Fashion is a $3 trillion dollar industry. Combine that number with the lucrative e-retail market and when you come across a panel like this produced by OS Fashion, you pay attention. The funders were men. The founders, women. The content, lively and informative.
“The secret to getting investors attention for your business is to build a cult following,” said Jacob Brody of Mesa+, an early investor in Grand Street, which did just that and raised a round to the tune of $1.3 million. “Grand Street created a cult following. People tweeted, ‘I want to buy that!’ Some people were putting their credit card numbers into emails (that they were sending to the company. Thanks for the love, guys, but don’t do that!”
“You need a standout product – and a story that’s greater than just the product alone, said Fashion’s Collective founder Elizabeth Cannon. “’The Ultimate Driving Machine’ – BMW hasn’t changed that story in years. Keep your message simple.”
Engagement and seduction were the keywords for keeping customers.
“The biggest challenge online is acquiring customers,” said Cannon. “You can have the best story, brand or product, but if you can’t get them into people’s hands, who gives a shit? It comes down to acquiring customers.”
Learn how to use the free platforms that are available. Like Twitter and Facebook. Email is another easy, cost-effective method for making that happen.
“Email is free,” Shai Goldman from 500 Startups offered. “Build a landing page. Collect email addresses, create reputable content and send emails. It’ll really build your business.”
Nikhil Kalghatgi of Softbank Capital (who invested in GiltGroup) suggested reaching out to bloggers who concentrate on your vertical. And don’t necessarily try to reach the Top 10 bloggers.
“Go for 11-50. Their aggregate audience is bigger than the Top 10’s and they don’t get as much love,” Kalghatgi suggested.
Again, you’d better be able to engage your customer, or have a brand or a story that can do that. And customer acquisition doesn’t always come cheap. All well and good, and GrandSt seems to have figured it out, so far, but what about Dollar Shave Club and subscription models and the wisdom of investors?
Here’s where the fun began, but what would you expect, considering where the gender dividing line lay in the room.
“Dollar Shave Club founders saw opportunity, instead of being innovative. They didn’t have a story to go with it,” said Sindhya Valloppillil, founder of the soon-to-be-launched Helix Men. “Your brand has to tell a story that seduces your audience.
DSC certainly had a catchy video that quickly went viral. They had the razors – but missed out (at first) on another potentially lucrative market for them: the shaving cream (they’ve since added it to their repertoire).
The company managed to secure a third round of funding, despite having no unique product or a brand story.
Not that investors always invest wisely.
“VCs also think that women need a bra subscription. They gave $2M in seed funding to True & Co., an e-commerce bra company with an algorithm and subscription model. Never mind that the clear majority of women don’t buy bras every month,” Valloppillil noted.
Latter day feminists seem to be leaning in. Are they planning on burning their bra as well?
“Domain expertise is not always noted,” Goldman admitted. “Entrepreneurs in Residence can get funding, or two people out of Facebook launching a fashion curation site. The guys could have been project managers at Facebook or Google and get funding. The investors figure, he’s a smart guy – he’ll figure it out.”
“It’s very inside baseball,” Brody noted.
Inside baseball, circlejerk, tomato, tomahto…
Which may also explain part of the breakdown of the VC model; the lemming affect and the proliferation subscription-based startups in almost any/every category.
The investors also noted that brands can’t stay online forever and expect to become a multibillion dollar player. WarbyParker recently opened a brick and mortar, and Bonobos started venturing into that space a while back, first via Neiman Marcus and later, by opening their own stores.
Subscription models like DSC aren’t likely to expand into brick-and-mortar any time soon. That’s the place from whence they came, and their very differentiator: undercut the local drugstore carrying exorbitantly overpriced razors and disrupt at $2.6 billion market. The overall takeaway of the evening was simplicity, and they may not have a story that grabs you, but DSC is certainly that. Love ‘em or hate, they’ve shaved out a niche for themselves and unless one of the major brands decide the step into their space, they aren’t likely to stubble (sic) any time soon.