In February, a startup called Ecomom failed suddenly and tragically. Its founder, Jody Sherman, committed suicide and two weeks later, the company entered into Assignment for Benefit of Creditors.
The eco-friendly e-commerce company ran out of cash. It had raised $12 million but a dangerous, discount-heavy marketing strategy and poor financial decisions dwindled Ecomom's bank account down to nothing.
Despite its abrupt ending, Ecomom's brand may live on. Today ETailz Inc, an Ecomom competitor that launched in 2008, announced its acquisition of Ecomom's assets. It will be relaunching Ecomom.com under entirely new management this summer.
ETailz (formerly called GreenCupboards) worked with Sherwood Partners, the company hired to wind down Ecomom, to acquire Ecomom's domain, social media accounts, and remaining $1 million worth of inventory. It was an all-cash deal that takes care of the $1 million securitized bank loan, as well as some unsecured creditors.
Josh Neblett, ETailz' CEO, spoke with us about the deal and his future plans for Ecomom.
Neblett is moving Ecomom's headquarters to Spokane, Washington where ETailz is based. He says none of Ecomom's former employees or management team have joined ETailz, although he's not opposed to hiring them. Three of Ecomom's previous employees knew about the ETailz acquisition before today, and Neblett says they're "excited [ETailz is] going to keep the brand and vision alive." Neblett is speaking with Sherman's co-founder Emily Blakeney, tomorrow about the relaunch.
Unlike Ecomom, which never made money, Neblett says Etailz is profitable. Last year, it generated $13 million and Neblett expects 2013 revenue to double. Also unlike Ecomom, ETailz isn't a big fan of raising outside funding. His company raised $280,000 one time in 2008 and it hasn't raised money since. ETailz has 60 employees.
We asked Neblett why he wanted to purchase Ecomom's assets. It's a little eerie, like buying a house someone died in.
"I strongly believe in the next three to five years you're going to see someone emerge as a leader in the eco-friendly space," Neblett said. "At the end of the day, you have to look at the business. As we looked at the customer following and brand loyalty, we said 'There's something here. It's a strong brand, a strong domain.' We can make this flourish, and grow Ecomom into we think what [the former management team] wanted."
We asked Neblett how he feels about discounts, a tactic Sherman's team leaned on too often to produce sales.
"We believe if price is the only reason you're buying from us then we're not doing our job right," he said. "We do run sales and discounts, but we do it selectively in a way that is sustainable."
More From Business Insider