Do founders need a little more love? When do you know if you’ve backed the wrong horse? And how can you build the ‘IKEA of tights’?
These were just some of the questions posed at Piper’s latest Founders’ Collective, a quarterly gathering of entrepreneurs each focused on a different consumer sector. Three speakers representing Piper’s three stages of growth (£7, £17, and £70m) shared their learnings with 15 entrepreneurs from a range of lifestyle, fashion and homeware brands.
Julian Granville, former CEO and now Chairman of two of Piper’s investments past and present, Boden (£300m+ turnover) and affordable luxury jewellery brand Monica Vinader (£40m+), gave tips on scaling a business. He explained the importance of focus and of constantly thinking ‘what is the size of the prize?’. Complexity, he argued, is a nightmare that can stifle growth. ‘Simplicity and scale are the Holy Grail.’
With the traditional retail model more threatened than ever, he insisted stores play an essential role, since 80% of clothing is still bought in shops – ‘even if there is a shift of 10-15% to online in the next decade, stores will still be incredibly important’. After resisting retail for a long time, Boden has recently started opening its own stores, first on King’s Road followed by Westfield – ‘it’s difficult to build a really big business without stores. Stores alongside concessions in John Lewis have led to impressive growth in orders on their own website – ‘if your core customer is a John Lewis shopper, then opening next to a John Lewis works really well’. He thinks that retailers should aim for no more than 30-40 carefully selected stores nationally – ‘with Monica Vinader, stores are very important as both a customer acquisition tool, but also as a driver of loyalty and gifting purchases.’
He explained that much of a brand’s unique qualities flows directly from its founder, but that as a company scales, its driving force can sometimes become marginalised. ‘Entrepreneurs can be made to feel they’re bad dogs but the entrepreneurial spirit and desire to question things all the time are absolutely critical,’ he said.
Aron Gelbard, founder and CEO of flower delivery brand Bloom & Wild, also shared his six learnings in growing his brand:
1) Don’t force the wrong product onto your customers: when we started Bloom & Wild, we thought we’d be a subscription service for flowers. Our initial customers tended to set up these subscriptions for other recipients than themselves, and in many cases cancelled after the first delivery. We learned from this and rapidly transitioned our focus to gifting, where customers are less well served by existing options such as supermarkets, and are also less price sensitive.
2) Own the technology: as non-technical co-founders, we massively underestimated the importance of technology. We budgeted just 10% of our initial funds to get our website built, and had no idea how much it would cost to continue to develop it into an industry-leading customer experience and platform. As soon as we raised external funding, we hired great developers in-house and started rebuilding from scratch. Today our website converts at several times the industry average as a result of our investment in this area.
3) Invest in personalisation: we have learned to harness the data that our customers share with us here and use it to show different products to different customers, in a different order, has increased customer satisfaction and allowed us to increase internally important metrics like conversion rate and revenue per visit
4) Start international early: we launched our first international markets – Germany, France and Ireland in 2017. We did this with a cost-efficient model – no international offices, just a group of German and French colleagues based here in London.
5) View logistics as an opportunity: we have invested our people’s time into deep relationship building and technological integrations with our carrier partners like Royal Mail. We have data on their performance by day by postcode and use this to make decisions about cut-off times, insourcing, proactive resending when original flowers won’t arrive on time – all of these tools drive customer satisfaction and reduce operating costs.
6) Use data to scale marketing: we target and run our business to a specific ratio of customer lifetime value for each pound we invest into acquisition marketing. We’ve built data mining and visualisation systems to be able to get a real time read on projected lifetime value for every marketing activity we are running. Our aim is to shift towards a higher proportion of (lower marketing cost) repeat orders, which in turn will drive our profitability.
Finally, there were lessons from one of the world’s most innovative brands, IKEA. Toby Darbyshire co-founded Engensa, a solar power company, which became one of Britain’s biggest home energy companies before being acquired to form the basis of a groundbreaking project with IKEA. Darbyshire told how the experience gave him a fascinating insight into the inner workings of IKEA and how the retail giant transformed our shopping habits through a highly differentiated view of the world and a ruthless sense of innovation – its store design, its counter-intuitive ‘slow’ 3 year product manufacturing cycles, and how it passes on all margin gains to consumers that are typically inflation-beating.
Having sold Engensa, Darbyshire turned his attention elsewhere, asking himself the (not immediately obvious) question: ‘How could we build the IKEA of tights and do it online?’. He spoke about how Heist is focused on promoting real femininity and not the illusory version created by the out-dated underwear industry. Toby spoke about his obsessive focus on leveraging semiotics to encourage consumers to make emotional not functional or price-driven purchases. As such, Heist’s marketing is constantly trying to push the boundaries – ‘all of our tube marketing campaigns are designed to get press writing about it. Our ad showing a woman’s nude back was censored by TfL, but we leveraged the ban and the story got picked up in the press. Guys also loved our tube ad of a banana in tights’. Only born in 2015, Heist now sells a pair of tights every 15 seconds.
Alongside our annual programme of consumer research, our Founders’ Collective and GeekMeet events are vital in helping our partner entrepreneurs and management teams explore and evaluate the changing ways in which brands leverage language, marketing, logistics and online/offline experiences to create brands consumers truly love.