There's a lot of dismissive hate in this thread, but this was a genuinely successful company before things went sour. I've heard about it many times from my wife. Amoruso has a very scrappy tale about how she launched the company, and she created a brand that many people loved. The site was well designed, and the company had very rapid growth.
This wasn't an VC investment born out of the bubble. Retail requires more money than a startup that makes apps, and this one had a great growth trajectory. Obviously, things went south, but that does occasionally happen to a VC investment.
Similarly, I don't think it's fair to dismiss Amoruso out of hand just because the company has now failed. Many startup founders are great at launching companies, but not so good at running them once they reach a certain size. This seems to be what happened here. There definitely is something to be learned by how she built the company and brand.
I bought her book as a gift for my teenage sister, who is smart but also kind of a rebel. She loved it. Amoruso went from freegan anarchist going dumpster-diving to running a successful business, and so had lots of unique insights and perspectives. My sister would never read a standard life-advice book, but Amoruso is someone she could relate to.
For people saying business books are all nonsense -- why is business seen as a uniquely luck-based activity? No-one says, oh, some bridges collapse and some don't, so books about civil engineering only reflect survivorship bias. Business can't be reduced to a formula, but it can be broken down into smaller areas, each with its own principles (sales, marketing, recruiting, product development, etc). Amuroso learned these areas very quickly when she was getting started, but made some mistakes when things got bigger and the challenges increased.
I haven't read Amoruso's book but business books are generally mediocre because they usually are written with the same logical fallacies. Most of them are either a businessperson extrapolating their unique circumstance to the whole world, or they are a study of a few companies that have succeeded without searching for companies that have failed using the same practices. Every now and again there is a good "philosophical" sort of book that challenges the zeitgeist. Those are the ones I usually like to read.
Most business books are nonsense because they present a case study of how a single organization succeeded and are written by a single executive or consultant trying to put a positive spin on the experience. But they present no evidence as to whether the success was caused by or in spite of their actions.
One business book that actually applied hard data analysis to look for causality across multiple companies is "Good to Great" by Jim Collins.
Good to great has a big problem with survivorship bias. It's fairly low-investment to read, but I wonder how much value there is in adhering to the principles it recommends.
I agree there are a lot of crappy business books out there that fit that description. I read Sophia's after writing this list but it's good for all the reasons mentioned by IsaacL.
I also enjoyed her book and think there's good stuff in there. However, so much of the book revolved around being an independent operator and having full control and, notably, this company is tumbling once it's not in an individual's control.
My opinion is that Amoruso is a superb leader for a certain type and size of business (and her book focuses on this) but probably not for a large one with many competing interests, investors and all - notoriously difficult especially in fashion retail with all its inventory and timing issues.
For real about unnecessary dismissive hate, I'm a female Engineer and loved her stuff, and for the people on here incredulous about the investment scale for this clothing store, you are seriously underestimating the proportion of ones paycheck or overall wealth a female with a decent salary like me (26yr old female working in tech) but also girls who don't make very much like coffee baristas or artists, spend on clothing, and being fashionable, however they define that for themselves.
Whether you agree its rational spending or not, the spending happens, and this is not an example of sexism, just an example of sometimes how clueless men can be about the time money and effort women put into their looks. I say that accepting as usual that me as a female am a minority in the HN community, so I try to provide gender perspective when its relevant.
That aside, even if fashion and makeup is of no interest, being a female costs more than being a male when it comes to basic clothing and hygeine. That is pretty undisputed.
For the men on this thread who may not have been there for the cult fashion launch that liberal awesome women really identified with and particularly nerdy female engineers I knew, as we were always the ones on the internet and finding new launched stuff that was not yet mainstream, in my opinion there were two major things, and both of those were fueled by VC firms funding it making decisions on Sophia's behalf that in my opinion were subpar, and also I'm saying this because I've read dispositions of her first female employees and have their perspective as well.
The big downfall was she Sophia was supposedly aggressive with her own female employees. That is all a matter of perspective from her employees and who knows the real story but one thing goes undisputed, the integrity of her teams spirit and unification went down the drain years back. Thats never a good sign for anyone, regardless of whose fault it was.
Secondly, The second the Male VC firms put the Macy's old Fashion Director in charge of revamping the clothing choices, I could immediately tell, and did not like it, and neither did Sophias best weapon in her company, her tight knit core of awesome scene girls who vigorously curated the clothing line into something awesome and unique.
Sophia had a magical ability to be at the racy edge of fashion while maintaining a classic California Vintage Style and pulled it off as a badass look that never came across as cheap or slutty. Her pieces did not look like something you bought online. They looked like you really did find that one amazing once in a lifetime impulse buy that was a buried treasure in a vintage fashion store in Oakland. Her pieces were original but echoed some classic badass and also classy shapes and ideas.
Fashion like this has its beauty in the FACT that it walks a very very very fine line without crossing it, and all that went down the drain when the business plan was modeled to cater to the masses and not the cult following.
Even early on female employees who did not like Sophia agreed that the input from the previous Macys Director was crap, and they should have never put her wannabe 80's common girl attempting to be badass and failing miserably and looking cheap and slutty input into the line, because it was obvious in the output of the clothing curation.
Sophia's magic was her own style, and finding other girls my age who genuinely emulated that style, and letting them do the curation. Bringing on a multimillion dollar chain store for 5th Ave Fashionistas was the worst idea ever.
Nastygal was like shopping with Scene girls in Oakland helping you pick out your clothes. Now It's like some lady 3x my age in stilettos prototyping my "stereotype" and picking out economy scale pieces and being dressed by my mom. Not only did the Macy's employees brought on just "not get it" in the first place, they really bypassed the input of the girls doing the original curation, and those girls spoke out about it alot.
If none of this makes sense about fashion sense, what should make sense to you is that the product components were mistaken as the input from a bigger better company when it really should have been the financial components of Macys as a target using good financial models they have made around clothing, and not trying to actually use the same type of curation.
It's very simple at the end of the day. They stopped listening to their customers, and the main curator was imported from a Brand that could not be further from the personality of her dedicated customers.
For men, I can only relate to you this concept as what it was like (I'm 26 so got FB two years before college when you had to be invited by a college student with a college email ID) to go from the awesome FB phase to the point when your parents and grandparents were allowed on facebook and suddenly started commenting on everything you like and posting pyramid schemes for tupperware sales. The party loses its edge quick. (Maybe some of you cannot relate, but for me, I have been off of FB for over three years).
Once you lose your cult following, your brand and the critical brand honement and feedback spirals out of control.
Nastygal was one of my favorite places to get a statement piece here and there when I wanted to be fun, but as a nerdy girl I'm not daring enough to pull it off without botching it, and Nastygal was always there to help me make a classy but original and slightly daring jump.
I havnt bought clothing from there in years. There are a million online female clothing stores that mimic nastygals brand now, and because theyve lost their uniqueness, there is not much to differentiate them from the rest.
Daring doesn't necessarily mean "more revealing" It could just be something super oddball, that may be (but probably not) a trend in a year. Like leather pants in neon shades, sequins in inappropriate contexts (like sequin shirt + blazer in the office), or bright blue lipstick. You have "daring" stilettos and "daring eyeshadows" and, well, yes, daring necklines. It depends on the context.
I can't know what OP actually meant, and, yeah Nasty Gal has some revealing clothes, but I interpreted to mean something like "a gigantic necklace" or "a romper with a bold pattern" or something.
Wow, these VCs blew $65 million dollars on an online clothing store.
Wozniak and Jobs funded their Apple I by selling an old car and an electronic calculator; probably a few thousand dollars at most. The Apple II was launched for $250K, or $996K in today's dollars. These are actual computers they designed, built, and sold. That's ICs, circuit boards, firmware, device drivers, cases, real engineering, programming, manufacturing, and selling -- all for less than a 1/65 of the money that an online retailer blew through selling clothes.
To put it another way, instead of one clothing retailer, these VCs could have funded 65 (sixty five!) hardware tech companies at $1 million each (at the Apple II level of funding).
Go read the article and read up on them: they only took on VC funding later when they had a solid business that had been built from scratch and was beyond the Apple II era of its existence.
This wasn't a case of somebody just having the idea to sell clothes online and then heading to VCs: it was a business that started out well, took on VC funding, and then started to tank.
Your comparison is unfair to both Apple and Nasty Gal.
The easiest way to build a big business is to solve the hardest and most important technical problems. The market position would be defensible due to hardness, and the market size would be big enough due to importance.
There's many other approaches to build a big business though. While Apple's workers and investors believed in Apple's approach, Nasty Gal's workers and investors believed in Nasty Gal's approach. Capitalism is the judge and redistributes capital to the approach that works.
Apple's workers and investors now have more capital, so they can start more hardware tech companies, while Nasty Gal's workers and investors have less capital, so they can start fewer online clothing store companies. It's inefficient, but it works out in the end.
Don't you need to look at the products that hit the mass market?
A successful experiment on Kickstarter isn't really a fair comparison to the Apple I and Apple II, you need the Apple II of the Kickstarter project to make for an interesting comparison.
It's more that people have a higher expectation of what a device can to, and that generally means what the software can do.
I mean right now there are computers you can get that are orders of magnitude better in every dimension than the first Apple computer, that you can buy for less than $100 (I'm talking about the Pi and its ilk). But to make it do something useful there has to be a lot more effort expended to add peripherals and write proper software to match people's expectations.
At that time there weren't much companies doing what Apple was doing, it was an almost new market but now you have thousands of online stores and you need the money to get seen and noticed more than for the shop itself.
Agree. But how many distinctive things are going down or not even being noticed. It's too difficult to find one that can work and probably investors are more reluctant to put the money in something new , cause now you need quite a lot of money for anything. I understand your point but most money doesn't go to innovation but to proven markets. They're afraid of what they don't know. Look how hard is the hardware market.
You're right that they're 2 very different investments, but I don't think you can say unequivocally that #1 is better than #2. It all depends on desired returns, risk, etc. Let's face it, if you had given money to Apple in 1976 there was a good chance you were never seeing that money again.
When Apple was founded there were many other companies selling microcomputers. Today, there are thousands of online stores yet some still manage to get seen and noticed through word-of-mouth and viral marketing which costs very little.
Woz and Jobs happened to be supremely talented, executed well, and were very lucky. How many other Silicon Valley garage startups of that era flamed out or fizzled with barely a whimper?
Yeah, in a world where the microcomputer is something you assemble from blueprints in a magazine, then programme to print "Hello, World", or maybe talk to Eliza on if you got the tape machine to work.
And given the competition for the market back then, you can probably presume that 60 of those 65 investments would have failed.
As a user of Nasty Gal, Ideeli before that, and any of the various other sites that are currently flooding the marketplace, some thoughts:
- Way too much money on targeted advertising.
I can't remember the name of the site, but I was looking for something in particular and so had some pretty specific search terms. I didn't find what I was looking for, but saw ads for the things I looked at for the next several weeks on every page load. Imgur, Facebook, news sites, Twitch. If the host had ads, I was seeing ads for this clothing site. A massive waste of money.
- Searchability is atrocious.
Good inventory search for women's clothing is an incredibly hard problem. What's teal to one person is aqua to another. What's the difference between off-shoulder and off-the-shoulder? What the hell is bodycon? Why am I seeing tee shirts when I'm looking for turtle necks?
- Quality is obviously bad.
When I was an Ideeli user (things have changed), I was never disappointed by anything purchased. Many of the items on these sites are either visibly low quality or massively overpriced. I was looking for a good pair of leather boots, and I was looking at either spending $80 on something that was clearly low quality or $250 on something that wasn't quite what I was looking for.
- The bait and switch is real.
This is just a general statement on the tactics of these sites. I click on an ad because I see something I like, either that item is out of stock, or I can't find it in the store. But here's thirty other items that no one is ever going to buy.
Interesting how she pushed hard her book GirlBoss while her business was alreafy floundering. And now it's filing for bankrutcy. Can you trust any of the advice from her book?
If anything, she knew her business was in trouble so she hatched a backup plan: turn herself into an authority on how to be a successful businesseswoman while Nasty Gal still existed.
Of course you can. She built a business from scratch to $100mm revenue and interesting enough for VC's to invest $65mm in. I'd love to be as succesful as that.
Yes. Cheaper to buy, but harder to sell. Experienced fashion retailers (and wholesalers/"manufacturers") have crazy detailed models to buy exactly what they should sell and very little more. Demand velocity based mostly, and when done well, sliced by category/range.
Unsold stuff usually goes through a bulk shredder - some of the more ethical ones send it to charity. What you see in outlets and seconds stores is usually made specifically for those outlets.
I got very jaded after a decade of watching the madness, left a few months back.
>They bought way too much stock, and never worked with size curves, just flat ranges.
Oh dear... I can get bringing in too much stock, It is understandable as a new young company that you overestimate sales of some items but not working with size curves is just plain unprofessional.
Ouch. I worked in ecommerce for five years myself and thought the companies that spent 20-50k on a site we could knock out with prebuilt components in a week or two was rough. Apparently we should have been tacking some zeros on there.
The agency I ran would charge at least £200k a year (full service) - and we were mid range - and when retailers choose to do things in-house or with a big provider, things go into the millions rapidly.
Yes, you should have been! I worked for a company that had this problem. The directors founded the company straight out of university and consequently had no experience of the industry to draw on.
I wonder what went wrong. Sounded like a pretty good concept overall. My guess is underestimating the volume of returns and generally margins in clothing retail. Possibly combined with a growth strategy that was too aggressive?
Amoruso and her previous work/network/following makes up a good bit of the value of the company imo...could she just start anew with a smaller/more niche shop?
Also curious...how would one go about buying the brandname/website etc. from this company once it's in bankruptcy (assets will be sold eventually, right)?
The late 90's dot-com bubble. The idea that any business vertical can be converted into a .com and it will just work by default. We were supposed to have learned from that era but this is not always the case.
I created a womens ecommerce site with some friends, took $1M in VC, grew it to several million in revenue per year, then the business fell apart when we realized scaling would not solve our net income issues. Online womens fashion is a hard nut to crack. I'm not surprised to see Nasty Girl file for bankruptcy. I am surprised that someone can put out 2 books about success and not be successful themselves.
What makes you say that, out of curiosity? I feel like Stitch Fix is targeting a whole other subset of fashion needs, and I've personally been really impressed with their operation.
It is because Stitch Fix isn't doing anything new and fashion is incredibly fast, Stitch Fix has to depend on a supply chain (whole sellers) that lag behind in terms of trends and styles in terms of weeks, seasons are measured in weeks. It is also going to be incredibly hard for them to drive growth and their market position is dependent on their ability to match clothes for people.
Fashion doesn't actually change measured in weeks. There is a fairly predictable flow from the next-season designs approved by the fashion elite (think Devil Meets Prada sort of stuff.) The not-too-risky designs there are quickly incorporated by the just-behind-the-curve brands to still make it into the next season and only a year (or more) later the aspects sufficiently palatable for the masses end up at regular retailers.
That means that if you stay in touch with the newest developments it's actually pretty easy to still be sufficiently ahead of the masses to justify a service like this.
And if that sounds remarkably similar to how tech works: I agree with you.
Were there other companies that attempted what Stitchfix is doing? Trunkclub and Stitchfix were early movers in this space as far as I am aware and others have copied them.
Didn't get your point regarding whole sellers. As far as I understand this industry, the retailers generally source directly from brands and so does Stitchfix.
"their market position is dependent on their ability to match clothes for people"
That's their core competency though. That's what makes them successful.
Jesus christ can we have heavier modding of people who need to RTFA on this site? It's a hundred times worse then the jokes to open the comment threads and see basic RTFA fails over and over and over again.
"Amoruso founded Nasty Gal in 2006, when she was only 22, as a vintage shop on eBay. Over the years, she grew the Los Angeles-based company into an online business with around $100 million in sales. It was fueled by a passionate customer base among millennial women and a personal fan base, thanks in part to her New York Times bestseller “#Girlboss.” The company also operates two stores in the Los Angeles area."
It's the fourth paragraph in the story. You have to get through one hundred and fifty-four words, man!
It's news because they were an interesting idea that ran through $65M of venture money with some turmoil and then folded. If you you think you're seeing a generational change in the way retail works and you see a charismatic founder who has found what looks like a new winning formula it doesn't seem that crazy to back her and see what happens. If you're the founder and you think you have fair odds at going from all of a small business to a large slice of the next H&M by pushing growth really hard then maybe that sounds like a good idea. My guess is that was the decision and she decided to go for growth, it would be interesting to hear why it blew up though.
They sold clothes online? I don't get why their idea was any different from the thousands of other retailers that is selling clothes?
Yeh, but going for the large growth and taking huge amount of vc money is very risky since if the growth you dream of never come that vc money is a ticking bomb.
Most retailers don't have any different of an "idea" than "pay us money for stuff." They're differentiated on brand, positioning, marketing, customer service, etc. LL Bean's "idea" is the same as J. Crew's but they're both very different but very successful companies.
> this isn't like a startup where people are trying to strike it rich by exploring a whole new greenfield
Most of the startups I hear about aren't doing that either. The vast majority are slight variations on a theme where most of the supposed novelty is in the marketing — just like Nasty Gal.
I like to think we're innovating at Thread (thread.com). We're innovating on the customer side with recommendations and more educational content than a standard ecommerce experience, but also on the business model/stock/supply side.
I went through the process, even though I live in the US. It's certainly interesting, but nothing that I don't get from simply walking into a Hugo Boss or Hermes' store.
They'll happily take my measurements, and let me call in for recommendations.
I do suppose the idea of giving personalized recommendations to lower spending groups might work though I bet that department stores do the same thing. I know that women's fashion websites tailor their experience to users already.
I guess the differences between us an a Hugo Boss/Hermes store are:
- Only high end stores do personal styling/personal shopping, whereas we have a range that suits all budgets.
- Styling in-store has a much more limited range, we have ~1500 brands.
- Going into a store, or chatting on the phone, is much less accessible than browsing a website (although obviously a trade-off on being able to try on the clothes right there, but we do free returns).
Just signed up, it's perfect, the service I never knew I needed but clearly always have.
Is there any time limit on purchases? I'm not paid for a week, I wouldn't want to go through that signup process and have it disappear for whatever reason.
Nope, you only sign up once, and then log in to your account any time you want to check your latest recommendations or just browse what we have, ordered by how suitable we think it is for you. We're also trialling direct contact with your stylist.
I don't think the OP was saying that - they were saying that it's not a technically difficult issue, and they would be fairly right.
In my experience, most large fashion sites can comfortably run on a Magento instance with a fairly simple architecture, normally a small handful of load balanced PHP instances, with a dual read slave / master database configuration.
Fashion itself, however, is a much different beast, being cool, hip, whatever, it takes a lot of skill - to really understand your target market and sell them something they don't even know they want yet.
Source: I'm a software engineer who has previously worked for www.missguided.co.uk, www.jdsports.co.uk, www.boohoo.com and currently works for www.countryattire.co.uk
>>I guess it's news because of the sex of the founder
You're suggesting it's some kind of feminism promotion piece?
Any company with over $50MM in funding will get press. I might buy the idea that part of it relates to her being a high profile founder, but none of this relates to gender.
> You're suggesting it's some kind of feminism promotion piece?
No I'm suggesting it gets covered because of a female founder. A lot of companies in that size go broke all the time without being covered. Maybe it hasn't anything to do with her gender but I can't help to think it has since the news otherwise is incredibly boring.
I'm sorry you find this boring, but it is of a lot of interest to many other people. The company had a good origin story, a charismatic founder, rapid growth, and great branding. It's interesting that such a rapidly growing company and brand could come to a screeching halt like this.
That and the company had a fairly provocative name, and targetted young women (read: teens) thus it was tailor made for family values controversy.
Also, the female founder is an author who heavily markets her book on business techniques and has publishers who are dedicated to calling newspapers and getting her name in them.
Startup bankruptcies are a very common topic and Nasty Gal isn't any different. To suggest that it's news just because of the founder's gender is ridiculous and trivializes the hard work and emotional roller coaster everybody involved went through.
No it doesn't, don't be ridiculous. 'Why is this getting voted up when I've never heard or the company' was my reaction to seeing it when skimming the top links this morning. It being a female founder helps answer that question without implying anything else other than what you willfully project onto others.
I disagree. Why would that "trivialize" the work behind building the company? Of course the people involved care deeply about the outcome.
But for me, as a total outsider, this has 0 news worth since from my understanding the company has no real public interest except for their customers and founders/owners. AFAIK the company isn't even public so it isn't like anyone has anything invested in it.
It is for me obvious that the company bankruptcy is covered because of the gender of the founder. Maybe I am wrong, but I don't really see any other reason to why.
If you live/work someplace like Los Angeles where "fast fashion" startups are doing a significant amount of tech hiring, it's useful to understand what they do and the difficulty of being "disruptive" in that space.
It's also useful, as a man, to have a basic understanding of the fashion industry as part of being an educated human being. You can tell a lot about a woman by how she dresses herself. Especially her shoes. :)
That's the point, that you can be successful and go broke doing it.
The reason fashion is a tough nut to crack is the short business cycle and associated inventory risk. You need to anticipate fashion trends, get product to market quickly, and if you screw up you have to dump your inventory at clearance sale prices and eat that loss. Big retailers are experts at finding ways to manage that risk, and that's why the Forever 21's of the world sell crap clothing made overseas.
Seriously, when Britney Spears popularized low-rise jeans, every teenage female in the USA had to go to the mall and change out her wardrobe. When Clark Gable appeared in a movie wearing a men's dress shirt with no undershirt, the market for men's undershirts tanked.
How does one plan for that sort of thing within the constraints of a VC-backed company?
Fashion is a pretty hard industry especially when you're targeting younger people with less disposable income. If you sell your brand to the mall type retailers, your brand image is pretty much dead. If you don't sell to them, they copy your designs and sell for less anyways.
This wasn't an VC investment born out of the bubble. Retail requires more money than a startup that makes apps, and this one had a great growth trajectory. Obviously, things went south, but that does occasionally happen to a VC investment.
Similarly, I don't think it's fair to dismiss Amoruso out of hand just because the company has now failed. Many startup founders are great at launching companies, but not so good at running them once they reach a certain size. This seems to be what happened here. There definitely is something to be learned by how she built the company and brand.