“Alexis had certainly never waxed on about her shopping habits in front of a room full of middle-aged men clad in blue shirts and khakis. She knew a big part of a VC partner’s job is to assess people’s judgment; they don’t tend to be fond of frivolity. Yet our business would live or die on the basis of people’s passion for fashion—our members’ love of a deal. Alexis had to convince the VCs of this and to project ‘CEO.’ Both were equally important.”
That’s an excerpt from By Invitation Only: How We Built Gilt and Changed the Way Millions Shop, which hit the shelves last Thursday. Alexis is Alexis Maybank, founder of Gilt, the New York-based flash sales site that offers limited-time, members-only sales on designer duds, home goods, gourmet food, and luxury vacations. Maybank authored the book with Alexandra Wilkis Wilson, her co-founder, Harvard Business School friend, and overall partner in crime.
It’s the story of how the duo convinced venture capitalists to give them money, how they convinced Internet-shy luxury brands to offload excess inventory to an upstart website, and how they convinced millions of people to drop everything at noon for deals on designer merchandise. (That last part didn’t actually take that much convincing. Just lots of viral marketing.) The story reads as a how-to manual for any entrepreneur looking to start something big and disruptive. Those lessons aren’t cliché or contrived, but were lived by Maybank, Wilson, and co-founders Kevin Ryan (now CEO), Mike Bryzek and Phong Nguyen as they got the fledgling Gilt off the ground and turned it into a company worth an estimated $1 billion-plus today.
“We really wrote the book hoping that it would inspire entrepreneurs and entrepreneurial thinking in large organizations,” said Wilson (an Xconomist) on a phone call while she and Maybank were cabbing between media appearances Friday. (A lot of Gilt work and communication is done in New York taxis, the book shows.)
You’ll see them face classic e-commerce startup challenges, like learning how to evade e-mail spam filters, scale servers to avoid a website crash, and fine-tune warehouse operations. And other hurdles that seem more unique to a luxury-focused company like Gilt. Not every startup, for example, will have to fret about Madonna showing up unexpectedly to a marketing event and rush to squeeze in a seat for her (between Gwyneth Paltrow and high fashion designer Valentino, nonetheless).
But most startups will need to tackle raising a Series A round. In recounting their venture fundraising experience, Maybank and Wilson, offer a slew of practical, actionable tips for entrepreneurs looking to court VCs for the first time: Build a sense of competition among different firms while being just mysterious enough. Say you want to raise slightly less money than you actually do. Give investors a clear deadline.
But one of the most striking revelations to me was the importance of displaying passion—even at the risk of looking ridiculous. That brings us back to the excerpt above, where Maybank is just about to enter her first pitch meeting at Boston’s Matrix Partners, alongside Ryan and Bryzek. Maybank and Wilson write that
