The Science of Badass: How Nasty Gal Avoided Ecommerce Gimmicks and Silicon Beach to Bank $40m and a New Line
Last November, when Sophia Amoruso finally made her pilgrimage to meet with the grand forces of Sand Hill Road, it’d been a long time coming.
Although she was barely in her late 20s, Amoruso had a five-year-old, profitable, edgy ecommerce business called Nasty Gal under her belt that she’d bootstrapped guided by little more than her gut, resources freely available online, and her Italian father’s voice in her head telling her if she was going to do something, she better do it right.
“Google is responsible for this business,” she says. “When I wanted to know what kind of warehouse shelving to buy, I looked online. I could watch Stanford Business School videos on YouTube. I don’t go to conferences. I didn’t talk to anyone. I didn’t have to. I grew up on the Internet.” She may be based in LA, but she’s hardly part of “Silicon Beach.”
It’s safe to say the Valley VCs didn’t quite know what to do with Amoruso. Or, very likely, a company called Nasty Gal, a business, by the way, that is on a run-rate to do $128 million in revenue this year without a daily deals, flash sale, or thing-in-a-box gimmick and nary a celebrity endorsement to its name. All built outside the Valley system, all bootstrapped until this year.
The entrepreneur who built the company is every bit as uncommon as that track record. Never mind the Valley’s history of funding misfits like stinky fruitarian Steve Jobs, junk food smacking Marc Andreessen, or socially awkward Mark Zuckerberg. Those misfits all fit in a similar box. Amoruso did not.
And, no, before you say it, it wasn’t because she was a woman. Rather, her distinct impression when she traveled north to meet with VCs around Thanksgiving of 2011 was that everyone was champing at the bit to fund another woman starting an ecommerce company. Particularly one that, back then, was nearing $30 million in revenues, and profitable.
In fact, that’s what turned her off most. “It was incredibly trendy to fund a female-focused ecommerce business then, and it was something I could have totally taken advantage of,” Amoruso says. “But I’d been growing this business for five years. I was scared to subject to the trendy whim of whatever investment thesis these guys happened to be excited about. I thought Danny [Rimer of Index Ventures] was really selective and had really good taste. That was something I wanted to be a part of.”
Also this: “He didn’t ask stupid questions.”
One meeting with a top-five firm was especially awkward. “They were all like ‘Data blah blah blah ERP software,’” Amoruso says. “What? That’s not how I grew this.”
Even worse: “One VC called my (then) COO and asked If I had a spending problem,” she says. “Are you kidding me? I’ve been living in squalor, building a business out of cash. I don’t want to hang out with you if you don’t trust me. Danny wasn’t trying to prove himself, and he wasn’t sending me resumes that were irrelevant.”
While other VCs pitched Amoruso on a big growth round commensurate with the company’s size and growth rate, Rimer also took a very direct, low-pressure tactic. He suggested they do a small round — just $9 million– and Index would send a principal to sit on the inside of her company for six months and help hire a senior team, restructure the equity pool, and other things that had to be done to get the company to the next level.
Rimer wouldn’t subject the company to a bout of full-blown due diligence, and he wouldn’t demand a board seat. They’d just help her and see how it went. And because Amoruso owned 100 percent of the company then, there was little risk of losing control to an unknown entity. “It was a super clean deal,” she says. “They had to earn their way in to the series B.”
And earn, he did. Yesterday, Index announced it invested another $40 million into Nasty Gal, making it one of the biggest bets yet out of the firm’s new fund. Rimer is on the board now — just the two of them. And today, Nasty Gal is hitting another milestone, launching its first 26-piece collection. (That’s a model showing off one of the pieces above, not Amoruso.)
Until now, Nasty Gal has done a clever job of curation that looks like it’s been designed from scratch, partly because the Nasty Gal aesthetic is so crisp, so defined, so– in its own words — badass. “This brand has been this digital thing that has moved things around but hasn’t actually produced anything,” Amoruso says.
Now, Amoruso and her 150-person team are actually creating something. It’s an exhilarating next step for an entrepreneur who started like so many others: Merely selling things on eBay to work her way through community college. But her story has ended up where almost no one expected.
The way Amoruso grew Nasty Gal has nothing to do with ERP systems and data. “It was very iterative,” she says. She realizes she’s slipped into a rare bit of Valley jargon and adds sheepishly, “I didn’t use that word then.”
To Amoruso, Nasty Gal is something organic — its own being, something that has a life of its own. She says there was no real moment when she decided to “go for it” — dissatisfying as that narrative may be for the journalists who are increasingly asking her the question. “I listened to the business,” she says. “Six months before it took off, I was taking community college classes and I was like, ‘Is this going to be it?’ I knew I didn’t want to schlep on eBay forever. So I was like, ‘You wanna grow? Cool. We probably won’t survive if we don’t.’”
Amoruso not only had an innate sense of her audience she had an innate sense of Web commerce. Again, it goes back to growing up on the Internet. She’d worked retail before, mostly “standing around” in a shoe store. It was part of a litany of shitty jobs she’s had, like working in a photo mat and the lobby of an art school checking student IDs. But she wasn’t trying to put a physical store online. She knew building a brand online was something different. “Can we sell a $100 cotton tank top online?” she says. “No, because no matter how you shoot it, it looks like it costs $30. That means it should cost $30.”
Let me say right now, I am not a Nasty Gal. I spoke with Amoruso about her company on a Sunday afternoon. I was sitting in my kitchen, and I couldn’t remember my last shower. Smashed, half-eaten Cheddar Bunnies were all around me. My 11-month-old son Eli — bribed by the bunnies — was giggling on my left knee as I typed with my right hand. I was swerving my knee around, trying in vain to keep both my phone and my laptop away from his grubby paws, orange with the Cheddar Bunny residue. At the point when I had to put the phone down to go change an absolutely rank diaper, I realized how far I was from the girl who wears a leather jacket with thigh-length fringe.
But when Amoruso described her customer, she could have been describing me in a younger, cooler time — or at least what I’d wanted to remember myself being. She didn’t give me demographics, age-ranges, income, or education parameters. “She’s cool but not too cool for school,” Amoruso says simply. “She’s pretty but not so pretty she looks like a bitch.”
That’s it. That’s exactly it.
Nasty Gal may be the Internet ecommerce iteration of that thing, but I’m very familiar with that thing. The once-angst-ridden teenager, doubting, fearful college girl and uncertain rookie reporter making her way in a man’s world, who are all still somewhere deep inside me were like, “Holla!”
I didn’t have a site like Nasty Gal to relate to back then, but I had Sassy magazine and Liz Phair’s “Exile in Guyville” — an album I felt spoke to me the way Nasty Gal’s aesthetic speaks to so many girls. And, while it felt personal back then — as if those songs were written just for me — I wasn’t alone. Years later when I saw Liz Phair play the album at the Fillmore, the audience was full of women and gay men of exactly my age and style, mouthing every word. It had clearly been that thing for all of us.
It’s “My So Called Life”. It’s the freaks in “Freaks and Geeks”. It’s Rory in “Gilmore Girls”. It’s the good Diablo Cody (“Juno”) not the bad Diablo Cody (“Young Adult” — blech.) It’s the central characters of “Heathers” and “Mean Girls”. It’s roller derby. It’s that gap between total dork and together, rich cheerleader where the bulk of girls who want to think for themselves but also be cool and accepted live. And, good God, Amoruso’s description just nailed it: “She’s cool but not too cool for school. She’s pretty but not so pretty she looks like a bitch.”
Yes. Yes. Yes. That’s what I wanted to be most of my life. And beneath the gold Cheddar Bunny dust and the torn Memphis State sweatshirt and dirty diaper sitting on my lap, that’s what part of me still wants to be.
This is what so many women who try to build apsirational brands — the would-be Martha Stewarts for the Internet generation — just miss. They try to be about perfection. Perfect job in a perfect city with the perfect hair and a perfect man. And that’s why they don’t catch on. No girl can relate to perfect — even the ones who seem to be from the outside. No part of me ever wanted to be the manicured, designer dress-wearing, coiffed Julia Allison clad in tutus with a little dog. And, as much as I like her personally, Brit Morin and her lifestyle brand Brit wouldn’t have been relatable to me either. She’s a pretty girl with a successful husband. That’s just not universal.
But Nasty Gal is. And that is why this works so well — not because of data or ERP. But because it’s an almost intangible, but deeply authentic thing. ”We have a relationship with this customer for going on six years,” Amoruso says. “There is undisputedly a living breathing soul to this brand. I don’t know how it happened. It’s amazing how much they care, how much they are upset when things aren’t perfect. This is not a faceless thing they are talking to. They feel they’ve been responsible for it growing, and they have. Until we recently started advertising, they were the only way anyone found out about us.”
Nasty Gal isn’t the only commerce company to capture this thing, and not surprisingly it’s the one innovation (read: gimmick) of modern ecommerce that seems to be lasting. The blending of content — in a highly aspirational, authentic, personal voice — and sales. It’s the same reason that people who may not be a gay, 30-something Manhattanite just absolutely resonate with Bradford Shellhammer’s quirky swarovski-crystal-skull-meets-ascot style as curated on Fab. It’s the same reason that Thrillist has an army of “dudes” who swear by every dining and fashion tip that comes in to their inbox. The only difference is Thrillist came to the content monetizing as ecommerce model relatively late. Fab and Nasty Gal have nailed it from the get go.
The way Ben Lerer talked about “our guys” at last month’s PandoMonthly is identical to how Amoruso talks about “her girl.” ”There’s no division between who we are, who we say we are and who the customer is,” she says. “No layers. The customer isn’t some department store. Who has the privilege of designing stuff for a customer they’ve known for so long?”
It’s that same thing that made Diggnation such a hit — the burgeoning Web 2.0 geek chic movement found its mascot in Kevin Rose. Had he leveraged that into a content/commerce business, the company might have had a very different ending. It’s probably not coincidence that Revision3 — a content company anchored by Diggnation — wound up with a better ending than Digg.
Interestingly, the ones who’ve done it well — Fab, Nasty Gal, and Thrillist — are outgrowths of the founders’ je ne sais quoi, but none are as literal as to be named after the founder. Even when Fab launched with pictures of Shellhammer’s apartment, they weren’t actually pictures of Shellhammer. That’s what’s kept the Thrillist guy the same, even as Lerer and his co-founder Adam Rich have aged, gotten married (and engaged), and winded down their shameless partying ways. (Somewhat. Lerer did ask that his mediocre superpower be the ability to make his wife cool with his going to bachelor parties.)
None of these companies are exact outgrowths of the founders personalities. Rather, the brands have become their own living things inspired by them.
It’s a subtle but important distinction from many other more clumsy attempts to be the “Martha Stewart” of fill-in-the-blank demographic. The whole promise of building an online empire around a single personal brand has never really worked, although many have tried and are still trying. Perhaps the Web — with 1 billion people spread across the world — is just too broad to relate to a single person. 35 percent of Nasty Gal’s audience is international. Would they relate to her the way they relate to her aesthetic? It’s hard to know. These brands are about what the founders represent, curate and arrange that resonates and resonates powerfully with huge audiences no one else is reaching in this way. That’s why the Samwers can’t copy it. “I’ve become this brand more than it’s become me,” Amoruso says.
Amoruso has come a long way since she was taking community college classes and selling things on eBay, and that rags to riches story is what most reporters will fixate on. But what struck me is the same thing Rimer said, when he told me I had to meet her several months ago: Her instincts are some of the best he’s ever seen. And that’s what the future of Nasty Gal will ride on.