1-800-WEDDING Closes Doors After Investors Balk
A couple of years ago, online wedding referral service 1-800-WEDDING was attracting cash from venture capital firms and big Orange County names such as Dennis Morin, founder of Wonderware Corp.
The Anaheim Hills-based company raised about $30 million, much to the credit of its energetic founder and president, Donne Kerestic, a young entrepreneur and former photographer.
The site accumulated a database of more than 70,000 brides and had several thousand vendors paying $200 to $700 a month to be listed, according to Frank Singer, a private investor with the Tech Coast Angels who also served as an adviser to 1-800-WEDDING’s board.
The company was expected to reach $6 million in sales this year, Singer said.
Instead, it hit a wall.
1-800-WEDDING silently closed its doors about two months ago. About 50 employees, which at one time numbered more than 100, were laid off.
“It’s a shame,” said Singer, whose Tech Coast Angels collectively invested about $1.5 million in the company. “Everything was put in place. The concept worked.”
The dot-com had four key ingredients, according to Singer: vendors, brides, a Web site that tied it together and a call center.
But he said 1-800-WEDDING needed more,about $2 million and six to nine months,to get to profitability.
“The major investor was ready to put more money in,” Singer said. “However, the other VCs didn’t want to belly up to the bar.”
Added one investor who asked not to be named: “It was a concept that needed a lot of capital to role out. The (collapse of the financial markets) helped do them in.”
A fed-up board of directors decided enough was enough.
The company closed with an undisclosed amount of cash in the bank, according to Singer, who was chairman of 1-800-WEDDING’s original board.
The company had raised money from a few venture capital groups including Las Vegas-based Flynn & Gallagher Investments, Wasatch Venture Fund, an affiliate of Silicon Valley-based Draper Fisher Jurveston, and Mercury Partners and E*Capital, both in Los Angeles.
“It took a lot of people by surprise including Donne Kerestic,” Singer said. “Some of the investors are wondering, ‘How do we put a loss down on our tax return?’ Because there was no letter, no notification from the board of directors, no Chapter 11.”
Singer said the main problem was “our management team was not as mature as it should have been.”
He said Kerestic, who could not be reached for this story, was spread too thin.
“We were asking him to raise money, run the company, hire people, it was too much for one individual,” Singer said. “The board of directors, of which I was part, let him down.”
Though 1-800-WEDDING eventually brought in other executives to help Kerestic, it was too late, Singer said.
And, there were other glitches.
1-800-WEDDING expanded too fast, sources said. At the time, Singer said the company was thinking “revenue, revenue, revenue” and the best way to do that was to “break out all over the country.”
The company operated in eight different cities, including Dallas, Houston and Chicago. Only one, San Diego, was profitable, according to Singer.
“The roll out to so many different markets probably cost us more than we originally anticipated and it might have been the crowning blow,” Singer said. “Had it been a year earlier, when the VC community was spending money like drunken sailors we probably would have made it.”
1-800-WEDDING charged wedding-related businesses in about 35 different categories to be online vendors. It also collected revenue from other sources, according to Singer.
For one, the company got a commission from travel vendors that put together travel packages through its site, or a percentage of revenue from invitation printers that received orders via the site.
1-800-WEDDING also sold elaborate wedding planning services, which Singer said brought in about $20,000 to $30,000 a month.
Meanwhile, brides got a chance to win prizes, select from a slew of wedding professionals, see virtual bridal fashion shows, among other things, for free.
But there was a glitch. Singer said 1-800-WEDDING wasn’t charging vendors enough for its services, and many didn’t “fully appreciate all they were getting.”
“Part of the problem was we provided a Cadillac in many cases where a Volkswagon would have done the job,” Singer said. “Our founder just wanted to give as much value as possible. We gave vendors much more than they were paying for.”
Before 1-800-WEDDING closed, Singer said the company looked for strategic partners. It talked to a number of different registry-type companies such as Martha Stewart Living Omnimedia Inc., Modern Bride magazine and undisclosed department stores.
Singer said they were all interested, but “operated a little bit slow.”
“We just couldn’t keep the door open long enough,” Singer said.
The company was left to sell its assets, including expensive printing equipment and faxes.
Singer said 1-800-WEDDING was commissioned to sell its database of 70,000 brides, one of its most valuable assets, but hasn’t been successful to his knowledge.
Kerestic also was looking to sell the site’s software, which is “amazing,” but a tough sell, according to Singer. He said the technology is complicated and “just a handful of people know how it works.”
“Without (Kerestic) the software is worthless. With him it’s worth hundreds of thousands of dollars,” Singer said.
Though 1-800-WEDDING’s fate was ultimately doomed, Singer said it hasn’t soured him from investing in other start-up companies. He called it “a learning experience.”
And other investors?
“Most people are big boys and girls and they’ll say, ‘Hey, we made an investment and it didn’t work. We’re going to take our losses,'” Singer said. “I’m going to take mine. I put a lot of my own money in it.” n
