ANN ARBOR – At first glance, Danny Sheridan's story reads more like a Hollywood screenplay than real life.
Sheridan, a senior at the University of Michigan, has turned a modest online operation into a multimillion-dollar business, thanks to encouragement from his business-savvy parents and a lot of determination.
It all started during his freshman year of high school in Cleveland, Ohio.
Sheridan noticed that a gaming accessory called Xbox Live, which allows you to play online with friends, was going to go up in price on eBay. The product, which came in the form of a gift card, cost $50 and the price was being changed to $60.
"So I thought, ‘Huh. If I buy them now,’ I asked my parents, ‘Can I sell them later for more money?'
That seemed simple," said Sheridan. "They said, 'Yes, that’s arbitrage. What would your profitability be?'"
Danny Sheridan (far right) and his managing team (Courtesy: Danny Sheridan)
He opened an Excel spreadsheet and ran the numbers, but ended up in the red, with a negative profit.
"I went back to my parents and showed them and they said, ‘What can you change?’ It was almost like being in business school. Little did I know!"
Sheridan is graduating from Michigan's Ross School of Business this spring.
The early days: Storing products at his parents' house (Courtesy: Danny Sheridan)
He began contacting companies and found a supplier that sold him 150 years' worth of one-year membership cards for $40.
"So I decided to use $6,000 of my bar mitzvah money, which was actually my funding source. I am glad that my parents didn’t say no, because at the time I wasn’t in control of the funds. They actually transferred all of it over and said, 'It’s your life,’ which was nice to a freshman in high school. I really appreciated it. They helped give me confidence early on and make good decisions, and made it clear that it's on me, not anyone else.
"And so boxes arrived at my house. And it was kind of an odd experience, to let $6,000 sit in the closet and then, two months later, when prices started going up on eBay, all of a sudden these things were selling for $60. So I bought it at $40, I sold them for about $55 to give a little discount, and was able to make a 10 percent profit margin so in just six months, (I) sold out of all of them and made $600."
Woodside Distributors was born.
He chose the name because he lived on Woodside Lane. "This was a true kid-business, said Sheridan. "There was a company in Cleveland that sold LED lights called ‘Mr. Beams,’ which by chance earlier this year was acquired by Ring, a startup, which was then acquired by Amazon for $1.8 billion. So by chance, the first product I sold, Amazon now owns. It’s kind of wild."
And soon he needed more space for his growing number of products, which his parents would drive him to pick up, since he wasn't yet 16.
"I have three older brothers and two had gone off to college, so I used their bedrooms as my fulfillment center. And I got really really good at about eight to ten seconds per package to send out a product. That rivals Amazon’s speeds today," he said.
Boxes fill one of Sheridan's brother's rooms at home (Courtesy: Danny Sheridan)
Sheridan dropped out of football and lacrosse to pursue his business full time.
After two years, he realized he needed a fulfillment service to deal with order demand. He discovered a small service called Amazon Marketplace and, within one month, his Amazon sales outperformed two years of sales on eBay.
Almost immediately, he severed operations with eBay and pushed forward with Amazon.
During his senior year of high school, he turned to his friend Alex Glassman who he calls "the smartest kid in AP Physics," to help with data analytics.
"Senior year of high school, we scaled it up to $2 million in revenue. So while other people were doing their thing in high school, we would meet up after school and sell stuff online, which other people didn’t understand."
(Screenshot of Woodside Distributors homepage)
The two attend U-M together today, and still work together as team managers, along with another one of their friends, selling over 200 products.
Throughout their years at Michigan, they have hired several students to help develop software, manage accounts and analyze data.
At its height, there were 12 students working for Woodside Distributors. Over one summer break, they rented a classroom at the Ross Business School and had live stats running on the projectors.
(Courtesy: Danny Sheridan)
"It was a very quantitative, goal-driven company. Our culture was: Drive profit, drive profit, drive profit. We topped $3.5 million in revenue together in a year and everyone was under 21 years old. But that’s real money. A coffee shop doesn’t do that in a year and they work really hard and they have staff."
So what's the secret to Woodside Distributor's success?
"We get to sit behind a computer, paying no full-time salaries, paying no rent. Right now, it’s making money and I’m putting in about seven to 10 hours a week. The ideas are based off a four-hour workweek."
With graduation around the corner, Sheridan is looking forward to starting his career.
Where? Amazon, of course.
"I’m going to be working with third-party sellers, so exactly people like me, and building a better experience for them on the platform. So every time I said, ‘This pisses me off,’ I get to go solve that, which is, in terms of job alignment, they placed me perfectly. And I think that gives credit to their on-campus recruiting program. Them choosing Michigan as a target school is what led me there."
Visit Woodside Distributors' website.