together again after their experience at Blue Nile. Both brought pieces of paper with lists of 10 people they wanted to work with.
“We compared lists,” Vadon said. “The people that overlapped, we circled them, and we went out and got them.”
Most of that initial group had already worked together. “That let us proceed very fast,” Vadon said.
The company’s timing — just after the 2008 recession — also made recruiting a little easier.
And as co-founders, Vadon and Cavens complemented each other well.
“Darrell was tech and ops, and I was finance and strategy, and good at fundraising,” Vadon said. “And there was no ego. We worked seamlessly together.”
We got in touch with Cavens, but he didn’t want to comment, beyond saying that it’s “certainly a sad day” for Zulily in light of the events of the past week.
Zulily’s secret sauce
There were a number of factors that led to Zulily’s success in a highly competitive retail environment, Vadon said.
- Target market: Zulily initially focused on selling clothes, toys and accessories for babies, kids, and moms. “Young moms, they’re learning new things, they’re trying to do a good job, they’re highly social, and they’re trying to help each other out,” he said. “We tapped into a good market.”
- Differentiation: Zulily didn’t want to contend with Amazon and other online retailers on shipping speed or selection. Instead it offered a limited number of daily deals and flash sales. Customers loved that shopping experience, and came back every day to ascertain new products. “They were getting entertainment out of the act of shopping itself,” Vadon said. “Not many companies were doing that.”
- Business model: The company used an unusual fulfillment strategy by selling merchandise on its site before ordering products from vendors. This gave Zulily more control over its supply chain and fulfillment. The company also found a way to allow smaller vendors to surface their products for a large audience, giving Zulily another edge compared to the Amazons and Nordstroms of the world.
“Zulily Mafia”
There was something about Zulily’s culture and business that created a breeding ground for future entrepreneurs.
“It was admire grad school for entrepreneurship,” said Vadon.
The company’s revenue skyrocketed from $18 million in 2010 to $143 million in 2011 and then to $331 million in 2012 — just three years after it launched.
At the time, Zulily was large enough to expose employees to the inherent challenges of running a big enterprise — but it was still small enough to give them an expansive view across the business, Vadon said.
“It was this place where you taught people to make decisions with data and proceed really fast, but then be willing to call out mistakes and change direction,” he added.
Many former Zulily employees went on to launch their own startups or take leadership roles at early stage companies in the Seattle area, including:
Zulily’s alumni, Vadon said, will “be impacting Seattle for a very long time.”
