When the co-founders of Faire Wholesale Inc. met to pitch the startup accelerator Y Combinator in Silicon Valley in 2016, one of them wasn’t there. As the team made a case for building an AI-powered marketplace to connect local retailers with the right merchandise wholesalers, chief technology officer Marcelo Cortes was beamed in on a Google Hangouts video.
This sort of thing didn’t happen so often before the COVID-19 pandemic, but Mr. Cortes was home in Canada’s Waterloo, Ont., region – where he’d already worked on the former social network Google+ and built out a team that helped launch Square Inc.’s Cash App mobile-payment service.
So Mr. Cortes was used to brushing off Silicon Valley when it beckoned. And by the time he started to put together the company Faire – then called Indigo Fair – he even joined the pitch remotely. As the company grew, so did its Kitchener, Ont., team. And as the pandemic hit, they were ready for the shift to remote collaboration. So ready, it seemed, that their growth accelerated.
The company, headquartered in San Francisco but with Mr. Cortes leading a team of nearly 250 staff of mostly engineers in the Kitchener-Waterloo region, was most recently valued at nearly US$12.6-billion. The company is now investing further in Canada, announcing a new downtown Toronto office Thursday with room for at least 150 staff. And its executives are confident they won’t stop there. “I just don’t know how long we’re going to be able to fit,” Mr. Cortes said of the new office.
Faire is joining the ranks of companies such as cloud-computing giant Snowflake Inc. to bet on both Toronto real estate and talent at a moment when the sector is on shaky footing. Even as they face the dual headwinds of a tech-market correction and retailers’ fears of an inflation-driven spending pullback, Faire’s co-founders are confident in their expansion.
Jeffrey Kolovson, the co-founding chief operating officer, pointed to the latest in Faire’s steady stream of financing: US$416-million just a month ago. The company, Mr. Kolovson said, has been “probably a little lucky with the timing” of it all.
Mr. Cortes arrived in Canada from Brazil in 2001, hoping to learn English before looking for work in the United States. Instead, he fell in love with both the country and his future wife. After working for a few small companies and studying at the University of Waterloo, he joined Google as a senior engineer at its local office, working on an Android app for Google+. When he later joined the payments platform Square – now called Block – in 2013, he established its Canadian office and treated its nascent Cash App like its own startup within the company.
He and several of the San Franciscans he worked with – Max Rhodes, Daniele Perito and Mr. Kolovson – spent the next few years talking about launching a company. Mr. Rhodes had started an umbrella business in his younger days, hoping to distribute products to mom-and-pop shops, but had been astounded at how difficult it was to connect with them. Eventually, the Square almuni decided to build a company that would address that problem by making it easier to connect brands with retailers.
“We understood how the market was in the dark of technology, like the way those retailers and brands were meeting … was completely outdated, inefficient and expensive,” Mr. Cortes said. “Both sides had to travel to a trade show.”
First launching out of Y Combinator, the venerated startup accelerator, they began to build a marketplace to make the whole process easier. They focused on gifts – such as greeting cards, candles and home decor – and curated a list of brands they believed would have a high success of selling at independent retailers. They enacted a try-before-you-buy policy, hoping to free retailers of the costly consequences of blindly buying new products in bulk.
And they began to develop artificial-intelligence algorithms to attempt matching shops with products that would sell well there, based in part on data provided by the retailers. To generate revenue, the company charged brands commissions on their orders.
Kirsten Green, the founder and managing partner of San Francisco’s commerce-focused Forerunner Ventures, had spent several years hunting for companies that would disrupt conventional retail-wholesale trade shows when she came across Faire just a few months into its existence.
Other marketplace businesses, she said in an interview, “weren’t fleshed out.” But with Faire, “I immediately saw that this team recognized the opportunity to create a bundled offering to make the whole proposition more compelling for both parties. … Their original vision is very much what they’re executing to today.”
The growth was rapid. By October, 2019, Faire was valued at US$1-billion after U.S.-based Lightspeed Venture Partners and Peter Thiel’s Founders Fund joined Forerunner in a US$150-million financing round. And when the pandemic hit months later, Faire was already well positioned for a world in which remote work became normal.
“We were fully set up for it,” Mr. Cortes said. “We had Zoom everywhere.” And it helped that in a world without trade shows, digital marketplaces only gained more appeal. “COVID forced them to adopt technology faster,” the co-founder continued.
Faire’s value has jumped a dozen-fold since then, as it offers goods from 70,000 brands to a network of half-a-million retailers across North America and Europe – though it’s hard to tell how the sector’s rocky past month has treated that valuation. The most recent US$416-million financing, Mr. Kolovson said, “is a good vote of confidence from our investors in how the business is performing and what they think will happen going forward.”
The company hired dozens of Toronto staff during the pandemic, and while remote work remains at a reality for many people on many days, the soon-to-be-official local hub on Wellington Street West may soon surpass Faire’s London office as its third-biggest.
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