How the Founder of Zola Grew Her Bottom Line by Giving Away Free Products
To grow its business, the CEO of the wedding-registry website added new services -- and gave them away for free.
Since its launch in 2013, Zola has had one way to make money: wedding registries. The company makes registries easier
and more efficient -- for example, offering the ability to curate them from dozens of brands, to delay shipping gifts until after the nuptials and to allow guests to pool funds into group gifts or honeymoon experiences. This has attracted hundreds of thousands of lovebirds to the site. Zola takes a 40 percent cut, on average, of gifts purchased directly from its marketplace and a smaller slice of items purchased through affiliates.
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It’s a straightforward business model, but last year, founder and CEO Shan-Lyn Ma was eager to expand. She knew what users wanted. “The number one request from couples was help with planning more of their wedding,” Ma says. But she couldn’t figure out how to do that efficiently. How does Zola build new services that complement its registry business?
In late 2016, she had a realization: She was thinking too narrowly. “If we build a lot of valuable tools for free, couples will see how well we work and want to register with us to have everything in one place.” It could have been seen as a risky move; she was essentially diverting resources away from the way Zola makes money. But she was following a model of a far bigger internet cash machine. “It’s similar to the strategy used at Google. People find value in its free tools, so they use its search, which is how the company makes money,” she says.
Ma tasked her engineering team with creating a suite of techie features. The marching orders: Build things that help people manage their weddings and that Zola can give away for free. Her team came back with a wide range of tools, including one that helps couples build a beautiful website and others to help manage the minutiae of the big event, from RSVP tracking to Aunt Judy’s meal preference.
This put Zola in competition with sites like The Knot and Wedding Wire, which offer similar services. But unlike both, Zola’s new tools and registry business are fully integrated, creating true one-stop digital planning. And anyway, Ma believes the opportunity is bigger than any competitor. Couples who spring for real-life wedding planners spend thousands of dollars -- so many of them should be interested in using Zola to streamline the process and cut costs. This new vision impressed the VC firm Lightspeed Ventures, which invested $25 million to help Zola make these tools real.
The new Zola launched in April, and now when someone googles “wedding planning,” they’ll find a paid listing that says, “Zola Weddings: Free Suite of Wedding Planning Tools.” To date, more than 300,000 couples have used Zola’s services, adding more than $10 million worth of gifts to registries every week. Ma declines to share specific dollar amounts but says that revenues are on track to double in 2017, easily exceeding $100 million. It’s the kind of happily-ever-after story she wanted.