In a profile/opinion piece last year, I introduced a then 1-year-old fashion startup called Everlane with a beautifully twisted brand that appeals to the brand-less seekers of the tech world. Instead of charging $50 for a quality t-shirt, the company “cuts out the middle man” by using in-house designers and direct relationships with quality manufacturers.
I had my beef with the logic but thought the outcome was pure gold and even went as far as wishing I was an investor with a shot at getting a stake in the company.
Alas, proving to be the shrewdest man in fashion AND tech, CEO Michael Preysman has decided to forgo venture capital investing all together and crowdfund Everlane’s expansion instead.
Modeled after a Kickstarter campaign, Everlane launched #CrowdFundCanada yesterday morning to help “raise $100k to cover the costs of growth.” The funding process essentially allows Canadian customers to pre-order their clothes with “credit” (kind of like a gift card) and perks to boot. It’s a call for die-hard fans to get behind the company’s needs. Almost like strategic investors.
But the campaign really has less to do with raising funding and more to do with demand generation and metrics. I see the genius of it much quicker this time, but that familiar “mind-fuck” feeling that I described last year is already starting to set in.
Much like the “push to pull” advertising we talked about this morning with TripleLift, Everlane is allowing their customers to set the demand for their product in the new market. Instead of producing a costly marketing campaign and trying to predict how much product they will need for the new market, the “kickstarter” campaign creates a free-range and self-driving platform.
Sure enough, just 24 hours into the 17 day campaign, Everlane has already raised $50k or half of the projected goal. While you might think that’s great for sales to go so far over the predictions, it’s actually a signal that there could have been a disaster.
Imagine if Everlane had only ordered enough product for the expected $100k of sales and instead got hit with what could be 10 times the demand? Their launch in Canada would have been completely botched. A bigger disaster yet would of course be the opposite case where $100k of product is ordered but only $10k is purchased.
Both are recipes for losing a great amount of money which Preysman says a small and young startup just can’t afford to lose.
More fashion brands should consider the crowd funding/preorder model.