In our long-running series, "How I'm Making It," we talk to people making a living in the fashion and beauty industries about how they broke in and found success.
Cuyana, a digital-first purveyor of chic, high-quality essentials for women, was not an overnight success. With little-to-no prior fashion-industry experience, co-founders Shilpa Shah and Karla Gallardo have learned and shifted things since they began working on the brand fresh out of business school in 2011. At the time, consumers hadn't yet grasped the concept of affordable luxury in the direct-to-consumer space (which is now, of course, the norm), let alone investors.
"Telling customers that you're selling luxury quality at $100, it's like, well, what quality is that?" explains Shah. "There was a lot of education that we had to do from the beginning to also make sure that customers know that our value proposition is real." They ultimately found success through word of mouth and with their "fewer, better things" tagline — despite it sounding like a counterintuitive way to market a fashion brand.
That wasn't the company's only challenge: While they fit the mold of "SF-based, direct-to-consumer, data-led fashion e-commerce startup" pretty perfectly, they started to feel like that image was detracting from their cachet as a fashion design house.
But now, they seem to have now found their groove, and an effective way of communicating their brand identity through a recent, subtle change in visuals and messaging. They feel their "buy less" ethos has caught on. (Whether that's their doing or the result of a broader shift in consumer behavior is hard to say.) In addition to regular pop-ups around the U.S., the brand operates a permanent store on Abbot Kinney in Los Angeles. It also just enjoyed its first New York Fashion Week runway moment through a collaboration with Creatures of the Wind on a very cute bag. (Quality, affordable leather accessories are the brand's bread and butter.)
We caught up Shah and Gallardo pre-NYFW to discuss their backgrounds, getting Cuyana off the ground, finding investors that would take them seriously and what's next. Read on for highlights from our chat.
Starting off, could you both tell me a little about your backgrounds and if and how they related to fashion and retail?
Shilpa: I was a user experience designer and passionate about designing customer experiences. I was doing that more through technology, but loved the storytelling of fashion and all the design aspects of it. Karla has been a lifelong fan of fashion; she's been basically designing her own clothes in Ecuador from an early age because she couldn't get access to the things that she wanted to wear. She's always been passionate about it as well, but I think for both of us what you'll find similar is that we both have a very strong analytical side. I have a background in computer science and Karla is actually an applied mathematics major, so we are very multifaceted. Then we went on to get our MBAs, Karla at Stanford and myself at Berkeley.
Karla: Our backgrounds end up being perfect for a business model like Cuyana because it's not only about creating beautiful products for women, which requires definitely a fashion eye, but it's also about building a business that's incredibly well run, very optimized.
How did you guys end up meeting, and who came up with the concept for the brand, and what were each of you doing previously at that time?
Shilpa: The concept of the brand has been in development, you can kind of say, our whole lives: Karla, from a perspective of always wanting to make quality product that matched her design aesthetic from day one. For me, really finding that fashion had kind of left us uninspired. We've been chewing on this problem for a long time, but it really got catapulted into fruition when Karla and I met. I was actually on my way in to apply to business school and she was a second-year student at Stanford. We actually worked on a project together when we met and it was really that energy that compelled us to form this brand together. We've never collaborated with people like ourselves before, that really were able to vibe so seamlessly on the creative and the analytical parts of the business.
Karla: In 2011, when Shilpa and I met, there were two things happening in the industry that made Cuyana an incredible business idea. The first one is that for the first time, the supply chain in luxury factories was wide open. Because of fast fashion and globalization and low cost in Asia, a lot of big, great brands have moved on to produce there, leaving behind capacity and luxury factories around the world that specialize in specific materials.
Because of that opening for the first time, we were able to build relationships with luxury factories that were open to discussing a business model like ours for the first time and that were also open to bringing in new clients, because they needed them. Then, the second thing that was happening also in the market is the trend of customers just being incredibly disappointed after the fast-fashion era, where their closets were full but they didn't really have anything to be proud of. From a consumer standpoint, there's a need for better-quality products.
Tell me about the process from talking about it to actually getting it off the ground?
Shilpa: [Karla] started working on it in May of 2011 before I joined her at the end of that year. The first two years were really spent establishing that supply chain. In order to even put a business like ours forward, and create incredible products with this value proposition, we had to go pound the pavement and go find all of these factories and create something where something never existed before.
The modern luxury movement was not out there yet. From the $140 to $400 price point, we saw that gap. When we dug in deeper, we uncovered that it was all of that wholesale stuff. For the first two years, we really built up that supply chain, worked with all these luxury factories, tested things in small batches, developed a business model. When we realized we had incredible repeat rate, that we were making an incredible product, is when we actually raised our first round of funding.
Karla: We couldn't launch a brand without perfecting product. The mistake that you see new brands do is that they find a supplier and they make a product and then they're ready to launch and market. Building a business and building a supply chain that supports a full assortment is very difficult and it takes years and years and years to be able to do that. For us, it wasn't about just one product. It was really about coming to market once we were certain that we could support an assortment of what the creative promise was, which was the assortment of essentials for women.
Then in 2013, it was about marketing and that was hard too, back in the day, because we were one of the first brands to come to market with a value proposition of this sort. Telling customers that you're selling luxury quality at $100, it's like, well, what quality is that? There was a lot of education that we had to do from the beginning to also make sure that customers know that our value proposition is real.
What did you find was successful in trying to educate consumers?
Karla: The answer is very old school, but it is all about your customers wearing your products and other people seeing your products and validating that product through use. If our product would've disappointed, then we wouldn't be where we are today. That growth is rapid now and it's because our customers consistently share about our brand, whether it's by telling their friends about us or through gifting.
Shilpa: We also had a breakthrough moment in 2013 when we were able to package that in an easy way for them to share, so with "fewer better things" and attaching our brand to an insight that was larger than just products, which is really tapping into this angst that people were feeling about not having or not finding that value proposition that they were looking for.
Going back to funding, how did you find who to reach out to and what worked in getting people to invest in the brand?
Shilpa: Because we were the leading brand and one of the innovators in this space, we had it really tough. Back in 2011, 2012, early-stage venture capital investors were not putting money in brands or companies that carried inventory. Investors are looking to put money into technology businesses, where there's no inventory risk.
We focused on female partners at venture capital firm. That's how we were able to spend our one-hour meeting talking about supply chain and unit economics, rather than talking about why does a woman want to buy this product or what is a brand and why are you spending this much money on photography. We were able to get to the point and the real juice of the business model.
Since then our strategy really was on raising capital but very little capital. We are building a business that sustains itself; we are in a place where we don't need to raise insane amounts of money to fund our operational expenses, to make payroll.
So you haven't raised much money since the initial round?
Shilpa: We haven't made public disclosures about our fundraising events. We actually have chosen not to do that purposefully. I unfortunately can't answer further, but I can tell you that our fundraising activity has been incredibly minimal. It's been a choice, we've done that purposefully.
Some people think that the more you fundraise or because a company got a big investment, it means the company's doing well. The correlation between a company doing very well and a big investment doesn't translate into future growth.
What is your growth strategy? And how will brick-and-mortar continue to factor in?
Shilpa: It has to be very thoughtful growth. There's quite a few ways that a retail business can grow and a company like ours: We can continue to grow our online channels, we can grow our retail channel, we can add more categories to our products, we can add new verticals, we can do men's, we can grow international also. Our point of view is that we should remain focused and build with focus, so that we don't grow in many directions all at the same time and so that we can build a brand that's consistent and that doesn't confuse the customer.
What's your plan for brick and mortar?
Shilpa: We have a lot of data on our customers and the choices that we make for our retail stores — they're based on actual data that we have from our online activity. We look for the most valuable opportunities, in terms of locations and the potential that we have for penetration there based on online activity, that's one. Then the other side of that is understanding how retail works in that location and making sure that that fits into the model that we have for retail. Our goal is to open stores that are well-run, that are profitable, and that bring value to the customer in that location.
You've recently made some changes in terms of messaging and design for the brand. What was behind that?
Shilpa: We are a design house based out of San Francisco, and I think starting our fashion brand in San Francisco had a lot of advantages... There are definitely layers of intention and consciousness that I think New York and LA brands sometimes add on after the fact, whereas ours are very much built into our DNA. We are a very analytical brand; we value data and metrics. Some of these things have kept us from projecting the confidence that we need to really show ourselves as a design house. We're very proud of those elements and we love the way that we run our business, but I think being removed from New York and LA, sometimes we get lumped into a category that doesn't allow just our design point of view to shine.
[We want to] put that at the forefront.
How, specifically, are you hoping to show that?
Shilpa: We are upping our game across every single touch point and every single channel. You can already start to see the elements of that in our fall campaign [which is] based on fine lines or negative space.
Showing how the pieces are really designed with that at the forefront. Even some of the packaging details, the store details, really thinking about our customer experience throughout the store.
Who is the Cuyana woman and how are you capturing the attention of millennials?
Shilpa: Our woman is between 25 and 45, so we definitely capture millennials in that audience for sure. Millennials are looking for a quality, integrity, a value proposition from the brand that they're following and we definitely are offering that.
What would you guys say has been either the biggest overall challenge or a specific hurdle that you've had to overcome in running this business?
Shilpa: New employees and exits are both the best and the hardest things to go through, but there's this third layer of complexity that you have in terms of people, when you operate a startup. That is how fast the business grows and how great employees can keep up with that growth or not. Many times we've hired incredible people, but the business starts growing much faster than they do.
Hiring and retaining great people and then unfortunately having to exit those that don't keep up or that are just not great hires or that maybe sometimes get poached by competitor.
With "fewer, better," do you feel like that's becoming more of a priority for consumers — not only consuming less but only possessing things that you love?
Shilpa: Oh my gosh, it's like the thing that everybody wants. When we talked about the trends that made Cuyana possible back in the day and that's when it all was starting, but this philosophy and way of living, it's now become part of the mass market too. You see mass markets or companies that target the mass market, like H&M, so many companies are trying to invent this message in what they do.
When we launched Fewer Better Things in 2013, people were in shock. What e-commerce company tells you to buy less?
What's next for you guys in terms of categories? Where do you generally see the brand in five-to-10 years?
Shilpa: Besides changing the way people consume, Cuyana will be the go-to brand for the day-to-day essentials of the modern woman and we want to become that for the entire world, not only for the current customer base that we serve.
Karla: Yeah, we want them to stop asking the question whether it's fashion or consciousness or quality or story. Just like our woman is multifaceted and that's what we're demonstrating through our essential woman campaign, there isn't a reason why we should choose or only focus on one thing.
This interview has been edited and condensed for clarity.