LOS ANGELES — If ever there were a Cinderella of tech, Sophia Amoruso might be it.
In
2006, Ms. Amoruso was a 22-year-old community college dropout, living
in her step-aunt’s cottage, working at an art school checking student
IDs for $13 an hour. Then she started a side project, Nasty Gal, an eBay
page that sold vintage women’s clothing.
Last year, Nasty Gal sold nearly $100 million of clothing and accessories — profitably.
For
the last seven years, Ms. Amoruso has been courting a cult following of
20-something women. Nasty Gal has more than half a million followers
on Facebook and more than 600,000
on Instagram. But it is not yet well known beyond that base. At fashion trade shows, the company’s name still gets strange looks.
“People
say: ‘Nasty Gal? What’s that?’ ” Ms. Amoruso, now 28, said in an
interview at her new headquarters in downtown Los Angeles. “I tell them,
‘It’s the fastest-growing retailer in the country.’ ”
Back in
2006, she toyed with the idea of going to photography school, but
couldn’t stomach the debt. Instead, she quit her job and started an eBay
page to sell some of the vintage designer items she found rummaging
through Goodwill bins. She bought a Chanel jacket at a Salvation Army
store for $8 and sold it for $1,000. She found Yves Saint Laurent
clothing online on the cheap by Googling misspellings of the designer’s
name, reasoning that anyone who didn’t know how to spell Yves Saint
Laurent probably didn’t realize his value.
She styled,
photographed, captioned and shipped each product herself and sold about
25 items a week. She named the eBay page “Nasty Gal” after
the 1975 album
by Betty Davis — not the smoky-eyed film star Bette Davis, but the
unabashedly sexy funk singer and style icon Betty, whose brief marriage
to the jazz legend Miles Davis inspired the song “Back Seat Betty.”
Ms.
Amoruso curated her eBay page to match her own style, which on a recent
rainy Friday included a floor-length trench coat, vintage rock T-shirt,
no-nonsense bob and blood-red lipstick. Her look and attitude resonated
with the type of young, body-confident women who would not be caught
dead in Tory Burch.
She created a Myspace page to market Nasty
Gal and garnered 60,000 “friends” by reaching out to fans of brands like
Nylon, the music and fashion magazine, who she thought might appreciate
Nasty Gal’s fierce aesthetic. Every week, her new finds ignited bidding
wars among shoppers from Australia to Britain.
She began
enlisting friends to model and photograph her products, which quickly
outgrew her step-aunt’s cottage. She moved Nasty Gal’s headquarters to a
1,700-square-foot studio in Berkeley, Calif., in 2007, and eight months
later moved again — this time to a 7,500-square-foot warehouse space in
Emeryville.
Ms. Amoruso also outgrew eBay, which she said was a
terrible platform to start a business. Competitors started flagging
Nasty Gal for breaking the site’s rules by, for example, linking to Ms.
Amoruso’s Myspace page. Fed up, she decided it was time to start
ShopNastyGal.com. (At the time,
NastyGal.com belonged to a pornography site. Nasty Gal now owns the domain.)
She
recruited a friend from junior high school to build a Web site and
taught herself to use Photoshop. She eventually abandoned Myspace for
Facebook, where she tantalized fans with coming inventory, from cheap
shrunken motorcycle jackets to high-end vintage Versace clothing.
She
challenged her Facebook fans to come up with the best titles for
vintage products and gave gift cards to the winners. She used models who
were approachable and “looked like nice people, not dead people,” she
said, and had to fire some when customers complained that they looked
too skinny or annoyed.
That constant conversation with customers
created a loyal following. Nasty Gal has no marketing team, but fans
comment on its every Facebook, Instagram,
Twitter,
Tumblr and
Pinterest
post and regularly post pictures of themselves in their Nasty Gal
finds. A quarter of Nasty Gal’s 550,000 customers visit the site daily
for six minutes; the top 10 percent return more than 100 times a month.
With Nasty Gal having made just shy of $100 million in revenue last year, analysts say they would expect a bigger audience.
“I
would expect them to have a few million visitors a month,” said
Sucharita Mulpuru, a Forrester analyst. On the flip side, Ms. Mulpuru
said Nasty Gal’s conversion rate must be significantly higher than the
industry standard of 3 percent. “It speaks to an engaged audience,” she
said. “They’ve figured out the marketing tool. That’s the real story.”
Ms.
Amoruso knew Nasty Gal couldn’t grow by selling one-off vintage items
forever; customers were asking why she didn’t have more sizes. So in
2008, she posted an ad on Craigslist for a buying assistant and hired
Christina Ferrucci, the first person who answered.
The two
experimented with buying vintage-inspired clothes from vendors in Los
Angeles’s fashion district. Soon, the items were selling so quickly that
Ms. Amoruso and Ms. Ferrucci were making the six-hour drive to Los
Angeles every other week.
They ventured to the
Project trade show
in Las Vegas, where fashion brands and buyers convene every August, but
higher-end brands weren’t exactly thrilled at the idea of having their
products sold by a brand called Nasty Gal. Many dismissed it as an
online sex shop. The fact that the
NastyGal.com domain was at that time still owned by a pornography site didn’t help matters.
Sam
Edelman, the shoe brand, initially gave Ms. Amoruso the cold shoulder.
She charged back an hour later, showed them Nasty Gal’s Web site on her
iPhone and promised to deliver the brand some street cred. Sam Edelman
acquiesced. That opened the door for a deal with Jeffrey Campbell,
another shoemaker, which has become one of the most recognizable brands
on the site. Nasty Gal fans will tell you Sophia Amoruso “made” Jeffrey
Campbell, not the other way around.
A Jeffrey Campbell
spokeswoman, Sharon Blackburn, said that the brand was well established
before partnering with Ms. Amoruso, but that Nasty Gal created a new
channel for its more provocative styles, like the “Lita,” a towering
lace-up platform boot with a five-inch heel. “Not a lot of people got
it, but Sophia loved it,” Ms. Blackburn said. “She bought it in every
color and fabric, wore it herself and opened the door for other styles
in our collection.”
By 2010, Nasty Gal started generating buzz
among unlikely fans in Silicon Valley. Venture capital firms were
pouring millions into e-commerce sites like ShoeDazzle.com, Kim
Kardashian’s shoe subscription site, and BeachMint.
But the
company had been making money from Day 1. “They would say, ‘We want to
invest in a woman-owned business — it’s part of our investment
thesis,’ ” Ms. Amoruso recalled of her discussions with several venture
capitalists. Her retort: She didn’t want to be part of their “investment
thesis” and didn’t need their money.
“I don’t think they got
it,” she said. “It’s this bunch of guys sitting around saying, ‘Oh,
yeah, let’s start a Web site and put Kim Kardashian’s face on it.’ ”
Ms.
Amoruso moved Nasty Gal to Los Angeles in 2011, to be closer to her
merchants and models. She shunned office space in Santa Monica, where
ShoeDazzle and BeachMint are based, for less glamorous space downtown,
where 20-something Nasty Gal employees in mesh crop tops, leggings and
platform shoes stand out from the paralegals. (Shortly after the move,
one employee was berated by a lawyer in the building who saw “Nasty Gal
Creative Studio” and assumed it was a pornography studio.)
Last
year, Ms. Amoruso, who had held on to 100 percent of her business,
decided she was ready to hear what Sand Hill Road had to offer. She met
with several venture capitalists but ultimately clicked with Danny
Rimer, a partner at Index Ventures, who had invested in e-commerce sites
like Net-a-Porter, Etsy and Asos.
In March, Ms. Amoruso agreed
to give Index a slice of equity for $9 million. But by August, things
were moving so quickly — Nasty Gal was on track to quadruple its 2011
sales to $128 million — that she raised an additional $40 million from
Index and used some of it to build a 500,000-square-foot fulfillment
center in Shepherdsville, Ky. Nasty Gal now attracts more than six
million visits a month, while e-commerce start-ups like ShoeDazzle and
BeachMint are losing customers and executives.
Bigger competitors
are taking notes. Urban Outfitters recently contacted Ms. Amoruso about
a potential acquisition, according to people briefed on the
discussions. Asked about that, Ms. Amoruso said only, “We’re talking.”
Naysayers
in Silicon Valley think she should consider the acquisition. Some
venture capitalists who would not speak on the record — perhaps because
they did not have the chance to invest — say Nasty Gal is playing on a
short-term fashion trend that will be difficult to sustain on the public
market.
“They’re the hot new thing, but I do think it’s risky,”
said Ms. Mulpuru, the Forrester analyst. “With this type of hype,
either they are looking for a big fat acquisition or a blockbuster
I.P.O.”
Ms. Amoruso is hardly ignorant of the possibility that it
could all fall apart. Nasty Gal’s motto is, “Nasty Gals do it better.”
But her personal motto is, “Only the paranoid survive.”
At 16,
Ms. Amoruso tattooed the Virgin Records logo on her arm. Last year, she
enjoyed a small Cinderella moment when she got to show it to Richard
Branson. She recently bought a Porsche — with cash — and is remodeling
her dream home.
But, she said, the Cinderella story ends here.
“It’s been very charmed, but I’m not willing to rest on my laurels,” she
said. “It’s only going to get harder to keep building from here.”
Participants in a flashmob dance an improvised version of the Harlem Shake in front of the Berlin cathedral February 20, 2013
