
Nasty Gal is expected to file for bankruptcy - prostoalex
http://www.recode.net/2016/11/9/13578718/nasty-gal-is-expected-to-file-for-bankruptcy
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ryporter
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.

~~~
IsaacL
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.

~~~
nradov
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.

[https://www.harpercollins.com/9780066620992/good-to-
great](https://www.harpercollins.com/9780066620992/good-to-great)

~~~
jstelly
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.

~~~
IsaacL
Tony Hsieh of Zappos was a big fan, and recommended it to all his execs.

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mysterypie
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).

~~~
adevine
That wouldn't work today, though. People have a much higher expectation of
what a piece of hardware can do and looks like.

~~~
davidiach
Not necessarily, look at all the projects on Kickstarter. There are still a
lot of products that can be designed and build for less than $1 million.

~~~
jmkni
Yeah, but those projects stand on the shoulders of giants. They are building
on top of already existing open source hardware and software.

~~~
orly_bookz
That's true of everything, though?

I mean a shitty $2 shirt wouldn't exist but for the power looms of the 19th
century...

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debacle
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.

~~~
profeta
except for the last item, you pretty much described amazon.

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Ayraa
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.

~~~
nibnib
>Can you trust any of the advice from her book?

This is pretty much the norm for business books. This time it just isn't
backed by survivorship bias.

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madaxe_again
Worked in ecommerce for a decade, knew innards at NG through a few sources.

They overspent on tech which they always thought would last forever. "Yeah,
let's spend $11M on a redesign. It'll last forever"

They bought way too much stock, and never worked with size curves, just flat
ranges.

These are common problems in small/young retailers - just most of them don't
fail quite so spectacularly on other people's money.

~~~
donatj
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.

~~~
marrs
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.

~~~
madaxe_again
I'm wondering if you worked for me, but with hindsight I realise this is a
common problem. We underpriced ourselves by orders of magnitude for years.

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kriro
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)?

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djsumdog
When I hear about stuff like this, it takes me back to the Fucked Company days
and the bubble bursting.

~~~
ryporter
Which bubble are you referring to? I'm not familiar with one in the retail
clothing space.

~~~
RichardCA
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.

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softbuilder
Did VC tank the company? As I recall from her book and interviews, she built
her business on revenue and only took on capital much later.

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smegel
Wasn't she in the news a few days ago as some kind of up and coming
billionaire?

~~~
visakanv
"Nasty Gal's Sophia Amoruso Hits Richest Self-Made Women List With $280
Million Fortune" – [http://www.forbes.com/sites/clareoconnor/2016/06/01/nasty-
ga...](http://www.forbes.com/sites/clareoconnor/2016/06/01/nasty-gal-sophia-
amoruso-richest-women-net-worth/#46dce5bd44e1)

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iblaine
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.

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samfisher83
This is Chapter 11. It means that they get time to figure out their finances.
It isn't chapter 7 where they are liquidating.

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PaulHoule
These were always cheaply made clothes that were not well designed. Good
riddance!

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zump
Next up StitchFix...

~~~
lastforestlark
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.

~~~
FashionExist
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.

~~~
mtrimpe
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.

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inian
Lol I thought the article was about Hillary

