This week Blackford Capital announced that it acquired e-commerce retailer Starfire Direct, and Casual News Now reached out to both companies to talk about how the partnership started, the synergies between the two companies, and the next steps.
Martin Stein, founder and managing director of Blackford, said the investment firm looks for three things when planning an acquisition.
One is an industry that they believe has a lot of opportunity. And those are usually larger, growing or fragmented industries. The second is an owner that they think is talented and has a unique business model. And finally, they look for a business where they’re actually able to contribute value.
“Starfire Direct checked all three boxes,” Stein said. “The outdoor industry is a growing industry and fragmented industry, and recently, it’s gotten quite a bit of attention because of the broad demographic shifts that are occurring. People are moving out of cities, and they’re moving out of places like Michigan, to Southern California, or to Florida. As they’re doing that, they’re making substantial investments in their home. And we really think that the future is outside.”
Stein says that right now, that gets a little overshadowed because everyone’s talking about the Covid bump and the Covid fall. But from Blackford’s vantage point, all Covid did was accelerate a trend that was occurring anyway.
“And then it moved things in a much more favorable direction toward the relationship that people have with their work and with their home,” Stein continued. “And so we see a long-term investment in that.”
Jonathan Burlingham started Starfire Direct 15 years ago, and he says it has been a fantastic journey. He’s been in the industry for 22 years, but he says he quickly realized that it’s hard going out on your own.
“I really needed a talented, driven partner that believes in the same ideals, that has a good work ethic and passion for helping people and companies grow,” Burlingham said. “And it’s just hard to do that on your own. We talked to several potential partners but when I met Martin and when I met Blackford, it was very clear to me that they set the bar much higher for themselves, which is something I’ve done for 15 years.”
Burlingham says the industry is much further ahead today than it would have been if Covid had not happened, despite a little bit of a fallback. “And with the right partnerships and the right strategy in place, and the resources, we can drive this so much further together. And we’re going to be able to help a lot of people, a lot of families in the process.”
One of Blackford’s particular skills and expertise is digital commerce, so it aims to help Starfire focus on interfacing with the customer and doing that in a better, more efficient and more customized fashion than the competitors do.
“One of our operating partners, a gentleman named Chris Wilson, has done a lot of work with Jonathan over the last several months to help identify how we can continue to be the best customer interface in the industry,” Stein said. “Wilson’s background was working at L.L. Bean — he helped grow them from $100 million of online revenue to a billion dollars of online revenue and be one of the top five brands in the industry. He is now working with us to help our portfolio companies, including Starfire.”
One of the big moves the two companies are making together is looking at a global sourcing strategy.
“We aim to have the best products in the market, at the lowest prices with the highest quality and have the best service levels that can only be achieved with the scale of the sourcing organization that Blackford will bring to this equation,” Stein said.
Stein says they plan to have that in place by 2023 and will then begin to focus on new product development and substantial opportunities to grow in that regard.
“We’ll also be looking at online growth through multiple channels and seeing if we can take the Starfire products and sell those through the distribution, sell those through brick and mortar. So that’ll be another big step that we’ll have. And then we’ll be looking to add to the product line inquisitively.”
Burlingham says something that our industry struggles with in general is showcasing products in a digital manner that is really appealing to the modern, everyday consumer, or contractor. That’s why he says Starfire is going to continue to drive focus toward that online model, where it’s a “beautiful, pleasant experience for the end consumer, whether that’s with augmented reality, having relaxed return policies, quick shipping, good value pieces, but also high-quality contractor programs, and more.”
“There’s so much that needs to happen yet in our industry that we’re hoping to kind of be the leader in that in that way,” he continued. “We’re gonna have a lot of headway into that.”
Starfire had a growth trajectory of 30% or 40%, which in its own right is spectacular. And Stein says Blackford is going to further accelerate that by doing additional add-on acquisitions. Starfire is just the beginning.
“In a few weeks we will have some more exciting announcements coming out on that, which is pretty short order,” Stein said. “These are businesses where we’ve already got the letters of intent signed, we’ve already done the due diligence, and are very close to getting them closed. So I think there’s going to be a pretty radical transformation in short order here,” Stein said.
Burlingham says he is excited about telling his story to other entrepreneurs or others thinking about going through this type of process.
“We’re doing this, and we’re not going to slow down,” he said. “We’re not going to take no for an answer, and we’re going to make this a huge success. My hope, personally, is that our partners that have come to trust me, the Starfire brand, and all that it represents over the last 15 years and that they continue to trust what we’re doing.
“I hope that they yield to certain initiatives that we’re trying to do because we’re implementing those to help others,” he continued. “Everything we do is a win-win-win. How do they win, how do we win and how does our customer win? Change is difficult to grasp, but we’re going in that direction, and we hope to partner with a lot of the manufacturers that we’ve already been partnered with, as well as continue to grow and be successful with them. It’s going to be an exciting few years.”
