Why Fashion Startups Fail?

Well perhaps not entirely fail, but don’t get serious traction. Sure, we’ve seen activity overload in the fashion startups space during the past few years – entrepreneurs are jumping on the bandwagon to reinvent this industry online; investors rushing to put their money into unfamiliar space, attracted by billion dollar valuations like in the case of Gilt Groupe. Each week, I receive emails from fashion startup founders asking for advice or a partnership with my company, Style Coalition. Many of these talented founders raised seed rounds from leading VCs, some even have celebrity investors, but how many of them got to the next round of financing or made significant exits? Not many. We’ve seen e-commerce companies thrive, and flash sale sites having their ride, but most of the fashion specific social or technology platforms haven’t had major success.

While I still believe the fashion industry is one of the most exciting industries for technology innovators, I also think it is one of the toughest to crack. After doing business in the space online for the past 5 years, trying multiple business models (and finding one that works) I came to a few realizations as to why it requires an extra effort to succeed.

1. The fashion audience is hard to please. People who are naturally drawn to fashion tend to have a critical eye. A big part of having taste is knowing what is NOT tasteful; therefore this audience is used to looking at new products, sites and apps from a critical perspective. It takes a lot to get praise or even a nod from the fashion audience, not to mention mass adoption.

2. People who are interested in fashion are individualists and don’t like following the masses. One of the reasons they do use mass social networks is to express themselves creatively in front of a large audiences and keep their status as trendsetters. They don’t want their own social network; they want to be among the small influential audience on the large networks.

3. The fashion audience is always on the lookout for the next cool thing. It is hard to keep their attention to the same product or online destination, unless you continue to innovate and surprise. This is perhaps true for our entire generation, but when targeting trendsetters, it is particularly challenging.

4. It is hard to gain the fashion audience’s trust, unless you are a known brand. This might look like a stereotypical statement, but labels are extremely important to fashion conscious audiences, especially when we are talking about the online world, where it’s harder to make people trust you. Labels may refer to clothes they wear, sites they sign up for – brand association is important. This is the reason I believe so many startups focusing on emerging designers are not getting mass traction. It is harder for people to trust an unknown label online. With the brand name comes quality reassurance. People are willing to spend small amounts on new brands (hence Etsy’s success), but when it comes to emerging high-end designers, people are still more reserved to open their wallets. The same goes for new sites – the only way to get them to trust a new brand is via some sort of endorsement from an influential person.

5. Fashion startups get distracted by the glitz and glamour of the industry. They try to cater to that high standard – putting together events and attracting celebrity names, instead of focusing on perfecting their product. Of course that helps, but if you don’t have any value proposition for your audience, no labels or names will help.

These are the main lessons I learned from my own mistakes and observing others. There is still so much room for innovation in this industry and so many problems to be solved, which will continue to attract talented entrepreneurs. I hope they learn from these mistakes.

Why I Just Unfollowed (Almost) Every Brand on Twitter.

This beautifully sunny Sunday morning I lost it. I lost my patience for the noise that my Twitter stream has become. Between desperate invites to check out the latest merchandise, to hashtag overload and cross-syndicated updates, these days my Twitter stream is mostly a distraction from the important things.

Being a self-aware person, I blamed myself for the poor “curation” of my content stream. Therefore I decided to take a closer look at the list of 2,300 names I follow. Don’t get me wrong, I still enjoy many of my contacts’ updates, but I find them largely outnumbered by promotional messages and noise. What I quickly realized was that most of what caused me the annoyance on this peaceful sunny morning was coming from the brands I followed. So I asked myself, why did I follow them in the first place?

When I joined Twitter back in 2007, there were almost no fashion or beauty brands on the platform. There was a sense of a small community of innovators who often engaged in conversations. When fashion brands started joining Twitter, I almost automatically followed each newcomer, cheering them on with my follow. Some of them had a human side and we became friends (like @dkny), but most of them never interacted with me, or even provided any valuable piece of content (I don’t count retail discounts as valuable content, sorry).

They stayed just logos to me, and it’s tough to have personal connections with logos.  I recently noticed that I started tuning out and/or skipping messages that didn’t have a human icon next to them, or at least a virtual character I could relate to.

This morning I realized there is no reason to continue pretend like I care about what most brands are saying. Posting your “exclusive discount” and “first look” of your own merchandise just doesn’t cut it anymore, because everyone else does the same. Asking questions about how my Sunday is going doesn’t trick me into thinking you really care. Maybe it’s because I know too much, and I know that your intern pre-scheduled this tweet question on Friday afternoon before leaving the office for the weekend.

Today I unfollowed most logos in my Twitter stream because I’m not willing to waste another second consuming the noise. These days I rely more than ever on my close circle of contacts to provide valuable information to me. If you are a brand and have something meaningful to say, I’m sure this will be shared among that circle, and from there will find its way to my information stream.

My advice to brands? Find your personality. These days your brand needs it more than ever. The only way you can participate in online conversation is as a human, not as a logo – otherwise how do you expect anyone to feel a connection? So, how do you find that personality or personal voice of your brand? Look around your company, from top to bottom, define the human DNA of your brand and translate it to the social medium. The good news is once you found that personality, it will be easier for you to adapt to new online platforms, which are popping up almost every day. If you don’t do it now, it will get harder for you going forward, as all of our interactions online will eventually become social.

On Data, Pinterest and Emotional Responses.

Data, stats and conversions are coming up more and more often in my daily business conversations. The more I talk about it with people, the more I realize how little knowledge we have about the effects of the web not only on our business, but our lives in general. We learned to measure  views, likes, clicks, purchases, shares and likes but still have no idea about how to measure the effect that our online actions make on other people.

This morning I looked at my Pinterest homepage and realized a big portion of it was filled with beautifully designed inspirational quotes, ranging from “I Hope You Feel Beautiful Today” to “Try Something New Today”. They made me wonder: how many of the people repining it will really feel beautiful or will, in fact, try something new today… We share these statements so easily online, creating an illusion for ourselves that we actually do follow the advice. There is no data on how sites like Pinterest and social media really affect our lives. Does it motivate and makes us better human beings? Or perhaps turns us into lazy jealous bunch, repining unattainable objects and other people’s dreams?

This is the reason I believe the next few years will be all about data, and coming up with more sophisticated tools measuring it. We will learn to gather valuable data not only on the immediate conversion such as comment/like/click/purchase, but the way content and messages affect our lives as a whole.

Right now our set of online emotional responses is limited pretty much to likes, repins and emoticons. There is something about the simplicity of these responses that works in the online world, however as our online interactions become more complicated and mimic the real life, there will be new tools for more sophisticated responses. Since technology is always connected to data, we will be able to measure and get stats on a whole new range of responses. This of course will be a tremendous help for marketers who will be able to focus their efforts more efficiently, and the geek inside me can’t help but get excited about this new set of tools that is about to come..

 

P.S. If you are curious about the effect of social media on e-commerce and want to learn from the leading platforms and drivers of s-commerce, come to the next Fashion 2.0 discussion panel on 4/16 or follow #fashion20 conversation on Twitter.

 

Influencer Marketing: Pay-Per-Play.

Very often I’m invited to give presentations to PR or Advertising agencies on the work we do with Style Coalition and our partnership with Hearst, as well as the state of the industry in general. There is still a lot of confusion in this new emerging space and many of the things we learn as we go. One topic that keeps coming up in every conversation I have with agencies is the separation of editorial vs sponsored opportunities when it comes to working with influencers. Is there always a pay-per-play?

I think the problem is twofold: one is the lack of education on the bloggers side, and another one is caused by the blurring roles of the agencies. PR, Advertising and Social Media used to be separate practices, handled by different people, divisions and agencies. These days we are seeing more of a holistic approach, where the same team is driving all three vehicles for one brand.

I support this practice wholeheartedly and think it provides the best value for a brand. Some of our most successful marketing campaigns included multiple mediums: sponsored content posted across several blogs, video, photo shoot, social media promotion and a media buy attached to it. These types of campaigns are usually managed by one agency and fully executed by Style Coalition – we are in charge of all communications with the bloggers and day-to-day operations of the campaign.

The issue comes up when the same agency manages directly sponsored campaigns AND press outreach, thus causing bloggers confusion. Put yourself for a moment in a blogger’s shoes – getting hundreds of pitch emails daily and trying to manage relationships with lots of PR professionals and brands, all while wearing two hats – editorial and business. If the same person who hired a blogger for a sponsored gig is reaching out with the latest press release from the same brand, it will obviously raise questions. Bloggers may not always understand the difference between the two – sometimes due to lack of education and sometimes due to lack of time it takes to learn the different aspects of every brand’s representation.

How can brands and agencies solve this? My advice is that even if your approach is holistic, have internal separation between these two, so when facing direct communication with a blogger you have two points of contact – one for news/PR and another one for marketing/sponsored opportunities. Define their roles very clearly from the beginning, while building relationships with bloggers. Of course this could be a challenge for smaller brands or agencies, which don’t have multiple resources to allocate for blogger communications. However I think there is no shame in communicating it to the bloggers, as well as making a clear statement about your brand policy regarding paying, gifts etc. This will only make a blogger’s job easier.

Another great way to prevent any confusion would be to use a network to execute any paid marketing/advertising initiatives, thus guaranteeing the separation between the two. At this point, almost all prominent/professional bloggers are represented by one of the networks. Networks make your job as a marketer worry free by handling all communications, negotiations, contracts and billing, as well as providing insights into the best way to work with the influencers.

I’m sure as the space evolves we will see changes in this process, but right now smart brands are realizing the importance of relationships with  influencers. They allocate resources to manage the diverse aspects of their relationships, preventing the awkward negotiations and confusion. Still, the main reason for the awkwardness is in the different point of views of the bloggers – what is pay-for-play for some is an opportunity of a lifetime for others. In my book I use several pages to define the differences between editorial and sponsored content, and then a few more to talk about the various kinds of sponsored content. When in doubt whether this should be a pay-for-play engagement or an editorial feature, ask yourself a few questions:

  • Does it add value to blog’s readers? Will they be interested in actually reading about this subject, or will they feel like they’re been duped into reading an advertisement?
  • Does it have a story? Some promotions can be pretty clever and have an interesting/unique story behind them. However this doesn’t make them editorial.
  • Was it advertised on other sites? Have you seen this content as a paid banner, advertorial or newsletter campaign on other sites?

I think if both sides ask themselves these questions it would help prevent any uncomfortable situations and focus on building healthy working relationships between bloggers and brands.

 

Startup Lessons: Uncertainty.

Eric Ries, the bestselling author and creator of the Lean Startup Methodology defines entrepreneurship as the management discipline of high uncertainty. I think it’s not the uncertainty that makes entrepreneurship so tough, but the pressure coming from being in charge of your own future.

Uncertainty is a creation in our mind and fighting it is like trying to fight your own thoughts. It wraps our lives just like air wraps our bodies – trying to manage it is like trying to manage air. There is a reason we, as human beings, were given the ability to remember the past, yet no ability to see our future. However, we were given the ability to dream and plan it, which is underestimated by most people. Most of us are sold on the idea of luck and randomness, or in the case of religious people God, defining our fate. These beliefs cause most of us to live in uncertainty, waiting for things to happen.

As an entrepreneur you suddenly become in charge of your own future. It is a new notion to most people, challenging their system of beliefs and causing stress. Suddenly we are faced with too many choices and lack of ability to make the choice that is right for us. We were taught to use empiric methodologies in chemistry classes in school, but never thought about applying these methodologies to our own lives. We were taught writing a business plan for our company at MBA programs, but never been challenged to write a plan for our own lives. Or in the words of my favorite teacher Yogi Bhajan: “You know how to drive a car, but you do not know how to drive your life!”

Entrepreneurship is an eye opening experience that forces us to face the fact that we are responsible for every single thing that’s happening to us. The only moments we experience uncertainty are a result of self-doubt, lack of knowledge or lack of experience. All of these are challenges that most of us can overcome. All it takes is realizing where you want to go and simply making your way there, step by step.