Philip Jacob wrote an interesting blog post recently called StyleFeeder: a retrospective. Philip was the Founder & CTO of StyleFeeder, which was funded by Highland Capital Partners & Schooner Capital. StyleFeeder was acquired by Time, Inc. last year (Jan 2010).
StyleFeeder is a perfect example of how a startup can achieve great levels of success with a fairly limited amount of resources. The company was started in 2005 and raised $4M in funding in May of 2006. The team included 7 people, plus a half-time office manager. Although the acquisition price was never officially disclosed, a journalist at The Wall Street Journal pegged the deal “well into eight figures.”
Here are some key takeaways from the blog post:
The Pivot…what are you good at?
StyleFeeder started out as a social sharing site or like a “del.icio.us for clothes.” Philip was able to anticipate some of the challenges of this business model in advance and thus, started to invest heavily in their recommendation engine. Philip notes:
“Our investment in innovation and technology stands out still as one of the key differentiators of StyleFeeder. While our competitors invested in other areas, leading edge technology was one zone where we really stood out. You have to do what you were good at… and we were good at building product. So we did that.”
Running Lean, hiring smart
Per above, StyleFeeder was operating with only 7 employees plus a part-time resource. As a company, they instilled a “no passengers” rule which Philip describes in his post:
“I had a “no passengers” hiring rule which basically meant that everyone has to be both an individual contributor, able to do their job without support and capable of handling a team (or contractors, or vendors, etc.). We divided our efforts and learned to trust each other to get the job done.”
Be patient… stay focused and learn
Over the course of time, many different companies expressed interested in acquiring StyleFeeder. I’m sure it is a challenge for most entrepreneurs to turn down a potential acquisition that could be life changing, but Philip talks about this experience and how he stayed focused… and learned from each situation… which ultimately led to a very positive outcome.
“We received offers from four different companies (three of which are public companies); I won’t disclose who these companies are as I intend to honor my NDAs. I learned a lot from this experience: the cost of distraction, the importance of a simple deal structure, what matters to a buyer, how to build leverage and so on. Turning down a written offer from the CEO of a public company is not a bubbly fun experience, especially when that offer could set you up pretty well in life. However, it pays to be patient and cold-blooded in analyzing deal terms. I had to learn that. It didn’t come naturally at first.”
As a next generation eCommerce company, StyleFeeder was a unique company in the Boston area a few years ago, especially one that was focused on the fashion inudstry. We are starting to see more companies pop up in Boston that intersect fashion with eCommerce which is great to see. Companies include: Rue La La, Gemvara, Krush, & Open Runway. Plus, we can’t forget Daily Grommet & Fashion Playtes, who also overlap.
Philip announced that he is moving on from Time, Inc., so I can’t wait to see what he is up to next…