What you should read and the order you should read it in.
People often say that the learning curve you take while working in a start-up is the equivalent of drinking from a firehose. While good start-uppers are thirsty for knowledge, it can be easy to get lost in all the information available today. In the year that I’ve been running Style Counsel, I have gone through hundreds of sources of information, but I do not return to them all. Below is a reading list I recommend from my first year, in the order I recommend you read them.
To give you some context, I started Style Counsel while at Chicago Booth last year. In our first year of company life we were coached in the New Venture Challenge (#4 US accelerator), raised our first round of funding, launched a product, got users and was featured in Inc, Cosmopolitan and Huffington Post. There was also stress, incredibly hard work, team tension and more mistakes than I can count. While start-up life is risky and stressful, you can mitigate some of that by getting advice from the pros as detailed below.
I also loved the testing and analytics chapters, which you should be reading when you have a product or a prototype. It is a good introduction to a topic which you should become obsessed with when your product launches.
If you understand how this applies to your business clearly, you can align your strategy with it.
Below, you will see how this applies to LinkedIn:
When LinkedIn first launched, they were focussed on getting new users to as many connections as possible in the first few days. If a new user saw that their professional network widened and made them better connected, they would continue to be an active user (and bring their networks to the platform).
Here’s the Style Counsel example:
The value to our users is getting and giving answers to photo questions. This means that without photo questions, we cannot provide value. Consequently, as a new platform, our focus is on enabling frictionless creation of value units, i.e. we make it very easy for users to ask questions.
Putting thought into this has had results: over 20% of our user base has asked a question (which is 20x the 1% rule described here: https://en.wikipedia.org/wiki/1%25_rule_(Internet_culture)
3) Build your monetization strategy early, even though you do not have to monetize from the start. The main idea is that monetization must not add friction to your core interaction. For example, if you grow your user-base by giving them a free service and then try to get them to pay for it, they will leave (and they won’t like you).Monetization should be frictionless and not annoy users. The book gives a good example of how MySpace was pushed by its investors to monetize quickly, so they crowded the site with adverts. Facebook, a competitor at the time, did not have the same pressure and we all know what happened next.
This does not mean you shouldn’t think about monetization! The model of building a big audience and then scrambling to work out how to get money out of it isn’t attractive to investors anymore.
If you have no plan to make money, you’re not building a business.
A successful strategy is to build the architecture for frictionless monetization into your platform from the start, way before you intend to deploy it.
Style Counsel’s main monetization strategy is to offer consumer insights to retailers through analytics and trend reports. We are already building the architecture, even though selling this analysis is some way off. Planning from the start means we won’t have to bolt on bulky technology or create an emergency monetization plan out of desperation.
4) Bake marketing into the platform: pull strategies work better than push strategies in platform businesses. This means your product should include something that makes its participants want to share it. Instagram is a great example: I first found out about Instagram because my friends were sharing beautiful photos on Facebook and I wanted to find out how they did it. You can also structure incentives for participation into the product, just like Airbnb does when it offers you cash to invite new users.
5) Good governance must be at the heart of the system from the start. Think about what kind of behaviour you want to promote on the platform and design the architecture as a recurring sequence of trigger, action, reward and investment.
For example, Pinterest’s governance means that great design is rewarded by public adoration and monetization.Clearly defined boundaries and public rewards for good behaviour create surplus value that makes users want to return to the platform. For example, Airbnb users with positive reviews are far more likely to use the platform than those with bad reviews. Twitter’s inability to deal with online bullying is an example of the lack of enforced governance rules, and is partly to blame for their user growth and revenue problems.
I hope you find this summary useful, but it is no substitute for the book.
Whatever industry you are working in, platforms are disrupting it, so understanding platform fundamentals is now as essential as reading a P&L.
Are you wearing any clothes right now? I assume for the majority of those reading this, the answer is yes. For those who are not, they are going to put them on in the next 24 hours. How long have you been wearing clothes? I assume since you were born: that’s a lot of garments over a lot of years.
Do you have a bank account? How about insurance? Credit cards? I assume the answers to those are also yes. But, how long have you had them for? I assume that you did not demand that your mother get you travel insurance where you were two.
From this, we can conclude that more people wear clothes than have financial products. It is therefore counterintuitive that fintech is getting so much interest and fashion tech is viewed as a little niche industry.
Fashion tech can be very broadly defined as technologies that are used to make and sell apparel, from new textiles and wearable tech, to commerce through social media and retail tracking beacons. Just like fintech, fashion tech goes from the depths of the B2B process to mass market consumer products.
For this article, I wanted to contrast data on the fashion tech and fintech markets, however this has proven impossible. While there is a large volume of data on fintech, fashion tech is still virgin territory. There is one figure that should impress you though: the global apparel market is valued at 3 trillion dollars and accounts for 2 percent of the world’s Gross Domestic Product. This figure does not take into account all the supporting industries, such as retail marketing and malls.
If we don’t have hard financial data, let’s delve into psychology. According to a Today / AOL Survey, US adult women worry more regularly about their appearance (67 percent at least once a week or more) than they do about finances (62 percent), health (49 percent), family/relationships (46 percent) or professional success (40 percent).
However, the fashion tech industry is not attracting nearly the same amount of capital as fintech, even though notable VCs like Balderton Capital, Index Ventures and Playfair do make fashion tech bets. The problem is most acutely felt at the early stage: according to Angel List, there are 1,246 fintech investors but just 599 fashion tech investors. This can be explained by who has enough disposable capital to invest in start-up: a banker’s bonus is much more likely to go to their former colleague’s fintech idea than into a fashion tech start-up.
Fashion tech is definitely the underdog, but underdogs have more opportunity. According to the same Angel List data, fashion tech’s early valuations are $4.1m on average, while being $3.8m for fintech.
The greatest opportunity in fashion tech lies in social commerce, because it marries two huge consumer trends into one: social media and online shopping. According to CEB Iconoculture, a consumer insight company, 29% of US millennials are already using social media to help them shop for clothes in store and the trend is on the rise. At Style Counsel, we are seeing live data every day which proves that people love getting the approval of others before making a purchase. I suspect that what is a nice-to-have today will be a necessity tomorrow and soon we will not buy clothes without social approval.
I am not arguing that finance is not uniquely and systematically important, and that it is not ripe for disruption. However, the over-emphasis on finance and under-emphasis on retail in the UK start-up scene means more competition in the latter and more opportunity in the former. That’s why I prefer being the underdog.
Originally published on Tech City.
Style Counsel has landed on the Apple App Store and our growth is incredible!
Join our style community and download here.
What is Style Counsel?
Style Counsel is an app where you can get immediate feedback on your outfit from a friendly community & fashion bloggers. Not sure if a look is right for the office? Or if a dress is too sexy for a first date? Just ask Style Counsel and get instant and expert advice.
Your opinions can also help our users with their clothes conundrums — join our community and help us solve dressing room dilemmas.
We’ve worked very hard to bring this product to life and really hope you like it. If you do, please tell your friends!
Download here: https://itunes.apple.com/us/app/style-counsel/id1128633043
The sharing economy is meant to unleash the value in our spare assets and spare time to either make or save us cash. Cash is blind (unlike love) and does not care about the colour or gender of the person who is holding it. However, the sharing economy is showing some troubling signs of propagating the established world order - one were white males benefit disproportionately, while minorities and women lose out.
In building Style Counsel, a platform for women to discuss clothes with a female community and fashion bloggers, I have come across these issues both in fundraising and product design. Sharing economy expert Claire Rampen interviewed me about this on her thoughtful blog, and you can read the full interview on here.
Before I left work today, I was thinking about what I had done with my day. It was 9 pm and I had been at our office space in Second Home since 8 am. Having reflected, I realised that it was a truly interesting and varied day, which used both the left and right sides of my brain. Since we mostly hear about the days of people with three secretaries who run a Fortune 100 company, I thought you might find it interesting to see the day of a start-up CEO.
I am the co-founder and CEO of Style Counsel. On our app, women can get feedback on their outfits from other women and fashion bloggers. We've just raised our first investment round and our product is about to be released on the Apple App Store.
8:10 am – 9:30: yoga at Second Home (was meant to be 8 am, but I couldn't get out of bed in time), followed by getting ready and dressed up for work.
9:30 – 10:00: meeting with our content & social media team consisting of the Fashion Editor and her freelance helper. Topics discussed: our upcoming Live interview with Swedish model and fashion blogger Tess Montgomery and our fashion blogger event next week.
10:00 – 10:30: Skype call with a brilliant designer regarding redesigning our site. Result: I really want us to do this, but can we agree a fee suitable to both?
10:30 – 12:30: following up with the great people I met at last week’s Web Summit in Lisbon. Post on this to follow.
12:30 – 1:30: walk around Spitalfields market, admire some vintage necklaces and furs, end up buying lunch from Itsu and eating it while watching Gary Vaynerchuk’s talk at the Web Summit (which I missed last week)
1:30 – 2:30: admin. The bane of my existence. Its volume keeps rising like yeasty dough. I still have so much of it to do :(
2:30 – 3:00: Preparation for the live interview with Tess Montgomery (including several applications of red lipstick) and then filming. Tess is fabulous. A true professional, which is what differentiates bloggers who can make blogging a full time job and those who can’t. She was so poised and pretty…while I was a total dork and made up the word “blobette” live on camera. Still have a lot to learn in this department. However, in the last 6 hours, the video has reached over 800 people, so that’s exciting!
3:30 – 4:30: watch the video, cringe while making notes to myself about what to do better next time. Lady Gaga does this every time she does a live show. Watching yourself on camera is hard, but I have to do it to get better. After that I worked with the content team to make sure the video is shared on our social and promoted beyond the usual channels.
4:30 – 4:40: more admin and getting inside info on the Second Home Christmas party. Apparently, the theme is “ethnic”. I’m unsure about this. But the drinks will be free. Always a winner.
4:40 – 5:30: catch up call with one of my investors. He is a developer, so is curious about our Beta testing. Every investor has different interests, so no conversation is the same.
5:30 – 6:30: call with our Development and User Experience teams to plan work on our next set of features. We have a brilliant CTO and are also getting support from the Evil Martians – a top development team who has worked with Groupon and Ebay (and has the most awesome company name). Our UX team, the smart people at Ribot, also design products for Google, so we’re in good hands. I wrote about our Sprints with them here.
6:30 – 7:30: walk around Spitalfields and come back to Itsu. I feel a bit brain-drained after speaking to so many smart people today!
7:30 – 9:00: legal admin around closing our first investment round: making sure everyone has all the right documents, everything is signed and all questions are answered. Not fun, but super important.
9:00 – 9:30: writing this blog!
So, this is what we start-uppers do with our time. It’s not for everyone, but I love it! Any questions, get in touch.
Today I interviewed Shokla, the author of the popular blog The Silk Sneaker for Style Counsel. We talked about fashion trends and her success as a blogger. Since this is not a fashion blog, if you want to get her style tips, check out the interview on our Facebook page. This is a blog about setting up and running a business, which is what I want to focus on in this article.
Shokla set up her blog a year ago and is already working on it full time. This means that within 12 months, her blog has gone from a fun hobby to a job which provides her with enough income to live in London, one of the world’s most expensive cities.
Having worked in digital media for a long time, I am always interested in seeing how some people manage to make their blog into a sustainable business, while others barely monetise even if they have very similar follower numbers. The influencer industry is currently getting a lot of press, but it is still not transparent in its earnings.
In my view, being a fashion blogger is much like being an actress in terms of what you can earn. For every Jennifer Lawrence, there are thousands of actresses waiting tables and working in call centres. Just as for every Blonde Salad and Man Repeller, I have seen hundreds of young women with notable followings and beautiful content who could not make a living from their blog.
While everybody has to start somewhere and every blogger (like every actress) has to grow their portfolio before they can expect payment from brands, I do see a consistent theme that differentiates those who manage to make fashion blogging a career. That theme is professionalism. What I saw in Shokla is a highly professional business woman, with a great eye for content. She always arrives on time, delivers consistently good content and engages with her followers across several channels (even on Soundcloud!). This reminded me of the Financial Times article on the Beganovich sisters in New York whose blog earnings are a reported $30,000 per month (FT: How to make money as a digital influencer) and who employ 12 people in Bosnia to market their services and support their influencer business.
However, for every Beganovich there are thousands of bloggers with five to six figure followings who cannot give up their full-time jobs. As a business person, a market this opaque with such high variance in earnings is an opportunity ripe for disruption, which is what Style Counsel aims to do. But for fashion bloggers, it seems to be every woman for herself.
You can watch the interview with the Silk Sneaker author here:
In the process of building Style Counsel, I came across a brilliant method of designing and testing an idea which I want to share with you. The Sprint Method, originally developed by Google Ventures, allows teams to test key assumptions, design a prototype and test it among your target customers in just five days. If you are sceptical, so was I, until I learnt that Airbnb, Facebook, Slack and McKinsey are just some of the companies that use it. So, as we needed to create Style Counsel’s Minimum Viable Product, we submitted ourselves to the Sprint. Our handlers for this journey were the team at Ribot, an award-winning product design company (which has incidentally created products for Google using this very method).
The Sprint takes place over five days and requires your full-time attention. You will need a team of up to seven (we had five), one of whom is The Decider, a couple of industry experts for short calls and five testers from your target market. You will also need a stop watch, dot stickers and a LOT of post its. Most importantly, you need the curiosity to test your assumptions and humility to understand when you are wrong.
Here is how the five days pan out:
Monday: big picture day. Start by setting your long term goal. Ours was “Help women decide what to wear and buy”. In order to get the best out of the Sprint process, you need to call in a couple of advisors for a 20 minute chat each. They shouldn't be an immediate part of the project, but should know about the field you are operating in. In our case, we spoke to Anne-Marie Tomchak, who set up a BBC format reporting on social media news, about current trends and how they could be relevant to Style Counsel. After all this theorising, you need to pick a target: decide what main topic you want to test.
Tuesday: drafting day. Start the day with every team member bringing ideas of how other companies have solved similar problems. Don’t look for your competitors (you’ll just end up copying), but instead look for companies who have solved a comparable issue, e.g. Uber and Airbnb.
Wednesday: decision day. This is the day you decide which ideas you are going to prototype and start your storyboard. The most important decision of the sprint is made on Wednesday, so make sure to be focused and energetic at this stage.
Thursday: prototyping day. On Thursday you turn your storyboard into a realistic prototype and prepare for testing day. A realistic prototype is a façade, it is not the real thing. To the testers, it must feel like a real experience so their reactions to it can teach you useful lessons. For example, we built our prototype in Invision and it worked almost like the real thing.
Friday: test day! The first time I did it, I was terrified: what if they hate it?! It is better to find out what your target market really thinks before you throw time and money at an untested idea. On Friday, you should have four or five people from your target market to test your prototype. User research by Jakob Nielsen has shown that 85% of problems in a product are observed after just five testers. Therefore, it makes more sense to fix the 85% of observed errors and then go back and test again, rather than interviewing hundreds of people to uncover the last 15%.
After the last round of interviews, you will be too tired to think straight. We noted all the user feedback and dissected it the following Monday. After that, we began another sprint to fix the mistakes in the last prototype.
After two sprints, we had a realistic prototype which testers loved and which helped us raise our funding round. It is the Minimum Viable Product, but testers could immediately see what it does and delighted in using it. We are Beta testing this product as I write this, but of course the real test will come when our product is open to the public. We cannot foresee the future, but we’re happy to live with 85% certainty for now.
Here are a couple of screenshots from our Sprint prototype:
A strange thing is happening in the fashion world. If the word “fashion” makes you think of angry skinny women, I am of the same opinion, so give me a chance and read on.
This month’s Vogue UK does not feature a single model. Instead, the women modelling the clothes and being interviewed about their health and beauty routines include a tech firm founder, a barrister and an academic. In her Editor’s Letter, Alexandra Shulman says that “fashion should be for everybody” and since the UK now has a Prime Minister who clearly enjoys fashion, this issue is meant to show that you can have a busy life, a non-model figure and a deep longing for the Burberry military jacket.
While Vogue has traditionally set the zeitgeist, this is not so anymore. In fact, this issue is just catching up with what many women actually want when it comes to fashion and shopping. Yes, we enjoy looking at pretty people wearing pretty clothes, but we also want to be able to relate to them. This is why Instagram and YouTube is making girls taking photos on their phones into stars. A lot of the time, these self-made fashionistas do not have the Vogue budget, but look fabulous in Zara and even in Primark. Why does this matter? Because their followers do not have the Vogue budget either and they can actually buy what their fashion hero is wearing, rather than wanting something out of reach.
However, it gets even more democratic than that! We are now looking for what people like us think about products and use that to make a decision whether to buy something or not. This has been true of Amazon reviews for toasters for a while, but is now heavily influencing fashion. The greatest examples usually come from new brands, which have had to innovate to do well from the start, rather than traditional retailers (think the now defunct BHS in the UK and Macy’s in the US, which is closing 100 stores.) Modcloth, an indie online retailer, has a fantastic section where their customers upload pictures of themselves wearing Modcloth dresses and show how they style them. ASOS As Seen on Me is also a hugely popular example of actual customers showing off their ASOS purchases. I dare you not to get stuck on these pages.
It is not just the social media revolution that has driven this change, but also women progressing at work and in education. This progress has meant more money in women’s pockets and a rising expectation of acceptance as multi-faceted human beings, rather than just pretty things. Just look at women’s outrage on social media when the talented Amal Clooney is referred to as the wife of a movie star, rather than a human rights lawyer.
So back to Vogue. The women in the November issue are still aspirational, but for things other than the thigh gap. Being a successful artist, an entrepreneur or a Cambridge scientist are no easy feats, but at least they are achievable even if you’ve been born with short legs. I would recommend buying this issue, but don’t subscribe just yet. The magazine might just climb back into its ivory tower, but fashion bloggers are just a few taps away.
The Seed Enterprise Investment Scheme is a must-use fundraising tool for any UK-based companies. If your company gets SEIS status, the UK government gives your investors 50% of their investment back as a tax cut and gives them over 70% downside protection.
Style Counsel got SEIS approval last week, and we’ve already seen what a huge difference it makes – quite simply, investors are willing to invest more.
In this post, I have given a quick explanation of what SEIS status does and how companies can get it. Accountants will offer to do the application for about £1,500, but as a start-up, you should not be paying these fees for something you can do yourself with a bit of elbow grease and research.
Why investors and start-ups love SEIS:
The above example shows that if someone invests £50,000 in a company with SEIS approval, only £13,750, i.e. 27% of capital invested, is at risk.
Here are some other important points to note:
How to get SEIS status:
Accountants will offer to do the application for you for about £1,500, since this will likely equate to 1% of the money you raise, you really should do it yourself. It isn’t fun, but it’s not rocket science.
As a company, you need to apply to advance assurance from HMRC. Once your application is approved, you will get a letter saying you have been granted advance assurance. You can then take it to investors, telling them that their investment qualifies for SEIS relief.
The form is only annoying to fill in because some of the questions are unclear if you have never answered them before. I spent some time researching and calling the HMRC and have listed my tips below.
It will take 6 – 8 weeks from when you submit the application to get your advance assurance approved. I recommend calling the SEIS team after you submit your documents to make sure that they have received them and to find out what your place in the queue is.
As you can see, your company and your investors can get great benefits with Seed Enterprise Investment Scheme relief and getting it is not difficult. Now go fund yourself! :)