Every few weeks, I see a high school friend on Facebook looking fabulous in a new photo. I lean closer to my computer to inspect her outfit, noting its color, style and perfect fit. Then I scour department store websites in search of the same thing, but come up short.
Exasperated, I messaged her and found out that she shops exclusively at ModCloth, an online retail store.
Browse the site and you'll find a range of items, from dresses to necklaces and hair accessories, all at reasonable prices. Most brand-name stores don't carry the retro, vintage styles.
The site was launched in 2002 by 17-year-old Susan Gregg Koger. Today, ModCloth is a wildly successful business, with three U.S. offices and more than 300 employees.
How did the teenager know what she wanted to do and make it work? I called her up to find out.
Tell me about your background and how you came up with the idea for ModCloth.
I grew up in South Florida and always loved vintage clothes. I became interested in thrift shopping and by the time I was 17, I’d collected a lot of clothes. I loved the idea of amazing pieces going to people who would wear them. So, my boyfriend (now husband), Eric, helped me launch a website to sell clothes.
We moved to Pittsburgh to attend Carnegie Mellon University and took my clothes with us. For the next three years, I sold things out of my dorm room. It wasn’t until later that I thought the site could turn into a full-fledged business.
How did ModCloth evolve from a hobby into a business?
I didn’t have enough time to work on the site in school, but whenever I did, it always worked better. So during the summer between my junior and senior year, I opted against going for a traditional internship, and instead worked on raising seed capital from family members and really giving ModCloth a try.
I reached out to independent designers and hired my first part-time employee to help me pack orders. It was really exciting, but also very scary to purposely decide not to get an internship that would turn into a salaried job.
What gave you the faith to go forward?
I could see my business gaining traction and online buying of unique vintage items was turning into a trend. I could feel that there was an opportunity in the market.
I went full-time on the site after my college graduation in 2006. Eric got his MBA that year and joined me full-time in 2007. We bought a house in Pittsburgh and operated the business out of our home. By 2007, we were seeing serious growth, so we started hiring like crazy.
In March 2009, we raised $1 million in A1 funding and moved into an office in Pittsburgh. We then decided to relocate to the West Coast because that’s where designers were. We are now based in San Francisco and have offices in Los Angeles and Pittsburgh.
What challenges have you faced running ModCloth?
Funding has always been a challenge for us. We’ve been lucky to work with an incredible group of investors who understand our vision.
But in the beginning, it was very difficult to gain traction with funding, primarily because we were in Pittsburgh. When we were raising our first round, some investors wouldn’t take a meeting with us because of our location. We were bootstrapped for a long time and there were tense moments where we were taking out every credit card we could find.
Growth has also been a challenge. We are a wide organization and have several working parts, from a technology team to a fulfillment center to a photography center. It is important that one arm of the business doesn’t go out ahead of another. We work hard on growing with balance.
What makes ModCloth different from other retail sites?
We are turning the supply chain on its head. Traditionally, in retail, designers meet buyers and then hopefully customers like what buyers purchase. Since we are online only, we are getting the customers in the process with a program called "Be the Buyer."
Before a garment is mass-produced, we post it and allow customers to vote on whether it should be sold on the site and give feedback in the development process.
What advice can you give to budding entrepreneurs?
Before starting anything, make sure you are passionate about what you will be doing. I love vintage clothing and creating a product and bringing it to customers. Eric doesn’t love clothing, but he is passionate about the process of building the business. Remember that if you are starting a business to get rich quick or get out of the 9-to-5, you may have a tough time. It takes a lot of hard work and dedication.
Also, trust your gut when building a team or it will hurt you later. Just because someone has a great resume, doesn’t mean they are a great fit for your company. You need to connect with each new hire on a personal level.
Photo credit: ModCloth