The mood was tense as David Daneshgar made his way to the final table at the end of a grueling, day-long poker tournament. He and two friends, Farbod Shoraka and Gregg Weisstein, had arrived at the Commerce Casino, a card room east of Los Angeles, for breakfast; it was now long past dinner. Daneshgar, who won a bracelet in an event at the 2008 World Series of Poker, had turned his $1,000 buy-in into a wad of potential as he picked off most of the 70 entrants. Finally, a single opponent remained. The other player shouted and pumped his fist in the air as he laid down two pairs on his final hand. But Daneshgar also held two pairs, and his were higher.
When Daneshgar collected the $27,000 in prize money later that night, he wasn’t dreaming of cars, parties, or island vacations. Instead, an exhilarating thought crystallized in his mind as he turned to his friends: “It’s flower time.”
As startup stories go, BloomNation’s is among the less likely–and the source of its initial funding is no exception. The idea that a poker pro would invest his winnings into a bid to shake up the floral business sounds far-fetched. But that’s how Daneshgar, Shoraka, and Weisstein financed the launch of BloomNation in 2011, and since then, the online marketplace has blossomed into what its founders envision as the Etsy of the flower industry. Now the young company is undertaking a major expansion. After successful launches in L.A., Las Vegas, and Chicago, BloomNation is prepping for a big move into the East Coast this spring. In early April the team will travel to Washington, D.C., to meet and recruit local florists, and they will embark on similar membership drives in Boston, New York City, and Philadelphia around Mother’s Day.
BloomNation takes the local artisan movement that has energized the food and craft markets and applies it to the most sentimental of transactions: sending flowers. On the company’s website, customers browse and purchase arrangements directly from local florists, who can trumpet their identities via a bio page and photos. The startup’s three co-founders aim to solve frustrations on both the buyer’s and seller’s ends: Customers can personally connect with the designer filling their order to ensure that what they see is what they get, and neighborhood florists gain a relatively low-cost web presence where they can advertise their strengths in a market dominated by big-name middlemen such as 1-800-Flowers and Teleflora. “Our goal has been to empower these small businesses and get them online, and give them the tools to compete with a lot of the big retailers you see today,” says Shoraka, the company’s CEO. “We wanted to help these flower shops get exposure and grow their business through our platform.”
The concept for BloomNation was born of–what else?–bad experiences sending bouquets. Each of the founding partners had flowers they sent show up late, or not at all, or look nothing like what they had ordered. “When you’re sending flowers, it’s an emotional thing–it’s for a girlfriend, or someone who’s sick,” says Weisstein, BloomNation’s COO. “You don’t want them going, ‘This is all you thought of me?’”
At the same time, Shoraka saw his aunt, a florist in Orange County, lose business as customers turned to Trader Joe’s and Whole Foods for loose cut flowers. “Her foot traffic died,” he says. “She didn’t really know how to get into this world of e-commerce.”
Sales through grocery stores and Internet middlemen have contributed to a muddier outlook for floral professionals, according to industry analysts. Revenue at flower shops has dropped 22% over the past decade, and 10% of brick and mortar stores have gone under since just 2007, market research firm IBISWorld said in a 2012 report. The number of floral design jobs is expected to decline another 8% over the next eight years, according to the U.S. Bureau of Labor Statistics.
Shoraka, Weisstein, and Daneshgar, friends since college, had an itch to start their own business, and Shoraka felt the floral industry was ripe for change. So during the summer of 2011, the trio canvassed more than 100 flower shops across L.A., knocking on doors and introducing themselves to the owners. Florists, they found, disliked the status quo. Many were paying steep monthly membership fees to be in the vendor networks of national wire services, which rely on local designers to fill orders processed through the corporate website. These services also take up to a 50% cut of each order, Shoraka says, leaving many neighborhood shops struggling to make a profit after all of the fees. Plus, producing stock catalogue bouquets wasn’t satisfying creatively, florists said. “They were being told what to do–‘Fill this order; this is the recipe; this is how much you’re going to get for it,’” Shoraka says. “That raw passion of why you’re in the business is gone. So if it’s not profitable, and there’s no real joy in what you’re doing, quality drops.”
“We thought, ‘We can make this so much better,’” Weisstein says.
They devised an easy-to-use platform that would give florists artistic freedom and encourage brand recognition among shoppers. Instead of “cookie-cutter” arrangements, Shoraka says, BloomNation lets florists advertise and sell their own hand-crafted designs. The site also gives florists a personal storefront where they can tell customers who they are and what they specialize in. And there are no membership costs or contracts–the only charge is the 10% cut BloomNation takes from each sale.
Since Daneshgar’s initial cash bonanza, the company’s growth has followed a more traditional path. In 2012, BloomNation was selected as a winner of the New Venture Challenge, held by the University of Chicago’s Booth School of Business. Last fall, the founders raised $1.65 million from a handful of venture capital firms, including Andreessen Horowitz, Spark Capital, and the startup accelerator MuckerLab, whose Santa Monica headquarters the company now uses as a home base for its staff of 12. The marketplace currently hosts about 2,500 florists spanning delivery to more than 3,000 cities. BloomNation passed $1 million in sales early this year; since then, they’ve been growing at a pace of about 20% to 30% per month.
“The relationships we have with our florists make a big difference,” Shoraka says. “We let the florists create what they’re good at and what they have the talent for, so there’s pride connected to every design. It’s not just a bunch of guys in suits making the decisions.”
The formula has been working for florist David Goldstein, who was thinking of closing his Beverly Hills shop, My Beverly Hills Florist, after stints with Teleflora and FTD “sucked me dry.” But after nine months on BloomNation, Goldstein says, his income quadrupled. “They saved my life,” he says. “The money I bring in now is unheard of.”
Similarly, L.A. florist Brooke Wetzel was on the brink of dissolving her home-based flower business due to low visibility when she found BloomNation on Twitter. Within a year, her company, The Plum Dahlia, went from three to five orders per month to the same number per day. “My business has been absolutely revolutionized,” says Wetzel, who has had to double her home office space to keep up. “They gave me a place to show myself off to way more people than I ever could have reached on my own.”
Customers also seem to like the setup. As for the classic worry over what will actually show up at the recipient’s door? Using a tool called BloomSnap, florists can take a picture of the completed arrangement before it goes out, so the sender–and BloomNation’s staff–can check on the quality.
So far, the company’s complaint rate is less than 1%, Daneshgar says. If a problem occurs, one of the co-founders places an apology call to the dissatisfied sender. And if they notice that a disproportionate number of complaints are directed toward a single flower shop, they ask the under-performing florist to leave BloomNation. “Store owners always ask if they can cancel at any time. I tell them, ‘Not only can you cancel, but we urge you to cancel,’” Daneshgar says. “The harm that you could do to the brand is much greater. We let them go if we don’t think they fit the brand.”
The team has faced a bevy of challenges: no prior background in the floral industry, no familiarity with coding or SEO (they were burned by an attempt to outsource those needs and opted instead to do it all in-house), and having to manage a sometimes-delicate balancing act between friendship and professional demands. “The odds were against us: We don’t know technology; we don’t know flowers–why are these three guys doing this?” Shoraka says. “It was a struggle, but it made us work harder to prove ourselves.”