by Y Combinator6/13/2016
Karla and Shilpa discuss their philosophy of “Fewer, Better Things” and how that guides them in determining what to sell and how to operate their business, choosing more ethical suppliers and supporting programs such as H.E.A.R.T., which provides clothing to women leaving situations of domestic violence.
Shilpa : It really did tap into that consumer need and angst that people were feeling, that there’s just so much stuff around and it’s not giving them that happiness and fulfillment. And it was from those insights, just interacting with customers and testing at every point in those first two years before we felt like we had a message that was strong to put out to market. But tapping into that consumer need. And now it’s something that people are talking about all the time, there’s Marie Kondo’s book, and lots of articles around having less but more because it’s more fulfilling product.
They went on to discuss the importance of building a compelling story around your company when fundraising–and finding investors with whom the story resonates.
Shilpa : Well investors love story, team, and financial models that make sense. So, if you meet with enough of investors and you have lots of conversations, over time you will identify the ones that match your philosophy. And the important thing is to actually refine it along the way. So Karla and I realize that a lot of the male investors that we were talking to in the beginning just quite didn’t understand the female consumer need that we were addressing. So it was never going to make sense for them unless they understood what the problem was.
And so the story was missing. So for that we switched directions and we targeted female VCs that understood the story part of it. And then from there, we basically met with a bunch of female VCs, as many as we could find. There’s not that many, so please take a bunch as not very big. But we were then able to pattern match with a VC that really understood our team and understood our business economics.
Karla : Yeah. When you look at the unit economics that we’re building, they’re incredibly attractive. We have great gross margins, we make money on first purchase, we’re not spending a lot of money acquiring our customers because they love what we make and they’re our advocates themselves. And we definitely spend on marketing and different tactics, we have a retail outlet that we actually haven’t talked about. We launched with retail and online at the same time. And so we spend there, but ultimately, it’s a really nice business model.
Shilpa : And so we through this effort found Maha Ibrahim at Canaan Partners. And she had everything that we were looking for, we were bringing everything that she was looking for. She is very strong in female business investing, as is Canaan Partners’ portfolio. It’s not a gender bias in any way. She’s looking for incredibly attractive businesses, and from an economic perspective, she understood.
Y Combinator created a new model for funding early stage startups. Twice a year we invest a small amount of money ($150k) in a large number of startups (recently 200). The startups move to Silicon