As its name implies, TechStyle represents a marriage of technology and fashion. It’s the parent company of successful, fast-growing brands including Fabletics, JustFab, ShoeDazzle and FabKids. TechStyle uses proprietary technology, personalization and vertical integration to create a winning combination of subscription e-Commerce with brick-and-mortar retail.
The emphasis on technology comes naturally to Co-CEO and Co-Founder Adam Goldenberg, who has been a serial tech entrepreneur since the age of 15. At 17 he sold his Gamer’s Alliance web site to Intermix; he was then offered a full-time position there, becoming COO at the age of 20. In this exclusive Q&A, Goldenberg reveals what makes TechStyle unique, including a heavy reliance on data, an emphasis on speed, and fruitful collaborations between data scientists and fashion merchandisers.
RTP: Technology is built into the name of your company, so obviously it’s important to you. But how specifically does TechStyle use technology as a differentiator?
Adam Goldenberg: One thing we do that is fundamentally different from other companies is that we don’t just think about technology as a tool or a service to power the organization. We view technology as our product, just as much as the physical merchandise we sell. A lot starts with that mindset, but it’s also that everything about the FashionOS technology was built to empower the marketing and merchandising teams, to constantly be optimizing running their parts of the business.
RTP: Can you share an example of technology as product?
Goldenberg: We have tested more than 30,000 different digital ads and thousands of different web site configurations in order to optimize our metrics. That’s really not possible to do at scale without technology. As much as possible we remove the programmers from these marketing experiments and let the marketers and merchandisers run them. That leads to happier developers because they can spend their time working on new features and functionality.
RTP: What were the results of your digital ad tests?
Goldenberg: One thing we discovered is that, as great as our marketing teams are at using data and analyzing trends, there’s no way to know which ad will perform best without actually getting them live and testing them in the real world. For example, we recently had a big push on Fabletics, spending $3 million in the first two weeks of the new year. During that time we were able to test 600 different ads and 30 different web site experiences. It took us only about three or four days to reduce our customer acquisition costs in half. If it had taken a month to run that, the dollars would have been spent even before we knew the results. It shows the importance of the rapid optimization and testing that marketers and merchandisers are driving.
Culture Clash Between Tech And Fashion?
RTP: TechStyle is known for data scientists and retail, fashion and merchandising people working together closely. Has this created any culture clashes or communications issues?
Goldenberg: The only way it works in our business is to marry the e-Commerce/quantitative data scientists with the fashion side of the business, and that’s what’s happened here. It’s amazing how well the two groups work together and love learning. We created a program called Rise, so when someone from a traditional retail background comes in, we show them all the data we have to make better decisions. If they are from e-Commerce and they want to learn more about technical design, merchandising and how retail works, we help with that, and the technical designers can learn all about customer acquisition and retention marketing.
Membership Model Deepens Customer Relationships
RTP: Membership-based and subscription retail has seen some spectacular successes, but there’s always the danger of excessive customer ‘churn.’ Why does the membership model work for TechStyle and its brands?
Goldenberg: The membership model is really critical in e-Commerce, because it allows you to have a much deeper relationship with consumers. You interact with them on a regular basis and learn about their likes and needs, so you can then provide better service. Our members also visit our personalized boutiques approximately 25 times per year. But a membership model is definitely not for every retailer. You have to have a physical product that customers love, and be able to tailor that product for your customers.
RTP: Fabletics is expanding its brick-and-mortar footprint at a time when many traditional retailers are closing stores and abandoning malls. How important is it to TechStyle to have a physical presence?
Goldenberg: It’s a nice addition to our business, but it’s not critical to our success. We look at whether physical retail is the right model on a brand-by-brand, case-by-case basis. For Fabletics, the retail stores are driven by our technology platform and are completely integrated with our web site. As a Fabletics VIP member, you can shop in the store with all your membership perks and discounts. About half of our customers do this; it’s a great way to give them an additional opportunity to interact with the products they love, and they spend significantly more than our online-only shoppers.
Approximately half of the remaining in-store shoppers become VIP members right in the store, so it’s a great new customer acquisition tool. Brick-and-mortar stores also help us leverage the advertising dollars we spend on brand awareness.
Advice For Entrepreneurs
RTP: You’ve been a tech entrepreneur from a very young age. What are some of the things that helped you be successful, and that continue to help you?
Goldenberg: Being an entrepreneur is really the only thing I know. I didn’t go to college or work somewhere for 10 years and then say ‘I want to be an entrepreneur.’ I was very fortunate to sell my company to Intermix media, where I worked for six years, because they had built so many other businesses under their corporate umbrella.
Starting from a young age also helped me get a broad range of exposure. To be an entrepreneur you have to be a jack-of-all-trades — to build teams, use technology, assess marketing opportunities, solve all sorts of challenges. The best way to do it is just by experiencing it. Another thing that’s really helped me is being willing to be completely creative in solving problems. One thing we value here at TechStyle is innovation, taking risks and chances. And like anything, the more you do it, the more practice you get at it.
RTP: Who are some of the people that have been particularly influential in your life?
Goldenberg: I have to give props to my mom, who is the stereotypical overprotective Jewish mother. When I told her I was dropping out of high school to sell my company, she could have said ‘Absolutely not young man, you’re going to college.’ But she was very supportive. Of course, moms always tell you that you can do anything, and now that I realize it, she may have had her ‘mom goggles’ on. But that gave me the confidence to take the chances that you have to take.
Another person is one of our board members, John Drew, who has been an investor in most of the companies I’ve built over the past 10 years. He always told me to be thinking about organization and succession planning. When you’re in the midst of building a business, those are the last things on your mind. But I took it to heart, and it’s allowed us to launch new brands very effectively.
RTP: Do you have advice for other would-be entrepreneurs?
Goldenberg: One of the most important parts of being an entrepreneur is knowing what you don’t know, and then surrounding yourself with amazing individuals to help offset those weaknesses or bring that knowledge. You cannot build a business by yourself, it’s a team sport. But you need to figure out who you need on the team. You learn not what you want to do, but what you can do best — and then you bring in people who are smarter and better than you to help with the other areas.
RTP: What are some of the things you value most in your colleagues?
Goldenberg: At TechStyle we have a bias for action. Speed really does matter. We certainly do want to use data to support decisions, but if you can make the right decision with 70% or 80% of the available data, rather than waiting for 95%, you’re going to win. You will make more decisions and make them more quickly. Be willing to take chances, and if it doesn’t work, we’ll change it and try it again.