Direct-to-consumer brands don’t often live up to the hype placed on them by endless amounts of VC funding and Silicon Valley fandom, says Jen Rubio, co-founder of travel brand Away, on the latest episode of TheCurrent Innovators podcast.
Speaking to Liz Bacelar, founder of TheCurrent, at the British Fashion Council’s annual Fashion Forum in London, Rubio explains that from its inception in 2016, she and her co-founder Steph Korey (who she met while both working at Warby Parker), were careful not to run their business like a lot of other brands in the space.
“If you go back in time a little bit, a lot of new brands and e-commerce companies were positioning themselves as tech companies and raising a lot of VC money at tech valuations that would never live up to the public market at how retail companies are valued, and then run into the trouble of needing these stores and claiming they are a retail company and not a tech one,” she explains. “We saw a lot of this happening in the industry and from the beginning Steph and I said, this is not how we are going to run our business.
After pitching Away as a brand aiming to make travel more seamless, as opposed to simply making luggage, the business famously received a first round of investment before even having a physical product, for instance.
From the lightbulb moment for the brand’s concept through to its launch, Away spoke to over 800 people about what elements would make the perfect suitcase. It is that open approach to constant feedback that it continues to focus on to this day – helping to inform its product collaborations, new features and color palettes, and even locations for pop-ups and permanent retail spaces.
In this conversation, Rubio also tells Liz how its first major hurdle – airline regulation that meant their smart suitcase was no longer allowed onboard – was an important opportunity to strengthen the relationship with Away customers; how retail landlords are finally giving non-legacy brands a chance; and why understanding your consumer is key to constant innovation.
Catch up with all of our episodes of TheCurrent Innovators here. The series is a weekly conversation with visionaries, executives and entrepreneurs. It’s backed by TheCurrent, a consultancy transforming how consumer retail brands intersect with technology. We deliver innovative integrations and experiences, powered by a network of top technologies and startups. Get in touch to learn more.
We recently held a #FashMash breakfast event at Soho House in London featuring three venture capitalists talking to the fashion and technology start-up space. Among them were Antoine Nussenbaum (AN) of Felix Capital, Tracy Dorée (TD) of Kindred VC and Suzanne Ashman (SA) of LocalGlobe. Here, we look at some highlights from the discussion, including what technology they’re seeing impacting the fashion industry and exactly what they look for in the businesses they invest in.
#FashMash: Given everything happening in the world right now, is it a good time to start a business?
TD: I think people start businesses because they have to solve a problem, because they can’t think of doing anything but that one thing, and I don’t see that type of macro trend of the uncertainty of Brexit or Trump or anything else that’s happening in the world affecting a great quality entrepreneur of getting started.
SA: I think it’s also easy to overstate kind of how the political turmoil over the last year has somehow impacted the funding landscape, because certainly at a really early stage we are backing entrepreneurs for five, seven, 10 years time. So, actually Brexit didn’t impact our investment cycle at all, we still made 25 odd investments last year… When we look back at our portfolio over the last 20 years we find that some of the best businesses were built in 2000 post the dotcom crash and 2008’s credit crunch, because people are looking for something new.
#FashMash: What technology are you seeing out there impacting fashion?
SA: I’d say the thing I’m seeing most of at the moment is the intersect between augmented reality and fashion. At the moment the vast majority of pitches that we’re seeing are very deep tech teams that have interesting products but not an end product that a consumer would actually wear – style is bottom priority and tech is top priority. I think the quality of those teams will improve over time as technical founders realise they need to work with someone with relevant domain experience to create a product that a consumer might want to wear. I got pitched an augmented reality t-shirt company and you know, it looks great, but at the moment it’s a t-shirt for 14-year-old boys. I can see over the next 12 months in this particular space that we’ll just see better and better things coming through.
TD: I also think we’re seeing less friction within payments thanks to mobile. People are designing experiences from a really mobile-first perspective. The first wave of online retail kind of looked like people were taking a warehouse and putting it online and it’s just a horrible sort of catalogue of walking through merchandise. But now people are really designing experiences for the platform on which they’re being delivered. I think the challenge with funding a B2C business, where you’re taking a new approach with your unique perspective, whether that’s to do with visual search or it’s to do with augmented reality or it’s to do with payments, any unique edge that you’ve got, is that you have to be able to show that the brand is going to have some type of longevity.
#FashMash: Which start-ups or new brands do you think are doing a good job and starting to prove they’ve got longevity?
AN: There’s a brand in France, which is great, called Sézane. The founder characterises exactly everything we’ve been talking about, to be extremely focused on the customer relationship and to be very true about what she’s building. It started off as a lifestyle business and grew into something very authentic with the customers.
SA: The brand I’ve seen recently that I think is executed super well, is Heist Tights – anyone that uses any form of social media will have seen their adverts. The founder there is also really interesting – he is super impressive and he’s all about the numbers. It helps if you can help us out by having some of the kind of standard metrics that we expect to see around a really strong repeat rate… Certainly things in the fashion space that we see, we really like people to have not just a product but some early numbers when they come to speak to us. From a tech perspective, I also think Hullabalook is an interesting example of two founders without a base in fashion, who have ultimately built a software enabler for e-commerce.
#FashMash: So beyond the numbers, what are you looking for in the start-ups that come to you?
TD: In whatever industry we’re looking at, we’re looking for this weird mix between the ability to think creatively, to have a unique insight, or a different perspective on something that people assume to be true. So that’s a creative vision piece with the ability to really get shit done. And to employ both sides of the brain is really hard. I’m excited for the businesses that use technology to make an existing workflow more efficient and that’s going to differentiate them in the long term.
AN: We see a new wave of people, of entrepreneurs, trying to create these companies that would connect better with, have a more authentic relationship with their customers. And from our end, we actually wouldn’t focus on the top line metrics looking at the business, but actually we would focus on something quite authentic being built in the relationship with the customer. It is not so much about the topic but about the interaction. It’s about how engaged the customers are and how engaged you are as an entrepreneur with your audience and your customers.
SA: At our stage, it’s really all about the team, it’s a little bit about the products, a little bit about the market but ultimately we’re backing a group of people as individuals to get through the next five years and overcome the many hurdles that stand in the way from where they are now to building a really big business.
#FashMash: Do you have any advice for start-ups on working with established retailers?
SA: As a start-up working with a big organisation, the one competitive advantage that you have as a small business, is speed and that’s the one reason why sometimes you have the opportunity to win against the big guys. Finding the person that’s going to really champion you within a retailer and help you navigate the maze of hierarchy and different workflows and different divisions is also so important.
TD: Two words of warning on working with really big clients: First, don’t end up doing work that is not core to your business. It’s very easy to want to work with X brand name and actually what they want you to produce is way off your product roadmap. If you think it’s going to be a massive distraction, that isn’t going to help you in your medium term vision, it’s tough to walk away and say no. The second thing is pricing. We often see start-ups working with larger brands offering heavily discounted products and it can be really hard to renegotiate that once you move from a pilot phase through to a longer-term relationship. So have that tough discussion about pricing up front.
All eyes might have been on the Milan collections, but the big business news this week is back in London where Natalie Massenet announced her move to Farfetch as co-chairman. An Instagram Story featuring Massenet with José Neves answering a Q&A followed – do watch it via @Farfetch before it disappears.
Otherwise, some interesting stories this week debating retail tech – what consumers do and don’t want on the one hand, versus why the industry hasn’t adopted artificial intelligence faster, on the other. Both are worth digging in to and digesting. Beyond that, there are new campaigns from Calvin Klein and Converse, as well as a scathing (but amusing) piece over on Digiday about just why fashion advertising is all out of (terrible) ideas. And if you’re still not sure about your video strategy, you might want to pay attention to the fact YouTube users now watch one billion hours per day.
Consumers don’t want Amazon or Google to help them shop [Bloomberg]
AI can make us all dress better, so why isn’t the fashion industry using it more? [Fast Company]
How Neiman Marcus is turning technology innovation into a ‘core value’ [Retail Dive]
Tommy Hilfiger looks to technology as it combats Macy’s decline [Bloomberg]
The trouble with all those t-shirt slogans about diversity on fashion’s runways [Quartz]
Natalie Massenet joins Farfetch as co-chairman [BoF]
How teen retailer Aerie is thriving while its competitors flounder [CNBC]
Céline names new CEO, joins Instagram, announces plans to launch e-commerce [The Fashion Law]
It’s been a pretty quiet season as far as technology goes during New York and London fashion weeks – live content is playing its part, as is politics, but there’s little in the way of the big innovations we’ve seen in the past. There’s lots to be said about that, so look out for some commentary around it in the coming weeks as we cycle into Milan and Paris. In the meantime, one of the highlights there has been is the Fashion Innovation Agency’s return to mixed reality with designer Sabinna.
Elsewhere, news to catch-up on this week spans Amazon as the world’s most innovative company, the digital printing technology taking us closer to fully customisable clothing, the fact Canada Goose has filed for its IPO, and how artificial intelligence is becoming the newest weapon in the fraud fight.
Why Amazon is the world’s most innovative company of 2017 [Fast Company]
Canada Goose IPO: Its smartest business move was expanding beyond Canada [Quartz]
How digital printing technology is taking us closer to fully customisable clothing [Forbes]
British Fashion industry steels itself for Brexit [BoF]
The all-new Hermès: Taking its cues from… Michael Kors? [LeanLuxe]
Snap lowers valuation expectations in highly awaited IPO [Reuters]
Rebecca Minkoff is continuing on the fashion and tech train, this time launching a venture capital fund dedicated to finding relevant early-stage start-ups.
Run in collaboration with Quotidian Ventures, it plans to identify and invest in six to eight companies per year.
According to Pedro Torres-Mackie, founder and managing director at Quotidian Ventures, the programme will serve as a talent funnel to help identify companies and resources that would best benefit the Rebecca Minkoff brand and the industry at large, reports Glossy.
Speaking at the National Retail Federation’s Retail’s Big Show in New York this week, Uri Minkoff, CEO and president of Rebecca Minkoff, said the brand was inspired to launch a fund off the back of the number of tech companies that got in touch following the introduction of its tech-enabled store concept in 2014. That includes its connected fitting room experience, and more recently its self-checkout concept.
He said the company’s first investment is in 42 Technologies, a big data business working with retailers (including Rebecca Minkoff already), and previously part of the New York Fashion Tech Lab cohort.
Rebecca Minkoff herself added that she hopes the fund will help leverage female entrepreneurs in STEM fields. “There are not enough female engineers and coders working in the tech space to bring their user experience to the conversation when it comes to design,” she said. “As females, we have different user experiences, and so the opportunity to invest in those that have a company that serves women by women, is what excites me the most.”
Torres-Mackie added that he’s particularly interested in growth areas including virtual reality and wearables. “We’ve reached the point where a virtual augmented closet will be an inevitability, and the reason we’re here is to make it happen faster,” he commented.
As we move ever closer to the end of the year, there are lots of forward-looking stories coming out, speculating around what the future of the industry might look like. Perhaps unsurprisingly, personalisation and machine learning are popping up time and again. A must-read this week is the perspective from Benedict Evans on what sensors in cameras everywhere means for data, retail, fashion trends and more.
Also worth taking a look at is the augmented reality that’s taken over Covent Garden, how adidas is taking inspiration from Uber in its latest m-commerce app, and insights on the rise and fall of both Nasty Gal and Karmaloop.
Don’t forget our Snapchat Masterclass takes place in London tomorrow (November 22) – just three tickets left for anyone looking to take advantage of our last minute 20% off offer using code “community”.
Sir Stuart Rose, chairman of Dressipi: The next revolution in retail is data-based, personalised services, and the UK is at the vanguard [City AM]
ForerunnerVC on tailoring investments to the new reality of retail [Medium]
This week’s round-up of relevant fashion business, digital comms and tech news neatly sums up a series of things to be tracking at present: the evolution of social media businesses into greater advertising and commercial retail opportunities, the role customer service and messaging apps play together, the explosion of all things virtual and augmented reality, and an ongoing bevy of start-ups to know about.
Meanwhile, also worth reading this week is detail on David Lauren’s promotion to the role of chief innovation officer over at Ralph Lauren, Dior’s catch up strategy on YouTube, and the growth of physical stores by online players including Warby Parker and Bonobos.
Fashion ‘unicorns’ have become an endangered species [BoF]
Dior’s borrowing Chanel’s strategies to catch up on YouTube [Glossy]