There’s a “new” kid on the block, and his name is Everlane.
And by “new” I actually mean a year old. The fashtech e-commerce startup raised a $1.1M seed round in April of last year, but it seems like just recently the company has been getting new attention. It must be time for Series A…
Like most fashtech e-commerce sites, Everlane comes with a twist. According to their landing page, Everlane “creates the finest luxury accessories and essentials under $100,” but a recent speech by founder Michael Preysman at SFFT’s May event in San Francisco shows that they have a lot more up their sleeve. (see what I did there?)
Everlane isn’t just selling clothes for cheap. They’re selling “luxury” clothes for cheap. They’re selling the clothes as their own brand. And their brand is cheap luxury clothes. Instead of paying fashion designers, Preysman takes “inspiration” from fashion trends and puts his money into hiring graphic designers to show how cheap the process is. And then he calls it “disruptive.”
But is it disruptive?
Everlane’s pitch is that fashion can sell for less when sold online (true) and without “Retail Middlemen” (also true). But what Preysman doesn’t understand (admittedly) is WHY the fashion industry has those roles. So here is a lesson on fashion:
The fashion industry consists of four sectors: Manufacturing, Design, Retail, and Marketing/Media. In Everlane’s model, the manufacturing is the same. The designs are essentially being copied (and particularly in the case of t-shirts, I agree with Johanna Blakley on this being ok). The retail is done online instead of in-store (nothing novel). But the “middlemen” who does the branding & marketing has been removed.
So what would happen if 100 other startups copied this model? Well, Everlane would need to compete with the abundance of cheap luxury clothes now in the market. Fashion brands compete with their designs and branding. Design and branding costs money. That has to be made up for in the costs of clothes. The clothes then need to be sold for more. Then they end up costing what they do everywhere else.
And that’s why I wouldn’t want to compete with Everlane.
Stepping into the market with them inherently means diluting the viability of cheap luxury clothes. That means it isn’t disruptive or a sustainable model. It is ignorant and ill-informed; the concoction of a geek who does not value, much less understand, the unique importance of a fashion brand.
But oh, good God, would I fund them!
If I was randomly chosen to be an associate for a VC, perhaps as a fashion expert, and had the opportunity to hear Everlane’s pitch, I can see myself experiencing a total mind fuck. If I was in that situation, I would have to look at 1) the execution of the company, 2) the profitability of the business model and 3) the target demographic and the company’s approach to said demographic.
VCs probably wouldn’t know or understand the aforementioned infliction that I see. But sitting there in a board room, all of the factors would clash in my head and instead of going on an educational tirade, all I would say is “fund them.”
Everlane might not be disruptive, but it sure as hell is targeting a demographic. Like Preysman himself, there is a huge demographic out there of people who like luxury things but don’t want a brand plastered on their clothes. I have spoken relentlessly about the disparity between what Bay Area consumers want and what Bay Area fashion designers are creating. The reality is that Everlane is a brand that not only creates clothes that people want, but has created a brand uniquely suited for the “average Joe’s” all over the world.
Everlane doesn’t need to sell clothes for cheap. That’s just part of their marketing tactic.
It’s a total mind-fuck, but Everlane is literally a brand that fights against fashion brands, and in doing so becomes a great brand itself. The business model is uniquely disguised as well. It plays on the ignorance of VCs just as the brand plays on the ignorance of geeky consumers. And that’s why I wouldn’t have said a damn word if I was in that board room. It would be like telling kids that they were unknowingly eating broccoli.
There should be more companies like Everlane.
Maybe there shouldn’t be more companies that use Everlane’s business model, but there is a HUGE potential for companies to be inspired by Everlane’s “anti-brand” brand. When Facebook went for IPO, a Silicon Valley folklore story started traveling about how an Oracle (?) executive once went from office to office with a bat threatening to smash the windows of any sports car that drove into the company parking lot.
Silicon Valley and a new class of wealthy Americans want nice luxury things that don’t flaunt money. If someone made a car that was like a Porsche on the inside and a Prius on the outside, they would EAT THAT SHIT UP.
And that’s what an Everlane shirt is; a quality fashion product in disguise.