Im not a reader of forbes magazine but i came across something about them that really ticked me off and makes me second guess their credibility as the CNN of econ news. I keep seeing #girlboss hashes in facebook posts and tweets and it seems like im the only one who hadnt read this book. I know the company Nasty Gal but i didnt know anything about the founder. Saw this podcast and was interesting.
I almost felt compelled to buy her book so i started doing some googling and i noticed that her company is now bankrupt and sold for just 20 million to a very low end online retailer boohoo who was their only bidder.
http://www.latimes.com/business/la-fi-nasty-gal-20170224-story.html
For those who dont know who girlboss is it is the title of the book about Nasty Gal founder Sophie Amoruso. She started selling used clothes on ebay when vintage was still a niche and made 10 million dollars. She was banned from ebay shortly after and had to start her own site that sold new clothing with an edge. If you watch youtube at all it seems like every girl was hauling stuff from Nasty Gal at one point.
In 2015 Forbes Magazine estimated her networth at 280 million and projected increasing revenue for Nasty Gal in excess of 300 million and growing. She released a book called GirlBoss that has been all the rage and topped the NY times best seller and Netflix is releasing a show based on her life.
In 2016 she made Forbes Richest self made women list.
http://www.forbes.com/sites/clareoc...y-gal-sophia-amoruso-richest-women-net-worth/
Then a few months later it came to light that Nasty Gal was filing for bankrupcy protection. New CEO former head at Lululemon was not able to turn the company around or find private investors and by 2017 the company went up for sale with only one paltry bid from a low end online retailer boohoo for 20 million.
http://www.forbes.com/sites/clareoc...cy-founder-sophia-amorusos-fortune-decimated/
Turns out Forbes projected wrong on all counts. The business once they stopped selling vintage on ebay never had a dedicated customer base and certainly not at those huge levels.
The company had poured money into aggressive marketing and PR namely through youtube which accounted for a spike in revenue from 2012 ~ 2015 but failed to translate that marketing expense into a loyal consumer base.
So what went wrong at Nasty Gal?
Wasn’t the company growing rapidly?
Nasty Gal enjoyed tremendous growth in its early years, but at a heavy cost.
By 2011, its annual sales hit $24 million, an 11,200% jump from three years earlier, the company said publicly. Sales leap-frogged again in 2012 to nearly $100 million.
But it wasn’t long before sales started dropping — to $85 million in 2014, and then $77 million in 2015, according to bankruptcy documents. (In a stark example of appearance versus reality, Forbes magazine predicted that its 2015 sales would top $300 million).
Why did sales start to drop?
Analysts said that Nasty Gal’s rapid growth was fueled by heavy spending in advertising and marketing. It’s a strategy that many start-ups use, but one that only pays off in the long-run if one-time buyers become loyal shoppers.
“You end up spending money via marketing online like banner ads [or paying] influencers,” said Ari Bloom, chief executive of Avametric, a fashion software company in San Francisco, and an investor in fashion start-ups. “If you spend $50 on marketing to get a customer to buy something and they only buy once from you, you are probably not making money.”
In Nasty Gal’s case, the inability to hold on to customers led to what’s called “a leaky bucket” situation, analysts said. Once the company burned through its fundraising capital and slowed down on marketing, sales began falling in 2014 and continued to drop.
“When they turned that spending off, the growth vastly declined and revenue went down,” said Richie Siegel, founder of Loose Threads, a media company focused on fashion and technology. “I can spend $200 million to make $100 million in revenue, but that” doesn’t make for a sustainable business.
That pretty much means that her wealth wasnt made from the Nasty Gal empire at all but made by selling books and a tv series that was based on a lie about how successful Nasty Gal was and there was Forbes a noted economic paper touting the hype when they had no actual data on how profitable the business was.
▪Bullet points▪
▪ woman makes a nice profit selling old clothes on ebay
▪gets banned on ebay decides to open e-store
▪funnels millions of dollars and product into advertising and pr on youtube
▪sales skyrocket for 3 years but company is spending more on marketing than making returns on that marketing
▪notable media sources such as financial giant Forbes grossly over estimate company and founders worth/wealth
▪company is bankrupt in 4 years
▪owner making bank on selling books and television series about her life as savvy kickstarted business woman
▪forbes got it wrong and possibly unreliable
▪you can make money conving others you made money when you didnt really make money
▪#girlboss
I almost felt compelled to buy her book so i started doing some googling and i noticed that her company is now bankrupt and sold for just 20 million to a very low end online retailer boohoo who was their only bidder.
http://www.latimes.com/business/la-fi-nasty-gal-20170224-story.html
For those who dont know who girlboss is it is the title of the book about Nasty Gal founder Sophie Amoruso. She started selling used clothes on ebay when vintage was still a niche and made 10 million dollars. She was banned from ebay shortly after and had to start her own site that sold new clothing with an edge. If you watch youtube at all it seems like every girl was hauling stuff from Nasty Gal at one point.
In 2015 Forbes Magazine estimated her networth at 280 million and projected increasing revenue for Nasty Gal in excess of 300 million and growing. She released a book called GirlBoss that has been all the rage and topped the NY times best seller and Netflix is releasing a show based on her life.
Forbes has had its eye on Amoruso’s net worth since 2012, when we described her in a magazine profile as “fashion’s new phenom.” That year, revenues topped $100 million. Nasty Gal also raised a significant amount of money to fuel its rise: $65 million between 2012 and early 2015.
In 2016 she made Forbes Richest self made women list.
http://www.forbes.com/sites/clareoc...y-gal-sophia-amoruso-richest-women-net-worth/
The #Girlboss empire now includes a 2014 New York Times bestseller, a hit podcast, a just-released coffee table book, and an upcoming Netflix comedy based on Amoruso’s unconventional path, produced by Charlize Theron.
The show is slated to debut in 2017. Netflix did not respond when Forbes asked whether the series will go ahead despite Nasty Gal’s woes.
The show is slated to debut in 2017. Netflix did not respond when Forbes asked whether the series will go ahead despite Nasty Gal’s woes.
Then a few months later it came to light that Nasty Gal was filing for bankrupcy protection. New CEO former head at Lululemon was not able to turn the company around or find private investors and by 2017 the company went up for sale with only one paltry bid from a low end online retailer boohoo for 20 million.
http://www.forbes.com/sites/clareoc...cy-founder-sophia-amorusos-fortune-decimated/
It is now clear the startup was unable to maintain the momentum required by such investment. Index Ventures, which pumped $49 million into the edgy e-tailer, will be feeling the brunt of this week’s bankruptcy news. Partner Danny Rimer is expected to resign from Nasty Gal’s board, as is Amoruso, the executive chairperson.
Amoruso stepped down from the CEO role in early 2015, when Waterson took the reins after a brief stint as chief product officer.
Amoruso stepped down from the CEO role in early 2015, when Waterson took the reins after a brief stint as chief product officer.
Turns out Forbes projected wrong on all counts. The business once they stopped selling vintage on ebay never had a dedicated customer base and certainly not at those huge levels.
Nasty Gal’s bankruptcy means Amoruso will tumble off Forbes’ list of Richest Self-Made Women, where she was one of the youngest members. She made her debut this year with an estimated net worth of $280 million, based entirely on the assumed value of her majority stake in Nasty Gal, which according to multiple sources had nearly $300 million in sales. In 2016, Nasty Gal secured the top spot on e-commerce bible Internet Retailer’s Top 500 guide thanks to its reported 92.4% compound annual growth.
The company had poured money into aggressive marketing and PR namely through youtube which accounted for a spike in revenue from 2012 ~ 2015 but failed to translate that marketing expense into a loyal consumer base.
So what went wrong at Nasty Gal?
Wasn’t the company growing rapidly?
Nasty Gal enjoyed tremendous growth in its early years, but at a heavy cost.
By 2011, its annual sales hit $24 million, an 11,200% jump from three years earlier, the company said publicly. Sales leap-frogged again in 2012 to nearly $100 million.
But it wasn’t long before sales started dropping — to $85 million in 2014, and then $77 million in 2015, according to bankruptcy documents. (In a stark example of appearance versus reality, Forbes magazine predicted that its 2015 sales would top $300 million).
Why did sales start to drop?
Analysts said that Nasty Gal’s rapid growth was fueled by heavy spending in advertising and marketing. It’s a strategy that many start-ups use, but one that only pays off in the long-run if one-time buyers become loyal shoppers.
“You end up spending money via marketing online like banner ads [or paying] influencers,” said Ari Bloom, chief executive of Avametric, a fashion software company in San Francisco, and an investor in fashion start-ups. “If you spend $50 on marketing to get a customer to buy something and they only buy once from you, you are probably not making money.”
In Nasty Gal’s case, the inability to hold on to customers led to what’s called “a leaky bucket” situation, analysts said. Once the company burned through its fundraising capital and slowed down on marketing, sales began falling in 2014 and continued to drop.
“When they turned that spending off, the growth vastly declined and revenue went down,” said Richie Siegel, founder of Loose Threads, a media company focused on fashion and technology. “I can spend $200 million to make $100 million in revenue, but that” doesn’t make for a sustainable business.
That pretty much means that her wealth wasnt made from the Nasty Gal empire at all but made by selling books and a tv series that was based on a lie about how successful Nasty Gal was and there was Forbes a noted economic paper touting the hype when they had no actual data on how profitable the business was.
▪Bullet points▪
▪ woman makes a nice profit selling old clothes on ebay
▪gets banned on ebay decides to open e-store
▪funnels millions of dollars and product into advertising and pr on youtube
▪sales skyrocket for 3 years but company is spending more on marketing than making returns on that marketing
▪notable media sources such as financial giant Forbes grossly over estimate company and founders worth/wealth
▪company is bankrupt in 4 years
▪owner making bank on selling books and television series about her life as savvy kickstarted business woman
▪forbes got it wrong and possibly unreliable
▪you can make money conving others you made money when you didnt really make money
▪#girlboss
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