Top 10 E-Commerce Startups in L.A.: #9 Shop Hers

Last week I started digging deeper into My Top 10 List of e-commerce startups in LA. I am going to attempt to pound through the rest of the list during the next week, so tune in.

Today I’ll take a closer look at Shop Hers, the #9 startup on my list. Shop Hers is a marketplace where women can buy and sell premium brand pre-owned clothing and accessories. Shop Hers hasn’t officially launched yet, so some of their product details are still under wraps. In essence, imagine a social-commerce peer-to-peer marketplace where women can view and potentially shop each other’s closets. This level of engagement will create an amount of trust that should add significant value to the peer-to-peer ecosystem. Check out their site when it launches, it will be very interesting from a social-commerce standpoint.

There are several startups working to innovate in the peer-to-peer market, especially around fashion. The one that immediately comes to mind is in NYC. My wife, Natalie, helped out at TheCools earlier this summer and she remains involved remotely as needed, so TheCools is inherently top of mind.

Shop Hers’ team consists of the previous CTO from Shoedazzle, Thanh Khuu, a former Internet Design Manager from Nordstrom, Jenna Stahl, and the previous Head of the New Faces Division for Vision Models, Jaclyn Shanfeld.

The company has received an undisclosed angel amount from Brian Lee (founder of LegalZoom and Shoedazzle), Paige Craig, Mike Hirshland, Shana Fisher, and Ryan Steelberg.

Key Points:

  • Location: Santa Monica, CA
  • Founded: February 2012
  • Launched: Pre-Launch
  • Initial Venture Investment: Undisclosed Angel Round
  • Investors: Brian Lee, Paige Craig, Others

The Most Important Formula for Startups

There are numerous metrics to focus on when launching an e-commerce startup. There are also several hypotheses that you will want to prove during the early months, but the most important hypothesis to make and prove is that your customer’s Lifetime Value divided by your Cost Per Acquisition is greater than 2x. This multiple holds true for numerous other startups, not just those in the e-commerce space.

While it is extremely important to continuously grow your daily Unique Visitors (i.e. shoppers) and number of Unique Buyers (i.e. customers), the LTV/CPA multiple will determine the scalability of your business. Note that 2x is what some would consider the minimum for investing. Aim to be at least in the 2x to 3x range.

My most important piece of advice related to this metric is to focus your efforts on increasing the LTV side of the equation. Too often I meet startups, typically with inexperienced entrepreneurs, that are not concerned about their low LTV because they anticipate using viral marketing to keep their CPA low. The web does make it possible to build a business based on a low LTV and CPA, but it is much harder and not as attractive. The one CPA aspect that you should pay attention to is the time to recover your CPA: aim to recover your CPA within the first 12 months. This will keep your working capital requirements down.

There are several levers you can pull to increase your customers LTV. The obvious ones are: increase cart-size, increase frequency of purchase, and move customers to higher margin products. One of the less obvious ways is to market third party offers to your customers. These are just a few of the things you can do to increase the LTV, which in its simplest form equals your Average Sale Price*Net Profit Margin*Purchases/Customer.

Lastly, their are different variations of an LTV calculations. Agree early-on what LTV calculation makes the most sense for your business, and start hypothesizing about your customers LTV, CPA, and the resulting multiple. Inherently, a large piece of your LTV calculation will be a forecast, and as with other startup forecast, it will be wrong, but the sooner you can create a hypothesis about your customers behavior and begin to test it…the closer you will be to proving your business model and attracting more capital.

Check out this infographic if you don’t know how to calculate your LTV.

And as always, check out some resources from other VCs:
Fred Wilson:
David Skok:


Fashion Fridays: August 3, 2012

Check out this weeks Fashion Fridays.  Also, check back this weekend as I will be continuing a deeper look at My Top 10 List of E-Commerce Startups in LA.

One. = 7 for all Mankind – Standard Jeans in Swedish Blue, $189, Park & Bond
Two. = Sperry – Top-Sider X Band of Outsiders Edition, $175, Mr.Porter
Three. = Luis Morais – String and White Gold Bracelet, $255, Mr.Porter
Four. = Gucci – Aviator Gold/White Sunglasses w/Top Bar, $275, bloomingdale’s
Five. = John Varvatos Star USA – V-Neck T-Shirt, $91, Matches


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

Fashion Fridays: July 27, 2012

It’s finally turned into beach weather here in Seattle. On that note, check out this weeks Fashion Fridays outfit.

Also, if you haven’t checked out My Top 10 List of E-Commerce Startups in Los Angeles, do so now. Starting next week, I will be taking a closer look at one company per day.

One. = Jeffrey – Light Weight V-Neck Tee, $32.50, Club Monaco
Two. = J.Crew – Long Board Short, $49.50, J.Crew
Three. = Vestal – Men’s Brig Tide and Train Gray Black Digital Surf Watch, $140, Amazon
Four. = Swims – Rubber and Mesh Boat Shoes, $150, Mr.Porter


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.


Fashion Fridays: July 20, 2012

This week’s Fashion Fridays features items from online-only brands. Some of these brands (Bonobos and Warby Parker) are now available in brick-and-mortar stores as well, but all of them got their start online.

ONE. = Everlane – The Slim Belt + Buckle, $40,
TWO. = Bonobos – Tipping Point Navy V-Neck Sweater, $68,
THREE. = Warby Parker – Rafferty Aqua Tonic, $95,
FOUR. = Everlane – The Weekender, $95,
FIVE. = Frank & Oak – Andorra Shirt in Steel, $45,

*Everlane and Frank & Oak still require an invite to shop immediately. The above links include my invite link. Enjoy!
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.