Tracing The Lineage Of Dsco

I’m an entrepreneur, that’s what I am and I don’t know how to be anything else. I have put almost 20 years of my life into the same problem so I know a lot about it.

If I know three things about Utah’s citizens, it’s this: they love startups, they love tracing lineage, and they love dirty soda. Today’s article is going to combine the first two and if you really want to get greedy, grab a creamer-splashed Diet Coke and read along.

Recently, it was announced that Nordstrom has acquired a minority stake in Lehi-based Dsco, a drop shipping-focused solution “simplifying and standardizing the way retailers and suppliers connect and exchange inventory, order, and catalog data.” This immediately led startup enthusiasts/lineage tracers to freak out and start asking questions. Who is Dsco? Do they have any ties to DropShip Commerce? What about a connection to Doba, another Utah-based drop shipping solution that was recently acquired by Focus Technology Company? Is Jeremy Hanks — known by many as the wizened grandfather of Utah drop shipping — involved? How do you pronounce Dsco? What the hell even is drop shipping and why do people keep talking about it?

These are all valid questions and I must admit, I’ve pondered on the possibilities myself a time or two. Being the intrepid truth-seeker I am, I went straight to the source and through sheer willpower — or maybe just an interview with Hanks, either way — I’m now ready to reveal the answers.

Rewind to the year 1998. Jeremy Hanks was neither wizened nor a drop shipping grandfather when he launched his first startup called GearTrade, an online marketplace for outdoor retailers to liquidate their closeout inventory. This carried on for a few years until a SLC-based retailer approached and basically said, a solution for closeout inventory is great but we need help with drop shipping.

“We were like, what is drop shipping?” said Hanks.

First off, I’m amazed that drop shipping was a thing this long ago because the first time I heard the word was six months ago. Second, to answer Hanks question to himself, drop shipping is when a retailer doesn’t stock inventory, instead relying on the supplier to fulfill orders and ship directly to the customer. This obviously reduces the need for a closeout inventory solution, which Hanks immediately realized.

“Wait a minute, if you do that for the retailer they wouldn’t have closeout inventory, which we had just spent several years working on,” said Hanks. “That’s where Doba came from. The business model and the actual product at Doba was a mismatch of what we saw through GearTrade.”

Enter Doba, startup #2 and Hanks’ first full-fledged dip into the drop shipping world. Doba was created in 2002 as a drop shipping virtual distributor solution for retailers and things quickly took off.

“I was at Doba nine years and we grew super fast,” said Hanks. “We were the fastest growing company in Utah from 2003–2006, we were #23 on the Inc 500, and we exploded because of this democratization of ecommerce.”

As time wore on, Hanks began examining other ways to make an impact in the drop shipping world. Doba had virtual distribution on lockdown, but there were all sorts of other problems waiting to be solved.

“Various times at Doba, we were poking around: how do we do more software?” said Hanks. “That culminated in 2011, when we said let’s see if we can have our cake and eat it too. We have some technology, some intellectual property that we’ve built, we do think there’s a problem out there for retailers and brands/suppliers to communicate and share data. Doba wasn’t that, they were a virtual distributor.”

Hanks’ third venture, DropShip Commerce, was built from this frame of mind and revolved around a strange connection to the number 11. Backed by some capital from Doba, Hanks took 11 team members from Doba to begin work on DropShip Commerce, announcing the venture on 11/11/11. They eventually raised a seed round led by Kickstart Seed Fund and began cracking down on finding an answer to retailer/brand communication problems. After three years, progress wasn’t going as expected.

“We had grown the business to a higher number of employees and we realized we were overscaling,” said Hanks. “We scaled down to seven people and we really kept working on what’s the problem, what’s the solution? We had some good things going but we weren’t really finding our stride.”

Running into the same roadblock, Hanks did what every entrepreneur does when they need to clear mental space — he went to Costa Rica for two weeks, turned off his cell phone, and filled a notebook with a bunch of random ideas. After returning and discussing some of the solutions with his team, a new project began.

“Right at the first of 2015, we started The Disco Ball Project,” said Hanks. “It was simplification. Let’s simplify and focus, move the product back to the basics of things we knew after nine years at Doba and three more years at DropShip Commerce. For me and a couple of the team, this is over a decade. What do we know?”

What they knew was this: how to build a simplified platform that helps retailers/brands partner and communicate through a single, standardized supply network. This platform — which was spun out of The Disco Ball Project — was originally known as the Dsco (pronounced the same as disco) platform from DropShip Commerce. It was released as a pilot program that convinced Nordstrom to onboard as a customer in September 2015 and things progressed from there, eventually leading to Nordstrom acquiring a minority stake in Dsco.

“The first thing that Nordstrom brought was validation of our worldview and philosophy,” said Hanks. “The second thing that Nordstrom gave us, they became a customer. It’s one thing to say we see the world the same way, it’s another to put their time, money, and energy behind it.”

If you’re confused by all the different names, don’t be. DropShip Commerce (whose legal entity is Ds Co) will move forward simply as Dsco. They will be strengthened by their Nordstrom partnership, they will keep addressing solutions for inventory distortion, and they will continue to be led by Jeremy Hanks (aka drop shipping grand master).

“I’m an entrepreneur, that’s what I am and I don’t know how to be anything else,” said Hanks. “I have put almost 20 years of my life into the same problem so I know a lot about it. Probably as much as anyone on the planet, me and some of the team as well. I turn 42 in a couple of months and it’s like, what else am I going to do? I’m going to be a serial entrepreneur, I’m going to do these startups, and it might take me 30 years but at the end of that, we’ve created the next disruptor of the supply chain that has not been disrupted. It’s a big opportunity.”

Published 7/22/2016

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