28 Jan 2011, Posted by admin in Fashion, 3 Comments

20 Questions With To Vie For CEO Melanie Moore

Shopping has never been so entertaining and addictive until now. To Vie For, an online shopping game that allows you to bid on this season’s hottest luxury items, is a new way to experience e-commerce. Using purchased credits, you can bid on a limited number of popular in-season goods such as the coveted Mulberry Alexa bag or a Marc Jacobs quilted leather purse, waiting for the price you want to vie for an item before it sells out. A winner of the NYU Stern Business School Competition, the company recently launched in fall 2010 at Techcrunch Disrupt. I recently sat down with To Vie For’s CEO and co-founder, Melanie Moore, who provided a refreshingly honest account of her experiences launching a company while transitioning co-founders, her opinion on getting an MBA and why she left an investment banking gig to discover her true calling as an entrepreneur.

Jennifer Sung: Why did you pick now to launch To Vie For?

Melanie Moore: If you follow the evolution of luxury on the web, it really started in 2000 with Net-a-Porter, which was really the first place to sell high-end apparel and accessories online. They broke down a lot of the barriers that existed for expanding luxury online and they were really the pioneers of that. And then in 2007, Gilt Groupe launched (as well as RueLaLa) and they not only made shopping more game-like and competitive, but they also took the luxury off-price business and they put it online, which really had not been done before. So they broke down some barriers as well. Now, we [at To Vie For] are trying to take it one step further and not only sell luxury online at a discount, but make it fun and game-like and entertaining.

JS: Who is your target demographic? Is it the urban fashionista or the suburbanite?

MM: It’s really for two demographics. It’s for the cool urban fashionistas who know everything that is going on, and know all the super trendy brands that are up and coming. You start with them and then you get a buzz and then everyone else will eventually come on board. And that’s a very standard sort of formula for expansion. So starting with the urban fashionista and then moving over to the suburban soccer mom. They are the women who know the brands that are in the mall because that’s what they see versus the women in New York who have so much available to them. If you look at the demographic of women who play casual online games, it’s really exploded with Facebook games a few years ago. It’s women in the South, Midwest and middle parts of the county, usually in their 30s or 40s and making about $50,000 a year. If you’re a designer who wants to be the next Marc Jacobs, you have to target that demographic and target the mass without appearing to do so. Basically if you’re a big designer, like a Proenza Schouler, you have to target that audience.

JS: Unlike other private sale sites, To Vie For offers designer handbags and accessories that are in-season. How long is an item considered “current” before it becomes outdated?

MM: It depends on the item. Really high fashion brands that sell at price points between $500 and $50,000 basically have a four-week shelf life. It’s a pretty quick turn around. However, in total, there are really about six seasons–pre-fall, pre-spring, fall, spring, resort and holiday. It depends on the season and it depends on the item. Certain items like the Louis Vuitton Speedy, which is Louis Vuitton’s number one selling entry level price point bag, is iconic. By in-season, what we mean is that we are buying at the beginning of the cycle whereas Gilt Groupe is buying at the end of the cycle. So we are buying along with Bergdorf Goodman, Bloomingdale’s, etc. and when they are going to market appointments, we are going right alongside them.

JS: Your partners include a number of notable luxury brands including Marc Jacobs, Mulberry, Kenneth Jay Lane and Alexander Wang. How were you able to bring them on board?

MM: Well, it’s hard and we’re still working through it. A lot of brands were like, ‘You want to discount my in-season goods? No way.’ And we’re still working on those brands. But the selling point is that we’re not selling 5,000 of your new in-season bag at discount. Maybe we have a game where a 100 people are playing and five bags are available. We try to keep that ratio one in five or one in ten. If you play the game, five women will get a great deal but 95 women spent money and a better part of their lunch hour vying for this item. That’s real intent to buy and what we are doing now is sending those women to the regular priced e-commerce part of our site and giving them early access to certain products or a $25 gift card towards that brand. It’s incentive to get them to shop at full price. So for brands, it’s a way for them to get full priced sales. There are always these two struggling forces in retail–what the consumer wants and what the brand wants. The two are very different things. So we are trying to figure out a way to bridge that and we figured out that the consumer wants awesome stuff at a discount and the brands want to keep their brand image intact and sell everything at full price and never have markdowns. So how do you really bridge that gap? What we’re saying is that we want to get women excited about brands. Maybe it’s a woman who has never heard of your brand before or maybe they’re not going to buy the Mulberry Alexa bag for $1,100 dollars but they’ll buy a little pochette or a little piece of jewelry or accessory piece for full price.

MM: It depends on how we set it up. When we first started, for brands like Kenneth Jay Lane, for example, we didn’t have that functionality set up but as we started talking to the head of sales and marketing she was talking to the company’s own stores and they had customers asking for a certain cuff that we were selling only through our site.

It’s on our roadmap–we’re not there yet but we intend to have a really robust system where we can not only track conversion but also provide large amounts of data about our customers. Not individuals’ private email addresses, but an aggregate picture of how customers are interacting with products. If they’re buying, why are they buying? We can provide that aggregate information to brands without violating the privacy of our customers and this data could be very valuable to them. Large department stores don’t really provide brands with significant amounts of data about their customers.

JS: With the plethora of private sale sites like Gilt Groupe and Rue La La, many consumers have been trained to wait for markdowns before making a purchase. Do you think anyone is willing to pay full price for anything anymore?

MM: Well, you would be surprised by how many people will actually pay full price. I know it seems like everything is being discounted now, but in reality, there’s a multi-billion dollar industry that is still full priced. I think with the recession, customers’ expectations really did reset but we’re moving out of the recession and I think a lot of people are adjusting their expectations as the jobs market picks up. It’s a tricky relationship. There’s no definitive black and white answer. We don’t want to sell everything at a discount because it ruins a brand’s equity and that in turn damages To Vie For’s brand equity. So we want people to return to full price selling. And we think this is a way to sort of change that. Shoppers might be competing for an Alexander Wang bag but we might also have five accessories that are on that same page that have a one-click “buy” option on it. What I think is important is that there’s still an element of scarcity. No matter how big we get, we’ll always keep that ratio pretty much the same. Maybe there’s one bag available for every ten or fifteen women. There will always be this element of competing whereas for Gilt, it started out that way where everything was selling out in the first couple of minutes, but now as they have bigger sales and more brands and have taken on so much–they’ve taken $85 million in funding and their investors want to put that money to work–they are selling more and more brands and more and more inventory. They are flooding the marketplace. It may seem like what we’re doing is the same thing as Gilt but we’re really trying not to compete with them and focus on our own little niche.

JS: What metrics do you use to define success in the day-to-day operations of your business?

MM: A lot of it is conversion rates and how people go from visitors to sign-up and from sign-up to paying user. We work every day to think about ways to improve those numbers. If you look at just pure visitors, a lot of it is driven by how many marketing dollars you’re putting into the machine so I don’t think that’s very interesting. I think conversion rates are sort of where the rubber hits the road. Another thing that’s really important for me is retention–getting customers to come back and play again. Somewhere around 30% of our users have already come back at least a 2nd time to play again. And we issue a survey after every sale and ask them, did you like vying for this bag? Would you play again? And the rates of yeses are somewhere between 80 and 90%. So people like the experience. Finally, I like to ask not only what could we do to improve the experience and what did we do wrong, but I also like to ask what we are doing right. What keeps you coming back? What we’ve found is that people like the gaming experience and the brands.

JS: Who are you most nervous about from a competitive standpoint?

MM: No one is doing the exact same thing as us. From a competitive standpoint, I would say the sample sale sites. The department stores and luxury brands are very slow to move so I’m not necessarily worried about them in that a lot of them are just starting to do online sample sales. I feel like the sample site websites have the brand relationships–that’s the barriers to entry. A couple of guys in a garage might have the technical ability but you have to have the brand relationships to build the product.

JS: Did you have any brand relationships before you started this idea?

MM: No. It was a combination of some of our own personal connections here and there and mainly because we hired a great buyer (Jana Adler) who has a lot of experience opening up boutiques. She has had a lot of experience getting fashion designers on board. So she’ll set up appointments and we will go in and we’ll pitch to them.

JS: What are the biggest near term challenges for your company?

MM: I think finding product market fit. My co-founder Eric Jennings and I need to come up with a bunch of great ideas and test them and figure out what works and what doesn’t. Hopefully in a year, we can be at a point where we can put money into the company and really scale it.

JS: How did you come up with this idea and once you did, what did you do? Did you write a business plan for it? Can you walk me through the process of how you evolved from concept to product?

MM: I came up with the idea because I knew about Gilt Groupe and then I discovered another website coincidentally from Germany called Swoopo. They focus on consumer electronics using what they call “entertainment shopping” and I liked that concept and thought, let’s take it from Germany to the US and use it for fashion. So that was the initial concept. And we entered the NYU Stern business school competition (co-founder Susanne Greenfield is an alum) where they ask you to write a two page executive summary and then grill you on it and then they tell what they think is wrong with it and then you write it again. Then you write a business plan and afterwards they help you refine the pitch. At the end, they have a final competition where you pitch in front of a group of 300 people or so, a lot of investors, and a panel of judges. There were about 200 teams who entered, and we entered just to help us organize our thoughts. Neither of us had ever started a business before and we didn’t really know what we were doing at all so we reached out to mentors who helped guide us. We never really thought we would win, we just sort of did it, and we ended up winning by a unanimous vote. We actually got the entire $75,000 grant.

JS: How do you respond to those who don’t believe in what you’re doing?

MM: The reality is that most people don’t when you’re starting a new company. Now because we have started to experience e a little bit of success, I think that people are gravitating more to us and coming back when they said no six months ago. But in general, most people don’t believe in your idea when you’re first starting out. I guess you sign up for it. It’s good practice because good investors, for example, are going to ask you tough questions and they’re going to poke holes in your business plan and you need to form good answers to their questions. Or at least be able to say, yes we know that’s a risk and we’re aware of it and these are three reasons why we are able to mitigate that risk.

JS: You worked in finance before you left to run a start-up. Was it relevant or helpful in launching To Vie For?

MM: Well, it’s not totally irrelevant but it’s mostly irrelevant. I went into investment banking right from school, which is possibly the worst training ground for future entrepreneurship. I did gain the ability to really work 20 hour days without sleep. And it made me realize that it’s not what I want to do. I had always loved fashion like a lot of women and always wanted to do something in luxury or retail and got the opportunity to work in a corporate mergers and acquisitions group at a smaller retailer that owns hundreds of different portfolio companies, one of which is Bill Blass. The president at the time hired me to come in and work for the larger parent company and I spent two years doing that and it was certainly more interesting [then investment banking] but I was still a cog in the corporate wheel.

When you go into investment banking, there’s this mindset of following the path. You go to a top school, then you go into banking and do that for two years, and then you do private equity for two years as a pre-MBA associate and then you go to a top business school and either come back and work for a private equity firm or a hedge fund. And that’s the path. If you’re not following that path, there’s this mindset that you’re somehow failing. And even when I left banking, I sort of still had that mindset that I had to get into private equity or else I wasn’t going to be successful. I was interviewing for private equity jobs at one point and I don’t have a degree from a top school. I went to University of Tampa, which is a great school, but it’s certainly not a Harvard. I was getting a lot of resistance and you know, at some point, after six-months of trying, I said to myself, ‘Why would I want a job in an industry that clearly doesn’t want me?’ And I saw this site Swoopo and thought it was brilliant and loved the game theory element. So I said, ‘Screw this. I’m going to do something else.’ I never actually envisioned myself as an entrepreneur. I always thought my risk tolerance was too low but I feel like I’ve found my calling.

JS: There’s often debate about whether business school is the right place for someone to launch a startup. Can you share your thoughts on your experience and whether you would recommend an MBA?

MM: I would not recommend business school. Entrepreneurship is not taught in a classroom. It’s taught by doing. I think that if you want to do something in tech, you really need to know how to code. We got lucky in that we won the NYU Stern competition and could afford to outsource, but the reality is that no investor will take you seriously if you’re outsourcing your tech development. If you’re a sandwich shop, you need to have someone who is really great at making sandwiches. Or if you’re engineering something then you need someone who can build that product. For Apple, Steve Wozniak was building computers in his garage and Steve Jobs was the sales guy. Whatever you do, you need to find that co-founder who can build that product, whatever that product is.

I think that a mistake that I made was not realizing that upfront and instead of finding a technical co-founder, I found another business co-founder, which ultimately didn’t work out. Now we have a technical co-founder, who we were able to hire because we had raised money. But I think if you’re a business person that doesn’t have technical ability, either learn enough to build your own prototype or network, network, network.

JS: I’ve come across a lot of startups where partnerships fall apart. Given your experience of transitioning to a different co-founder, what qualities do you look for in a partner?

MM: I think I’ve learned a lot just from transitioning from one co-founder to another. It’s so common. Co-founders break up all the time and I think that is for a couple of reasons. You start a company with a friend and you don’t set real expectations from the beginning about what everyone’s role is going to be. Or a lot of times, like in our case, one person was more committed while the other was not. You can’t build company on a part-time basis. You really need people who are in it. I think that if you find someone, ideally it’s someone who is not your best friend and more of someone who you have professional relationship with. You need to be able to have tough conversations upfront with that person. Like who gets what equity? How are we splitting up roles and responsibilities? What are our vesting schedules going to be like? You have to have those conversations upfront, and you have to be on the same page.

JS: What does your daily schedule look like?

MM: Because I’m not a morning person, I usually get up between ten or eleven and then grab coffee and I’l l answer any urgent emails that come in overnight. And then I’ll deal with whatever is going on that day. Maybe it’s a fundraising issue and I need to negotiate a term sheet with an investor or maybe it’s a photo shoot and I’m helping to assist or maybe it’s packaging and shipping. I do try to delegate for my own personal sanity but I wear many hats–HR, finance, fundraising, creative planning and managing.

JS: What has been the most difficult aspect of launching this company?

MM: In the beginning, we were still outsourcing development and managing that process. When you don’t have total control it is extremely frustrating. As I think about what the most challenging thing has been, the reality is that we haven’t even really started doing the most challenging thing, which is finding product market fit and building a company. Yes, we have a good customer list, and we have usage, but we haven’t actually built anything yet and that’s the hard part.

JS: Was there ever a point when you wanted to give up? How did you get past that hurdle?

MM: I’ve thought about it, but I was never at a point where I was ever really serious about giving up. There was one point when I had a falling out with my co-founder and felt like I didn’t need this. Or a feeling that if we can’t negotiate a scenario where the company has a good viable future and is fundable, then why am I working on this? And going through that was certainly serious.

JS: So how did you get past those hurdles?

MM: Techcrunch wrote this very timely article recently about how to not get fired from your own company. It was basically like, when it’s you and one other person, it’s about getting as many people as you possibly can on your side whether that’s advisors or board members or investors or other people in the organization, so you can get their help in negotiation. And in the beginning, I was actually really afraid to reach out to investors and tell them, ‘Hey, we’re having a big issue and this could bankrupt the whole company and take us down.’ I was afraid that they would just be like, ‘Oh, well I’m no longer interested.’ But the reality is that our investors have helped us negotiate through this process. So I would say I got past this hurdle by not being afraid to reach out to as many people as possible that could help.

JS: What’s your biggest fear about not keeping your company together?

MM: Going through a situation where there is potential litigation. That automatically means you’re done. No investors will come near you so it’s over at that point. It’s not necessarily a fear–I’ll start another company or I’ll get another job and life goes on–but it would be a sort of sadness that we worked so hard on this and there is so much potential here and then to have to give it up. So it’s more of sadness than a fear.

JS: What have you learned about yourself while launching To Vie For?

MM: I think what surprised me is that I’ve always been one of those people who wears my heart on my sleeve whereas my former co-founder (Susanne Greenfield) is very level headed. And having gone through this whole situation, I’ve had to squelch any kind of emotion and really be able to keep it together and approach it in a calm, cool and collected way. It’s obviously a very emotional situation–the company is your baby–so it sort of surprised me that I’ve been able to stay calm in stressful situations.

JS: What is the best piece of advice you have ever received or given?

MM: Something I’ve learned that I would give as advice to other young people is that no matter what happens, failure is not a bad thing and you shouldn’t be afraid of it. And if you aren’t failing, you aren’t trying hard enough.

–Jennifer Sung

Follow Jennifer on Twitter @Changingtide