Category: startups

Totsy Completes Series B: Raises $18.5Mil

I am extremely late on this news story: announced on July 17, that it has completed its Series B, closing on an additional $18.5Mil. This brings their total funding to ~$23.5Mil. Congratulations to the team at Totsy!

I had a fantastic time interning at Totsy earlier this summer (see here). Totsy has a great team that is working on some fantastic initiatives. Of course, I am a little biased as the project I worked on will be launching soon.

Look for Totsy to make additional waves as the best site for moms to discover great deals and new products, from children’s clothing and toys to maternity clothes and baby accessories.

In the meantime…checkout this WSJ chart about the flash sales space…note Totsy’s growth compared to the competition (second to only Fab).


Top 10 E-Commerce Startups in L.A.: #10 Little Black Bag

Over the next couple weeks I’ll be taking a closer look at the companies in My Top 10 List of e-commerce startups in Los Angeles. Today I’ll start with Little Black Bag, the company at number 10 on my list.

First, it’s worth mentioning that Little Black Bag has the potential to quickly move up this list. Little Black Bag is still very early in its history; the company was launched on January 31, 2012.

LBB’s business model is a hybrid of the numerous subscription “box” startups (e.g. Birchbox, BarkBox, RocksBox, GlossyBox, Wittlebee, et al). The main difference with LBB is that customers can view the items they are going to receive and even trade them with other customers before they are shipped. This generates much more social engagement then other subscription services. In addition customers can pay a $10 premium and try out LBB without signing up for a subscription

To quote LBB’s Press Kit:

“On Little Black Bag, shoppers take an interactive style quiz & are offered a personalized mystery bag filled with the best in women’s fashion & beauty products. Shoppers then have a week to search the Little Black Bag marketplace & trade with others to assemble their perfect bag of items. Once trading is over, the products in the bag are shipped out. Trading is fun & exciting, as shoppers discover new brands & see what products are trending. In addition, select users can win “Delights”—hot seasonal products worth 4-5 times the price of their bag.”

Little Black Bag was co-founded by Dan Murillo, Sasha Siddhartha, and David Weissman. David Weissman was recently an executive at GSI Commerce (sold to EBay for $2.4Bil). The co-founders clearly have a big vision for Little Black Bag and anticipate using it as an entry point to build a larger social commerce company. Co-Founder Dan Murillo was quoted as saying “When I came across this idea, I thought it would be the perfect starting point from which to build a truly interactive community around eCommerce.”

Little Black Bag has raised $2.75Mil from GRP Partners, DCM, David Tisch, and others.

Key Points:

  • Location: Santa Monica, CA
  • Founded: Fall 2011
  • Launched: January 2012
  • Initial Venture Investment: February 2012
  • Amount Raised: $2.75Mil (Series A)
  • Investors: GRP Partners, DCM, Chamath Palihapitiya, Tim Kendall and David Tisch

My Top 10 List: E-Commerce Startups in L.A.

Below is my list of the Top 10 e-commerce startups based in Los Angeles. Over the next couple of weeks I will provide a closer look at each company.

  1. Beachmint – BeachMint is a social commerce company specializing in celebrity-curated direct-to-consumer products.
  2. JustFab – JustFab designs and sells its own brand of shoes, jewelry and handbags, and charges subscribers a flat $39.95 for each item.
  3. Nasty Gal - Nasty Gal is a global online destination for both new and vintage clothing, shoes, and accessories.
  4. The Honest Company - The Honest Company is a consumer products company that delivers non-toxic, eco-friendly diapers and biodegradable wipes, organic bath/skin care and green cleaning products. Co-Founded by Jessica Alba.
  5. Shoedazzle – ShoeDazzle offers personalized shoe, handbag and accessory recommendations chosen by a team of A-list stylists, including co-founder Kim Kardashian.
  6. Daily Look – DailyLook sells one new fashion look every day for under $100.
  7. Wittlebee – Wittlebee is a kids clothing club that creates custom packages for parents based on their child’s age, color preferences, geographic location and more.
  8. Dollar Shave Club – The Dollar Shave Club is a service that delivers fresh razors to your doorstep, monthly, for a fraction of the cost of the grocery-store equivalent.
  9. Shop-Hers – Shop-Hers is a socially-inspired, user-driven, e-commerce, marketplace where women sell and buy premium label, pre-owned clothing and accessories
  10. Little Black Bag – Social shopping and trading for designer handbags, jewelry, accessories, beauty and home decor

Eleventh Man Award: StyleHaul – StyleHaul is the largest original video content network on YouTube for fashion and beauty. Not quite e-commerce but relevant and interesting.

Twelth Man Award: Omaze – Omaze is not a traditional e-commerce/retail company, but it’s worth taking a look at. Omaze, in its simplest form, is an online raffle company. Omaze raises money and awareness for charitable initiatives by offering everyone the opportunity to win once in a lifetime experiences that can’t be bought.

More + $105Mil: No Longer a Flash-Sales Site

The Wall Street Journal reports that closed their Series C, raising an additional $105Mil at a $600Mil valuation. This compares to the Series B of $40Mil they raised in December of 2011 at a reported $200Mil valuation…3x isn’t bad for seven months. Not to mention that it has barely been a year since the company pivoted from being a gay social network to a flash-sales site.

Writing on the companies blog, Jason Goldberg mentions that they intend to use the money to expand internationally, build more fulfillment centers, and most importantly continue to build their platform from the ground up. The last two are most important to me: building out their fulfillment centers and logistics are a clear sign that they have matured past flash-sales, and they must continue to innovate their platform, as it has served as a constant and evolving  example of what e-commerce should be.

Fab’s recent round was led by Atomico (Skype founder, Niklas Zennström’s fund). Also participating in the round were Fab’s previous investors: Andreessen Horowitz, Menlo Ventures, First Round Capital, Baroda Ventures,  ru-Net Technology Partners, Pinnacle Ventures, Docomo Capital, Mayfield Fund, and Troy Carter.

This latest round is clearly a bet on Fab becoming a multi-billion dollar business and much more than a flash-sales site. Honestly, I have a hard time disagreeing with this conclusion. Their platform includes numerous revolutionary social shopping features that are consistently ahead of their time. Most recently, Gilt copied Fab’s “recent purchases feed” (Internet Retailer Article: here).

Interestingly, Fab was one of the last companies to the flash-sales space, and they are on pace to be the first one to fully mature past flash-sales. While writing this article, I conducted a random survey of 20 items on I found that the average advertised markdown was 25%, which is clearly not flash sales territory. That said, there are still some items marked down > 70%, especially within the furniture category, but there are also items that are not marked down at all.

Congratulations to the Fab team, and here’s to Fab becoming a multi-billion dollar company. It’s a BIG market.

Bonus Coverage:
To give you an example of Fab’s innovation and customer focus: I recently received the below email encouraging me to manage my email subscriptions and to unsubscribe from those I didn’t want. Most e-commerce companies are constantly watching their opt-out rate to ensure they are maintaining their customer list. I was surprised when I saw this, and of course didn’t choose to opt-out.


The Birth of Retail As A Service: A Trunk Club Review

Numerous e-commerce startups have recently launched utilizing a business model derived from the offline personal shopping experience provided by high-end retailers. These startups are using e-commerce tools to build an entire retail business around personal shopping. Under this model, consumers no longer have to shop; curated outfits are delivered to customers based on their style preferences, leaving customers free to spend their time doing something other than hunting for things to buy (i.e. shopping). In essence, these companies are building service businesses based on the traditional retail model, which is why I call them Retail As A Service (RAAS) companies.  Trunk Club is the clear front runner in the men’s RAAS category. Other companies utilizing this business model include: UnScruffBombfell, GentlemanSquare, and CakeStyle (for women). Below is a brief summary of Trunk Club’s history and a review of their current service offering.

Trunk Club was founded in 2009 as a personal shopping service for men who don’t have the time or desire to shop. Originally, the company used a remote network of personal stylist to make product recommendations via Skype calls. These remote stylist were then paid a commission based on the product sales they generated. Purchased products were then drop shipped from the manufactures or distributors to the customers.

In 2011, Trunk Club hired Brian Spaly, one of the co-founders of Bonobos, as their CEO. Spaly quickly moved to make changes to the company’s business model. His overarching change was to adopt a retail business model rather than a product recommendation model. The retail business model that he choose is exactly what I am calling Retail As A Service. The change in business model required numerous changes to Trunk Club’s key activities. These changes included: purchasing and storing inventory rather than having it drop shipped, locating all stylist (personal shoppers) at the company’s headquarters rather than remotely throughout the U.S., having stylist work with customers through email and phone calls rather than Skype, and – most importantly – sending customers curated boxes (“trunks”) of ~10 clothing items rather than making individual online product recommendations. Learn more: TechCrunch, TechCrunch, RedEye, and Forbes.

I recently sampled Trunk Club’s current service (photos below). Overall, it was a very enjoyable experience. The online style survey, which is used to make recommendations, was engaging and quick. My personal stylist (shopper) called me soon after I completed the survey to discuss my style preferences. She then completed my trunk of ten items and had it shipped to me via second day air. They did not charge for shipping in either direction, this is consistent across most RAAS companies, and my trunk of 10 items arrived within 2 days.

The average MSRP of the items in the trunk was $160.40 (range: $36-$348). Most notably, all items were sold at MSRP. This is especially important as consumers (incl. me) have gotten used to discounts over the past 3 years. Based on Trunk Club’s business model, they are clearly banking on customers purchasing enough merchandise per trunk to recover the cost of shipping, fulfillment (it is a NICE box), and the inventory holding cost while customers make decisions. To give you some perspective, each trunk contains roughly $1,000-$1,500 in “value”, and if you assume that shipping, fulfillment, insurance, and other costs amount to roughly $50 per box, then based on an assumed gross margin of 40% (e.g. Nordstrom’s GM is ~40%), the company’s contribution margin breaks even if the average customer keeps one average priced item. It should also be noted that if the average customer keeps 2.5 average priced items then the contribution margin from each box is roughly $110 (GM*Q-S&H = $64*2.5-50). Please note, these numbers are completely speculation.

As noted above, this model creates a substantially high LTV, especially if the average customer keeps 1-3 items, and remains comfortable paying MSRP. I would add that this model is much more scalable than the traditional retail shopping model. As one example, a RAAS company doesn’t have to maintain a broad selection that can be shopped.

My biggest concern for Trunk Club, and the RAAS business model, is that men’s shopping habits are changing due to e-commerce tools. Affluent males (Trunk Club’s target market) are using the efficiencies of e-commerce to shop smarter and more often. In fact this very trend is at the heart of this blog’s focus (see post).

In order to fight this trend, Trunk Club should provide an online price guarantee. I understand the need for the company to keep its margin’s high and to differentiate based on service not price. That said, the one item I liked the most in my trunk was a blazer from Bonobos, and when I price matched it online it was $90 cheaper on I quickly chose to buy it from Bonobos instead. To be fair, I didn’t ask them to match the price, so there is a chance the may have. Regardless, it should be something that is advertised in the box, because at the minimum it reinforces that they aren’t gouging you from a pricing standpoint.



TechCrunch Disrupt NYC Hackathon: Recap

TechCrunch hosted its third annual Hackathon this weekend. As expected, the NYC hackers were able to complete a tremendous amount of work in the allotted 24 hours. They also regrouped very well to deliver some engaging pitches. There were over 90 pitches in all. Four of the pitches were particularly interesting to me; two that were simply interesting products and two that have the potential to become businesses.

WhizCafe and Pickle are both interesting products that could have various applications in social-commerce. Both could be used to make purchasing decision more social; WhizCafe by allowing you to video chat with an expert, and Pickle by allowing you to poll your friends in a quick “this or that” fashion. Learn more about WhizCafe and Pickle below.

WhizCafe                                                                      Pickle

Although the event was mostly a showcase of different products that where hacked together in 24 hours or less, there were a few products that have the potential to become businesses. Most notably, ThingScription and Fantasy Buzzer. ThingScription, which WON the entire event, is a website where you can order a subscription of anything sold on This was one of the best pitches of the day, but, for me, the biggest issue is that Amazon already does this, its called Amazon Subscribe & Save. That’s not to say that ThingScription can’t beat Amazon at their own game, especially if they can create a better UI, and capitalize on their free publicity from TechCrunch Disrupt. ThingScription’s back-end analytics and business model will also help them remain competitive.

Fantasy Buzzer was the other product that I thought had the potential to quickly become a business. Fantasy Buzzer is a fantasy sports SAAS service. I’ve personally never managed my own fantasy sports team, so I can’t assess how truly breakthrough their solution is. But with >30Mil fantasy sports players in the US, this could be an interesting product for a passionate marketplace. Fantasy Buzzer’s goal of capturing 2% of the fantasy sports market, at $1 per team per league, is not large enough on its own for a venture fundable business. However, it could make for a good lifestyle business and potential product acquisition. We’ll see if the market sees the value as well. Learn more about ThingScription and Fantasy Buzzer below.

ThingScription                                                              Fantasy Buzzer

Check out the rest of the pitches here.


Internet Week NY: Recap

This past week I had the privilege of attending the Internet Week NY conference. I want to first thank the Internet Week NY organizers for making a student pass available. If only TechCrunch and Business Insider would offer a discount to their conferences as well (wishful thinking).

Internet Week NY is more of a crowd-sourced festival than an actual conference. Founded in 2008 in conjunction with The NYC Mayor’s Office of Media and Entertainment the week long event includes speeches and classroom sessions at IWNY headquarters in SOHO, and numerous other networking and educational events throughout the city. The conference kicked off with a speech on big data from Billy Bean, General Manager of the Oakland A’s. It was fascinating to hear the story of “Moneyball” first hand.

The other highlight was hearing Mitchell Baker, co-founder of Mozilla, speak about the future of Mozilla and Firefox. She seemed to have a clear vision of how Mozilla can become a larger player in the mobile space. The strategy includes using HTML 5 apps to let Mozilla become a platform for future devices. This shouldn’t be a surprising strategy at this stage, but it was intriguing to hear her discuss the future of the platform.

I was also able to attend a few e-commerce specific events: 1.) Recreating Retail: Bringing the In-Store Experience Online, 2.) Etsy: Transforming Search in the Digital Marketplace, and 3.) The Power of Content: How Women Connect, Catch Up and Share Online (relevant to my current internship at The panels unfortunately confirmed my general dislike for panels. I believe only one comment during the Recreating Retail panel was actually relevant to the topic. The majority of the discussions were dominated by one or two people, and in both cases it was the people who added the least value. I continue to dislike panel discussions.

Overall it was a  great 4 day event and it was good to mix it up with the NYC startup scene during the short time I will be in the city. Now on to TechCrunch Disrupt.


North X Midwest 2012: Recap

I attended the NXMW conference last night at the Innovatrium, which is on UofM‘s campus. It was a fabulous event, featuring a YCombinator vs TechStars panel and an after party at Savas restaurant in Ann Arbor. The most notable take away from the event was the speed and quality at which the UofM startup community is growing. I am always surprised by the number of new people I meet at these events who are building exciting digital media and consumer internet companies here in the manufacturing heart of the midwest.

During the event, Jeff Epstein (Zferral, TechStars Alum) and Zach Steindler (Olark, YCombinator Alum) discussed their different incubator experiences, and Ken Wohl (VP Marketing at Benzinga) did an excellent job moderating the event. Fortunately, a fight didn’t break out between TechStars and YCombinator loyalists.

This was my first entrepreneurship event outside of the b-school in months, and it was terrific to be surrounded by all of the sharp people designing products and building businesses in the Greater Detroit area. To name a few, Erick Bzovi and Lance Carlson (co-founders of HealPay) are building a financial services startup that could massively disrupt the debt collection process. Also, I was introduced to Andrew Rauh while using Highlight for the first time in a large group setting. Andrew is a rockstar iOS developer and freshman at UoM who works part-time at Detroit Labs.

Overall it was a fantastic night. Thanks to MPowered, Startup Weekend, and GrowDetroit for sponsoring the event!

Next on the Ann Arbor startup seen: TechArb demo day on April 13, 2012.

Go Blue!!


13 Years Later Cafepress Completes IPO

Cafepress went public this morning after 13 years in the making. This is in stark contrast to the 6.5 years it took the average venture backed company to reach IPO in 2011 (DJ VentureSource). Fortunately for cafepress’ early investors, the company only required $18Mil in venture financing over the past 13 years, which is a fraction of the $85Mil that the average venture backed company needed to reach an IPO in 2011 (DJ VentureSource).

Cafepress is an e-commerce platform for custom printing and production. In it’s simplest form it allows you to print custom t-shirts for your student club or custom coffee mugs for your small business. Cafepress’ “secret sauce” allows it to ship custom orders within 72 hours of placement, and sometimes within the same-day. The company’s streamlined operations also allows it to complete orders of any size with minimal setup costs. Cafepress’ 15Mil members have created over 320Mil unique designs to date.

Cafepress also owns and operates,, and

Here’s a look at cafepress by the numbers.

Cafepress’ venture investors consisted of Institutional Venture Partners, New Millenium Partners, PacRim Venture Partners, Staenberg Venture Partners, and Sequoia Capital. Most notably, Sequoia did not sell any of its stake during the IPO and now owns ~17% of the company post-IPO.

Congrats to the team at cafepress on their recent IPO.


I won’t sign your NDA! {not yet at least}

We’ve all had the experience of discovering a new product or business and thinking…I had that idea years ago. This is especially true with new consumer products and consumer facing businesses. Knowing that, I can understand why first-time entrepreneurs are so nervous about having their ideas stolen. However, what these first-time entrepreneurs fail to realize is that there is a massive difference between having an idea for a business and successfully gaining market share. Turning an idea into a business and successfully launching it to the masses requires an enormous amount of EXECUTION and at least a teaspoon of dumb luck.

Numerous articles have been written on the topic of Non Disclosure Agreements, but this continues to be an issue for first-time entrepreneurs. I was recently approached by an undergraduate student at the University of Michigan (Go Blue!) who wanted help with his e-commerce startup. The conversation only lasted ten minutes because he wouldn’t tell me anything more than that he was working on an e-commerce startup. He wouldn’t disclose anything about his idea unless I signed an NDA. Needless to say, I didn’t sign the NDA, and unfortunately wasn’t able to help him out. Following this experience, I thought it might be helpful to publish a list of articles on the topic of NDAs.

In summary: VCs don’t sign NDAs because they are constantly evaluating businesses and will often be looking at 3-5 companies in the same space as they decide where to place their chips. Also, a typical VC might look at close to 1,000 businesses a year, and it would be a nightmare to manage the paperwork and conflicts associated with signing NDAs. Lastly, and most importantly, ideas in and of themselves are useless and proving their origin is impossible.

There isn’t much I can add to what the below guys have already said. I will say that a company’s ability (and need) to require an NDA changes as it matures. Of course a late-stage startup like Facebook has the right to demand an NDA before disclosing information to potential investors.

Hope the following list is helpful.

On NDAs and Confidentiality – Mark Suster
Why VCs Don’t Sign NDAs – Fred Wilson
Why Most VCs Don’t Sign NDAs – Brad Feld
The Venture Capitalist Wishlist – Guy Kawasaki
Perfect Your Pitch – Brad Feld
Going to Raise VC? Here’s a Primer on Process, People & Powerpoint Deck – Mark Suster
Why a VC Will Take a Lighter to Your NDA – Startup Lawyer
Why Startups Shouldn’t Ask Investors to Sign NDAs – Jerome Gentolia