Recently we attended the 645 Ventures’ annual meeting in NYC. All of the presenters did a phenomenal job, but ask anyone who was there and they will tell you the most interesting portion was the last speaker, Sarah LaFleur, CEO of 645 portfolio company MM LaFleur (MML). Sarah spoke about several exciting things currently happening at MML while also discussing many of the challenges faced along the way. Founded in 2013, MML has grown from the idea of a young girl who grew up looking at Japanese fashion magazines to a company with the hottest business professional dress on the market. Though the path has been tough, LaFleur praised the struggles saying, “without them we might not be in business right now.” This ability to look at negative events as constructive and helpful and still forge ahead is an attribute that all investors should look for in a CEO.
One of the first difficulties that MML faced was trying to raise capital from people who did not fully understand the product. Sarah mentioned that one road block that often came up was trying to explain to men why female business professionals do not have time to shop and need MML. Sadly, this issue comes up often in the VC world, as investors tend to stick to what they know best. Ironically, by passing over on MML, investors helped to reveal one of the best competitive advantages often found in successful startups, which is the drive and optimism of the founder. It forced MML to get lean and focus on the customer. As we look at the success of MML today, investors would leap at the opportunity to turn back time and get on board at an earlier round. The valuable lesson here is if the idea or market is not easily understood to look at the founder, dig deeper to understand the problem being solved, and see if there is something lying underneath the surface which the numbers do not show.
Another struggle was convincing investors the value of building the MM LaFleur brand and not just another multi-brand subscription channel like Stitch Fix. LaFleur felt it made sense to go after both markets because the brand provides scale to the subscription model by ultimately bringing down the customer acquisition cost, which is critical in this very focused space. Currently, the female professional market consists of a relatively small number of women (26 million) spending large amounts on clothing every year. (Some estimates show as much as $6,000 annually.) The confidence that the MML team had to stick to their vision is beginning to drive significant traction among customers. Entrepreneurs tend to give in to the well-meaning advice of investors about pivoting or doing something that they are not passionate about, which is often a recipe for disaster.
The drive, determination, and confidence of the founder is critical to the success of the business, yet it is often overlooked or not prioritized when investing. Every startup encounters problems and struggles but the key factor is how the founder responds.