Tag Archives: Future

Digital Colour Forecasting – Pimkie Color

Here is a novel approach to the evolving digital landscape that we find ourselves in. Ever though to yourself – I wonder what they’re wearing in Antwerp? Ever ended up drunk on a train only to wake-up in Milan with everyone in blue and you’re in green (damn, so last year)?

I came across the Pimkie Color Forecast today to solve just such first world problems. The forecast shows you in real time what colors people are wearing in the fashion capitals. The service currently investigates Paris, Milan, & Antwerp via Big Brother type approach utilising live web feeds and daily, weekly, and monthly colour trending charts in each city.

The movement from a web 2.0 world, into a truly interconnected world harnessing the full resources of web and mobile, plus all the demographic, geographical, and other data sets the latter allows for, will thoroughly change the how fashion is forecast and planned for in coming years.

 

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From Big Idea To Launch

Written by Áslaug Magnúsdóttir, the co-founder and CEO of Moda Operandi for the Business of Fashion.

In February 2011, I launched an online store — Moda Operandi — with my business partner, Lauren Santo Domingo. Moda Operandi (M’O) was the first of its kind, offering the latest runway styles for immediate pre-order following their presentation at fashion shows in New York, London, Milan and Paris. The site was the result of an idea that I had back in the Fall of 2009 while I was running the premium division at Gilt Groupe: why not allow fashion lovers to buy anything off the runway, in any size offered by the designer, from the comfort and privacy of home? That idea became an obsession that I knew I had to see through to fruition. And I did: Friday last week, M’O announced a Series C round of financing in the amount of $36 million. Investors in the round included venture capital firms RRE, NEA and NAV, as well as strategic investors Condé Nast, LVMH and IMG. Champagne was uncorked. M’O was cemented as a real business.

While celebrating the closing of our latest round, I sat down for coffee with my friend and former McKinsey colleague, Imran Amed, founder of The Business of Fashion.  Imran suggested I write a column for BoF about my experience as a founder and CEO of a fashion startup. Our conversation got me thinking about my career, M’O and how it all came to be. Specifically, what are the key requirements for success as an entrepreneur? Why do some start-ups prosper while others fail? How much of it is a result of planning and skill, and how much is just dumb luck?

There is no perfect script for launching a business and I don’t pretend to have all the answers to these questions. But I do hope that sharing my thoughts and experience over the weeks to come can shed some light on the issues that fashion start-ups face and tease out some lessons learned. And, most important, I hope that my story might help others obsessed with an idea to take the plunge to see it through.

1. SOLVE A PROBLEM, EVEN IF OTHERS ARE ALSO PRESENT

You have heard it before and you will hear it again: a start-up that solves a problem, addresses a need and/or fills a void is one that is best positioned for success. The fact that M’O fills a gap in the market has been one of the key factors that has taken us this far. M’O also is unique in that it is the only business specializing in letting consumers pre-order the latest designer runway styles. But if solving a problem is critical to a company’s success, is uniqueness a requirement as well? Absolutely not. Many examples exist of successful companies that were not the first of their kind. In the online fashion space, Gilt Groupe is a good example of this. Gilt took its concept (selling exclusive fashion at a discounted price through limited-time “flash sales”) from a business previously launched in Europe, Vente-Privée, but shaped the concept to address the needs of a US customer base. And Gilt is not alone: flash sale sites have taken the US by storm, delivering discounted goods and services to customers who crave them. The bottom line is that while filling a void is key, being first to do it is not.

2. ACTUALLY, IT’S REALLY ALL ABOUT THE TEAM

When I started thinking about the concept for M’O, I immediately knew that Lauren was the perfect business partner. We had both worked in the fashion industry for a long time and we had complementary skills. My background was steeped in the business side of fashion, having worked as both an investor and consultant to fashion brands. Lauren’s expertise was in the creative side: a long time stylist and editor, she has an exceptional eye for fashion and deep relationships with designers around the world. We knew that technology was our weak spot, so we embarked on the notoriously difficult task of finding a qualified CTO in New York. Once this problem was solved, we knew we had the key skill sets covered. We could then move on to building our initial website with a small, but highly qualified team of passionate people.

The key take-away? Your initial team is everything. Nail down the key people at the get go who are critical to success and then get going with it. Don’t get bogged down with hiring in non-essentials at the early stages. Outsource other needs or just acknowledge to your investors and partners you aren’t wasting time on those areas now and will address them later.

3. PASSION WILL GET YOU FAR

People often ask me what it is like to be a founder and CEO of a start-up and whether this is a path I recommend. My answer is simple: don’t start and run a company unless there is nothing else in the world you want to do. Being the CEO of a start-up is all consuming. You no longer have weekends, holidays or a truly carefree drink after work. You are on constant alert, thinking about the people who work for you, planning out the future of your company, fussing over every small detail that might contribute to the success (or demise) of your business. The ups and downs are real and extreme. So the one thing you absolutely need to keep yourself and your team motivated is complete and utter conviction in and passion for what you are doing. Anything short of that and your team will smell it, your partners will smell it, your customers will smell it and you will fail.

Years ago, while living in London, a business partner and I spent several months researching and developing a concept for a healthy fast food chain. Despite it being a solid business concept that catered to a real need in the market, it just wasn’t my passion. And when things started to get tough, I didn’t have the conviction to keep myself going. M’O, on the other hand, has captivated me from the day I picked up the phone to call Lauren. With that kind of love for our company, I am motivated to wake up every day to nurture and grow the company.

4. LIKE IT OR NOT, CASH IS KING

At the risk of stating the obvious: you might have a wonderful business idea, but unless you are independently wealthy or able to convince someone else to fund your idea, it is unlikely to go much further than the drawing pad. Raising money is like most things in life, an acquired skill that requires practice and dedication. When I moved to New York in 2006, I started an investment company, TSM Capital, with retail legend Marvin Traub. TSM invested in fashion brands, such as Matthew Williamson and Rachel Roy, and I spent a good deal of time (and heartache) raising capital for early stage fashion companies. This was an extraordinarily difficult task, as many investors were not comfortable assessing the competitive advantage of individual fashion brands. I had to hone my fund raising skills by learning the do’s and don’ts of selling brands to investors: what motivates them, what scares them. That learning was critical during M’O’s fund raising process and we have been blessed with the ability to access capital to fund our growth and development, having raised nearly $50 million in under two years. Without this money — and without knowing how to raise money — the beautiful idea behind M’O would have stayed a sketch on the drawing pad.

5. LIFE IS ALL ABOUT TIMING

This lesson is may be the hardest. Timing is everything, too. Some ideas are great but they are just too far ahead of their time and they fail. Some ideas are great but they arrive at the party too late and they fail. This is as true in the online fashion world as anywhere else. Gilt got its timing completely right, launching just when the economy was experiencing a significant downturn and full price luxury sales were suffering heavily. As a result, Gilt’s business, selling discounted fashion merchandise from previous seasons, was an instant success.

At M’O, we knew our time was now. We saw the writing on the wall. Consumers were demanding online access not just to commodity products from Amazon but luxury goods from designers. With the economy rebounding, we worked hard to get to market fast — even at the expense of making mistakes along the way. As a result, M’O has been able to generate the sales and financing required to put the company in a unique place. In short, while you can’t time everything, do your homework to determine the right moment for your idea. Once you see that wave coming, paddle as hard as you can to catch it. There might not be another big one on the horizon for some time.

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The Business Plan Is Your Roadmap

This article is a blatant copy and paste job from The Business of Fashion but upon reading it I thought it was such golden information I had to drop it here for future reference.

Written by Áslaug Magnúsdóttir, co-founder and CEO of Moda Operandi.

NEW YORK, United States — Early stage entrepreneurs often ask: is a business plan really that important or can you get away without one?

The quick answer is: yes, it’s really that important, and, no, you cannot get away without one. If you’re looking to third parties to raise capital, they’re understandably going to want to see a plan for what you want to do and how their money is going to be spent, with some very specific topics addressed along the way.

Certainly, there are exceptions to the rule. Friends and family sometimes just want to fund your business no matter what, or maybe you’ve found an angel with such an understanding of your concept that a plan isn’t necessary to get the checkbook out. My partners and I at TSM Capital sometimes invested in fashion brands that did not have business plans, but did have management teams with very clear ideas about growing the business. But even in those situations, our first order of business was always to sit down together and map out a plan. A business plan, at its core, forces the entrepreneur to clearly articulate the business in writing so that the entrepreneur, key team members and investors all stay on the same page in terms of product, strategy and financial expectations.

In short, you’re most likely going to need a business plan to get funded. And if you’re lucky enough to get funded without one, you’re still better off having one as it will serve as a roadmap for your early months.

So beyond wanting exceptional management to be pioneering a high margin, scalable business that takes advantage of an exploding industry trend, what else are investors looking for in a business plan? Here are a few general rules to keep in mind in terms of the presentation of the plan itself:

Be brief. Professional investors like short business plans, generally no more than 10 pages and certainly no more than 20. Remember that you are catering to a short attention span, since these people see lots of plans. Get in, make your points and get out. Yes, there can be exceptions: The investor deck for Moda Operandi’s last round of financing crept up to nearly 70 pages, since we had multiple investors with numerous requests, and, thankfully, we ended-up being oversubscribed. But honestly, what do you accomplish with 70 pages that you can’t with 20?

Be visual. If a picture is worth a thousand words, in a business plan, a picture might be worth a million dollars. Your goal is to make sure your potential investor understands and is focused on the beauty of your concept and good graphics help convey good ideas. I learned this the hard way: an ex-lawyer and a McKinsey alum, I drowned M’O’s first business plan in a sea of microscopic data, lists and charts with very few pretty pictures. One investor, gasping for air, (who, fortunately, did come in on our Series A) asked whether I came from McKinsey’s German office! Your business plan needs to let investors breathe so they can digest what is going on. I now always balance key data with gorgeous visuals, and I have a brilliant art director who helps create this precise aesthetic.

Be numerical. As you might imagine, financial investors are particularly focused on — you guessed it — the finances. Not only do they want to see financial projections, they want to see these same financial projections twisted and contorted into a baffling array of numerical analyses: P&L projections, cash flows, unit economic analysis, customer acquisition costs, customer lifetime value analysis, conversion funnels, etc. At the risk of jeopardizing the brevity point: the more numbers, the better.

If you want to stick to the 10 page rule, below is a framework that works for most businesses:

Page 1 – The Team. Either start with “The team” or “The summary of the concept” (see Page 2 below). I like to start with The Team because when you’re presenting to investors in person, it makes sense to introduce everyone at the beginning of the meeting. The goal is to give investors a quick summary of the experience you and your team bring to the table. Don’t spend more than a minute on this when presenting.

Page 2 – Summary of the concept. Here you want to give the big picture about your concept before diving into details. For example, at M’O, this was a description of an “online trunkshow service that sells luxury clothes and accessories to consumers immediately following their presentation during fashion week,” plus a couple of other points.

Page 3 – The problem you are trying to solve. This is critical. Why is there a need for your business? What real problems does it solve? What voids does it fill? Investors are going to love to debate this one with you so make sure you really drill down to the specific value add your business provides. M’O example: “Customers can only purchase a small percentage of a designer’s overall collection at traditional retail and often only in a limited number of sizes.”

Page 4 – Your solution to the problem. What is your solution to the specific problem? How does it benefit the various stakeholders (customers, businesses etc.) M’O example: “M’O consumers can order any item from our designers’ runway collections in any size the designer offers, from the privacy and comfort of home.”

Page 5 – The size of the opportunity. This one is also critical. You want the bread baking in the oven and wafting over to the dinner table. While some investors are willing to invest in strategic but financially “small potatoes” opportunities, most VCs are looking to invest in businesses that have the potential to generate hundreds of millions of dollars in revenue. So you need to research and quantify the opportunity and then paint a picture that tells it clearly (and aggressively), i.e. a top down analysis of how big the market is to how big a share your company will take.

Page 6 – Your competitors. Who else has tried to solve the specific problem, or a similar problem, and how have they done it? What makes you unique versus them? How do you position yourself versus them?

Page 7 – Why will your concept succeed. Time to peacock. Why are you good? What is your competitive advantage? What assets — IP, expertise, contractual rights, relationships, technology etc — do you possess that will allow you to demonstrate success? You want to show off here anything that is unique or superior. Don’t be bashful.

Page 8 – Your marketing and customer acquisition plan. Assume in the beginning that you are unlikely to have a significant marketing budget. How are you going to get the word out there about your business without breaking the bank? Think PR, partnerships, customer relationships, social media, etc.

Page 9 – Five year financial projections. Full disclosure: no one has a crystal ball and it is unrealistic to create a perfect (or even near perfect) five year plan for a completely new business. Investors know this, too, but they want to see how YOU think about growing the business; whether you’re really in it to win it. There is no right answer to how you shape these financial projections. Different entrepreneurs have different approaches, ranging from being aggressive (fearing investors will deflate the numbers anyway) to under promising and over delivering (hoping investors will appreciate a conservative tact). Bottom line, the numbers need to look attractive but achievable. You need to show them the money. And if you can’t, then why are you launching this business?

Page 10 – Next steps. Take a deep breath, you’re almost done. Let them know quickly where you are in terms of the product, the team and your timing. “Next steps” is less about what’s on the page and more about how you talk around it: that this is a huge opportunity for investors, that other investors are interested, etc. Remember that fundraising is like dating: honesty is important but go slow. Don’t reveal all of your quirks and flaws on the first date, it is up to the other party to discover those attributes over time. By that point, hopefully both parties will be in love.

 

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Why Inspiration Trumps Imitation

This post is sourced from the blog of futurist and keynote speaker Mike Walsh

Why Inspiration Trumps Imitation

You can have too much of a good thing, especially if it wasn’t yours to start with. Here’s the perfect example – brands that shamelessly imitate the strategies of their major competitors. I was scouting the Westfield complex in Century City, LA last week and noticed a new Sony concept store a few feet from a classic Apple retail shrine. It was striking how similar both stores appeared, except for one crucial distinction – Sony was devoid of customers.

Years ago I remember watching a fascinating interview with Steve Jobs. He was comparing himself to Microsoft and Bill Gates, explaining that their mission at Apple was to take as much as they could from art, music, history, science and technology – in his words ‘the best things that humans have done’ – and cram it into their products. That’s why, he said while people use Microsoft products, they love the ones that Apple makes. The difference was passion.

Apple’s retail strategy is also no stranger to appropriation. Next time you are in front of one of their stores, stop for a minute and squint your eyes so that the laptops and screens disappear and all you can see are abstract shapes, materials and lighting. Anything look familiar? When they designed their stores, Apple took direct inspiration from the world of luxury boutiques with their expensive construction materials, theatrical street presence and sparse merchandising, They ruthlessly imitated, but importantly – it was not from the playbooks of their immediate competition.

That said – there are some limited scenarios when direct imitation works as a disruptive strategy. For example when you take an expensive product, and deliver a comparable substitute at a dramatically lower pricer point. Although their customers might deny it – low priced imitation is the secret behind the success of fashion brands like Zara and H&M. They directly copy high fashion styles from established luxury brands, and rapidly manufacture and curate market appropriate products at prices mass market consumers can afford. Not so dissimilar is the practice of Chinese ‘shanzhai’ or bandit phone manufacturers, who offer clones of high end smartphones at substantial discounts to their originals, and in doing so, open up entirely new consumer niches.

The distinction between inspiration and imitation might be nuanced, but the competitive differentiation can be vast. Steve Jobs was always fond of the infamous Picasso quip – ‘good artists copy but great artists steal’. But what does stealing really mean? When you steal something, you don’t just take it – you make it your own. Sage advice for the next time someone asks you to look over your shoulder and mindlessly mimic something your competition does.

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Evolving with the times

Globalisation is nothing new to the fashion industry. In fact it could probably be said that it was one of the first industries to exploit the specialisation of particular parts of the world to trade silks, fine jewellery and other pieces of antiquity. For decades manufacturing has been switching largely from West to East as relatively cheaper labour could execute the ‘low-value’ side of the production cycle, while the more ‘high-value’ design and creative processes were retained in the country of origin.

Technology is now poised to disrupt the production cycle yet again. The disruption largely yet to be felt is that around what economists call global labour market arbitrage. Put simply this is where you can engage someone or some company, somewhere else in the world to perform the same task that you would at home, for a fraction of the price. Manufacturing has been doing this for decades, but the true disruption yet to come will be in white-collar and professional occupations.

Already sites like freelancer.com allow one to engage a designer, copywriter, strategist, technology provider, and other services to perform their respective actions remotely at a fraction of the domestic full employment cost. Setup similar to an auction site freelancer allows you to post a project, review quotes from suppliers, the reputation, feedback and history of suppliers, allocate budgets and milestones for your project and process payments.

All of that is great for a fashion label looking to update their website, build an iphone app, or craft some fresh copy for their SS launch, but what are the longer term implications? Thinking about it, it means that the people conducting the operations of your business in the next few years may have to compete with someone in the second and third world who can achieve the same outcome as them, hold the same qualifications, and potentially have a higher service ethic. What there is the potential (and I say ‘potential’ as this is not some kind of dooms-day prediction) for a reduction in first world incomes should labour markets not adjust accordingly. Reduction in incomes means less spending power. Less spending power means less money spent in the world of  fashion. Yes clothing is an essential item, but that $1,500 handbag can probably wait.

What would such a world mean for particular players in the fashion industry. Brands with a global presence will be able to exploit and leverage changes in discretionary spending as wealth transitions around the globe. Brands unable to escape the confines of their home boundaries (especially in the west) will most likely feel the strongest effects. Especially if there have not carved themselves a well-defined and serviced niche in the marketplace.

Australian strategist and author Mike Walsh is exploring such a world. Mike’s latest book Futuretainment encompasses the traditional forms of media and entertainment and reveals how the rise of the internet, mobile devices, social networking, audience networks, user generated content, ubiquitous networks and the ‘adaptive web’, amongst other advances, has affected them forever. Futuretainment explains how consumer behaviour has combined with new technologies to enact these changes. The opportunities provided by the digital age for new ways of accessing and providing information have been embraced across the world and diverted the course of media. Entertainment and broadcasting are now in the hands of the consumer, rather than the media executive.

Whether the impact of this will threaten western labour markets is yet to be determined, but what is clear is that the world is changing, and change can mean with opportunity or ruin. In the natural world natural selection takes care of the problem. History shows the business world and that of fashion is no different. How can you make sure your brand and product is selected to evolve and not be left behind?

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