What Nasty Gal & Bonobos Can Teach You About Scaling Your Ecommerce Company
You know what is a lot more intensive than you expect? Scaling. Going up an order of magnitude is a hellll of a ride and a LOT of work
— Julie Fredrickson (@AlmostMedia) November 3, 2015
Julie Fredrickson would know.
The company she cofounded, Stowaway, has raised $1.5 million from VC’s and is said to be on track to ‘disrupt’ the makeup industry that’s currently controlled by 10 main players (think: brands like L’Oreal).
The company launched earlier this year, so it’s yet to be seen if they will be successful in scaling. (It looks like they’re under some good guidance and hopefully we can write a separate case study about their success in a couple of years!)
That’s what this post is about: how to scale your company without losing it.
There’s a secret to doing it and that secret is focus.
Many founders actually exhibit characteristics far from being “detail-oriented”, but that doesn’t mean you can’t or don’t work hard.
Maintaining focus is a very hard thing for a founder to do.
Scaling a company is undoubtedly scary: things begin to move so quickly. It’s easy to shift your attention to putting out a fire, addressing a non-critical problem, or making a decision without considering if you’re actually ready to take that step.
The successful founders and CEO’s know how to hold their vision steady while the storm rages in all directions.
Some are naturals: Nasty Gal seems to be scaling naturally (they’re still pretty new).
Some learn it: Bonobos seems to be learning through trial and error (they’ve been in operations a bit longer).
This article is about both.
Looking at both companies we’ll cover:
Effectively Communicate Your Mission
How can you achieve scale and still make sure your brand reflects your original mission? One of the biggest challenges for a founder is to take their somewhat controlled environment and open it up to growth.
More room for error.
Anticipating more problems in your company isn’t pessimistic, it’s reality. Now that you’re ready to grow, you have to make sure that everyone in your company – old and new – is on the same page.
Reinforce Your Company Mission
You can get everyone on the same page by effectively and constantly communicating your mission.
If you can do this, those already involved with your business will remember why they wanted to work with you in the first place. And, those new to the company will be on board. Effective communication of your mission can also help deter those who may be ‘wrong hires’ from the get-go.
Sophia Amoruso, CEO of Nasty Gal, has been in the spotlight this year. Her company has grown into a $100M plus online women’s fashion retailer with 350 employees in just 8 years. The brand is getting attention for a reason: it’s growing and it’s staying solid.
You know a Nasty Gal when you see one.It’s kind of like how you know an Apple Watch wearer when you see one or a Dallas Cowboy’s fan (sorry for that example, but it’s appropriate).
They’re walking ambassadors for the brand.
That kind of recognition doesn’t come by accident. It’s built. It comes from the top down.
Fresh off reading Amoruso’s book Girl Boss, I’m most impressed with her ability to effectively communicate her mission than anything else.
In her book, Amoruso says,
“I’m loyal to every person I’ve hired. But my loyalty lies with the greater business, which means the hundreds of others’ jobs could be at stake if we have the wrong person in the wrong role…[this is] the level of objectivity that leaders need to have.”
At Nasty Gal, they’ve made it a point to reinforce their mission by creating something called “Our Philosophy” which are posted up around their offices. This is an easy way to daily remind people working for you why they are there.
This is more difficult for businesses who have, for example, 5,000 employees.
How do you keep so many people on the same page?
Scaling A Business is like Scaling A ProductKeeping a large amount of people on the same page will absolutely require something more complex than checking in on Slack every couple of hours.
In this article about scaling a company, Ben Horowitz makes the argument that scaling a company is like scaling a product. Scaling a product necessitates different departments within a company’s architecture to function in new ways.
Similarly, scaling a company also requires a company’s architecture to function in a new way. This can be streamlined by developing a process for your company’s communication.
You’re not 10 people anymore. You’re not 100 people.
Now more than ever, you need effective communication.
Using Horowitz’s idea of developing a process, let’s look at an example of having an “all hands” meeting every other Monday.
To improve communication and have an effective meeting you should:
- Decide on the desired output of this meeting.
[Example problem] Are sales down? The goal of the meeting should be to determine what are the top 3 causes for sales being down over the past 2 weeks and come up with actionable items to improve them.
- How will you know if the goal of the meeting is accomplished?
All parties should have their own ‘homework’ and ‘action items’ to carry out.
- Who is accountable for verifying you have a desired output?
Now that each party has their homework, there should be an accountable person from each party who will report back on their performance with assigned action items in the next “all hands” meeting.
Developing methods to consistently reinforce your company’s mission will ensure that you have like-minded workers contributing to the same goal.
Learn To Recognize Tech Problems
You don’t have to be a CTO to recognize when you’re technology is a burden rather than a channel to reach your shoppers.
It’s as simple as understanding if the dollar amount you’re putting into your tech balances out the dollar amount invested in the hours used to upgrade, maintain and run your technology solutions.
We’ve written before about Quarterly.co choosing to switch from their faulty order fulfillment solution to Wombat. They were experiencing issues when they made changes to their storefront. When changes were made, the SKU’s didn’t match with the available stock of the shipper, causing orders to be lost and unfulfilled.
This resulted in a few damaging things: 1) customer complaints, 2) negative branding effects from these complaints and 3) loss of revenue due to refunds.
Something had to change.
Rather than funnel more hours and money into troubleshooting their faulty setup, now ex-CEO and co-founder of Netflix, Mitch Lowe, decided to take action. He chose to invest in a new solution.
“I expected Wombat to make my business more efficient by streamlining my store’s operations. But it has gone beyond that. Wombat has spared our customers from lost orders, and spared us from losing customers.” (source)
Similarly, fitness tracking company Strava was experiencing a need to move on from their internal platform. Their customers wanted gear. They needed a solution that allowed them to move quickly without compromising quality of the store.
Jon Dreyfus, Senior Manager at Strava, said the company evaluated many platforms before finally settling on Shopify Plus. After implementing Shopify, they were able to finally focus internal resources on “properly marketing” to their customers:
“With the migration from our internal platform to Shopify, we were able to properly market to our members and saw an immediate increase in sales – so much so that we had to recruit from the business development and marketing teams to help ship orders until the late hours of the night.” (source)
What Lowe and Dreyfus were able to do is recognize that resources were being wasted on unnecessary issues. New technologies can solve these issues.
Have Processes & Systems in PlaceWhen a company chooses to hire a new CEO, it usually means the company is positioned and ready to scale. New leadership means new ideas for growth.
However, whether the company will scale successfully is not totally dependent on the new leader.
Having functional systems & processes in place is crucial to scale. We’ve seen this play out recently, in Bonobos’ hire of a new CEO in June 2015, only to revert back to their original CEO a few month’s later in August.
The company wasn’t ready.
According to Della Badia, the now ex-CEO of Bonobos (previously president of Coach’s North American retail division), she accepted the role of CEO anticipating a more mature company.
Bonobos still felt like a startup to her.
Badia said that there weren’t “systems” in place that made her transition into the new CEO role an effective one. She didn’t anticipate employee training and day-to-day operations as part of her new role. (source)
Coming from her position at Coach, she was expecting to be able to accomplish similar goals: growing sales and revenue, not building systems from the ground up. Her skill set just didn’t fit Bonobos.
“I was eager and excited to bring someone in with Fran’s experience and pedigree,” said founder Andy Dunn. (source) But now he’s stepped back into the role of CEO.As a founder, it’s important to try and solidify your processes before you seek to hand over control. By ensuring everything is solid when you hand it off, there’s only room for growth. No wasted time or resources on rebuilding faulty processes.
Identify what of your current processes and systems are efficient, need development, or are completely missing:
- Customer Service
- Sales System
- Vendor / Supplier Onboarding
The above are just a few examples but all of these should be outlined in your business plan, which should be constantly evolving. By having these in place, or at least knowing where your deficiencies are, it will be easier to identify how your company (or a new CEO) can grow the business.
Update: Bonobos has officially hired a CPO (Chief People Officer), Sara Patterson, who is set to “establish systems for scaling” and “cement systems for further growth”. (source)
One of Steve Jobs’ best talents was being a good editor. He knew when to cut the crap. One of his most famous quotes is:
“Focus is about saying no. And the result of that focus is going to be some really great products where the total is much greater than the sum of the parts.”
Each area we’ve outlined in this article asks you to say “no” more than “yes” to choices you’ll have to make in order to successfully scale your business.
Say “no” to someone who doesn’t share your vision. Don’t hire them.
Say “no” to your development team when they ask for “just a few more weeks” to fix the bug in your ecommerce platform. You’ll waste a few more weeks of money that could be used elsewhere.
Say “no” to your own temptation to hire a new CEO who’s more experienced. You may not be ready.
New problems and fires will begin appearing left and right once you’re entering a true growth stage. You may not be as natural as Sophia Amoruso at communicating your company mission.
You may be more like Andy Dunn, who’s learning along the way, but still going. He didn’t stop. He hasn’t failed.
Scaling is unpredictable, but you can prime yourself as much as possible before you initiate this step. Learn from studying others and surround yourself with people who have made a similar jump.