For anyone who has ever dreamed of starting and growing a business, By Invitation Only: How We Built Gilt and Changed the Way Millions Shop, by Alexis Maybank and Alexandra Wilkis Wilson is an absolute must-read. Their story, from how they met at Harvard Business School to starting the billion-dollar online fashion empire Gilt Groupe, is a page-turner filled with real-world insights and lessons every entrepreneur can profit from. We talked to Maybank and Wilson about their business beginnings, building up Gilt and advice for aspiring entrepreneurs.
Where did your idea for the company come from?
We were inspired by the popularity of New York’s designer sample sales, and we wanted to make this popular local pastime available online to customers throughout the U.S. and offer highly coveted fashion labels at insider prices to a passionate group of consumers.
In just four years you attracted 5 million members and earned a $1 billion valuation. This is hardly the norm for a start-up company. What is it that sets Gilt Groupe apart?
The most critical success factor was probably our founding team. But a number of other things made us different. We enlisted leading and coveted brands to sell on our site. We curated the best of a season or collection rather than feature everything. We tapped cutting-edge viral and social marketing techniques to scale the customer base quickly. And we used the best creative talent we could find to help us cultivate an online luxury brand.
A common piece of advice is to never go into business with friends or family, but you two are close friends. What advice would you give to someone thinking of going into business with friends?
In a startup, it is absolutely critical to be able to trust and rely on your co-founders and/or team. If you are considering going into business with a friend or family member, you are likely to put a lot on the line. It is important to communicate. Lay out any potential issues or concerns on the table and talk about them in detail. We did this because people told us to have these discussions, but we were never all that concerned about working together. It is important to think about the context of your friendship. In our case, we were friends from Harvard Business School, so we had seen each other’s work ethic and drive in action, and we were familiar with each other’s basic business acumen. Most importantly, we each had seen the other at her best and worst and knew we would not encounter any surprises as we hit the inevitable highs and lows any start-up faces as it grows. Our confidence and trust in each other was absolute.
Gilt Groupe’s success was largely built during the recession. With a sleepy economy still very much a reality, many people are eager to start their own business. What advice do you have for someone dreaming of starting his or her own business now?
There is no better time than now to pursue an idea you are deeply passionate about, and in fact there are many sources of financing available now to would-be-entrepreneurs. If you have an idea, here are some things that you might consider in determining if now is the right time to pursue it.
First, the idea should be easy for you to explain in one sentence to a friend or colleague. Second, does this concept exist in any shape or form already? Why or why not? Take an honest look at the marketplace. Who else is out there? Has someone already tried this and failed? And if so, why? Have times changed? Sometimes an idea can be too ahead of its time and advanced for the market. Can you test your idea before over-investing, just to make sure? These days, the best way to make sure that the time is right for your idea is to get it out there and see what people think. Getting customer feedback from the start will help you build a better product, one that will maximize your investment.
In your book you discuss the importance of naysayers, especially early on, in building the company. Can you explain that?
Don't get discouraged by the people who tell you your idea will never work. Instead, listen to them and see if you can apply any of their thinking into refining and improving your strategy. If you can anticipate pitfalls and those hard questions you will get from investors and partners alike in advance and more importantly be ready with great, well-thought-through answers, then you will be better equipped for the challenges ahead.
With the tech industry still being predominantly male, what are some of the unique challenges you faced getting started? How can women make their gender an advantage?
We launched a business initially targeting female customers; in fact we were precisely the target demographic. This was very clearly an advantage, as we understood the consumer mindset better than anyone. Beyond that it can be more challenging raising money as a woman. Women led 28 percent of all U.S. businesses in 2002. Yet female entrepreneurs historically receive less of the invested dollars coming from venture capital firms, estimates are as little as 4 to 9 percent. So while this is clearly a challenge, keep in mind that as a female you are more likely to be a more memorable party pitching the partnership as there are not as many women walking through their doors to begin with!
Photo credit: Gilt Groupe