Greg Selkoe is CEO of Karmaloop, the world’s largest online retailer of streetwear. In recent years, Karmaloop has spun off a series of related sites, including Karmaloop.tv, the flash sale site Plndr.com the skate site BrickHarbor.com and the online marketplaceKazbah. Selkoe says the company stands to earn $200 million in revenue this year.
By no means was this ordained from the start. Selkoe tells Fast Company the story of his harrowing seven-year journey to profitability. Having vowed not to draw a salary until the company was in the black, Selkoe borrowed from just about anyone who would listen–including his father, a hot dog vendor, and a perfect stranger he met in a store.
FAST COMPANY: When did this begin?
GREG SELKOE: I founded the company in 2000 in my parents’ basement.
Around this time you were also getting a master’s from Harvard in public policy.
I know, it’s a little incongruous. I didn’t know what the hell I was gonna do. My dad’s a scientist, but I didn’t have that skill set. My mother’s an urban planner, and I’d always liked buildings and thinking about how a city works, so I tried urban planning. I worked a couple of years doing both things, City Hall during the day, then at night with my girlfriend, now wife, packing boxes and doing customer service. I’d take boxes on the train in the morning, go to the post office, then go to work.
Can you tell us a bit about the early years?
Let me put it this way: It was very scary. I would’ve been personally bankrupt for 20 years if the thing hadn’t worked out. I was running up debt on my wife’s credit card, on my credit card, I was borrowing money from a hot dog vendor in the Boston Common. I put it all on the line. My father invested several hundred thousand dollars into the company over a long period of time. If I’d lost my dad’s money–I say my dad’s because my mom didn’t know about it for many years–it would’ve been very painful. If we’d gone under, I would have been forgiven, but there would have been a lot of uncomfortable Thanksgivings.
What was it like pitching your dad?
The first time pitching my dad wasn’t that hard. When I came back a year later and lost all that money plus another $400,000 and had sold my Roth IRA, that was a little tougher. A couple times after that, I came to him for money in small chunks. “I can’t make payroll: Can you give me $5,000?” Those were difficult conversations. He wasn’t the only one. He invested a lot of money, but as a percentage of the total… it wouldn’t have kept the lights on. I had a lot of people supporting me, I was doing the pitch a lot. I met our most important investor, Frank Celeste, when I overheard him talking to a woman in a store saying the store was great, and he’d just made some money from an oil and gas deal, and did she want to expand? I came up to him and said, “Did I hear you say you wanted to invest in retail?” He says now that as soon as I walked out the door I was leaving him messages.
Was your wife worried?
She believed in me, but I kept telling her “one more month, stick with us.” Around 2005, she was starting to be like, “Hey, are you sure this isn’t some crazy quixotic thing? You keep saying it’s gonna turn the corner, but it keeps getting pushed back. Are you sure you’re not lying to yourself?” There was a bit of tension. It sucks having no money. Once I had to buy us senior tickets at the movie theater.
I went to the kiosk, and I realized I didn’t have any money in the bank at all. I was into overdraft, around the $5,000 limit. I don’t know how the bank’s algorithm works. Sometimes it would let me go over the overdraft limit, but other times it wouldn’t. It was a crapshoot, and if I had to go tell my wife that we couldn’t even go to the movies after a stressful week, that would’ve been a bad moment. I didn’t want to put her in the position of, “What did my husband do? We’re so broke we can’t even get movie tickets.” So I pressed the button for senior tickets. I was sweating as we were going through, when they were taking the tickets. But they didn’t check.
Where was this?
The Loews Boston Common movie theater. I went back five years later, when I was successful. I confessed my sins, and tried to pay the difference. I thought they’d appreciate the story, would think it was cute, but the manager just kinda looked at me like I had two heads. “Why would you pay us back? It was five years ago.”
When did you finally turn the corner?
We’re profitable since 2007. We had a partial liquidity event in 2008. My dad’s investment is worth many millions of dollars, and he got several million at the time. He did well, a thousands-of-percent return on his money. I don’t think he ever told me, “Give up, this isn’t gonna work.” I always make fun of our #2 here–at one point he said, “We gotta do the right thing here and shut the doors.” A lot of smart people I respect were telling me to give it up, but my dad wasn’t one of them.