Do you have a billion-dollar idea? The founders of Gilt Groupe explain how they changed the rules of retail.
Scaling a business is akin to balancing a set of fine china while walking a tight rope; it's a fragile operation requiring precision and skill. It must be carefully planned and maneuvered and the cost of one wrong move may be small--or it could be devastating.
Yet businesses across the globe are successfully traversing this virtual tight-rope by combining ingenuity, creativity, calculated risk, and a lot of dedicated, hard work. And one thing for certain is that these entrepreneurs don't do it alone. They surround themselves with successful people, talented employees, and experts who believe in them--such as coaches, mentors and peers.
"If you don't have a great team in the midst of hyper-growth," Alexis Maybank, co-founder of Gilt Groupe, tells me. "your customer demand can outpace what you can handle and your business will grind to a halt."
Gilt Groupe took only four years to take the fashionista crowd by storm, revolutionize both the fashion and e-commerce industries, attract five million members, and earn a $1 billion valuation. This members-only website brings the rush of shopping at exclusive New York City designer sample sales to the Internet. The idea caught on like wildfire--but the task of getting the concept off the ground was no picnic.
"Our first task was to convince designer brands to partner with us and sell in a way that was completely unfamiliar and unconventional, both to them and to the marketplace," says Gilt co-founder Alexandra Wilkis Wilson.
Alexis and Alexandra, friends since attending Harvard Business School together, knew that this would be a challenge. Nonetheless they succeeded in bringing these impressive brands on board and built a website that would transform the typically leisurely pace of shopping into a competitive sport. At Gilt.com members love vying for luxury brand items designed by the likes of Valentino, Christian Louboutin and Zac Posen, along with many other formerly "untouchable" designer labels. The fashion-loving duo swiftly brought their concept to market, blending their unique skills and weaknesses to manage the demand of suppliers, engineers, marketers and potential investors.
"I thought of the hard work as a combination of drive and learning on the job," says Wilkis Wilson. "We were all learning all the time. But once we paved a path and created a system it become clear that I needed to delegate and trust our team that they could and would do their jobs well."
Delegating wasn't easy for either of these young entrepreneurs. Not yet 30 years old when they founded Gilt, trusting others to manage critical details didn't come naturally.
"You have to hire well and train well," Wilkis Wilson says. "I generally conducted first-time interviews in a local café because our roles as merchants were externally facing roles and I wanted to make sure that candidates felt comfortable in a more social environment; that they carried themselves with poise."
Gilt's first offices were modest and the five co-founders sat shoulder-to-shoulder in their cozy headquarters. Maybank and Wilkis Wilson knew that they would have to find employees who exhibited entrepreneurial energy so they would understand the necessity of watching every penny. They also understood the importance of hiring diverse personalities and avoiding the temptation to hire people just like them.
"It is key that you have the bright-eyed optimists on board as well as sage individuals who bring experience to the table," says Wilkis Wilson. "Most business owner's focus only on the skill set of their candidates but you must be sure to have a diverse group so that you get a more diverse outcome." Maybank and Wilkis Wilson used intuition and science to achieve this goal.
When it became clear that we had to grow our team we used the The Myers-Briggs assessment tool to better understand the team we had already hired," says Maybank. "It showed us which personalities were missing and that we had to bring on board to get the diverse team we knew we needed. In the past we had always hired people just like ourselves and who were oriented in the world in the same way; we had to fill in the gaps."
To begin the process, Maybank would ask candidates questions like, "how do you make decisions, how do you learn, and how do you communicate to others"? And both women stress the importance of getting opinions from those whose input you value.
"Get a broad group involved in the interviewing process for a best fit candidate," she says. "Our team always gave us great feedback."
With a team of eager and talented individuals on board, Maybank, Wilkis Wilson, and the other co-founders, knew they had to strengthen the focus on investor relationships for their dream company to survive. Investors always look at the track record of the people involved in an upstart because there is not much else to base their research on. Many investors like to see a history of success, drive, ambition, leadership potential, integrity and the ability to motivate others. Both women had a solid track record in these areas, as well as an Ivy League education in place, so they took inventory of the other areas that investors would surely investigate.
Once satisfied that their answers would be attractive to investors, Maybank and Wilkis Wilson approached investors--only three weeks before launch.
Today, Gilt Groupe has expanded into new categories of what it calls "accessible luxuries," like housewares, travel, and menswear.
"We received clear communication from our members that they were not only interested in fashion and decorative, items but that they lived, or aspired to live, a luxury lifestyle. This includes travel, local experiences, food and wine," says Wilkis Wilson. "We incorporated this feedback into our business offerings; listening to your customer base is critical."
And this move certainly made investors quite happy. The site hosts more than 22 sales per day (up from three a week at the onset) and caters to more than five million members. One fun example of a luxury item that members loved is the $200,000 villa rental in the Bahamas, which sold on Gilt's Jetsetter area. But not to worry--the two-story penthouse loft at Thompson LES is still available at $1099 per night. Any takers?
For more insights, fun stories and ideas for growth, download my conversation with Alexandra Wilkis Wilson. We will be chatting today, April 16 on The Million Dollar Mindset.