Michael Mente and Mike Karanikolas, Founders, Revolve
Where Data Meets Denim
How Revolve founders Michael Mente and Mike Karanikolas, a duo with backgrounds in finance and engineering, used data to take the fashion world by storm.
You would think that finance, computer engineering, and fashion have nothing in common.
But Michael Mente and Mike Karanikolas, the founders of the wildly popular online clothing company Revolve, would beg to differ. It’s true that when they first met each other at a software startup, they never thought fashion was in their cards. After all, Mente was a finance guy and Karanikolas was a computer engineer. They weren’t exactly cozying up to the catwalk.
And yet, a series of unfortunate events led Mente and Karanikolas to the retail business, which ended up yielding quite the fortunate outcome—together, they built a billion-dollar business that serves as inspiration for any entrepreneur looking to get into the online apparel game.
Using their respective strengths in analytics and number crunching, they developed a hunch that there was a gap in the market when it came to places young, millennial women could buy fashion brands online. Their hunch proved to be correct.
From there, it was Revolve’s famously prescient marketing strategy — in particular, the company’s influencer marketing — that set them apart from other online clothing brands coming onto the market.
“We had first-mover advantage and recognized power of social early on. We’re been working with influencers before they were even called influencers — before instagram even existed,” Karanikolas says.
With their near-perfect product-market fit and the love of influencers like Chrissy Teigen, Chanel Iman, and Jessica Alba, the California-based company has grown from being a small online store to an iconic billion-dollar business.
Challenging the Mainstream
Mente and Karanikolas were both working at the software startup NextStrat when the dotcom bubble burst, kicking off a recession that eventually led to the company’s collapse. That’s when the duo started to brainstorm ideas for a new venture. They knew they made a great team and had a feeling they could achieve big things together, it was simply a matter of finding the right opportunity.
Given their math and engineering backgrounds, they approached the research process of finding that new endeavor in a very methodical way. Ecommerce was on the rise, and after digging into keyword search data, they noticed there was growing interest around online apparel. There were other attractive aspects of the apparel business too, such as the fact that it promised high gross margins and was a relatively untouched market in the late 90s and early 2000s.
“There were a lot of questions about whether apparel made sense online at that time,” Karanikolas says. “But any time there’s a new space, that means there’s room for innovation. We recognized that online represented a wealth of opportunities, and it was just a matter of figuring how this new medium worked for apparel and how to make it appealing for consumers.”
It didn’t take them long.
From Denim to Dominance
Mente and Karanikolas launched Revolve in 2003 with $50,000 of their own savings. That meant carefully watching cash flow was extremely important, which forced the duo to be highly disciplined about how they made decisions. Even early on, they leaned heavily on data to inform what products to sell. The core of their business model was to sell clothing from other brands, start with existing numbers, and then test and iterate as they identified what worked and what didn’t.
For instance, they initially assumed denim would be one of the hardest types of clothing to sell online, since fit is so important and there are lots of size variations. Through data analysis, however, they discovered that people actually did shop for jeans online and even returned them less frequently than other clothing categories. So for the first year or two of running Revolve, denim made up a majority of their business, which led to their first wave of success with the company.
They also weren’t afraid to go against the grain in how they ran an online store. When they realized the inherent risk that came with buying online due to fit issues, they instituted a policy of free shipping and returns. Mente and Karanikolas also quickly recognized the importance of having big, high-quality photos of their apparel—so they kicked standard web guidelines to the curb and covered their site with beautiful images, even if it meant it took a little longer to load.
“There were all sorts of different ways we approached retail and online fashion that ended up working out really well for us,” Mente says.
“Eventually, we came to understand the creative and aesthetic side of things more and become expert in areas we weren’t before. That piece took us many years to develop, and it wasn’t easy because it didn’t leverage our initial core strengths. But building that expertise on top of our existing strengths helped us become really powerful.”
Struggling to Survive
Mente and Karanikolas’ journey wasn’t without difficult times. They were still self funded when the Great Recession hit in 2008. Demand plummeted, and they saw that competitors were responding with extreme discounts, which made it challenging to make money.
Despite the fact that they were fighting for their lives, Mente and Karanikolas agree that this period actually led to incredible personal and professional growth. It also showed them they had the right company culture and people to get them through these challenging times.
The duo recalls one particular memory with fondness. Since Revolve also had to offer discounts to make sales during the recession, they had to ship a massive volume of product to remain profitable. During this time, every single employee voluntarily came out to the warehouse on weekends to help get all the products out on time. That’s when Karanikolas and Mente knew they would survive and come out on the other side as a stronger company.
Revolve is now a major player in an incredibly competitive online apparel market. But Mente and Karanikolas aren’t worried because they’ve come to deeply understand one of the most important lessons in marketing: You’ve got to stand out from the noise.
The way they do this is by leaning into the authenticity of their brand. Everything, from the events they host to the people they work with, is saturated with a genuine desire to grow relationships with consumers. It has never been about trying to outspend their competitors.
This type of commitment to their consumers is also what led the founders to start Revolve’s own line of clothing back in 2010.
Through data and conversations with their audience, they knew that there were products they either didn’t have a big enough selection of, or weren’t stocking fast enough. They realized they had the ability to provide a better product and have since launched an array of new clothing lines to meet the different needs of their customers.
Next Level of Growth
Karanikolas and Mente are optimistic about the future of Revolve.
“There are more opportunities today than ever, and we’re the best positioned we’ve ever been in the history of our company. We’re trying to build one of the biggest fashion and apparel companies out there,” Karanikolas says.
The duo plan to continue focusing on their core business of building a better experience for their target consumers, youthful women in 20s-30s looking for premium fashion. They’re passionate about getting better at everything they do, from improving their data to creating better products. Thoughts of further international expansion are top of mind for the founders as well, given that more than 40% of their social media following is international.
When it comes to the secret of success, the duo say there isn’t one—it’s simply about putting in the hard work, grit, and perseverance.
“There’s so much chance involved in the short term, but if you keep making the right steps, over the long run you’ll go in the direction you want, even though there are periods of time where it feels like things aren’t working for you,” Karanikolas says. “It’s a lot of hard work, but it’s going to be more rewarding than anything you’ve ever done.”
Mente agrees and leaves aspiring entrepreneurs with an additional piece of wisdom.
“Hard work and dedication are 100% important, but another aspect is to take care of yourself and your life,” he says.
“Your physical, mental, friendships, and relationships are all important as well. When you’re living well, you’re thinking clearly, healthier, and more productive over the long run. You need to recharge and have some balance in your life. It’s something I’m still trying to learn.”
3 Tips to Build a Powerful Consumer Brand, From Michael Mente & Mike Karanikolas
- Define core principles. It’s important to clearly identify which principles drive your brand—make sure those values are authentic to your organization and aren’t just an imitation of other organizations. From there, all decisions should map back to these principles to ensure the brand is consistent.
- Understand the landscape. You have to know who you’re competing against so you can figure out how to spread your message more broadly in the market. This also means figuring out who your primary consumers are and where they’re spending their time, as well as discovering your own message that’s positioned well and unique enough to mean something, but not so niche that your target audience is too small.
- Be consistent, but don’t be afraid to be flexible. “Know what you stand for and make sure you’re consistent in communicating that message. What you stand for has to make sense for the consumer segment you’re targeting in comparison to the competitive space,” Karanikolas says. However, he also says that it’s okay to refine your brand message. “We actually have consistently used data to refine our brand message. In other words, what are consumers responding to? There are things we knew from the start but also evolved as we learned from data.”
Interview by Nathan Chan, feature article reprinted from Foundr Magazine, by Sophia Lee
- How Mente and Karanikolas’ paths crossed while working at a software startup
- How the dotcom bubble led the duo to start brainstorming new ventures
- How their backgrounds in finance and engineering helped them decide on an online apparel business
- The launch of Revolve, with $14,000 out of pocket
- Why every business decision was driven by data
- The duo’s breakthrough with denim
- How Revolve survived (and thrived) through the Great Recession in 2008
- Mente and Karanikolas’ recommendations on standing out in a crowded market
- How Revolve changed the game of influencer marketing
- The importance of knowing your consumers, not outspending your competitors
- The future of Revolve’s global presence
Full Transcript of Podcast with Michael Mente and Mike Karanikolas
Nathan: The first question that we ask everyone that comes on is, how did you guys get your job?
Michael: This question, I think, is confusing because we founded the company, and I guess we created the job so, I’m not exactly sure what you mean.
Nathan: Yeah. Look, I guess how did you guys find yourselves doing the work that you’re doing today?
Michael: Mike, do you want to go? That’s a broad question that could be asked a 30 minute answer.
Mike Mente: Yeah, no, we can give you some background. So, Michael and I met each other out of college in our first job. It was a software startup of the dot.com era. I was a computer engineer by trade, Michael was a Finance major. In terms of how we first got interested in the internet and technology was through that first job and through the era we were living in then.
Really the genesis for Revolve though was what transpired towards the end of the dot.com era, basically the company we were working for went bust. In which point we had no employment. We actually initially re-started the company, Michael and I with the CEO of that company, bought the assets out of bankruptcy for about three months work to refound that company. I think being founders, we gained a new perspective and felt like the road was going to be difficult with that company and we started working on other ideas about how we could work together.
For my plan really, the genesis of Revolve is that we made a great team, great partnership and could do great things together. So it was just a matter of finding opportunity into the industry. And Michael, leading up to more specifically what got us into the apparel industry, Michael was doing research for business opportunities and we knew online looked interesting. Michael was looking at different business segments and apparel attracted us for a couple of reasons. One we saw a large and growing interest in apparel online from keyword search data that we had access to, but there wasn’t much in the way of competition. It felt relatively open in a place we could make our mark.
The other thing is, when we thought about the apparel industry, there were a lot of things that were interesting to us about it. It had really high gross margins, so we thought there was good room to grow a profitable business. We also felt like after we brainstormed on the different industry opportunities, that we felt like we had some good ideas to take the apparel space online, where we could essentially create a better version of online apparel retail than what others were offering at the time. That was really the genesis of how we got into online tech fashion retail.
Nathan: Interesting. How did you guys in the early days… Because you had the internet, buying online really wasn’t that much of a thing. Did you guys start purely online? Was it any retail at all or thoughts of retail?
Mike Mente: There wasn’t any physical retail at all. Online was all the rage in the late 90s, early 2000s. Certainly it went bust in the early 2000s. You are right, there were a lot of questions that whether apparel made sense online at that time. Few people today have conceded but it was highly questionable at the time weather apparel could actually work online.
For us, the other thing that attracted us… Any time there is a new space opening up that means opportunity, right? Opportunity for innovation and it’s much harder in a stagnant industry that isn’t changing, but we recognised that online represent a huge wealth of opportunity to figure out a better way of doing business. Not just taking clothing online, right, but figuring out what that meant, because it wasn’t just as simple as a slapping your physical retail store online, you had to recognise the way the new medium worked and how make the new medium work well for consumers.
Out of the gate, we recognised a couple of key things. The first was that fit was going to be issue online and risk of buying items. We, out of the house, from pretty much day one it took us a couple of weeks to get, or a couple of months maybe to get everything together. We started doing free shipping and free returns on all apparel purchases. Essentially we could turn the home into the dressing room. That was a really key concept that we hit early on. Pretty much no one was doing that back then. Zappos I think was, but we weren’t even aware of that, they were a very small company back then. It was probably just us and Zappos at the time that recognised how important that was.
what a website should look like and how it should function. But we realised other key things initially, that apparel was different than other categories. That you needed really big beautiful photos and we kicked the guidelines to the curb and said, “Even if our website takes longer to download, the photos need to be big and beautiful for people to buy clothing online.”
The news section, it sounds silly today, no one that we were aware of was doing that. We recognised keeping customers engaged, right, because online can have such a huge catalogue, right, and how do people sort through it? We realised having a special section to tell them what’s new, what’s changed on the web store. Just as retailers have physical displays, we realised that was key and again, really no one was doing that back then.
Selection, we realised that online could be essentially the biggest flagship store that the world had ever seen, right. bigger than the biggest flagship store in New York and that was a huge point of leverage and power that online had.
Again, not many other people realised that back then, they were just taking whatever their typical physical store assortment was and carbon copying that online. We were able to come in with an outside perspective. Recognise what would make the medium work and leverage those strengths and then… From the point of how we approached fashion itself, as I’m sure you have heard, we approached it very different. We didn’t have a knowledge of fashion or retail or how things were typically done. My background was engineering. Micheal’s background was finance. We approached it from a numbers and technology perspective.
Out of the house, I started building systems that would essentially compute and calculate how much of each product we needed to buy and when we should reorder and all of that. There were just all sorts of, I think different ways in which we approached retail and online fashion that ended up working out really well for us.
Over the course of time we have become experts in other areas that we weren’t before. Understanding some of the more creative and aesthetic side of things, right? Which even with all our data and technology is still important. Understanding how to build a great consumer brand. Those last two pieces were pieces, I think, that took us many years to develop because they are not easy and they take a lot of expertise and it didn’t leverage our initial core strength.
I think once we became experts of those combined with continuing to build on our core strengths, our technology and data background, our ability to innovate and constantly see how to make things better for consumers, how to create something from scratch in a better way. Then, combine that with becoming experts on the brand and creative side, I think it would become really powerful after.
Really, 16 years of doing this, you do anything 16 years and you are going to become pretty damn good at it. I think that is what we’ve become.
Nathan: Yeah, but I think you guys… There are companies that have been around for 16 years even in this space that haven’t had the success that you guys have had. I’m curious, talk to me about the early days because you guys did not have a background in fashion. Even on the aesthetic side, how did you guys get your first customers? What did that look like? Did it take long to launch the site? How did you know what people would like?
Michael: I guess in the early days, it is very core our business philosophy to test and aerate. So when we first launched the site, Mike did all the backend and I did all the front end and design work more of the photography and such. You know it was like very, very scrappy, very, very hands-on.
The brand that we selected to carry were very driven by analytical research, we saw that this brand or XYZ brand was getting a lot of searches. There wasn’t that much supply so let’s start with that. And, we launched it. I think our initial investment of inventory position was like $12,000 to $14,000, a big chunk of what we had at the time.
We bought brands that we knew had traffic and we experimented with it on which actual product would be relevant. Sometimes there would be some analytical data, knowing which categories would be interesting, whether a brand was known for dresses versus tops or jeans or whatever it may be. When we selected the actual styles, the first time we had no information. We basically tried a lot of different things and tried to understand what worked and what not.
Very quickly some of things we thought were more than likely to happen, were complete failures. Very quickly we were able to identify things that worked. I think one of the things that was counterintuitive to us was the thought that denim would be one of the harder things to sell online because fit is so important. It really has to fit the body extremely well. There are so many size variations versus our typical dress has four sizes, extra small through large. Here we have size 23 to 32. So it’s been counterintuitive that would be easy to shop online, but we discovered quickly that people do shop for jeans online. Actually they return less of their jeans compared to other categories.
That was partly luck, that we experimented with denim. We quickly built a big denim business. I think for the first year or two, denim was 70 to 80% of our business. Then we were lucky because that was when a lot of great denim lines were just being introduced. It’s when Arrow and Premium Denim, cost $150 jeans was just being introduced to the marketplace. There were a lot of consumers looking for this product. There wasn’t great distribution. We were able to have a great selection online. It was the first wave and the first few breakthroughs on the site that really gave us our momentum.
The thing with denim is that it is really easy to also study analytically. There is a certain aspect in rise, inseam, or leg opening and this and that. There are a lot of technical things we could measure but there was also things in terms of colours and levels of distressing and stuff. Mike was really able to help quickly develop analytical models to help us understand from the inventory planning side, what styles we buy there, what quantity do we buy, what sizes do we buy and that was the first wave of success for us.
Nathan: Yeah, interesting. So it sounds like you guys, even in the early days were very, very strong on your numbers, the yield and really understanding that from even a cash flow management standpoint to really help you scale.
Michael: Yeah, that was very, very key. We had no investment other than the money we had saved up from our one job. So cash flow was extreme important to basically as to, in terms of batting out the inventory and grabbing up sales as fast as we could and changing inventory with things that work. It really forced us to have good foresight and discipline from the early days.
Nathan: Interesting, one thing you guys talked about, Mike mentioned was you guys really understood and understand now, how to build a really great consumer brand. I would love for you guys to unpack that because it’s so competitive now. Yes, you guys start a long time ago and you had first mover advantage, but still to this day selling any products online, direct to a consumer is very difficult. There is a lot of noise. When you guys started there wasn’t social media. It is crazy and it is becoming easier than ever to start a business with all the different tools and Shopify and just so easy to get setup. Because that barrier to entry is lower, it becomes a lot more competitive.
Nathan: What would you guys say? What are the keys things people need to be thinking about for building a great consumer brand? Yes, it doesn’t happen over night but how do you build that over time?
Michael: Well I think from the very beginning, not from the very beginning actually, I think once we committed that we had great analytic and a long-term opportunity that was attractive, we really did some work to understand and break down the core principles of brand internally. The number of our characteristics or core pillars that we refer to, whether it be youthful or fun or social and vibrant and different things. These all evolve a little bit over the time, too and sometimes we replace the word with another word, but. defining that very, very clearly and ensuring that all creative decisions always refer back to the adherence to the brand or tough decisions about how to preset ourselves. We have these core pillars to refer to.
I think it is also important to understand the landscape of who you are competing against. I think that the relationship between our company’s brand ethos is distinct in relation to who we are competing with. I just said youthful is one of our core attributes. Over the years we have really been competing with the large department stores, the typical household names. We thought that youthful as a timeless principle, that would connect with our audience, that our competitors don’t provide. This is one step into opening their hearts towards us and developing a relationship with us but ultimately of course, consistency over time is very important as well.
Nathan: Interesting. I would love to hear your take, Mike. What are the keys things you guys have done to build a great consumer brand?
Mike Mente: I think high-level, Micheal really covered the most important points, I can certainly expand upon that but, high-level you need to know what you stand for. You need to make sure you are consistent in communicating that message. And, what you stand for in the message you are sending has to make sense for the broader consumer segment you are targeting in compared to the competitive space. Right, so that’s absolutely key. You have to find your own message that is positioned well versus everyone else and unique enough to mean something but also not so niche that you target customers very small.
I think that’s a large part of the trick, if you will. And certainly figuring out how to get your message out, right. You need to have consistency when you communicate it through all your mediums and obviously from a marketing standpoint, how do you escape the box of just your own website or retail format and communicate more broadly toward the consumers you’re targeting. The consumer is your target, right, so figuring out where your consumers are. Who they’re looking to, what inspires them, where they’re spending their time, what they’re looking at and make sure your brand message is there as well.
The only other thing I can kind of add is… Going back to understanding what you stand for or what makes sense in the marketplace. Strategically, it made sense for us to go after the youthful. That was always clear from day one. But some of the other elements weren’t as clear. Actually I wouldn’t say this is always, for someone starting a new business, the best initial approach or an approach that you can run right off the bat because it takes time, but we actually have consistently used data to refine our brand message and understand what are our consumers actually responding, reacting well too, right?
So, there’s certain things we knew from the start about our brand message but there were certain things that evolved as we understood from data where the opportunities were and what was actually vibing and resonating with consumers.
Nathan: I see. One thing you talk about understanding the landscape and where that person spends time, I think you guys have done a really good job of keeping this really cool, young, hip brand. The things you do are on social and influence in marketing and especially with your events, Revolve Fest and you see all the influencers posting, it looks so cool. I think you’ve done an extraordinary job there.
I’d love if you guys can unpack some of that. Because you guys are really, really strong on staying on the cutting edge when it comes to influencer marketing, social media and just doing events and stuff like that.
Mike Mente: In terms of social, I think there’s a couple things that were key for us. One, we’ve certainly had a huge first mover advantage. We were above to recognise early on the power of it and what it could be and that’s a combination of a number of things. One is just… I think we are always constantly innovating and dabbling and trying to find new areas of opportunities. So, we’ve been essentially working with influencers before they were called influencers, back when they were called bloggers and had a website blog and before Instagram even existed. So, I think that’s one thing.
I think the other thing… Mike and I have always been good, and our organisation has always been good about understanding not what is it that you do, but what are the principles that drive what you do. And so from a marketing perspective, it’s not about whether you just advertise in magazines or advertise on billboards or advertise on TV, it’s about… And, here’s the tactics per unit, that’s great to know, right? But when a new opportunity opens up like social media, if you understand more the principles and theory behind what you’re trying to do regardless of the tactical landscape, it becomes much easier to quickly move into a new area and blow it up before anyone else does.
And we recognise that it was a huge opportunity. It was where our consumers eyeballs were going. It was a great way for us to present and represent our brand. And I think the other real key thing in marketing and branding that I forgot to mention is you have to stand out from the noise. You mentioned how it’s so easy to start a brand and there’s so many people out there, right. How do you stand out from the noise? So, whatever you’re going to own, trying to do it bigger and badder than everyone else and really own things, right?
And, as you know from our events and all that, that’s what we do, right? And I think that that is really important versus just being a, me too and having your foot in the door, but no one us going to remember you.
Michael: Yeah, the one other thing that I add also is that everything that we do is really authentic. I think the events that we have, the people that we work with, these are people that we have genuine relationships with, it’s not really throwing money at things and just trying to outspend someone else. It’s really doing it in ways that are meaningful and ultimately that authenticity definitely help connect with the consumer in a genuine way.
I think that applies to the people that we work with, the type of events that we have, the type of lifestyle and the general ethos of the brand, it’s one that’s very, very close to us, it’s close to our organisation, is very much also very similar to our consumers. So, things that excite us internally, I think that’s important because it will excite the consumer and if things aren’t interesting to us, it’s highly unlikely that the consumer will connect.
Nathan: Yeah that makes sense and you can see that. So, talk to me about the hard times guys. Has it been that easy building this billion dollar brand? Can you tell us about some times where you guys ever felt like giving up or it’s just been really tough.
Michael: The most obvious time for us was the great recession, 2008, 2009. We were still self-funded and bootstrapped and of course the economy took one of the steepest down turn in our lifetime and many, many decades obviously and it was challenging. We saw that instantly. Demand decreased by 30 to 40% within a period of month, which is of course, quite challenging. We also saw that a lot of our competitors were reacting in aggressive ways of just massive discounts. I think the most notable for a lot of people in the industry at Sax, the clothes were 50% off the whole store. And of course that’s great bargains for everybody, but of course it was hard to sell, but obviously when you’re selling at 50%, it’s very challenging to make money. So, that was a very, very challenging time
There’s times where, of course, there’s never been a time when we wanted to give up, but that was more of a time we were fighting for our lives but it really helped us grow and really helped us get stronger. One of my most favourite memories in the tough times was really understanding that we had the people and we had the culture that would get us through these challenging times.
We discounted products to some degree, alongside everyone else and I think we could have been a little bit more conservative back then, but we were selling massive amounts of product and no margins, minimal margins. We weren’t equipped to sell that, so literally everyone in the company came and worked the warehouse on the weekends. And we did it for a couple weekends, where every single person was there, all hands on deck.
I don’t think it was mandatory but it was of course, communicated very clearly how important this was and everyone came together and everyone worked and that’s when I knew we really had the spirit that we’re going to get through this and not only are we going to get through this, we’re going to survive and enter a market place that’s going to be a little bit less competitive because I know we’ll get through this and I know that a lot of our competition won’t be able to get through this and that is ultimately what happened, that the recession was the wild fire that cleared the forest floor. It turned out to be the most challenging time but coming out of the recession, we really accelerated and went through a bigger phase of growth spurts and it’s been an amazing … since that recession.
Mike Mente: Yeah definitely. That really a tough time period for us. In terms of the demand reduction, it was fairly temporary in terms of, even in October when the banks failed, we saw a really sharp demand reduction. But then rebounded quite quickly. But just in general, obviously, through 2009 it continued to be a challenging economic environment. We were profitable in that year and to Michael’s point, we accelerated out of it. But there were certainly a few dark weeks and dark months at the end of 2008, where it felt like to us and to consumers that the world was falling down and so it took a couple months for the consumer mindset to shift to, not a great mindset, but something a little bit more manageable.
Nathan: Sounds like you guys had and still have a really great culture to be able to rally everyone together even behind the hard times. I’d love to hear what are the things that you guys do to… You’ve got your values and the things that you guys stand for, but anything important that you’d like to share from developing a great company culture that you think is really important, that if you were to do this again, you have to do.
Michael: I think one thing, from my perspective is employee fit. It’s always tempting to hire people with experience from the best companies in the world or from some direct competitors that we look up to or admirable companies or people with degrees from the best schools and such and of core those are all great but if you don’t have that core cultural fit that we all work and see the world the same way, that we have the same values, that’s always super, super important.
We definitely had incredible people on the team that weren’t the best cultural fit, super smart people and whatnot, but ultimately they were unable to be productive over the long-term and ultimately destroyed that culture and decided to pull different people in different directions and such. So, ensuring the employee fits with the organisation and where everyone will be able to grow and learn together.
Nathan: So, yeah, let’s talk about at first you guys stalked other brand but then obviously you saw an opportunity to create your own. At what point in time did that happen and from a strategic standpoint, even a margin standpoint, that’s really smart because you’re bringing in people that shop with you guys because they want certain brand but then you’ve got your own, then you’ve got that trust and that person becomes a customer and in your community, et, cetera, et, cetera. I’d love to hear around at what point did you guys start to do that.
Michael: We started that, I think 2010. So, roughly nine years ago, many years into the business already. And ultimately it was very interesting because of course from a margin standpoint and from a financial profile makes a lot of sense, but more importantly for us is that with all the data that we had and our understanding and our closeness with the consumer, we knew that we had product that we needed that we weren’t getting creative diversity of or maybe we were getting it a little bit too slow.
We really understand our customers and because of our technology and the type of connection with it and we were realising that there the ability to provide better product to the customer and I think it’s important to note that our brand on average cost more, they’re more expensive than our third party distributors because this is premium product and it’s already a premium presence.
So really it’s our best products from the other end, margins of course are consistently getting stronger as well.
Nathan: Is it difficult once you have so many product lines around focus?
Michael: No. I think it’s all cohesive. I think it’s all one aspect of the business. We do have all these different lines but it’s because we understand all of the different needs and the different aesthetics. Our customers definitely shop multi brands for different purposes and I think that was important that the authenticity of having a brand that connects with the right… Both focuses on the brand attributes.
So, with these brands, our customers know that if I am more of a bohemian type of aesthetic than I’m more of Tularosa customer or if I’m looking for a great dress for a special event or just to go out, I know that MVB is a great pitch for that. So, having the multiple aspects and needs of the customer across the different brands, we’re cohesively able to leverage our foundation and our platform to develop all of that product and present it in the right way. So, there’s a little bit multi-faceted aspect to it.
Nathan: I see. When it comes to the next level of growth for you guys, what are trends or what are the things that are exciting you guys for the next wave? Because you guys have had incredible growth thus far and I’d love to hear what’s exciting for you guys.
Mike Mente: We’re really excited, first and foremost just about the core of what we’re doing. We think we built a better experience for our target consumer, youthful women in their 20s and 30s that are looking for premium fashion. We think there’s no better place than Revolve and we think we have a great way to spread our brand message and awareness and continue to find new customers, and we’re really only scratching the surface of our target market. We have less than 3% penetration, so we’re first and foremost focused on that core.
Then we’re also focused on getting better at every single thing that we do, right? All the things we think that we’re really good at, we’re constantly every day trying to get even better at it, right? How can we do a better job marketing? How can we improve our data and technology systems even more. How can me make even better product in our brand division? What exciting opportunities are there? In every… I was going to say every day, but certainly every month, there’s always exciting new stuff going on. The recent launch we had of Song of Style and the Camila Coehlo collaboration that’s coming out. I think there’s just a lot of exciting things in the pipeline in our core, beyond that, expanding international in a bigger way is really exiting to us. We’ve got this huge awareness-
Michael: I can speak to that Mike.
Mike Mente: You want to go?
Michael: I was going to say that the international part is such an interesting part of the future.
Mike Mente: Yeah, because all this marketing that we’re doing, we’re building up a huge audience internationally. 45% of our fans are international, and we haven’t fully captured that. We think the answer is upgrading our experience internationally to make it very comparable to the core US experience. And so that’s another thing we’re really focused on along with again, the core. And growing your own brand, which at this point we consider part of the core. The additional business segments that we have, or in the luxurious segment, super down in the more attainable price segment, really interesting opportunities for us. Then just continue to innovate.
For us, we feel like there’s more opportunities today than ever. We’re in the best position we’ve been ever in our history of the company. We’re just really excited to keep working and keep growing and try to build one of the biggest fashion apparel and tech companies out there.
Nathan: It’s interesting in the sense that, we’ve spoken to a lot of founders and some people get bored, right? They got that 10 year itch and they want to move on to the next thing and it sounds like you guys, this is what you guys are going to do for a long, long time.
Nathan: I was going to say, we have to work towards wrapping up but, if you were to change anything in the course of the growth of the company, would there be anything that you guys wish you had of done sooner or had of done which would help you grow faster?
Mike Mente: It’s a great question. Certainly, I think there’s been a lot of things that we’ve learned over the years and could have done better over the years. I also, and maybe it’s easy to collect that sitting here today where things are certainly going very well for us, but I almost feel like very point in the journey happens for a reason and if you made a mistake or could have done better, it was a learning experience and made you all the more stronger for it.
The recession being a perfect example. When the recession hit in 2008, 2009 we had five years business experience and prior to that, just a year and a half out of college and up until that point, it felt like we couldn’t do anything wrong. We had the golden touch, everything worked. The recession was really important learning for us. I think having to guide the company through more troubled waters and realise that not everything you do is always golden and sometimes things get tough and we came out so much more stronger for it.
If we knew back then what we knew today, I think the recession would have been much easier for us. But, again, I think it was a good experience because it made us who we are today.
Nathan: I see. Awesome, well look, we’ll work towards wrapping up. I’d just like to hear from both of you, Mike and Michael, if there’s anything that you would like to share. I guess parting words of wisdom or any kep principles that you guys live by that you think have been really important for your personal growth as founders or personal journeys as building this incredibly successful company. Anything that you’d like to share, I’d love to hear from each of you and then we can wrap there.
Mike Mente: Definitely. From my experience, the main thing that probably to share for others founders is, it’s going to be a long journey, it’s going to be a lot of hard work, but it’s going to be more rewarding than anything you’ve ever done. I think the key is to constantly work hard, to constantly take the right steps, day after day. And there’s so much chance and luck that’s involved in the short-term right, but you have to keep making the right steps, day after day and over the long run, if you keep making those right steps, you’ll go in the direction you want, even if there will be periods of weeks or months or quarters where it feels like things aren’t working for you. So, I guess just perseverance and hard work and faith in doing the right thing pays off over time.
Nathan: Awesome, thank you Mike. Michael.
Michael: I think there’s a couple things that I feel is very important to us. Don’t believe the hype. Whether it’s your hype or your own success or whether it’s hype of other companies that you think are doing better than you. I think people always tend to talk about how great things are going, but sometimes the real story isn’t really there, and I think ultimately staying true to your vision, staying true to what you believe. It doesn’t mean ignore what’s going on elsewhere by any means and of course to stay educated on everything that’s going on, but it’s of course important to stay focused and disciplined on what your mission is and what your plan is.
The one other thing on a different level, on a more personal level, is that 100% hard work, dedication and intensity to a maximum is very, very important, and I think that message as an entrepreneur of course is no secret, but I think the other aspect that is maybe a little bit not as obvious that I had to learn over time is also, take care of yourself in all aspects of your life. Whether that be your physical health, your mental health, your friendships, and relationships, those are all important as well and ultimately when you’re living well, you’re thinking well, you’re thinking clearly, you’re healthier, you’re more productive over the long run and I think that work as hard as possible but there’s also a time where you have to recharge and refuel and refocus and have some sort of balance in your life. And that’s something I’m still trying to learn, still trying to implement.
Nathan: Yeah, that actually… If it’s cool for you guys, one last question, do you guys believe and I’d love to hear from both of you, Michael and Mike, do you guys believe you can build a billion dollar company off working 40 hours a week?
Michael: I would say no. Or, you could, but it’s just incredibly longer or just pure luck.
Mike Mente: Very difficult. Anythings possible, but wouldn’t recommend it. You’d have to be very lucky and have really strong backers where essentially someone else can take over and do the work for you but someone is going to be working more than 40 hours a week to build a billion dollar company and a lot of the company needs to be.
Nathan: Awesome. Well look, thank you for sharing. It sets a good expectation for what’s to come for everyone who is listening or reading. Awesome. Well look, thank you so much for your time guys, I really appreciate it. Congratulations on all of your success thus far and I really appreciate it and look forward to putting this piece together.
Mike Mente: Great. Thank you.
Michael: Thank you. Enjoyed the conversation very much.
Key Resources From Our Interview With Michael Mente and Mike Karanikolas
- Visit the Revolve website