Le Tote Founder Brett Northart on Building First Version of Your Product – Hustle Con 2016

The idea phase— whoa, that is real touchy. How you go from the idea phase to actually building out the first version of your product. And if you're not familiar with Le Tote, we've been dubbed the Netflix for fashion. So we provide unlimited access to our closet of women's apparel and accessories for a fixed price each month. And the business is going really well. We've been growing like crazy. Whoa! We've been growing like crazy. Um, we've got over 200 employees today, split between 2 locations, and we've raised over $30 million from top-tier VCs like Google Ventures, Andreessen Horowitz, and Y Combinator. So we're gonna talk about getting started today. And the only thing that really matters when you're starting your business is getting to product market fit. Seriously? This is gonna be interesting. So product market fit is basically putting something out there that really strikes a nerve with consumers, something that people are really excited about. And for us, what that meant, or how we got started getting towards product market fit, was my co-founder's wife was pregnant, and she realized that buying maternity clothes is insane. You only use them for 4 or 5 months, and then you never see them again. And at the same time, my wife was in a clothing swap group in the city, and she was constantly looking for more variety in her closet. And we were all out to dinner one night, and we got to talking and realized that both of these women were doing the exact same thing to get access to variety. And we thought to ourselves, "Wouldn't it be interesting if you took this online and gave people unlimited access to a closet that they could all use?" So we started talking to more people over the coming weeks, and the idea started seeming better and better. But the big question that we had to ask ourselves was, "Are we willing to quit our cushy finance jobs and go all in on this idea?" Well, needless to say, a couple weeks later, we quit our jobs, and— whoop— and we took over the kids' playroom. So this is our very first office. We've got a sweet basketball hoop here. We had a fold-out couch, which was helpful for late nights, and we put up a whiteboard. And we poured our collective savings into the business and started buying clothing and accessories. And I can't tell you guys how many times I got a fraud alert phone call from Wells Fargo saying, "Hey Brett, did you just buy $7,000 worth of women's dresses?" And frighteningly, the answer was yes every single time. But we didn't really care, because in the early days, you're just trying to figure out if people want what you're putting out into the world. So we were trying to answer fundamental questions about our business, like, how many times can you send out a dress before it starts getting worn out? And how much does it cost to ship these items all over the country? And even something as simple as, do people want unlimited fashion on a rental model? So another piece of advice I have early on is you've got to have someone by your side to help out. So for me, I had a co-founder, but it was a lot more than that. You've got to have someone in the trenches that you can bounce ideas off of, someone who's there to pick you up when you're feeling unmotivated. And it wasn't just my co-founder, it was a family affair for us from day one. So this is actually a picture of my co-founder's wife and his newborn daughter. And they were helping us unbag one of our first inventory buys. And it didn't stop there. So we also convinced a good friend of ours who was a buyer out in New York City to pack up her life, fly to San Francisco, sleep on one of our couches for 6 months, and help us get this crazy idea off the ground. And my co-founder's parents even got involved. So they came to visit from India, and they thought they were going to have a relaxing 3-month visit and get to see the family. Well, we convinced them to come to the office every single day and do administrative tasks around the office. This is very serious, by the way. They totally made all these boxes. Um, so I stress this point because it's really critical early on to get people to help you out, to bring your product to life. 'Cause it's really hard and it's an uphill battle and you hear no all the time, so you need that support system there. And just know that things will break in the early days. So you're optimizing for speed over perfection, and these are actually racks that I built myself. So as you can tell, I'm a really shitty handyman. But the good news is we had enough demand for our product that we were actually breaking the infrastructure that we had built, albeit it was very bad infrastructure. But we did it anyways. So, whoop. And just know that being bad is okay in the early days because it's the first step to building something amazing. And my favorite quote on this comes from the legendary investor and founder of LinkedIn, Reid Hoffman, and he said that if you're not embarrassed by the first version of your product, you've launched too late. And I love this because it really embodies the idea that done is better than perfect. So let me show you guys what embarrassing looked like for us when we launched the first version of our product. So we could have gone out and hired an engineering team and built out this robust product of all the features that we thought people wanted, but instead we hired an outsourced development team in India and we had them slap together a landing page for us. And this is hideous. It's this black background with like 19 different fonts. And there's a couple shades of blue that are clashing with each other. It really, it makes me cringe looking at this today. But we had to get something out into the world to see if people even cared what we were doing. And we took a lot of solace in the fact that no one knows who you are when you're launching. And so there's not that many people that you can piss off or offend in the early days. You just want to get it out there, hear what people have to say, and you can always make it better. But don't be wrapped up in this idea that it needs to be perfect before it gets out the door. Because you don't even know what perfect is yet. So this is the version that we ended up launching. This is actually not where we are today. This was reformatted. Um, this was the very first version that we launched back in the day, and all you could really do on this site is log in. You could enter your email address, create a password. You could log in to see how many people that you had referred, or you could refer your friends through Facebook. And we also had this referral page, and we went out and we got a couple thousand tote bags printed, and we decided we were gonna send these bags to anyone that could get 3 of their friends to refer, or get 3 of their friends to come and enter their email address on our website. And this is the type of stuff that's very inexpensive to you, but it goes a long way with customers and potential customers. So with this very simple landing page, and this referral tool behind it, we were able to gather over 25,000 email addresses in the first few months that we could market to, and this gave us more customers than we could handle for over a year. So, oh geez. So we were two guys starting a women's fashion company. We worked in finance before, we didn't have a background in merchandising or operations. But we did know Excel and PowerPoint like the back of our hand. And so instead of trying to go out and like build all these things we didn't know how to do and use tools that we didn't know how to work, we built everything in Excel and PowerPoint. So this is one of the very first design sessions we did. We used to mock everything up in PowerPoint, and we'd send it to our offshore development team. And this is not ideal. It was actually a horrible way to do it, but But it got things done, and it got our first product out the door. So all the customers could do at the time was go on the website and fill out a quick style profile. And it had things like their age, their style preferences, their measurements, their location. So we used to download these in Excel, make each tab a customer's name, and put them into this master Excel workbook. Now, at the end of this, we had, like, thousands of tabs in this workbook, and it took, like, 15 minutes to open this thing. But it got us where we needed to go. And so over time, this actually morphed into we started tracking every single item that we sent customers. We would manually enter this stuff, and then we'd get feedback in the customer service inbox, and we'd put that off to the side. And if it sounds really painful, that's because it was. We even tracked every single shipment that went out to customers. So this spreadsheet also had like thousands of rows by the end. And this is all to say that you can do a lot with a little in the early days, so just think about what you can do well and go out and build with those tools and that skill set. The next— whoa, God. The next important thing is that you've got to get out and actually talk to your customers. So once you get your product out into the world, you have to hear what people think. So I always encourage people to actually go meet people, collect phone numbers, collect email addresses, Give them a phone call. My co-founder and I were the customer service for our business for the first 18 months or so, and just being in the flow every day, talking to customers, hearing what they had to say, was incredibly helpful, and it gave us a lot of insights into how to make the service better. You also have to charge people money. A lot of people are willing to, or tell you what they're willing to pay for something, or they'll tell you, "Oh yeah, I would use it this way or that way," But until they're parting with their hard-earned cash, no one's gonna give you an unbiased opinion. So you've gotta charge for whatever you're putting out there. And the last thing is you've gotta question all of your assumptions you have. So for us, when we started the business, we thought our demographic was gonna be significantly younger. Turns out it's actually a working professional woman. We thought that our customers were gonna really like to get a curated mystery box every time, and our customers actually want a lot more control over the experience. And we also figured that because people were signing up for a rental service, they wouldn't actually want to buy anything. And we were completely wrong on that, luckily, because purchase is now a huge part of our revenue. So once you put your product out there, built something, and you've talked to your customers, you've got to— whoop— you've got to iterate. And this is the most important piece. So you've got to take all that feedback and build meaningful improvements into your product based on what your customers tell you. And I think we've been able to do that, so I want to give you guys a quick glimpse into where we are today. Luckily, I no longer sit and fill out spreadsheets all day, and I'm no longer in charge of design, which is great for everyone. Um, we've got a massive distribution center out in the Central Valley. These are racks that I didn't build myself, which is why they're holding up so well. Um, we've built our own inventory management system from scratch. We have an amazing in-house development team, data scientists. We built our own warehouse management system as well. It's all cloud-based. We send out thousands of items daily, moving us closer to our mission of making fashion accessible for everyone, every day. So again, I'm Brett— oh, geez. I'm Brett. I'm the founder of Le Tote. Thank you guys so much. I'm also horrible at working the little clicker, apparently. I apologize.

Hi, Brett. Thanks so much for talking to us. Just had a quick question about getting your product out quickly.

Yeah.

Do you think that gets in the way of building a strong brand? Like, if it's a crappy product, then it might, like, get in the way of building a strong brand?

Yeah, so it really depends what kind of product you're launching. If, if you, if you just created that $700 juicer machine, you have to make sure your product is dialed in from day one because you only get one shot at really putting a huge consumer product like that out into the market. And it's really expensive to go and get something like that prototyped and built out, and you can't just iterate. I think a lot of this is in the context of software, but for us, it was kind of a mix of software and physical goods. And so we just wanted to see what people thought and if there was demand. Now, it really, it's very specific to whatever product you're building, I think. Yeah, thank you.

Hi, Brad. I'm Roxy.

Hey.

I, so I have a very similar model, but the problem that I'm having is the go-to-market strategy. So can you explain Can you explain a little bit how you figured that out when you first started? 'Cause I'm kind of in the same position.

Sure, yeah, so we just talked to anyone that would listen to us, really. We started asking a lot of people if they would be interested in a service like this, what they thought of it. We actually just bought a bunch of clothing and sent it to friends and colleagues, like anyone that would take a box. And we got feedback from them before we went out to the market. And then we started, We started buying some Google AdWords just to drive people to our landing page, and we wanted to figure out what price point people would be willing to pay, so we put different prices in the ads and we drove them to a landing page. We also put a checkout page up with varying configurations of the box. So today we send 3 garments and 2 accessories, and we didn't just pick this out of thin air. We arrived at that after iterating on this quite a bit. So there was a lot that went into figuring it out, and then that landing page and the referral thing that I showed, helped us get a ton of email addresses early on. We just gave away some freebies, and because it was a gated experience, we were in a private beta, we used exclusivity to our advantage, and we said you have to refer a certain number of people to actually get early access to the site. So we used exclusivity as a way to also juice our referrals.

Sure, and then, sorry, follow-up question. How many people do you think you actually reached before you decided to go all in?

You mean like how many people did we talk to?

Yes, yeah.

Hundreds. I mean, we talked to like any women that we could find that would listen to two guys in like a coffee shop or, you know, in the streets of San Francisco. People thought we were like crazy dudes walking around just talking to people.

That's amazing.

Yeah, you have to do what you have to do. So I don't know, hundreds, thousands, I don't know. Cool. Yeah.

Thank you.

But don't overthink it too much. I think a lot of people like, Again, like, you have to charge money for your product early on, 'cause until you're charging, a lot of people are like, "Oh, I love that idea," or, "I hate that idea." But until you put it out there, it's hard to know.

Sounds good. Thank you.

Cool. All right, thank you, Brett. That's all the time we have. Thanks. Cool. Cheers, guys. Thanks. Good job. Thank you.

All right.