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Back in the black

John Seelmeyer

The announcement by RetailOne last week that it was moving its executive offices and four jobs from Reno to Atlanta didn’t make much of a splash.

But the mere fact that RetailOne even exists anymore reflects a Herculean effort during the past two years by a Reno-based venture capital fund to keep the company alive.

These days, RetailOne is repositioned, much smaller and operated by a new management team and board.

Created by a couple of high school buddies, RetailOne in its first incarnation worked with grocery stores and other retailers on labor-intensive maintenance.

It took care of fixing grocery carts, for instance, and it provided maintenance of cold cases and other store hardware.

The business was good enough that it attracted the financial backing of Reno’s Nevada Ventures, but the venture capital firm soon watched as RetailOne began losing money big money nearly every month.

Robb Smith, the general partner in Nevada Ventures, recalled last week that principals of the venture firm wrestled with the decision whether to simply pull the plug on RetailOne and walk away.

Instead, they decided to try to stop the bleeding.

Nevada Ventures took over management of the RetailOne in 2003.

The first step: Dramatically paring back the company, which was operating in seven states.

Over the next few months, Nevada Ventures cut back more than 60 percent of RetailOne’s revenues, looking to get to a leaner, more profitable operation.

By 2004, the company was stable enough to attract new financing.

Nevada Ventures and Goldman Sachs raised $14 million in new capital.

At the same time, Nevada Ventures began pulling together a new management team, an effort that was completed just last month.A key hire: Jerry Seabourne took over as president after working as a top executive for a major store-planning company.

A new board of directors, meanwhile, includes Lawrie Lieberman, a technology and venture capital veteran.

Smith serves as chairman of the board.

Most important, the Nevada Ventures team and the new managers began thinking anew about RetailOne’s place in the world.

The retail maintenance business, Smith said, was proving to be a hard way to make a living.

“Every dollar we earned was a hardfought dollar,” he said.

But as they look around, the RetailOne team saw what they believed to be a potentially profitable niche: Managing store renovation projects.

Retail renewal is an estimated $11 billion market, Smith said, and each project for a national retail chain might involve dozens of subcontractors and suppliers working at hundreds of locations across the nation.

RetailOne began positioning itself to coordinate the work for major accounts.

“It has a chance, we think, to have spectacular growth,” Smith said.

The company these days is profitable with annual sales of about $4 million as it handles work for IKEA, Safeway and others.

But its owners think a couple of contracts from major retailers could drive the revenue figure upward in a hurry.

And to chase that business, RetailOne’s executive team wants to be closer to major retailers.

That accounts for its move at the start of this month to Atlanta, the home of major chains such as Home Depot.

The Georgia location should be helpful, too, in the company’s efforts to recruit information technology and other professionals, Seabourne said.

RetailOne found that labor supply thin in northern Nevada.

If nothing else, Seabourne said, air travel from Atlanta to potential clients will be easier and less expensive than travel from Reno.

The company said the move eliminated eight jobs in northern Nevada.

So will two years of intense, hands-on turnaround work pay off for Nevada Ventures? “You never know in this business,” Smith said.”You’re either a genius or idiot.

Sometimes both.”