As a resident of Alabama, who left school, earned $ 550 million

Bill Smith grew up in the family of an ordinary entrepreneur, but due to the fact that all his life he had learned from his mistakes, he managed to create a company for the delivery of Shipt products worth more than $ 550 million. The success story of an ordinary guy from Birmingham, Alabama, tells CNBC.

Photo: Shipt

Acquisition of a company for hundreds of millions of dollars is the dream of any company, but the story Shipt not like the others. It was not created in start-up mecca, for example, in Silicon Valley or in Seattle, where the idea to create Amazon.

History Shipt starts in Birmingham, Alabama. High school student and avid entrepreneur Bill Smith was extremely disliked going to the grocery store.

“My dad was an entrepreneur, so I grew up seeing him do different things, and literally from the time I was 5 years old, I wanted to understand business and how things worked,” Smith said, adding that his father worked at mobile phone industry. “This way I was able to be involved and learn some things at an early age.”

Inspired by his father and having a great desire to make money, Smith dropped out of school when he was 16 years old. This is very disappointed father.

“My father wasn’t supportive of my idea,” Smith recalls, laughing. “He actually thought it was terrible... and I remember him coming to the school and meeting with the counselors who told my dad, 'We're not worried about Bill. He'll do great."

At the beginning of 2000, Smith began selling cell phones to small businesses. In the end, he opened two retail cell phone stores and earned from $ 4000 to $ 5000 per month.

While working, Smith passed the GED and even attended college for a while. But he quickly realized that traditional education was simply not for him. Entrepreneurship, in his opinion, was something that could not be studied in the classroom.

“I think business is just about getting out and solving problems, and I don’t know if you can learn entrepreneurship,” Smith says. “It’s wrong to think that you’ll go to school and someone who’s never been an entrepreneur will teach you how to be an entrepreneur.”

After three years of managing his cellular business, Smith built a company that provided small loans. Then, in 2009, he founded Insight Card Servicescompany offering re-downloadable prepaid cards Visa.

Smith said the prepaid credit card business was extremely difficult, but he studied it. His first big deal happened in 2014, when GreenDot Corporationbank holding company acquired Insight for an amount that was not reported, although Smith notes that it was about millions.

After the deal, Smith began his next earning opportunity. While Amazon began to create his cult, and Uber - win clients. At this moment the idea came up with Shipt.

From what it all began

Initial plan Shipt, says Smith, was to build a business around delivery on the day of the order for large retailers. He himself hated shopping and wanted to figure out how to solve this terrible task.

“There has to be a way to buy anything from any store and get it the same day,” Smith explains. “I saw that this is a new model that allows us to offer services that have not been offered before on such a scale. I wanted to figure out how to apply it to my problem.”

Photo: Shipt

Smith wanted customers to go to the retailer's website, place an order, and get it the same day. To make it happen Shipt used a network of independent contractors. Smith invested $ 3 million of his own capital into a company that was initially valued at $ 100 000.

In the first test version Shiptwhich was launched in November of 2014, in Birmingham, Smith invested $ 250 000 capital to hire several engineers. Since it was difficult for Smith to convince retailers to integrate his delivery option into their website, he had to think about a different approach.

The team combined a system in which the customer was redirected to the retailer’s website, placed a purchase order in the store, and then switched to the platform Shiptso that a company employee can pick it up from the store.

Did not work

“I quickly realized that people wanted to be able to go to a website and do everything in one place,” Bill said.

At that time, in December 2014, the company was on the verge of closure. The model did not work, and people told him that the demand for products was growing more than anything else.

That all changed after the stressful journey of Bill and two babies to the store.

He first went to the grocery store with his wife, a one-year-old child and a newborn. Both children burst into tears, so the family had to leave immediately.

“Literally in the grocery store parking lot, I said to my wife, ‘A lot of people want grocery delivery, and I want to find a way to solve that problem,’” Bill recalls.

On Monday after his insight, Smith came to work and told his team that they should focus on creating a fully integrated system where customers can do everything from buying a product to delivery, all on a single platform.

To understand that the service really works, he suggested to his team not to write the first line of code until they sell 1000 membership fees for this service.

Having invested a couple of thousand dollars in a quality 60-second video about the service, Smith managed to get the first 1000 subscribers in three weeks.

What helped Shipt stand out

Now Shipt Offers same-day unlimited delivery to its members for 99 dollars per year or 14 dollars per month. After registering for a membership, users can shop in their app or online, choose a delivery option, and then check. Field of this representatives Shipt go to the store, remove the products from the shelf and deliver them to customers' homes. Shipping is free for orders over $ 35.

Shipt now operates in more than 80 US markets and has a network of 40 000 representatives, and by the end of the year it is planned to expand to 100 000. It offers many retailers on its platform, including major brands such as Kroger and Publix.

Smith says at the end of the year 2015 Shipt began to achieve some success.

At that point, “we changed our approach,” Smith says. “Once customers started using the service, retailers started calling us.”

By December 2017, orders Shipt increased by 60 percent compared to June, and the company expected to receive revenue of 1 billion in 2018 year.

Photo: Shipt

But Shipt competitors quickly emerged, such as Instacart, Amazon Fresh.

Despite their success, Smith talked about what distinguishes his company.

“The fact that employees care about customers is really the key to success,” Smith says. “For example, a person will order children's cough syrup or some item that indicates they have a child, and our employee will take a balloon for the child and deliver it with the order.”

Future Shipt

Since the inception of the company, Smith has calculated that Target will be his main partner, but this happened only in the summer of 2017.

“Talks have moved from partnership to potential investment to full acquisition,” Smith says. “I met with some of their senior leaders and it was clear that they were interested in what we were doing.”

In December Target has acquired Shipt more than half a billion dollars.

With a poet Target began to rapidly expand the service, offering delivery of products and other goods on the platform Shipt for a few days in Florida.

Shipt will remain a subsidiary Targetmanaging their business on their own, and will continue to offer their services to other retailers and continue to work with offices in Birmingham and San Francisco.

For Smith, this is important because success Shipt based on a simple concept: treat people well (both with employees and customers).

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