Long before Mark Costigliola learned one of his employees had been dealing cocaine out of a warehouse…
Costigliola, who was drenched in sweat after spending yet another night sleeping on the floor, woke up wondering whether it was all worth it. “It never dipped below 80-degrees in the Florida warehouse,” he recalls. “You just slept in your own sweat and stayed in the warehouse so you could keep working.”
This is what multimillion-dollar entrepreneurial success really looks like.
“The perception is that it’s easy,” Costigliola says of entrepreneurship. “We idolize business icons and often hear about their success stories but the truth is those guys have been through hell and back.”
Hell for Costigliola started the moment he became just successful enough to get the boot from his mother and father.
Filling the Shed
In 2006, after decorating a Christmas tree with LED lights, Costigliola wondered whether LED bulbs for home use were readily available.
A quick web search came up empty, and an idea was born. “I was already selling stuff on eBay as a hobby to pay for a car,” Costigliola says. “I found some suppliers in Asia and became one of the first people selling LED bulbs online.”
EarthLED, the ecommerce store that would ultimately become home to one of the largest selections of LED bulbs, tubes, and fixtures on the web, started modestly with approximately one order a week. By the end of its first year, EarthLED was receiving 5-10 orders a week and Costigliola knew he’d need to take on more inventory to meet demand.
“I went to my parents and asked for space in their house to store inventory,” Costigliola says. “We started growing so quickly we even filled dad’s shed with boxes of bulbs.”
That growth trajectory, in revenue, looked like this:
- 2007- $30,000
- 2008- $300,000
- 2009- $1 million
“Our growth was absolutely phenomenal,” Costigliola says proudly. “Dad came to me and said I had to find a warehouse because he couldn’t have a shipping operation this large out of his home.”
Eye-popping growth that gets you booted from dad’s shed might seem like an entrepreneurial badge of honor.
But moving to a warehouse would bring unexpected and illegal woes.
Mansions, Cocaine, & Plateaus
“Once I had a warehouse I filled it fast and started sleeping there,” Costigliola says of the hot and humid Florida location where he spent more time sweating than sleeping. “I was doing the accounting, shipping, and answering the phone talking to customers.”
Costigliola’s sweat was dripping through to the bottom line, though. The company quickly outgrew its Florida warehouse and needed more room, and more employees, to keep up with demand. A chance meeting with some Coloradans convinced Costigliola to pick up and move the company to Colorado.
“It was a rough first year,” he admits.
Costigliola went from doing almost everything himself to hiring fourteen employees to manage inventory and fulfill orders. As a result, Costigliola faced a myriad employee related issues even discovering one was dealing cocaine out of EarthLED's warehouse “It was a mess,” he recalls. “I had never dealt with having employees and all of the sudden I had to be concerned with people stealing inventory from our warehouse.”
It was a business that had grown more than 8,000% and once been named one of Inc’s fastest growing companies. But that growth plateaued and remained flat for several years despite the fancy warehouse and all of the employees:
- 2010- $3 million
- 2011- $3 million
- 2012- $3 million
“We flat-lined,” Costigliola recalls. “We were trying to learn how to take things to the next step and should’ve left warehousing to the experts and outsourced it all.”
Eventually, that’s what EarthLED did.
The next logical step? Move the company’s headquarters to a mansion in the Colorado mountains just as you’re about to make the most important decision of the company’s life; one that would hinge, in part, on gaining the acceptance of the lighting industry’s largest and oldest players.
“Yea, our vendors thought we were a little strange,” Costigliola admits with a grin.
The Rebels of Lighting
“This is a really old school industry,” Costiglio says. “In some cases, the companies making light bulbs have been around one hundred years.”
Increasingly, those industry titans began making their own LED bulbs that were competing with those Costiglio had been importing. The industry would rapidly become commoditized which would pressure EarthLED’s margins.
It’s why 8,000 feet high, in that remote mansion nestled in the mountains of Colorado, Costigliola made a decision to completely upend EarthLED’s business model. “It was a complete rebrand,” he says. “We wanted to become a distributor of bulbs made by U.S. suppliers rather than an importer.”
It meant rubbing shoulders with and cultivating relationships with people who had been selling light bulbs and fixtures long before Costigliola and his team had even been born.
“We really struggled to get respect,” Costigliola says of the early days. “A lot of the industry veterans are all about face to face meetings, and we were headquartered in the mountains and transitioning to an all remote team.”
But the industry underestimated EarthLED.
The revenue plateau the company had experienced just a few years prior changed just as dramatically as the company did. After ditching the mansion, becoming an all remote company, and optimizing its business processes, Costigliola says EarthLED generated $10 million in revenue in 2015.
Even more importantly, the company also earned the respect of a stodgy industry more comfortable with trade shows than SEO and conversion optimization.
“We’re the rebels of the industry,” Costigliola says proudly. “Our performance speaks for itself and got the attention of a lot of people.”
Growing Up Together
While it may be true that opposites attract, it’s also true that what we have in common often results in marriages that stand test the time.
One of those marriages is between EarthLED and Shopify.
Just like EarthLED, Shopify is disrupting an old industry in desperate need of innovation; the enterprise ecommerce space which has historically been dominated by industry titans that charge too much and deliver too little.
Besides being one of the originals, or first 100 companies to choose Shopify as its ecommerce backbone, EarthLED is also one of the first to switch to Shopify Plus, an enterprise ecommerce solution for high volume merchants.
Shopify is the best ecommerce platform in the world. Nothing even comes close.
Having grown up together, EarthLED and Shopify have helped fuel one another’s growth.
For instance, the ability to easily and quickly integrate third party tools is one reason EarthLED was able to punch through the $10 million dollar mark in sales recently. “We don’t make any money until a customer orders a second or third time,” Costigliola says. “Our customers love us so much now they come back and order between 7-9 times.”
One of the third-party integrations inspiring this loyalty is Retention Grid, an application that segments customers by loyalty and lifecycle analytics and targets them with personalized automated email campaigns that earn loyalty, trust, and faster repeat business. “Retention Grid generated about $250,000 for us in the last eighteen months,” Costigliola says. “It’s amazing and we think with a few tweaks it’ll make us even more money.”
Besides increasing sales and providing EarthLED with valuable customer feedback for use in optimization efforts, Costigliola also credits Retention Grid with improving average order values:
- Initial AOV = $150
- With Retention Grid AOV = $200
Another trusted partner on whom EarthLED relies is InstantSearch+, which helps ecommerce companies provide users with robust site search technology that powers millions of searches each day. As EarthLED grew its offering from 12 original SKUs to more than seven hundred, the ability to easily and quickly search the site became extremely important.
Besides powering up to 25,000 site searches a month for EarthLED, InstantSearch+ also plays a pivotal role in helping Costigliola better select inventory. “What I find to be one of the most important aspects of implementing a tool like this is that it gives you insight as to potential products that we should be carrying or working to add to the site,” he says. “Having an insight into what customers are looking for on the site is a very valuable feature to me.”
Outsourcing key marketing and site search responsibilities to trusted third-parties and relying on Shopify for all of its technology needs allows Costigliola to focus on customer service.“It’s amazing to see how quickly Shopify has grown- you’re just so quick to solve problems,” he says. “I don’t have an IT person, and I don’t need one. Live chat is usually a joke, but Shopify’s is the real thing and gets me the answers I need fast.”
You’re dynamite. If I’m ever asked, I recommend Shopify without hesitation.
Beyond $10 Million
Today, Costigliola manages a remote team scattered across two countries; the U.S. and Indonesia. Expect EarthLED to be a first mover in the smart lighting space and to be the go-to online retailer for lighting offerings that help fuel the Internet of Things’s growth.
“Shopify makes it really easy to start a business,” Costigliola says. “The hard part is what happens afterward.”
From $30,000 to $10 million in nine years, Costigliola says growing EarthLED into a force the lighting industry has no choice but to reckon with is the hardest thing he has ever done. The days of begging to store inventory in his parents’ home and sleeping on warehouse floors may be long gone, but the lessons those difficulties taught never will be.
“You have to be willing to give up everything,” Costigliola says. “You have to be willing to sleep on the floor in your own sweat.”
About The Author
Nick Winkler is a contributor to the Shopify Plus blog. He helps individuals & organizations generate new leads, make more money, and ignite growth with story. Get more from Nick here.