This Startup Wants to Grow Your Side Hustle For You, While Cutting You a Monthly Check OpenStore gives Shopify owners two interesting options: Sell and walk away with a generous payout, or take a vacation while they do the work.
This story appears in the March 2024 issue of BIZ Experiences. Subscribe »
Stefan Gehrig's side hustle was doing well — and that became a dilemma.
The Melbourne, Australia-based BIZ Experiences had started a gym bag brand called Knkg, also known as King Kong Apparel, in 2011. It began as a side hustle that scratched an BIZ Experiencesial itch untouched by his academic day job, then grew into his full-time business. But by 2021, he'd hit a wall: To scale up, he needed resources that he didn't have.
Meanwhile, in Miami, investor and former PayPal executive Keith Rabois had just helped found a startup called OpenStore, which acquires Shopify stores with growth potential. Gehrig heard about OpenStore, but wasn't interested in selling Knkg. Then, in 2023, the startup launched another offering called OpenStore Drive, which lets Shopify owners retain ownership while handing off operations to OpenStore. That interested Gehrig a lot more.
Here's how it works: For one year, OpenStore Drive offers Shopify brand owners monthly payments comparable to what they were making before starting the program, while Drive scales the brand and keeps any revenue beyond that monthly payment. At the end of the year, owners have the choice to sign up for another year, sell to OpenStore if they make an offer, or take the company back. For Gehrig, this arrangement had basically no downsides. "Signing up for Drive was not just about having more time for myself, but about putting Knkg in better hands," he says. "I'm still a full owner of the brand, but they're kicking goals on my behalf."
For both acquisition and Drive, OpenStore looks for brands that do the majority of their business on Shopify, have at least $500,000 in net sales, and sell primarily to U.S.-based customers. "Where it becomes more of an art than a science is when we project whether a store has significant upside under our operation," says OpenStore's head of sourcing, Frank Kosarek. "Knkg was really the golden situation. We saw very strong potential and realized we absolutely needed to work with this brand to take it to the next level."
The road to getting noticed by OpenStore is straightforward. To be considered for both acquisition and Drive, BIZ Experiencess upload their financials to the OpenStore website and connect their Shopify and ad accounts. Within a business day, business owners can expect to receive an estimate of how much OpenStore would pay to buy them out (acquisition deals typically fall between $500,000 and $10 million) or how much they would receive in monthly payments.
From sign-up to sale, the process generally takes under a month, with the majority of time spent in due diligence after an offer is accepted. Once that hurdle is crossed, a transition phase allows the OpenStore team to learn more about the intricacies of the brand. As Gehrig was considering Drive, his main concern was whether the customer experience would change. After visiting the OpenStore team at their Miami office, he was convinced that they would operate the brand with care and were invested in the Knkg brand guidelines he'd established.
OpenStore has many success stories to show off. Jack Archer, a brand that was acquired in 2022 with a revenue of $1 million, reached $10 million after just nine months with OpenStore. Regen Health, a Drive brand, saw new customers grow 50% month over month after just a few months on Drive. "Whether we're driving a store or acquiring a store, we're treating it with the same growth playbook that we've developed to scale any new Shopify brand," says Kosarek.
These days, Gehrig is a few months into his time on Drive — and still not sure what he'll do at the end of the year. But he does know this: Having more time has allowed him to spend more time with his kids, go golfing more often, and, true to the BIZ Experiencesial spirit, work on developing a new brand. "If I do take Knkg back, I'll get a much better brand than I left," Gehrig says.
