When she co-founded the online clothing retailer ModCloth, Susan Gregg Koger had never worked in retail and had no connections with the fashion industry. She had no experience that helped her write a business plan or how to source inventory for her site. But being a “rookie” turned out to be asset as she built her company without the constraints of tradition or routine. Since founding the company in college, Koger and her team have innovated in the online retail world with unconventional tactics like asking her customers to select what dresses to stock, and using user photos on product pages — all thanks to not knowing the “right” way to do things.
“Approaching a problem from a rookie point of view enables you to innovate just because you don’t how its usually done,” she says. The result? The company now is located in three cities and boasts over $100 million in sales. Not bad for a newbie.
Susan Gregg Koger is the co-founder and chief creative officer of ModCloth, an online retailer known for its innovative social shopping experience, unique apparel and décor, and wide range of styles sourced from independent designers around the world. As ModCloth’s CCO, Susan employs her creative edge and love for vintage to inform all things ModCloth; from its careful curation of remarkable goods, to the look and feel of the site and mobile apps. In 2013, ModCloth was recognized as one of Fast Company’s “Most Innovative Companies,” and Susan was listed in Forbes’ “30 Under 30″ and Refinery29′s “30 Under 30: San Francisco.”
This is like such a cool and inspirational conference. And to be surrounded by so many amazing people, it’s definitely an honor. So thanks for having me. I’m Susan Gregg Koger. I’m the co-founder and chief creative officer of ModCloth. For those of you who maybe don’t wear dresses every day and don’t know who we are, we are an online-only retailer of women’s fashion and decor. This is just a screen shot of our desktop homepage today. And I think that our customers would say that we have some of the coolest product that you can find anywhere on the web.
But we are way more than just a retailer that sells clothing. We’ve really become known for putting our community at the center of everything that we do. So our customers help us pick the products that we sell on the site. They help us merchandise those products by taking great outfit photos and leaving really detailed reviews including body measurements. And sometimes they help us design the products that we manufacture and sell on ModCloth. I think a picture is really worth a thousand words. So rather than try to tell you who our customers are, I thought it would be better just to show you. This is her. To give you a sense of our scale, we now have a team of We’re headquartered in San Francisco, which is where I’m based. We have a big office in Pittsburgh, which includes our fulfillment and our customer care. I’m actually a Carnegie Mellon alum. And we built the business in Pittsburgh. And our buying team is based out of Los Angeles. Last year, we shipped over 1.6 million orders, which is pretty exciting. I like to imagine these products flying out around the world to new homes. And we have now over including hundreds from our own in-house design private label, including the dress that I’m wearing today. I founded ModCloth was 17 with my then boyfriend, who’s now my husband and my business partner, Eric Koger. And it was really just like a– it was a big labor of love for me at the time. It was just something that I was really passionate about doing. I started the business in the summer between high school and college. And I ran it part-time while I was getting my undergraduate degree at Carnegie Mellon. I was literally shipping products out of my dorm rooms and then out of my college basement, which is the photo that you see above. And when we started, we were super, super scrappy. We designed the site– I designed the site myself. We coded it on an open source shopping cart. And when we started, we were just selling all one of a kind vintage. So it was all stuff that I was finding at thrift stores, and estate sales, and that sort of thing. As much as we’ve grown and I’m excited to be here to share what I’ve learned thus far, I still feel like, in a lot of ways, we’re just getting started. We want to be one of the biggest specialty retailers in the world one day. So as much as going from nothing to where we are today has been an incredible journey over these last 12 years– which is really crazy. I still can’t believe it’s been 12 years. As much as we’ve grown, I think that I still feel like I’m learning every day. I still feel like I have a lot to learn and a lot of areas to grow in. But I’m excited to share what I’ve learned so far. And this is really– this is the first big takeaway, that it’s OK to be a rookie. It’s OK to start something and not have any idea what you’re doing. If it’s something that you love, you can really make it work. And I would say that we often forget about how powerful being a rookie can be. And I’ll explain a little bit more about what I mean there. So when we got started, we were absolutely rookies. Probably definition of rookie in the dictionary, picture of me next to it. Yeah. Neither Eric nor I grew up in retail families. We don’t have retail backgrounds. We didn’t grow up working in our parent’s stores or anything like that. So we really approach the business from a rookie mindset. And it definitely enabled us to innovate. Because we just didn’t– we had no idea how it’s traditionally done. I mentioned that we started by selling all one of a kind vintage. And when I was approaching graduation and decided to pursue ModCloth full-time, I knew that we had to change our business model. It wasn’t scalable to just keep selling these one-offs. And it wasn’t a really good customer experience either. You can imagine. You come, you find something, you fall in love with it. But then it’s out of stock, or it’s not your size, or it’s the wrong color. So when I knew that we needed to grow our business, I literally Googled, how do you find designer clothing? Where do you buy wholesale clothing? I was in Pittsburgh. I had no idea how to even approach this. What I did find was a link to the MAGIC Trade Show, which is the biggest apparel trade show. It happens twice a year in Las Vegas. This is actually me in our college house in our living room with our first delivery of non-vintage designer goods. I think this picture is a great testament to how scrappy we were also and how cool our roommates were letting us bring all these crazy boxes into the house. So this is a snapshot of the MAGIC Trade Show. A lot of times when I tell people that I’m a fashion buyer, it sounds really glamorous. But it’s just– it’s like being in a concrete square and not seeing the sunlight for two days. And you’re just walking around. And when I went, I was like a total rookie asking lots of rookie questions. So literally, so if I buy this from you, when do I have to pay you? And how many do I have to buy? And when will you ship them to me? I was just looking around and seeing what everyone else was doing and asking questions about even the smallest, simplest things. But I learned really quickly. And I’ll give you guys the high level of how this industry generally works. Buyers like myself, like people– everyone, from people who are just getting started, to small brick and mortar boutiques, up to the major department stores, go to these shows and they walk the floors. And the designers come. And they bring everything that they’ve been working on for the upcoming season. They get feedback and they get orders from those buyers. And then they decide what they’re actually going to commit to and go into production with. So they say, everyone really liked these products, but we didn’t really get any reaction from these. So we’re just not going to make these. We’re going to drop them off. What I realized pretty quickly was that the stuff that I really loved wasn’t getting made. Because I was building a differentiated brand. And I was looking for these really cool different products that the other big retailers weren’t picking up. And I’d hear from the designers. They’d say, well, why don’t you buy this one? Because this one is this amazing piece I’m like, well, I don’t want to just buy the same stuff that the big guys are selling. I want to actually bring my customers something that’s new and something that’s really cool. And because of this problem, we were able to innovate in a way that hadn’t ever been done before in the industry as far as I can tell. We created a platform called Be the Buyer– and this is a screenshot of what it looks like today. It looked very different when we talked to these designers. And we said, hey, you’ve already gone through the process of making these samples. Why don’t we just photograph them and share them with our customers? Because our customers are the ones that are going to be wearing the products anyway. It seems like it would be a good idea to get their opinion, rather than us just trying to guess at the trade show what they’re going to want to wear in a few months. And this was really a turning point for our business. Empowering our community to help as part of the process was– it’s something that we’ve always believed in at ModCloth. And being able to do this through this platform not only helped us to better plan our inventory, but it allowed our customers to feel like they were actually part of the process for the first time. And that’s really powerful. When our customers come to Be the Buyer, they don’t just pick or skip items, but they also leave lots of comments. So it’s become this really cool product development platform as well. So this is a great example of a dress that went through early in the program. You can see, 11.3% percent pick rate. Not great. But this dress had hundreds of comments. Thousands of votes, hundreds of comments. There was clearly something that was really resonating. People were drawn to this dress. They just didn’t want us to sell it. [LAUGHTER] So we looked at all the comments. And we just kept seeing waistline, ruffles, kind of weird, what’s going on. We do a word cloud of all the comments. And it was like ruffle was the biggest one. So we went to the designer. And we were like, OK, let’s try removing the ruffle. We actually didn’t have to make a new sample. We just Photoshopped it, put it back through, asked people to come and let us know if we had improved. And it got a 63.4% pick, which is actually pretty incredible. And she was– for this item particularly, but in general, she was so excited that we were actually listening to her and not just listening, but then actually actioning on it and doing something about it. So we placed the order for the dress. It came in a few months later. Went into production. We sold that minimum production quantity. Usually, it’s a few hundred. I think it was about It sold out in two days. It was amazing. So I think this whole program is a great example of how approaching an industry, approaching a problem from a rookie point of view can actually really empower– can really enable you to innovate, just because you don’t know how it’s usually done. For me, I was just like, why wouldn’t we ask the customers? I think that for a lot of people in the industry, it’s like, well, as buyers, that’s our job. We have to know what’s going to be on trend. And that’s what we do. And our buying team absolutely still does that. We’ve put thousands of products through this program now. But it’s being open to getting your community involved and being open to that kind of rookie point of view of why not. Let’s try it. I wanted to spend a minute talking about the concept of faking it till you make it. Because I think this is something that we hear a lot in business. And it’s really important. I think we kind of intuitively start to do it as you grow a business. It’s important. But it’s important to fake it until you make it appropriately. Right? If you’re an entrepreneur and you’re getting started, you’re pitching your business for the first time, by all means, fake it. Right? You’re going to get questions that you have no idea what the answers would be. But that’s what investors are supposed to do is ask you these hard questions. And then you just say, oh, yes. Of course. I’ve thought about that. I know what to do about it. It’s totally fine. But I think that sometimes we just fake it all the time. And it’s not always appropriate. Sometimes it’s OK to ask questions. When I think back to going to that trade show for the first time, if I wasn’t asking these “stupid” questions– because I was just coming from this truly rookie mindset– I don’t think I would have had this idea. Right? I would have just said, oh, this is what buyers do. And I would have just followed everyone else. I also think it’s really important to– this is something that we try to do at ModCloth today is when we’re approaching new problems try to put ourselves back in that rookie mindset just to see, is there a new way around this problem that maybe we’re not seeing? And I think it’s really important for all of us to do. We all know go and ask advisors, ask experts, ask people who’ve been there and done that. I’m not saying not to do that. Because that’s really important. But think about getting that rookie opinion as well. If you’re a rookie, trust your gut. If you’re not a rookie, try to get into that mindset again. Maybe ask your mom. Maybe she’ll have an interesting point of view. It’s possible. It could happen, even if she doesn’t have any idea what the industry or what inner workings are of the question that you’re trying to solve. So my final point here is that you don’t have to worry about being a rookie and entering an industry that you don’t have any background in. This girl can go on to lead a multimillion dollar fashion company. You can do it too. [LAUGHTER] OK. So this leads really well into my second lesson that I’ve learned, which is that it’s OK to look back and cringe. [LAUGHTER] You actually– you want to look back and cringe. And as creatives, especially when you’re early in your career, if you aren’t looking back and cringing at your earlier work, then you’re not getting better. This is a quote that I really love from Neil Gaiman. “If you’re making mistakes, it means you’re out there doing something.” I think that we put so much of ourselves into our work. And it can be really hard to– it will never be perfect. And you just have to get it out the door and just accept the fact that you’re going to look back and cringe. And that’s great because that means that you have better taste. You know? Ira Glass is really eloquent in talking about this. I highly recommend Googling his videos where he talks about this concept. And I wanted to just spend a little time looking back. So this was the first version of the ModCloth logo, clearly designed by a 17-year-old who just taught herself Photoshop But at the time– I’m not saying that I didn’t spend time on this. I thought this was kind of the shit. I was like, oh, I did good. I had the paint splotches. It’s awesome. This is the second version of ModCloth’s site. I also designed this one, the Photoshop radish you might recognize from the shapes. I discovered that. Again– [LAUGHTER] I thought this was really great. I have to say, also, I was a business major at CMU. People might assume I was a design major there. But I wasn’t. So this is not CMU’s fault. [LAUGHTER] So yeah. But I was really proud of this. I worked really hard on it. And this was like– it’s a progression. Right? You can see it. This is the next iteration of ModCloth. It was not designed by me. But you’re seeing our mushroom. This is the first version of the mushroom logo, which has become really iconic for our brand. You’re starting to see this really fun, colorful, quirky aesthetic come through. And this is our homepage today. This is just another screen shot. And I think– I’m super proud of everything that we put out into the world, everything that our creative team puts out at ModCloth. But I think maybe if I give this talk in another 10 years, this will be on my cringe list. And that’s OK. That’s OK. I’m accepting it. We also do this in technology at ModCloth. So we aren’t just a creative team. We built our technology at ModCloth in-house. And we have a great mobile app and all that stuff. And a great example from the technology side of the business, we talk about the minimum viable product. So it’s taking the vision of what you want your product to be and really ruthlessly cutting it down to what is the minimum viable product to just get it out into the world. A great example is our style gallery. We had two goals. Upload and share photos and be able to shop those photos, shop those outfit photos. This was what it looked like when we first launched it. And we realized that she knew how to upload outfit photos, but she did not get that they were clickable and that you could actually shop them. And this is what it looks like today. And it’s continuing to evolve all the time, of course. But we found just putting this magnifying glass on the rollover told her that she could click and that she could go further into the experience. We’ve added tons of features, like you can follow and all that great stuff. But the important thing here is we didn’t view the first version as a failure, even though we had two goals and it did not do one of those goals. Not at all. She just didn’t get it. But that wasn’t a failure. We got something out there and we got real user customer community feedback. And I think at the highest level, the biggest lesson I’ve learned has been that getting your community involved is so important. Because it allows you to really empower them to create this emotional connection with them. They feel like they really own your brands. And it can be really scary, I think, to put your brand in the hands of your community. Because what if I don’t like the user-generated content that comes out? I think, especially in the fashion world, it can be a scary thing to do. But I think this is absolutely the biggest thing that I have learned in the last 12 years. And I think, as creatives, it’s really important to know that, in the same way that emotion is really what connects customers to a brand, or people to your artwork, or whatever you’re creating, it’s that emotional connection that really connects the team to the work as well. So if you’re a creative and you want to actually build a team and a company around your creative vision, it’s important that you not just share your vision and what it will look like and feel like, the aesthetic part of it, but that you also can distill it down to the emotional core and share that emotional core as well. Part of that is knowing your audience. So at ModCloth– studies have shown 96% of women believe that what you wear can affect how you feel. And that’s really meaningful. It’s not just selling dresses, right? This is our purpose at ModCloth. We’re committed to inspiring personal style and helping our customers feel like the best versions of themselves. And this is what connects us to our customers. And this is what connects now to be– this is what we do. And I think it’s really important here– it’s important to me that we’re not making her feel– or we’re not making her the best dressed in the room. Maybe she will be, hopefully. But we’re making her the best version of herself. So when she’s wearing ModCloth, she feels like she has that extra confidence to go on stage and talk to a bunch of people or whatever it happens to be that she’s going about in her day, even if it’s just something little. And this is generally what she’s seeing from the fashion world. As we were putting the final touches on this presentation last week, we went through and we pulled images from– each of these images is from a different popular retailer from their current campaign. And these images are beautiful in their own way. But to me, they feel like really– they look pretty similar when you see them all up on a slide like this. They feel sort of generic and they’re very stylized. I don’t see myself in these images. This is an image from our upcoming campaign. It’s going live, I think, next week. I started just shooting myself and my friends for the website because that was all I could afford. I’d have my friends over and I’d pay them in pizza. That sort of thing. And as we’ve grown, I could afford those models now. But we actually don’t use any professional models at ModCloth. We put out casting calls to our customer base. If we see a really cute girl that we think could be a great model, we go and talk to her. But we still don’t use professional models. Because it’s not part of our brand. I think about, you have to differentiate your brain aesthetically. And you also have to differentiate emotionally and connect emotionally. And I think with this image, we do look very different than that slide that I just showed you. Here. We look really different. But this is also speaking to her emotionally. Right? With this one image, we’re saying, hey, we all look different in swimsuits. And that’s OK. And that’s actually something to be celebrated. That’s not something that you see in the fashion industry at large. This is what I’m most proud of and most honored to be a part of at ModCloth. This is why I get out of bed in the morning. If you can find something that you love to do that connects emotionally with other people, that’s worth working really hard for. And as an entrepreneur, you’re going to have to work really hard. It’s hard. It’s a lot.
I think at the very highest level, what I’ve really learned is that fashion, styles, they come and go. Right? It’s in, it’s out, it’s in, it’s out. Whatever we’re doing visually today is going to look stale tomorrow. That’s just the way the world works, right? We see it, and we see it, and then we want to see something new.
But emotion really endures. And we get so much emotion from our customers. We connect emotionally with her and she gives it back to us. And it’s amazing. It’s so, so great.
Yeah. This is why I do what I do. So thank you so much for having me here today. I really have enjoyed having the time to talk to you guys. [APPLAUSE]