LA Venture: R-Squared Ventures’ Roy Rubin on the Evolution of Ecommerce

Minnie Ingersoll
Minnie Ingersoll is a partner at TenOneTen and host of the LA Venture podcast. Prior to TenOneTen, Minnie was the COO and co-founder of $100M+ Shift.com, an online marketplace for used cars. Minnie started her career as an early product manager at Google. Minnie studied Computer Science at Stanford and has an MBA from HBS. She recently moved back to L.A. after 20+ years in the Bay Area and is excited to be a part of the growing tech ecosystem of Southern California. In her space time, Minnie surfs baby waves and raises baby people.
R-Squared Ventures’ Roy Rubin
Photo provided by Roy Rubin

On the episode of the L.A. Venture podcast, R-Squared Ventures’ co-founder Roy Rubin talks about investing, ecommerce and how he got started in tech at UCLA.

R-Squared, the venture firm Rubin co-founded with his partner and former Loop Commerce co-founder Roy Erez, focuses on early-stage startups. The firm writes checks of between $500K to $1.5 million, with a focus on ecommerce, fintech, marketplaces and SaaS. R-Squared has made about 30 investments in the past 18 months.


Before co-founding the firm, Rubin was the CEO of Magento, a massive open source ecommerce platform that scaled to doing over $100 billion in transactions annually.

“We're both long term ecommerce guys, right? We care about the space; we're passionate about it,” Rubin said. “I think I come with a bit of skepticism, which is, maybe, healthy, because I've seen the ups and downs.”

That skepticism comes from some hard-won wisdom gained during the ecommerce’s heady early years, as well as steering a young company into the 2008 recession.

Rubin got his start in tech in the early 2000s as a student at UCLA, where he made rent by putting his programming skills to use as a kind of code-writer for hire.

“At the time I was reading a magazine article, and it said to be successful in business you have to focus,” he explained. “And I said, ‘You know, as a freelancer, I'm doing everything and anything. I'm doing content management systems and a bit of ecommerce and some website [design]. So if I have to focus, I know what to focus on’.”

He turned his full attention to creating ecommerce platforms for clients— an area of the industry he felt would grow rapidly.

“So that little freelance business turned into about 25 full-time people, while I was at UCLA,” he said. “And I said, ‘This is blowing up. And I need to go and really spend time here and make sure this is not going to fall apart’.”

He dropped out of school with only 10 weeks left, and devoted his full attention to growing his business and providing services to an army of clients.

Rubin’s early business was based on forking code for every new client, and developing it to their specifications.

”It was just messy and ugly. And it just didn't really allow us to scale,” he said.

Rubin and his team decided to end their relationship with their existing agency clients and instead focus on building a great ecommerce product.

He and his team began brainstorming what the “next-generation open-source platform would look like” and thought about building it based on a “commercial open source model,” building a open-source version that was free for the community, and another, paid version for enterprise users.

Magento, was born and quickly became a go-to product for companies, small and large, that were looking to scale their business online and safely sell over the rapidly growing internet.

“The great thing about open source — and the great thing about the product being free — is that you kind of get really great adoption very quickly,” Rubin said. “And I think that's what happened. It was absolutely crazy.”

Rubin remembers getting calls from Fortune 500 companies that were using the free version of his software, and were looking for assistance and the ability to do more with it. Magento scaled rapidly to 400 employees.

In 2008, during the height of the recession, Rubin sold the company to Ebay.

“I didn't really have the foresight to say, ‘Look, is this the right product-driven and technology-driven organization that I'm selling the company into? That really has alignment as far as just the thirst and hunger to go build great products?’” he said. “You know, that's one lesson learned.”

The company was later spun off and sold again to become what is now known as Adobe Commerce.

Those successes and mistakes, Rubin said, are what drive him as an investor. He said he’s constantly thinking about ways to innovate in the ecommerce space.

“If we think about how much of our time is spent on feeds, whether it's Facebook, or Instagram or Tiktok, I mean, everything's kind of scrolling down, right?” he said. “In the ecommerce world, we still drill down on taxonomies. How crazy is that? And for me, I think there may be opportunities for a new design language, for a new paradigm — around how we discover, search and source information in the ecommerce space.”

dot.LA Social and Engagement Editor Andria Moore contributed to this post.

Click the link above to hear the full episode, and subscribe to LA Venture on Apple Podcasts, Stitcher, Spotify or wherever you get your podcasts.

This podcast is produced by L.A. Venture. The views and opinions expressed in the show are those of the speakers and do not necessarily reflect those of dot.LA or its newsroom.

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How the 'Thrift Haul' Boosted Secondhand Ecommerce Platforms

Lon Harris
Lon Harris is a contributor to dot.LA. His work has also appeared on ScreenJunkies, RottenTomatoes and Inside Streaming.
How the 'Thrift Haul' Boosted Secondhand Ecommerce Platforms
Evan Xie

If you can believe it, it’s been more than a decade since rapper Macklemore extolled the virtues of thrift shopping in a viral music video. But while scouring the ranks of vintage clothing stores looking for the ultimate come-up may have waned in popularity since 2012, the online version of this activity is apparently thriving.

According to a new trend story from CNBC, interest in “reselling” platforms like Etsy-owned Depop and Poshmark has exploded in the years since the start of the COVID-19 pandemic and lockdown. In an article that spends a frankly surprising amount of time focused on sellers receiving death threats before concluding that they’re “not the norm,” the network cites the usual belt-tightening ecommerce suspects – housebound individuals doing more of their shopping online coupled with inflation woes and recession fears – as the causes behind the uptick.

As for data, there’s a survey from Depop themselves, finding that 53% of respondents in the UK are more inclined to shop secondhand as living costs continue to rise. Additional research from Advance Market Analytics confirms the trend, citing not just increased demand for cheap clothes but the pressing need for a sustainable alternative to recycling clothing materials at its core.

The major popularity of “thrift haul” videos across social media platforms like YouTube and TikTok has also boosted the visibility of vintage clothes shopping and hunting for buried treasures. Teenage TikToker Jacklyn Wells scores millions of views on her thrift haul videos, only to get routinely mass-accused of greed for ratching up the Depop resell prices for her coolest finds and discoveries. Nonetheless, viral clips like Wells’ have helped to embed secondhand shopping apps more generally within online fashion culture. Fashion and beauty magazine Hunger now features a regular list of the hottest items on the re-sale market, with a focus on how to use them to recreate hot runway looks.

As with a lot of consumer and technology trends, the sudden surge of interest in second-hand clothing retailers was only partly organic. According to The Drum, ecommerce apps Vinted, eBay, and Depop have collectively spent around $120 million on advertising throughout the last few years, promoting the recent vintage shopping boom and helping to normalize second-hand shopping. This includes conventional advertising, of course, but also deals with online influencers to post content like “thrift haul” videos, along with shoutouts for where to track down the best finds.

Reselling platforms have naturally responded to the increase in visibility with new features (as well as a predictable hike in transaction fees). Poshmark recently introduced livestreamed “Posh Shows” during which sellers can host auctions or provide deeper insight into their inventory. Depop, meanwhile, has introduced a “Make Offer” option to fully integrate the bartering and negotiation process into the app, rather than forcing buyers and sellers to text or Direct Message one another elsewhere. (The platform formerly had a comments section on product pages, but shut this option down after finding that it led to arguments, and wasn’t particularly helpful in making purchase decisions.)

Now that it’s clear there’s money to be made in online thrift stores, larger and more established brands and retailers are also pushing their way into the space. H&M and Target have both partnered with online thrift store ThredUp on featured collections of previously-worn clothing. A new “curated” resale collection from Tommy Hilfiger – featuring minorly damaged items that were returned to its retail stores – was developed and promoted through a partnership with Depop, which has also teamed with Kellogg’s on a line of Pop-Tarts-inspired wear. J.Crew is even bringing back its classic ‘80s Rollneck Sweater in a nod to the renewed interest in all things vintage.

Still, with any surge of popularity and visibility, there must also come an accompanying backlash. In a sharp editorial this week for Arizona University’s Daily Wildcat, thrift shopping enthusiast Luke Lawson makes the case that sites like Depop are “gentrifying fashion,” stripping communities of local thrift stores that provide a valuable public service, particularly for members of low-income communities. As well, UK tabloids are routinely filled with secondhand shopping horror stories these days, another evidence point as to their increased visibility among British consumers specifically, not to mention the general dangers of buying personal items from strangers you met over the internet.

How to Startup: Mission Acquisition

Spencer Rascoff

Spencer Rascoff serves as executive chairman of dot.LA. He is an entrepreneur and company leader who co-founded Zillow, Hotwire, dot.LA, Pacaso and Supernova, and who served as Zillow's CEO for a decade. During Spencer's time as CEO, Zillow won dozens of "best places to work" awards as it grew to over 4,500 employees, $3 billion in revenue, and $10 billion in market capitalization. Prior to Zillow, Spencer co-founded and was VP Corporate Development of Hotwire, which was sold to Expedia for $685 million in 2003. Through his startup studio and venture capital firm, 75 & Sunny, Spencer is an active angel investor in over 100 companies and is incubating several more.

How to Startup: Mission Acquisition

Numbers don’t lie, but often they don’t tell the whole story. If you look at the facts and figures alone, launching a startup seems like a daunting enterprise. It seems like a miracle anyone makes it out the other side.

  • 90% of startups around the world fail.
  • On average, it takes startups 2-3 years to turn a profit. (Venture funded startups take far longer.)
  • Post-seed round, fewer than 10% of startups go on to successfully raise a Series A investment.
  • Less than 1% of startups go public.
  • A startup only has a .00006% chance of becoming a unicorn.

Ouch.

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From The Vault: VC Legend Bill Gurley On Startups, Venture Capital and Scaling

Spencer Rascoff

Spencer Rascoff serves as executive chairman of dot.LA. He is an entrepreneur and company leader who co-founded Zillow, Hotwire, dot.LA, Pacaso and Supernova, and who served as Zillow's CEO for a decade. During Spencer's time as CEO, Zillow won dozens of "best places to work" awards as it grew to over 4,500 employees, $3 billion in revenue, and $10 billion in market capitalization. Prior to Zillow, Spencer co-founded and was VP Corporate Development of Hotwire, which was sold to Expedia for $685 million in 2003. Through his startup studio and venture capital firm, 75 & Sunny, Spencer is an active angel investor in over 100 companies and is incubating several more.

Bill Gurley in a blue suit
Bill Gurley

This interview was originally published on December of 2020, and was recorded at the inaugural dot.LA Summit held October 27th & 28th.

One of my longtime favorite episodes of Office Hours was a few years ago when famed venture capitalist Bill Gurley and I talked about marketplace-based companies, how work-from-home will continue to accelerate business opportunities and his thoughts on big tech and antitrust.

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