Academic journal article Entrepreneurship: Theory and Practice

Snappy Auctions

Academic journal article Entrepreneurship: Theory and Practice

Snappy Auctions

Article excerpt

Snappy Auctions presents the story of an online auction business founded from the personal aspirations and efforts of Debbie Gordon who sought to bring together sellers lacking technological expertise and potential buyers. Having rapidly expanded Snappy Auctions to 100 franchise agreements since its launch in 2003, Gordon confronted the challenge in 2006 of evaluating the sustainability of her drop-off store business model and of deciding whether to seek external financing to support further rapid venture growth.

Snappy Auctions

Debbie Gordon's new venture, Snappy Auctions, had already achieved a substantial degree of success. Even she was surprised that in just over two and one half years of operations, her start-up efforts which had begun in 2003 had already resulted in 100 franchise agreements by early 2006. Gordon's new venture had exploited a significant niche in the rapidly evolving industry that surrounded the online auction business eBay[R]. Many people wanting to sell items using eBay did not want to deal with the challenges, hassles, and time required running online auctions. These people were willing to pay a premium to have someone else establish and run the auction for them. Gordon's retail-based model served this desire and rendered eBay both accessible and relatively painless. Many aspiring entrepreneurs recognized the potential of her model and were eager to buy a franchise from Snappy Auctions and join the eBay craze that was sweeping the nation. But with such rapid growth came a new set of concerns and questions for Gordon. eBay made changes to its online auction platform designed to enhance the user experience. These changes were intensifying an already fierce level of competition. In addition, tension had emerged among her executive team. Gordon was beginning to wonder whether the drop-off store business model in place at Snappy Auctions would be sustainable moving forward given these aspects, or whether it would need to evolve further. The success of Snappy Auctions had also attracted the attention of investors looking to fund even further expansion and growth of the venture. While acknowledging this exciting prospect, Gordon had self-funded the venture through her own savings and creative bootstrapping until this point. Her awareness of the growing pains she was observing and that often come with such rapid growth also led her to wonder if seeking external growth capital would enhance the prospects of the current business model's sustainability while also achieving her personal goals of retaining control over the business, its strategy, and the "soul" of the venture's culture. In less than 2 years in business, Gordon's brainchild, Snappy Auctions, was already at a serious crossroad.

From Selling Shoes On-Line to Business Opportunity

Gordon graduated from Vanderbilt University in 1994 where she majored in Human and Organizational Development. For the next several years after her graduation, Gordon worked in a series of sales and technology jobs. It was in the last of this string of jobs in 2002 when Gordon realized that it was time to venture out on her own. The entrepreneur for whom she was working at the time faced serious cash flow challenges. He came to Gordon to ask if she would be willing to lend the company $15,000 in order to make payroll. Gordon was willing to give generously to her employer, but this request seemed beyond the call of duty. Rather than put her own money at risk for her employer, Gordon decided to leave that employer for a few months to consider which direction she preferred her career to take.

While reflecting on her work experience since college, Gordon came to several conclusions. First, she concluded that what she observed had taught her much about what the broad qualities central to running any business successfully are. Second, she concluded that it was possible to have a company appear large without actually being supported by a correspondingly large infrastructure. …

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