One Kings Lane is announcing a whopper of a funding round today — a $50 million Series D. The round was lead by Institutional Venture Partners, with participation by existing investors Kleiner Perkins, Greylock Partners, and Tiger Global Management. Also joining in this round was strategic investor Scripps Networks Interactive.
Let’s deal with the cash, then the strategy behind it.
This brings the total raised to date to $116 million. And with revenues growing, half of its previous round was still in the bank, says One Kings Lane’s CEO Doug Mack. So why raise more? The Facebook effect. Watching how the IPO fared, the board decided to go ahead and raise the last big round of venture capital that they anticipate needing. You know, just in case the mood towards late stage deals sours further.
One Kings Lane keeps a lower profile than other ecommerce 2.0 giants, but it’s performing well in the home goods market — a place where other ecommerce 2.0 vendors have floundered. It’s tracking to do some $200 million in revenue this year, up 100 percent over last year.
What’s going so well? Three things.
First, like Zulily or Warby Parker, One Kings Lane has outlived the flash sales slump by focusing on a single site rather than succumbing to vertical fever. This is where Gilt — the granddaddy of the group — went wrong.
Second, like Fab, NastyGal, Jetsetter, and Thrillist, One Kings Lane is investing heavily on the commerce-as-content trend. Remember the awesome Domino magazine? It was like a Lucky Magazine for the home, showing you cool decorating ideas and where to buy them. One Kings Lane has hired the founding team that started it, along with several other editorial hires from magazines like Architectural Digest. Like Jetsetter hopes to be the new incarnation of Conde Nast Travel, One Kings Lane hopes to be something like a new Domino — only like all companies aiming at the content and commerce sweet spot, purchasing is a hell of a lot easier.
Mack cites the example of a recent feature of five ways an ottoman can change a room, and gives me examples in my own home. (Note: At some point, PandoDaily will need a real office.)
It’s a better way to monetize editorial content and — when done right — a better way to make ecommerce 2.0 feel more special than the mega-mall Amazon experience. Interestingly, One Kings Lane is one of the only Valley-based companies that’s a leader in this trend. It’s been a decidedly New York-based phenomenon, not surprisingly given the media and editorial concentration of talent found there.
That brings us to strength No. 3: One Kings Lane has been aggressively embracing mobile commerce, as we’ve reported before. This is a lot harder than just throwing up an app, and one of the things One Kings Lane will be investing in is more data expertise to make sure it’s serving up the right item to the right user at the right time. Mobile experiences don’t give you the room to browse.
As of now, a quarter of One Kings Lane’s traffic is via mobile. On holidays and weekends it’s even more than that. As much as Mack pooh-poohed the whole “Mobile Thursday” Thanksgiving shopping trend before the day, 50 percent of its traffic was via mobile devices on Turkey Day, and that stayed high at 40 percent through the mega-holiday shopping weekend. “This is the big thing I obsess about,” Mack says of mobile commerce. “We’re probably not investing in it heavily enough.” Expect that to change with $50 million more in the bank.
And each of these points brings us back to that Scripps Network Partnership. Scripps owns HGTV — by far the leader when it comes to home improvement television.
So, the synergies, in reverse order:
- Mack is a huge believer in the power of three screens, and he thinks One Kings Lane has a shot at dominating home improvement on the Web and mobile/tablets. But they’ll never get TV. Scripps has it.
- Who better to partner with on a doubling down of content and commerce than one of the largest home improvement mass media brands in the world? “Scripps knows content,” Mack says. “They know more about content than we could build on our own.”
- One Kings Lane has no desire to expand beyond home improvement. A partnership like this helps them going even deeper with their core audience.
“I can’t share all the stuff we’re going to do together. But from a vision standpoint, we are so aligned,” Mack says. “Both of us serve the affluent female customer, age 24-55. Their viewers are they people who view home improvement as a hobby, and that’s who we want to get to.”
Mack and One Kings Lane’s founders sought out the Scripps partnership once the board started to think about raising a new round. And the deal took nearly four months to close. While strategic investor relationships can go badly, Mack is a fan of them when done right. This is his third company and his third strategic investment.
That said, he knows from experience that the announcement of these deals are worth about as much as the press release they are written on. All a strategic deal announcement flags is the potential for a powerful tie-up. It’ll be up to him to make sure One Kings Lane actually gets all the synergies HGTV offers on paper.
[Illustration by Hallie Bateman]