Elise Wetzel of Pasadena founded iSold It LLC, a franchisor of eBay drop-off stores. Customers can bring items they wish to auction on eBay, and for a commission, iSold It takes care of the listing, the photographs, the descriptions and the shipping. Since Wetzel opened the first iSold It store in Pasadena three years ago, the chain has ballooned to more than 160 operating franchises, with another 800 under contract to open later this year after a recent $7.3 million venture capital infusion. The idea for the stores came when Wetzel tried to set up an eBay auction as a school fundraiser and discovered it was more complicated than she'd thought. At the time, she was a 39-year-old mom taking a break to stay at home with her two preschool-aged children. In 1994, she and her husband Rick founded Wetzel's Pretzels, the ubiquitous mall-based chain that sells baked soft pretzels. She had been a marketing executive at Nestle USA.


Question: How do you balance being a mom with running an entrepreneurial operation?
Answer:
It's definitely a balancing act. And it's a tough one. People ask if there was ever a moment when you didn't think the business would make it, and with this, that was never the issue. It was more a question of whether I was going to make it through this with two preschoolers. I live very close to the office, and the kid's school is very close to the office. That makes life a lot simpler. Plus, I've stepped aside. So when my kids get out of school at 2 p.m., that's where I go.


Q: Who's running the company now?
A:
I was the chairman of the company until about a month and a half ago. I handed it over to my husband with the influx of the venture capital money. When the VC money came in, that's when I decided "OK, now I'll take my bow." He's the chairman now. He's mostly involved with setting up strategic relationships with other partners.


Q: You hired Mail Boxes Etc. executive Ken Sully after six months. When did you realize the company was bigger than you?
A:
After about 30 days it was bigger than me. My husband and I were trying to figure out how we should handle this tiger we've got by the tail. We thought we could hire our way out of it. I had just decided to stay home with my kids, and I wasn't really excited about a work-chart with 13 people reporting to me. Ken was the 'perfect storm' of experience for us: He's a technology guy, he's a franchise guy with a very similar concept for a similar kind of store economics and he's just got a tremendous amount of energy.


Q: So where did you come up with the idea?
A:
I had never sold anything on eBay before this idea I am very open about that. That's why we needed this service. Because I started to sit down and figure out what it would take to set up an auction, and went "Oh my gosh, I've got to take this somewhere this is too complicated." Finding somebody that could help out with the technology aspect of it was key. Thousands of people sell on eBay from their garages. I knew that I could do it. I knew I could figure it out.


Q: A lot of people get great ideas, but what made you so sure it would work as a business?
A:
The idea just went through me like a lightning bolt, and when life serves you up one of those I would just get chills thinking about the opportunity that was there. I couldn't believe it hadn't been done. And so I had to hire the nanny back again and shift into gear. I was actually a stay-at-home mom at that point. I had decided to take a break and be home with my two kids. They call it "stopping out," not dropping out. I'd been on a break for nine months.


Q: What were the initial challenges?
A:
I knew I had a system to talk to eBay everyone does but what I didn't have was an automated system to talk backwards, to my customers, and to process checks. I mean, I could sit back there with my calculator and figure out how much they were owed, but if I wanted this to be scalable I would need to automate these things.


Q: Where did you turn for help?
A:
My brother makes his living selling on eBay (he sells cables and wireless hookups), so he was very helpful in the beginning. He flew out several times. I'd call him on the hotline with tears streaming down my face. We hired a programmer. Then we hired two. Then we hired 11.


Q: How did you fund the company initially?
A:
We had a number of individual investors who gave us seed money for initial operations. And now of course we have franchise fees coming in to help with cash flow. The infrastructure is in place. The engine is built. Now we want to put our foot on the gas and accelerate. To do that, we have to spread the message. We're spending on marketing. Since we've received the venture capital money, we have a much more aggressive marketing program. We've already been on radio. We're starting some cable TV, some Sunday inserts.


Q: What happened in those first three months that made you realize you had something?
A:
EBay calls these drop-off stores "trading posts." After opening our first store in Pasadena, within three months we became the highest-volume trading post in the world. The day I opened, before I dropped a single postcard, I had people coming in asking how it worked. You'd give them a brochure and your commission schedule and two days later they'd be back, backing up their cars. We tapped into a consumer need, that's what it was. People wanted a place to take things to. We give free appraisals people love that. Sometimes people don't know if what they've got is trash or treasure.


Q: When I shop on eBay, will I know that an item I'm buying is from an iSold It drop-off store?
A:
Absolutely. You'll even know which store it could be, iSold it, Florida 102, for example. We're trying to prove it out with market research right now but our hypothesis is that items that sell through iSold it stores go for more money than items sold by an individuals. We're very straightforward. We have a return policy if it's not what we presented it to be. People pay more for the higher feedback, for the return policy.


Q: So in a way, you're competing with the mom-and-pop sellers on eBay?
A:
There's a couple of ways to think about competition. Once your auction is up there, who are you competing with that might have the same item? That's one way. But the way I look at competition, I have two customers: one is the guy who buys it on eBay, but I'm also trying to get to get people to sell through my stores. Those are my customers the people who come into my stores. So what is my competition there? Yard sales? They could do it themselves on eBay which they're not going to do.


Q: What's your relation like with eBay?
A:
We're partners with eBay. You know, eBay is as strong as their stuff to sell and the people to buy on their site. We're helping all sorts of people who would love to sell but aren't going to invest the time to figure out how to go about it. We've done lots of studies with eBay, and it's incremental volume coming onto their site. They love us. We're on the phone with them all the time.


Q: Did you consult with eBay before you launched?
A:
When we started, I didn't call them or anything. They have thousands of merchants they weren't interested in hearing from me back then. But once we became the highest-volume trading post, and they saw what we were doing, then we started talking. Once our sellers get their stuff up for auction on eBay, we send them an electronic link in their e-mail so they can watch the auction. They're much more likely to then go spend more time on eBay, because we send them there to watch their own sale. While they're there, they start looking around at all the other cool things for sale.


Q: You weren't the first to think of this idea. Do you pay attention to your competitors?
A:
My hunch is it's in the hundreds. I equate our industry very much to the video rental industry when that category was emerging: Gas stations were renting out videos for you. Everybody was hanging out a shingle. But at the end of the day, it was the people who specialized and built a brand that came to mean something in the consumer's minds. Blockbuster Video emerged. They took this idea that was out there that everybody was doing they had scores of competitors but had a single-minded focus. I think it's the same way in this industry.


Q: Do you see yourselves as an Internet company or a franchise company?
A:
It's a technology company, but at the same time we're enablers. We're just getting started, and we're in the first inning of this concept. We aim to be able to have a network of what will be thousands of stores tangible brick-and-mortar stores that can talk to the Internet. None of us knows where e-commerce is going to go in the future, but I do believe that lots of online companies are going to want a physical point of contact for their customers. I don't see it as a replacement for online commerce. I just think we're in a very good position as it evolves.


Q: How do you go from pretzels to eBay?
A:
Wetzel's Pretzels gave us a wonderful background in understanding franchising. When I came up with this idea, there was a competitor out here called Auction Drop but their idea was to go out and build stores. We looked at it and said, "This model is perfect for franchising." Because you want an owner-operator who can show the love that the business deserves in each of their individual communities.


Q: Tell us about the Wetzel's Pretzel experience.
A:
I was there for Wetzel's Pretzels from the beginning. My husband and a business partner started it in 1994. In fact, Rick credits me with the idea. The lines for mall pretzel shops on the East Coast were really long. It hadn't hit the West Coast yet. We had been saying, "Were getting married, let's open a restaurant, what should we do?" Rotisserie chicken was emerging at the time, we thought of doing something like that, but we didn't really know how to cook. We thought, "Pretzels, that's one we can figure out. Salt and butter and water and flour. We can do that."


Q: Could you?
A:
So I made the first batch of pretzels in my oven at our apartment, and it was horrid. But that didn't dissuade us. We knew had to get a professional to come up with the recipe.


Q: What's it like being a franchise power-couple?
A:
We don't really think of ourselves that way. It's fun. We have a shared interest in business, and a passion for the companies that we're building. It makes for interesting breakfast conversation, that's for sure. Rick is still running Wetzel's Pretzels, though he works with a partner in that business. He spends a lot of time working on iSold It too.


Q: What's your day-to-day role at the company now that you're back to being a mom?
A:
My role has shifted to more of a founder-type of role. Providing "strategic insight," and key marketing areas. I guess that sounds like what a CEO does, but I've really taken a step back.


Q: The franchise marketplace seems much more cluttered than it was 12 years ago. Do you feel that?
A:
I think there's always room in the marketplace for a good idea. You've got to find it. If there's a window of opportunity that opens up, you've got to jump through it. Two times we have found that.


Q: Do you think the online auction is just a trend?
A:
You know, I read an interesting book by a guy named Daniel Nissanoff, and his notion is that as a society, we're going to start hanging on to valuables less and flipping them more. If you've got a pair of skis taking up space in your closet, for a long time you had an emotional attachment to them. But then you'll realize that you can turn them into money to get another pair of skis, or maybe you switched to snowboarding.


Q: How long do you hold onto things?
A:
Since I've started this business, I sell a lot of stuff. I'm down at that Pasadena store once a month with stuff, like a fancy pair of blue jeans that doesn't fit, the Palm Pilot we upgraded to the next one. There's always something. A kid's trike that we no longer use. There's always something to sell. It's fun.

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