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Nasty Gal: Turning an eBay SideHustle to an Empire
Today's post is about the rise and fall of Nasty Gal from a side hustle to a multi-million dollar company
When Sophia Amoruso was 13, she fell in love with vintage clothes after buying a persimmon-red pair of disco pants. 15 years later, her vintage clothes company was pulling in close to $100 million a year!
Here is the story.
A Rough Start
Sophia’s adolescence was far from optimal.
At 16, she got diagnosed with ADD and depression.
At 18, she’s out of her parents’ house hitchhiking and dumpster diving.
At 19, she sold her first item online. A stolen book.
In 2006, now 22, Sophia was diagnosed with Hernia. She direly needed a job to get health insurance.
She finds one checking IDs in the lobby of an art school.
Bored with her job, she starts selling vintage clothes on eBay to kill time.
Why an eBay store?
She was getting many friend requests on MySpace from eBay sellers of vintage clothes. After checking their stores, she realized that she can do a better job.
Sophia realized the potential of social media early on.
"Using social media allowed me to have a conversation with our customers - I would say it was the number one reason we created awareness"
One year after launching, she had 30,000 friends on MySpace and had done $115,000 in sales.
But Sophia wanted to have her own website. She started referring customers to NastyGalVintage.com in feedback emails. eBay wasn’t happy with the move and she was kicked out of the platform in June 2008.
The website took off pretty quickly by betting on social media.
Sophia ditched MySpace for Facebook.
She ran contests for $200 gift cards to get customers to share photos in vintage styles.
By 2010, sales had grown organically to $6.5 million.
By 2011, NastyGal was bringing in close to $28 million a year. But things were getting out of hand.
On Black Friday, the company had to cancel 1000 orders after the warehouse manager quit as a new inventory system was rolled out.
Index Ventures came for the rescue. The venture capital was an early backer of retail startups such as Etsy and ASOS. In 2012, the VC firm poured in $49 million to help NasyGal expand its operations.
A Curse in Disguise
The investment from Index came with an expectation to grow the annual sales from $28 million to $128 million in one year.
The company had to hire 100 people overnight to meet the target. It also made a growth plan without having the data to back it.
While sales did grow to $100 million in 2012, it wasn’t long before they started dropping, reaching $77 million in 2015.
Before the venture investment, NastyGal grew through its cult following.
A quarter of Nasty Gal's 250,000 customers visited the site once a day for at least seven minutes.
The growth after the investment didn’t stick because it was fueled by heavy spending on advertising.
In June 2015, Sophia stepped down as CEO to allow a more experienced leader to take over.
The step didn’t save the company which filed for Chapter 11 bankruptcy protection in November 2016.
In 2017, BooHoo acquired NastyGal for $20 million.
So, was NastyGal a success or a failure?
“I mean, the company sold for $20 million in bankruptcy. So, in the grand scheme of things that can happen in your early 30s, yeah I’m proud of it.”
Sophia went on to found GirlBoss, a media business that was acquired by Attention Capital in December 2019.
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