The womenswear line Nasty Gal filed for Chapter 11 bankruptcy in November 2016, the same day half the nation mourned the evaporated hope of a first female presidency. I know I’m not alone in wondering whether founder and self-proclaimed Girlboss Sophia Amoruso can still claim her title now. I believe the answer is yes, but ultimately that’s up to her.
The sale of Nasty Gal to Boohoo, their sole bidder, was confirmed last week, and over the weekend Amoruso and crew cleaned out the Nasty Gal offices in Downtown Los Angeles. Amoruso shared it all on Instagram, beginning with an image of herself in her office bidding farewell to her company. Via fleeting posts to her Story, she added a few nostalgic images and shoutouts to team members. She closed the story with a note that said, “There’s more, but I had to gush. We paved the way for copycats who eventually ate our lunch. It was a lot of fun.”
Amoruso now has an opportunity to show how we can all learn from setbacks – particularly that business is not about short-term gains and building a brand is, if you are doing it right, a lifetime endeavor. Having followed the rise and fall of Nasty Gal, and its leader over the years, I have some thoughts on how the writing has been on the wall for a while. As the founder of Little Hippie, these are issues I think about a lot.
While e-commerce has traditionally been a tepid market for investment, in recent years, venture capital firms have poured piles of cash into a handful of retail darlings like Nasty Gal that looked like they might be able to scale a consumer business within the startup format. Examples include: ModCloth ($78.7M), Bonobos ($127M + $100M currently in talks), and the lesser known, but most significant to me, Lolly Wolly Doodle ($21.7M, based on their success selling children’s clothing through Facebook marketing and on demand manufacturing).
Amoruso and company are a sign that applying the startup model to fashion retail is not as simple as that formula. Bonobos, on the other hand, though still on shaky ground, may prove itself to be exceptional, in large part because of their high quality design and manufacturing, key values Nasty Gal’s customers felt they were not receiving in recent years. As much as Nasty Gal was built on social media customer acquisition, social media also provided an outlet for those same customers to express their frustration when the brand declined. It doesn’t take long to find early brand loyalists expressing disappointment on Nasty Gal’s social media.
The early days of social media marketing looked promising for millennial entrepreneurs as social networks built their user bases in part by encouraging brands to use their new networks as free promotion, and Amoruso is well known for having built her business on that premise. When this realm of digital marketing became pay to play, the landscape shifted dramatically. To have expected those services to remain free was naive, and the truth is they offer a considerable value to business with the budgets to pay for them.
While social media does indeed offer a seemingly endless array of potential customers to target your ads to, customer acquisition is ultimately a lot more expensive in retail than it is for subscription services, which is typically how a tech startup would offer their products. In retail, unless a customer returns for repeat purchasing, there’s little chance of the cost of acquisition being offset enough to continue the kind of rapid growth investors expect.
The unfortunate downside for the competitive nature of the industry is that an economy has emerged where well-funded companies are able to project an image of success through vanity metrics without being profitable, well-structured companies. They use strategic discounting and incentive programs supported by their funding rounds, chasing customer acquisition with short term losses in the name of long term customer loyalty gains. As it turns out, these are not so easy to guarantee.
Meanwhile, smaller retail companies without such funding are not able to offer the same discounts; especially the free shipping and lightning fast turn around. Furthermore, they don’t have the sizable marketing budgets of funded companies that in turn generate the kind of sales figures that get the attention of the media, regardless of bottom line. Sales may more often go to the giant, whose credibility has been bolstered by finance and media, but not real proof of return. The question then becomes who’s eating whose lunch?
There are plenty of things I admire about Sophia Amoruso, not least of which is that she inspired an entire generation of young women to believe, “If she can do it, so can I.” That’s huge. When I started my business fifteen years ago a public figure like her did not exist. For years, I was the only woman I knew who founded her own business. I suspect the same was also true for her.
Amoruso now has an opportunity to provide a roadmap for recovery from failure, which is also huge. Imagine if this generation of entrepreneurial women she helped to create can learn from someone who failed before them? They may avoid failure themselves, or at least have a different understanding of what failure means.
As Adele showed us at this year’s Grammys, it is ok to start over when you didn’t get it right the first time. Men and women alike are benefiting by more women taking professional initiative, and it is important for them to know that it’s ok to get it wrong sometimes.
My trajectory as an entrepreneur shares some similarities with Amoruso’s. Like her, I started my business at 23 without a clear idea of where it was heading, knowing mostly that I couldn’t see myself in a traditional job. Perhaps our biggest difference is that she used social media to build her business from the beginning, but I didn’t begin using it until the Christmas season of 2013 over a decade after starting my business. Being six years older than her, I started my business before the rise of social media, and I built it with old-fashioned word-of-mouth, traveling around to music festivals where I set up booths to sell my products and hand out postcards encouraging people to visit my website.
Using social media for my business eventually led me to become aware of Amoruso, and I read her book shortly after it came out. I found the book to be dumbed down, but I was nonetheless struck by the many similarities to my own story and, like many other women, I saw myself in her.
Of course I was already in the retail space at the time, but I didn’t know anything about the world of venture capital back then. Studying Nasty Gal taught me how I could do it bigger and made me realize that I could pursue funding should I so desire. Oddly, I didn’t learn much of this from following Amoruso’s social media, because she doesn’t really ever talk about it. Although eventually, as her company began to unravel, she did start making some slight references to her VC experiences in conversations with the women she interviewed for her Girlboss podcast.
In some cases, I learned what not to do from Amoruso, like when I attended the Nasty Galaxy book release in Williamsburg, Brooklyn last October. I was wholly unimpressed. Sophia never looked directly at the audience, was cagey when answering questions, and if she did greet the audience and thank them for being there, it was not memorable. She and her interviewer, a woman who has held some impressive positions, acted like catty teenagers; referring to inside jokes, talking about a party they were going to afterwards to which the audience was not invited, and drinking Mezcal on stage. If that’s a new version of feminist leadership I should look up to as role models, it’s a disappointing image.
By Amoruso’s own admission, public speaking is not her strength, and that’s understandable. Public speaking is hard! Scarier than death! However, Sophia is well past the point in her career where she can coyly claim that excuse. Perhaps that’s the true meaning of Girlboss – being in a position of influence but acting like a girl instead of an adult. If so, should we keep using the term to set the bar for entrepreneurial female millennials? I would think not.
I don’t know Amoruso, so I can only speculate as to what she was feeling at any point, but my guess is that she outgrew the demographic that overwhelmingly defined her company and didn’t know what to do about it.
There was a real divergence in the Girlboss culture in regards to women embracing their opportunities to work according to their own rules, to manifest their dreams and businesses, and the image presented by the clothes on the Nasty Gal rack.
Amoruso became celebrated as the Cinderella of tech, thanks in part to an origin story that includes dumpster diving. The press loved her, and Forbes went so far as to put her on the cover of their Richest Self Made Women issue in the summer of 2016, based on valuations that the Nasty Gal bankruptcy filings proved were far from accurate.
Amoruso was also celebrated for being a master of social media, yet she never really showed herself working. The more attention she got in that space, the more she catered to her image, showing herself getting glammed up for photoshoots and attending events. What I most wanted to know was that this woman who built this business was still hustling really hard at it, but she didn’t portray that life.
What’s more, you’d be hard-pressed to find any clothes that you could wear to work on NastyGal.com. They sold party clothes for party girls, and as Sophia matured in to her 30’s, my next guess is she felt a little bit lost in the storyline that Nasty Gal was conveying; maybe it did not fit her anymore.
It is very important to me that my business continue to adapt to my interests as they arise. Little Hippie has grown with me and will continue to do so as long as I maintain that as a priority. Keeping that in sync is crucial to long term success and difficult to do when there are big investors involved.
I get to make decisions when and if I want to without such ties, but on the flip side, I do not have the stability of funding. When Amoruso took on venture capital she would have inevitably lost that kind of independent control, regardless of the fact that she retained majority ownership. I think this is a big thing that a lot of people are overlooking when they start to condemn her for the track her business took in the last few years.
Venture capital creates the expectation of impossibly high, and very quick, returns. As a result, Nasty Gal in recent years began doing things that many considered questionable, and conflicts with former employees began to sprout up. To pin the weight of all of that on Amoruso is a bit unkind, but not entirely unreasonable. My impression is once she became Girlboss, she was not really boss at Nasty Gal anymore.
In fact, it has been since Nasty Gal failed that I have been most impressed with Amoruso. She was smart to take a step back from the public for a minute before she started saying much. She was gracious and grateful about what was happening. She displayed vulnerability her followers hadn’t seen in a long time, and she stopped acting like that girl you love to hate. In short, she got real again.
After a relatively brief pause from public life, Amoruso came back ready to prove that she would not be defeated. To make sweeping judgments from afar, condemning her as a sham Girlboss simply because a company she started that had been taken over by investors with unrealistic expectations had filed for bankruptcy – as many other companies have done – is to lose sight of Amoruso’s potential for future success.
To stand out and to succeed means to never stop creating. My wish for Amoruso is that in her next endeavor, she builds on the value of originality. This was the ingredient most lacking in Nasty Gal once it was funded by venture capital. There is nothing in this world that has more professional value in this industry than creativity. It is the one thing that can’t be grown, manufactured or bought. It was Amoruso’s innovation and unique sense of style that brought her to prominence in the first place. Surely she has more of it.
As for whether or not she can still use her Girlboss title, Amoruso is going to have to get over her imposter syndrome to do so. With her inaugural Girlboss Rally fast approaching, which I am looking forward to attending, she has a perfect opportunity to show the world she is ready to step into her big girl pantsuit. I know she can do it, and I’m excited to continue learning from her as she embarks on her next entrepreneurial journey.