Bootstrapping E-commerce Company Fun.com

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Tom Fallenstein, CEO of Fun.com, has built a fabulous e-commerce company out of rural Minnesota.

Sramana Mitra: Let’s start with your personal journey. Where are you from? Where were you born and raised, in what kind of environment?

Tom Fallenstein: I was born in Minnesota in a small town about an hour and a half south of Minneapolis. I’ve lived here all my life. I grew up just outside of the city. I went to school in Mankato for Computer Science and Graphic Design. Our mom was a seamstress. We loved Halloween. We always had the best costumes when we were little. When we got older, all of our friends wanted to borrow those costumes, so my sister decided to rent them out. That’s how the business started.Sramana Mitra: What year are we talking when you were starting this business with your sister?

Tom Fallenstein: This was 1992. I was still in high school. It was her business for a while and I just helped out. We opened the doors every October and started buying and making more costumes.

Sramana Mitra: I assume it was a brick-and-mortar business. In 1992, there was hardly any commercial Internet.

Tom Fallenstein: Yes. It was just that way until mid-2000. I went to school for Computer Science. I graduated in 2004. I started the first website in 2002 while I was in school and was learning about websites. The Internet was just coming online. I started the first website with one costume in three different colors. My sister was the model. I had those costumes in my college dorm room. That’s how our first website started.

Sramana Mitra: You were selling on the website or were you just taking orders and fulfilling offline?

Tom Fallenstein: Yes, the first website was flappercostumes.com. It was a flapper dress and I was taking orders over the Internet. At that time, when you searched on Yahoo for a flapper costume, there was only one result and it was my website.

Sramana Mitra: You were actually taking the payments over the Internet already?

Tom Fallenstein: Yes. At that time, PayPal was up and live. People were able to process through PayPal.

Sramana Mitra: That’s 2002, you said?

Tom Fallenstein: Yes.

Sramana Mitra: What happens next?

Tom Fallenstein: I graduated in 2004. At that time, the business was doing $40,000 a year. I was trying to decide if I should do this full-time. I really liked what was happening in the costume business. I just wasn’t sure if I could grow it. I did decide to try it full-time even though my mom said, “You should maybe try and get a real job.” I actually went suit shopping with my mom. After going suit shopping, the next day I showed up at her house in my suit ready for my first day to run my own business.

Our conversation continues here.

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