Lessons for everyone from the CEO of a multimillion lingerie business
Lessons for everyone from the CEO of multimillion lingerie business.
“Just find something and do it better,” says Morgan Hermand-Waiche the Founder and CEO of Adore Me, a disruptive e-commerce company revolutionizing the lingerie industry. Since launch four years ago, it has grown to generate nearly $100 million dollars of annual revenue and is poised to take on Victoria Secret for a considerable share of the lingerie market.
The business is ranked second on the Inc. 5000 list of fastest-growing companies in NYC. With around $11.5M raised from VCs and private investors, Morgan leads a team of 100 employees across the US and Europe. How did it get this far so fast? At the April Startup Grind New York City, held at Rise New York, the audience got to hear how Morgan is making millions on helping women get the perfect fit.
Ideation
“I was never attached to the idea of lingerie; I was attached to the idea that I would make something for myself,” says Herman.
Back when he was vetting ideas he went through a process of whittling down thirty business concepts, and eventually he landed on Adore Me. How did he filter the ideas? As he was a former McKinsey employee, he applied the McKinsey model of analysis to the evaluate the business. This quantitative analysis weighed many criteria like margin structure, market size, and more.
“I would look at industries and figure out how they worked, I put all these ideas into a funnel and evaluated them one-by-one. How did lingerie get into the mix? It was a girlfriend; she inspired the idea. As I was evaluating all the ideas, she recommended I did this for the lingerie category. We went shopping, and it was expensive, it needed improvement. I researched for a few months and then I said I think I have a winner. Now, here I am on a mission to save the lingerie industry.”
Improving the Model
“Many people say they cannot come up with an idea for their startup. But, it’s not about the idea, it’s about how you do it. The idea is heavily overrated. It’s about doing something better than others, or innovating. If you do not have an idea just find something and do it better.”
Hermand admits he had never ordered anything online before starting this company. Despite this small detail, he applied a data-driven approach to the category, worked on a minimal viable product while getting an MBA at Harvard, then after graduation he was off to the races. “It’s about doing better,” he says. Since its launch in 2012, Adore Me has established a loyal VIP membership client base and gained a massive online presence with over 1M Facebook followers.
Snaps & the Uncomfortable Parts
“Lots of companies have tried and failed in this space; this is a maze. The product requires a huge lead time between conception and coming out of the warehouse, and the variety of sizes is very wide which are some of the reasons many people have tried and failed. We had a very data-driven approach and could circumvent those issues, but we’re still not done dealing with problems as the come up.”
Herman spoke of two crises in which his business was difficult to run.
One was a rough patch with inventory management. At one point they didn’t know what to order in advance and as a result, they ran out of product in some areas.
Additionally, there was a time where the company was spending more money than it could sustain. It was around Christmas, and he needed to call people to ask for money.
“I had to wish people a Happy New Year while asking for money. Between some hard times like I’ve never felt “I’m done” but I’ve felt I just needed to find a way to make it work.”
Make Distribution a Priority
Being able to get a distribution is massively important. Distribution is the key to making sales. “We became great at distributing our product. That is where revenue is made. Differentiation only comes second. The quality and differentiation make people repeat purchases. But distribution is key. There are many things on the customer experience that we do much better.
“If you have something better quality in every size, with a better experience overall with a broader range of style then you have something that is compelling to the customer. However, if you have all of this and don’t have the distribution. I challenge you to make ten dollars a month, it’s really hard.”
Spend Profitably: Know Your Numbers
Early on the team realized it was important to spend and get a solid ROI. As a data-driven business this influences every aspect of the enterprise.
“I usually think that Public Relations agencies are a bunch of morons who take your money for no actual deliverable. We tried three and none of them worked. So I can really claim how bad they all were. We internalized PR, and since we’ve done that it’s gone so amazingly well. Having PR matters, but is overrated. If you do PR do it internally, you have to be careful to draw a correlation between PR and sales. I am not sure if PR drives sales. If you want sales, advertising or word of mouth work better.”
Statistics Engineering and Everything in Between
“There are two areas where engineering is required, and there’s math behind the beauty of it. One is marketing. We understand, in a sharp way, where each dollar of revenue comes from. And allocation between channels is not necessarily easy. You need to triangulate and attribute where all this came from, it’s a real mess to do.
We are strong in this area. It requires statistics. That’s an area where because we understand we can accelerate and spend more where it works. We built internal tools to track. No one has come close to understanding advertising the way that we do. We are now in the process of outpacing others in this space because we know how to spend money.
The second feat that requires engineering is inventory management. Lot’s of statistics go behind understanding the granular aspects of it.”
Streamline Operations
At first, the company did most tasks manually. But, this led to logistical snags and customer support issues.
“Ultimately the customer is happy when they feel empowered, so we built a self-service platform, that was great. We automate any repetitive tasks when someone in the office does something they find repetitive; we always try to find IT capacity to automate what they do and to focus everything they work on right on the value added part.”
Appreciate a Good Fit & Find Purpose
“The day we poached and recruited the head of design at Victoria’s Secret as our head of design, that was a good day. We also were excited about revenue growth. Our first million, our first ten million.
As you go along, it becomes about what you can do, what is the next milestone, it’s not about revenue it’s about the mission and changing things in an industry and brand image. It’s a moving target that grows with the company and grows inside of you. Can you predict that when you’re starting something, no.”
Looking Beyond
If Hermand gets his way, he hopes to provide intimates for every woman in America. That means: every wallet, every taste, every size. Currently, they are planning a pilot test with Nordstrom’s.
“We are looking at China. I like China very much; it’s a great country to have a business.”
He said the company may be preparing for an IPO, meaning the company will become public. Clearly through finding a category and doing it better, he tried this one on for size and it seems it was a good fit.”
Watch out full interview with Adore Me Founder & CEO Morgan Hermand-Waiche here.
The interview was conducted by Clara Buchanan, CEO, Hypergrow.
Originally published at www.startupgrind.com.