One Kings Lane Raises $23 Million From Kleiner Perkins, Greylock & Others
One Kings Lane, which is competing in the trendy flash sales market, selling home décor, furnishings and accessories, has raised $23 million in a second round of funding.
The round was co-led by existing investor Kleiner Perkins and new investor Greylock Partners. Also participating is First Round Capital and LinkedIn co-founder Reid Hoffman, as well as new investors TriplePoint Capital and Marissa Mayer.
If you haven’t heard of it, San Francisco-based One Kings Lane is an online retailer that sells designer home items, ranging from large oriental rugs to sophisticated and modern side tables, at deep discounts. The offer, which is sent to your inbox on a daily basis, is limited and can sell out in five minutes or five hours.
Typically, the merchandise comes from unsold inventory at luxury or high-end interior designers, which is why it can be sold for so much lower than retail.
The concept is part of a burgeoning new industry that is being called “private sales” or “flash sales.” Companies in the space include Gilt Groupe and Rue La La, which are mainly focused on fashion and clothing.
One Kings Lane has another differentiator: It is not building big warehouses to store all the items it wants to sell, nor is it committing to purchasing any of the inventory in advance. Therefore, the costs are lower because One Kings Lane doesn’t get stuck with any excess inventory.
On the other hand, it doesn’t have complete control over the shipping process, meaning shipments can sometimes take one to two weeks to reach customers.
CEO Doug Mack said he doesn’t expect the model to change with this funding.
The site was founded in late 2008 by Susan Feldman and Alison Pincus (who is married to Mark Pincus, founder and CEO of Zynga, the social games company that has also raised funding from Kleiner Perkins–albeit on a much larger scale). One Kings Lane launched in the spring of 2009.
Last year was a pivotal time for the company.
Mack, who was hired in June, quickly ramped up the management team, hiring other executives from Hotwire, eBay, Walmart.com and Zappos.
It grew revenues five times over 2009 and boosted its membership base to around one million. It launched an iPhone app in November that generated two to three percent of its sales on the first day. Since then, the app has sustained those revenue levels.
Mack says the home furnishings are top of the line, and are compelling because they’re nothing you’d ever see at Ikea, or even in a department store like Macy’s.
While quality is hard to convey over the Web, he says the company has slowly gained customers’ trust over time. Often, customers will start by purchasing something small, like a candle. From there they might work their way up to a cashmere blanket, and eventually take the plunge into something as large as an armchair or area rug.
One of the more telling statistics that supports this is that 70 to 80 percent of sales are from repeat buyers.
This round of funding follows its Series A, which it raised back in December 2009. That was led by Kleiner Perkins, with Hoffman also participating. Hoffman introduced One Kings Lane to Greylock, where he is also a partner.
Mack says the capital will be used for three things: Accelerating the growth of its membership base, expanding the catalog of merchandise and scaling customer service as its membership grows.
To attract more members beyond the viral growth the company has already experienced, Mack says it will begin its first meaningful Web campaign, addressing its target of middle- to upper-class women, ages 35 to 55, in metro areas.
“In the grand scheme of things, we are only scraping the surface. Anyone with a home or apartment could use one of the things we sell,” Mack said.
In relation to the funding, James Slavet of Greylock will be a board observer, joining Aileen Lee of Kleiner Perkins, who has a board seat, and Bing Gordon of Kleiner Perkins, who is also an observer.