Julie Wainwright helped pioneer e-commerce in 1997 as the CEO of Reel.com; then again two years later as CEO of Pets.com. But it wasn’t until 2011 that Wainwright struck out on her own for the first time. With less than $100,000 from savings and a few angel investors, she launched The RealReal, a website that lets shoppers buy expert-authenticated consignment luxury goods.
In its first year the site had $500,000 in sales. This year, The RealReal, which has raised $22 million in venture funding, is on track to reach sales of $100 million. It receives and ships 30,000 items a month to a member base of two million people; 80 percent of items sell within the first three days. The company has two warehouses in San Francisco and New York, and just signed leases on two more in New Jersey and Los Angeles.
The site has now expanded from clothes, shoes, and accessories to art as well, and is currently testing home items. Everything is authenticated by curators, brand authenticators, gemologists, horologists (watch experts) and other staff experts. Twenty percent of the items still have tags on them.
We spoke to Wainwright about what it’s been like to build a business of her own in her fifties, and how her company is changing the way people shop.
You told Businessweek you’re the only person over 50 to get funded in the last three years…
Actually I was just at the recode.net launch, founded by Kara Swisher and Walt Mossberg, and Walt told me he’s 67. So I told him, you win oldest-person-getting-funded!
The people giving out capital are younger people; they tend to be just out of business school. Very few of the VCs have any operational experience and almost none of them have ever built their own business. Consequently they're pretty young and they tend to fund people that look like them because it's a comfort level. And when I say “looks like them,” that tends to be younger men.
Very few people, especially in the tech world…get funded over the age of 35. There are all kinds of inherent biases built in, but the truth is that's not going to change for a long time. It’s harder for women to get financed and it's harder for older women, in particular, to get financed; but it obviously can happen because I got funded.
How do you overcome those biases?
I think what you do is you build a really good business and you get turned down a lot. You don't take it personally and just keep going. If you're going to build a business you have to believe in what you're going to do more than anyone else, and you have to push and make it happen and be gracious when you get turned down. It could be anything. The guy's wife didn't like the site. Or, he made an investment in something else that failed so doesn’t have any street cred in his partnership right now. But maybe in eight years he's back. You never know what happens.
I would say your advantage if you're older is: you've done it before; you're not going to make the same mistakes someone else will. Hopefully you don’t take things personally. And when you've decided to do the business, you have more determination than you've ever had in your whole life. You're just like, `I'm going to make this happen come hell or high water, and that's it!’ And that force, ultimately, will make you successful.
I think it's a really fun time to start a business because you don't have other issues like when you're in your 20s or 30s. You're the person you are when you're in your 50s. You are the person you're going to become, and that's a very freeing, fun time to do some extraordinary things.
How is it different working in start-ups now versus the 1.0 days?
It was the wild, wild West [in the 1990s]! The Internet was brand new; it was moving from an educational information exchange to, “Can we build businesses on this backbone?” So there were no tools, there was no infrastructure, security was a bigger issue than it is now…people didn’t have devices; your phone was just your phone! Now it's a proven backbone for building businesses, and it’s cluttered with good and bad ideas. Now the challenge is to build a business that’s unique.
And what’s different personally about running your own company?
Before, I was a hired gun; I was the CEO who came in and worked with the founders and moved their company ahead. That was always my role. I had not started my own company and was just dying to do it. I love commerce, e-commerce and I love shopping. I prefer to shop online. I actually believe that most e-commerce needs are met by Amazon and they're going to do it better, faster and cheaper than anyone else.
So, for me, I was thinking: “What can I do in the commerce space that's really exciting, that I'd love to do every single day, that Amazon can't do easily?” And then a light bulb went on and I said that's it. Then I ran fast and hard to make it happen.
What’s different about The RealReal versus eBay or another consignment site? One of your top sellers who switched over from eBay said she loves it and has made $90,000 in five months, but also mentioned that The RealReal takes a higher percentage than eBay.
Ebay will pay you more. If you do it yourself you're going to make up to 80 percent, sometimes 82 percent, and the most you can make with us is 70 percent. But the difference is you don't have to take returns, deal with customers, do chargebacks or ship. After your first consignment, we'll even pay for shipping to us.
Think of what she had to do before: she had to take pictures, post everything; she probably had an auction price instead of a full price so had to go back and forth on the prices, then deal with the credit card processing and take returns… she really was her own business front to back, and now she's a product sourcer and we run the business aspect of it for her. In the end, she's making a lot more money and I think she's having a lot more fun.
Also our product mix is different than eBay's. It really is more of a Sotheby's or Christie's that also does fashion. And we will give you the brands we sell and the price points we sell at before you start selling with us (with the exception of fine jewelry and watches). We are really transparent and will give all that info to you. And the other thing is our items sell much faster. They sell so quickly that it makes people's heads spin. When people come from eBay, people have something listed for 60-70 days, and it may or may not sell. With us, 80 percent of the things sell within the first three days.
How are you changing consumers’ buying habits?
[For example,] I'm buying and selling things on a regular basis in a way that I didn't think I would be. I still buy full retail, but I buy things I know have the best resale value, and then I supplement it and consign, wear, and reconsign on a regular basis.
Let's say my budget for the year for clothing was $12,000. Now I can actually spend less and look better because I'm buying two or three really gorgeous things retail, and everything else I'm buying consignment and then I reconsign and make money off of it. I'll buy on our site and will know I can resell it. And when I'm out shopping, I will tend to shop the designer floor, and know the resale value. Because, there's plenty of items in the store that are $600 or more, but they have no resale value, so now I’m like, “Why would I do that when, if I spend $900 I can resell it for $600 later?”
And I'm not alone. People who have been using the site for a couple years have changed their retail buying behavior. They tend to buy brands they know have resale value, and then they buy and reconsign on a regular basis. It just changes your perspective about your closet. It's very interesting to me: there's this whole economy even on reselling your phone, and yet people will spend thousands on their handbag or a dress and won't resell it; won't even think about it. We're really providing liquidity where there wasn't liquidity before.
What advice would you give to an entrepreneur wanting to start an e-commerce or fashion business today?
Do something that Amazon can’t do better or more efficiently. For fashion — clearly define your target market, your customer, your competition and do something different than the competition that appeals to the customer base. Have a unique and consistent point of view. Start with one type of item and expand from that.