In the fashion world, a vintage Chanel jacket typically resides worlds away from mesh garter leggings, but Sophia Amoruso has built a thriving e-commerce company by catering to customers whose cravings run that gamut. Nasty Gal, which started out auctioning vintage items on eBay, now sells unselfconsciously sexy clothing to 18 to 24-year-old women and reportedly racked up sales of over $100 million last year (the number has been widely reported, but Amoruso would not confirm it).
"I never worked in fashion or in a clothing store, but I wore vintage clothing and I was savvy with the Internet," says Amoruso. But she found eBay to be "a semi-punitive marketplace," since it prohibited social media links, and often included links to competitors' goods on the same page as her own offerings. "I was building a brand and I didn’t have control over it," she says. She describes Nasty Gal, named after a song by funk diva Betty Davis, as "my idea of what a cool girl looks like." Think Victoria’s Secret meets Urban Outfitters.
In 2007, Amoruso left eBay, launched her own website and redirected Nasty Gal’s growing base of MySpace fans to her new home on the Web. She’d hit every thrift store in the Bay Area, come back with a carload of clothing, styled it, photographed it on her friends, then put it online. Traffic increased, and then the economics of selling vintage clothing online caught up with her. "The margin on vintage is high, but when it’s gone, it’s gone," she says. "It’s a lot of work to sell one thing on the Internet." And so she began selling non-vintage items, sourcing them from vendors in L.A. and curating them carefully to stay true to the Nasty Gal aesthetic.
Young women flocked to the brand, giving it nearly overnight cult status. Revenues skyrocketed from a mere $223,000 in 2008 to almost $23 million in 2011, earning Nasty Gal the No. 11 spot on the Inc. 5000 list of fastest growing, private companies last year. And Amoruso suddenly found herself at the helm of an e-tail powerhouse. "The challenges we have today, I never could have predicted a year ago," she says. "I’m showing up every month to an entirely different business."
Enter Danny Rimer of Index Ventures, who tried for eighteen months to get Amoruso on the phone. Index has investments in fashion companies such as Net-A-Porter, and ASOS, a large European brand, and Rimer thought that Nasty Gal had the potential to be just as big. When he finally landed a meeting with Amoruso in the beginning of 2012, he convinced her that Index could help her do just that. "We were profitable and didn’t need the money," she says. But Rimer’s pedigree and the promise of a solid growth strategy convinced her to give up some equity for an initial $9 million from Index. In August of 2012, Index put in another whopping $40 million. "The chemistry between Sophia and us just got better and better," says Rimer. "The demand and obsession that girls have for Nasty Gal turned out to be true and growing. There’s no reason why [the company] shouldn’t be as big as ASOS one day."
For her part, Amoruso still seems a bit stunned by Nasty Gal’s trajectory. She now has a team of professional managers, 280 full-time employees, and a 500,000-square-foot fulfillment center in Kentucky. The Los Angeles-based company is also now manufacturing its own brand of clothing, which she hopes will one day account for a significant percentage of the company’s revenues. What’s the most important thing she’s learned through it all? "That I can keep a job," she jokes. "And that I don’t think this is ever going to be finished." Nonetheless, Nasty Gal is a pretty impressive work in progress.
Unselfconsciously Sexy Style
With $23 million in revenue in 2011, a three-year growth rate of 10,160%, and over $40 million in investments, Nasty Gal's Sophia Amoruso is feeling lucky.