The surprises and challenges to building a new brand were just a few of the topics discussed at a panel discussion hosted by Norwest Venture Partners.
The participants were Alexandra Wilkis Wilson, cofounder of Gilt Groupe and now chief executive officer of Glamsquad; Amy Errett, ceo and founder of hair-color firm Madison Reed; and jewelry designer Kendra Scott, ceo and founder of Kendra Scott Design. The event was held last month at NeueHouse in Manhattan.
The program was opened by Norwest managing partner Jeff Crowe, who noted the trend of traditional brick-and-mortar brands being disrupted by brands that are built up online. The panel was moderated by Norwest general partner Sonya Brown.
Wilkis Wilson spoke of the two different customers at Gilt and Glamsquad, saying, “At Gilt, membership was built by the power of word of mouth. We wanted it to be a club everyone wants to get into. We wanted people to ask their friends, ‘Are you a member? Will you invite me?’ ”
She said that, in the beginning, Gilt didn’t have much inventory, and it became really competitive to shop at the site: If members didn’t order as soon as the sale started, they found themselves shut out, Wilkis Wilson noted. “Because of the scarcity factor, early on, it was a question of how do we get the women back. We figured it would be three tries and you’re out,” she said. Gilt has since evolved to include more than just women’s products and is no longer focused on just flash sales.
At Glamsquad, it’s less about referral and more about downloading the app. “People call to set up an appointment for makeup or hair styling because they want to look good for the job or a special occasion,” Wilks Wilson said. The Glamsquad model is an “interesting way to get into people’s homes,” she added. “We do blowouts, and, after 45 minutes to an hour later, you feel totally pampered. We leave our customer with more self-confidence. We plan to expand to new cities…and we want to expand to guys.”
Errett claimed her firm is reinventing hair care by taking out the harsh dye chemicals, such as ammonia. Consumers snap a picture of their hair and e-mail it to a certified colorist for the appropriate color match, she said of the ecommerce-based site.
Errett noted that one of the hardest parts of building an online brand concerns customer acquisition, since half the women who dye their hair go to a salon and the other half are at-home do-it-yourselfers. She said algorithms can tell the company what the patterns of frequency are regarding purchase behavior. “Markets used to be subscription-based. Now, it is moving to on-demand. The algorithm knows when she will need to color her hair next,” Erret said, adding that the company can reach out to suggest, without being intrusive, a time for the next purchase. “This is where conversion really takes place,” she said.
Scott said she has “brand ambassadors” passing out “Caught you in Kendra Scott” cards, which provide a 15 percent discount. The company also has in-store Color Bars, which let consumers create their own custom jewelry by picking out settings to mix with selected colored stones. “It’s the Build-a-Bear for grown-ups. We serve Champagne while they wait. I’m all about instant gratification. Our customers can create something and wait not six to eight weeks but, literally, six to eight minutes.”
Scott also said customers can get special items from the company’s in-store, clublike events, which range from a turquoise-themed night to a two-hour special sale on a particular night to a girls’ night out, which offers 15 percent off purchases.
And while the mind-set of the investor group has changed, the participants said there are still too few women in the venture-capital community.
Wilkis Wilson spoke of how — back in 2007, when Gilt first started — potential investors would flip through the investment deck, but then reach out to their moms, sisters or wives to get feedback because they didn’t understand the value proposition at Gilt. “I feel that, now, seven years later in Glamsquad, there’s a change [in attitude] because the investor conversations are that ‘Your business could only be run by a woman, a female ceo,’ ” she observed.
Scott noted that, when she started 13 years ago, she personally guaranteed everything. “Most [investors] didn’t understand me early on. They thought I was this weird artist, with no aligned vision. I waited a long time, until 2010, before I began thinking of bringing in money because I had too many loans,” she said.
And Errett spoke about the need for mentors and how she meets with fellow entrepreneurs to share war stories. “Having that support around you is really critical. There’s this idea that you’re supposed to know everything, but you find that you know nothing. If you don’t ask, you don’t know,” she told attendees, many of whom were spearheading start-ups of their own.