Local Companies Hitting Home Runs as Fast as Red Sox
Three local companies were in the national news last week. They are great examples of how local innovators create jobs, opportunity and wealth. By applying new ideas in mature industries, they created two billionaires, revived an old retailer, and established a brand new billion dollar company. I am talking about Wayfair, BJ’s and PillPack.
Wayfair conquers online home furnishings market
Steve Conine, co-founder of Wayfair, is well known by now. He and Niraj Shah started Wayfair in 2002 as one of many companies they invested all their sweat equity in. Steve, a colorful 45-year-old multi-billionaire, recently spoke to the MIT Angels, holding the Wayfair Copley Square office room rapt with funny and true stories.
Like most success stories, Steve’s had plenty of twists and turns. After college, he turned down an offer to enter the family business. He and Niraj originally found success selling speaker stands online. Lots of them. They had 250 companies selling “things for your home you can’t easily get” for at least five years. Eventually, they settled on Wayfair (a made up name), took in $351 million of local venture capital and went public. They now offer 5 million furnishings online! Last week Wayfair stock hit a new high of $118 per share with a market cap over $10 billion.
It’s Steve’s hope that there will be many Wayfair alumni who start their own big successful local companies. Afterward, I privately asked him what the family business was that he turned down. “Selling furniture,” of course.
Frustrated pharmacist reinvents distribution
Last week Amazon bought Somerville-based PillPack for one billion dollars in cash. Cofounders TJ Park, who went to pharmacy school, and Elliot Cohen won the MIT Hackathon in 2012 with their idea of rapid delivery of sorted, labeled medications. Along the way, they raised $118m in venture capital. That’s a 9x average return in five years for all the venture capitalists, and much, much more for earlier investors.
BJ’s Wholesale Club is public again
BJ’s of Westborough is now a public company, seven years after it was acquired by a private equity firm. The IPO soared 29% on the first day, making it a $3 billion company. BJ’s is a survivor, having been founded in 1984. Despite the very challenging retail environment, BJ’s is doing very well again, and so are its shareholders and 26,000 employees.
Fourteen billion in total
If you add up the value of Wayfair, BJ’s and PillPack it is over $14 billion dollars. One of these companies didn’t exist seven years ago. The other two are not that old for their size. The point is simply that Boston and environs remain a place where businesses can be established and grow to be quite large, quite quickly. We’re thankful to be part of this exciting business community.
PS – too late for details, but SimpliSafe was acquired for $1Billion last Friday. It was founded in 2006 by husband and wife HBS grads at a Downtown Crossing location.
This communication may include forward-looking statements. All statements other than statements of historical fact are forward-looking statements (including words such as “believe,” “estimate,” “anticipate,” “may,” “will,” “should,” and “expect”). Although we believe that the expectations reflected in such forward-looking statements are reasonable, we can give no assurance that such expectations will prove to be correct. Various factors could cause actual results or performance to differ materially from those discussed in such forward-looking statements.”
“Historical performance is not indicative of future results. The investment return will fluctuate with market conditions.
Past performance is not indicative of any specific investment or future results. Views regarding the economy, securities markets or other specialized areas, like all predictors of future events, cannot be guaranteed to be accurate and may result in economic loss to the investor.
Investment strategies, philosophies, allocations and holdings are subject to change without prior notice.
This communication is intended to provide general information only and should not be construed as an offer of specifically tailored individualized advice.
While the Adviser believes the outside data sources cited to be credible, it has not independently verified the correctness of any of their inputs or calculations and, therefore, does not warranty the accuracy of any third-party sources or information.
Adviser does not endorse the statements, services or performance of any third-party vendor.
Unless stated otherwise, any mention of specific securities or investments is for hypothetical and illustrative purposes only. Adviser’s clients may or may not hold the securities discussed in their portfolios. Adviser makes no representations that any of the securities discussed have been or will be profitable.
Any IPO alerts are purely informational and should not be construed as recommendations to invest.
Any case studies or hypothetical client profiles are for demonstration purposes only. They illustrate the breadth and depth of the many clients we represent at various life stages. Any similarities to actual Adviser’s clients past or present are strictly coincidental. Individual advice and results will vary based on each client’s circumstances, objectives and prevailing economic conditions.