Nasty Gal is Killing It at ECommerce - Here's How They Did It

Much has been written about Nasty Gal founder Sophia Amoruso’s “rags to riches” story.The simpli�ed version, as she recounts in her recent memoir, is this: a community collegedropout who had recently been �red from a high-end shoe store, Amoruso was a self-described “broke, anarchist ‘freegan’ dead set on smashing the system” [1] when shedeveloped a hernia. Unable to afford treatment, she took a job checking IDs in the lobbyof an art school and worked there 90 days, just long enough for her health insurance tokick in.

Image via Washington Post

During this period, she spent a lot of time sitting at a desk browsing MySpace—after all, itwas 2006—where she received tons of friend requests from vintage sellers on eBay. Anavid vintage shopper, Amoruso explains, "I realized that the world is your market. I wasjust like, 'Oh my God, I can �nd this stuff for way cheaper for what they’re selling it for oneBay,' and I went for it.” [2] And so in 2006, twenty-two year old Sophia Amoruso launchedan eBay store called Nasty Gal Vintage. She says:

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Nasty Gal is Killing It at ECommerce - Here's How They Did It

“The �rst thing I did was buy a book: Starting an eBay Business forDummies, which taught me how to set up my store. The �rst order ofbusiness was to choose a name. Many of the vintage shops already oneBay were so bohemian it hurt, with names like Lady in the Tall GrassVintage or Spirit Moon Raven Sister Vintage. So the contrarian in megrabbed the keyboard and named my shop-to-be Nasty Gal Vintage,inspired by my favorite album by legendary funk singer and wildwoman Betty Davis. … I thought I was just picking a name for an eBaystore, but it turned out that I was actually infusing the entire brandwith not only my spirit, but the spirit of this incredible woman.” [1]

Her early aspirations for the shop were humble enough: cover her rent. [2] But accordingto Amoruso, Nasty Gal Vintage has been pro�table since the very beginning. [3] In 2008,after being suspended from eBay for promoting her upcoming stand-alone e-commercestore, Amoruso launched Nasty Gal as an independent website. [4] By 2011, revenues hadreached $28 million, [3] and by 2012 that number had swelled to a reported $100 million.[5] So how did Nasty Gal grow from a vintage shop on eBay to an ecommerce site with$100 million in sales, customers in over 150 countries, and two brick and mortar stores? [5]

In  this growth study we’ll break down Nasty Gal’s growth engine includingearly traction efforts of:

 Building a relevant brand that resonated with millennials Turning vintage �nds into high margin sales Leveraging social networks and eBay to reach their audience Using data and Amoruso’s fashion sense to �nd and stylepieces that sell

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Nasty Gal is Killing It at ECommerce - Here's How They Did It

To their more recent growth efforts including:

 Going from vintage to original designs and an independentclothing line Turning the Nasty Gal brand into a mission and philosophy Fostering word of mouth and customer loyalty Expanding into brick and mortar stores

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Nasty Gal is Killing It at ECommerce - Here's How They Did It

The Early Days: Making Magic Out of NothingAmoruso says it took her years to realize Nasty Gal could be what it is today. She says, “Iwas thinking, 'What am I going to do with my life?' This works for now, but do I want toschlep on eBay for the rest of my life?" [2] Amoruso initially she did all of the work forNasty Gal single-handedly—everything from sourcing inventory to learning HTML tophotographing, listing, writing item descriptions, and shipping. Though she was an avidvintage shopper, it proved dif�cult to scale her recreational thrifting to a level that wassustainable for her growing business. Furthermore, most sellers closely guarded theirsources. As Amoruso explains, “You have to establish relationships. One person leads youto another person, if that person is willing to talk. It’s like the drug trade.” [4] Most ofNasty Gal Vintage’s inventory came from rag houses, which Molly Young describes as:

“warehouses of Salvation Army rejects waiting to be sold in bales toAfrica or picked through by vintage sellers. It was a needle-in-the-haystack situation, with every tissue-thin Rolling Stones shirt buriedunder a thousand preshrunk Ozzfest tees.” [4]

Though Amoruso remembers these days fondly, the fact of the matter was that diggingthrough clothes at rag houses required as much luck as skill, and it wasn’t uncommon forher to drive ten hours for “a pile of last year’s Forever 21 dresses.” [4] Sometimes Amorusomodeled these clothes herself, but typically she used girls she found on MySpace. "In thebeginning, I was basically paying the models with hamburgers,” she explains, “They werenormal high school girls that you �nd on Myspace. I would buy them lunch and maybegive them $20 a day." [7] After a year and half of this, Nasty Gal Vintage was doing around$115,000 in sales and earning $20,000 in pro�t, and Amoruso had moved the businessfrom its initial location in a rented beach house to a studio outside of San Francisco. [8]One secret behind these impressive numbers is Amoruso’s philosophy “that you sellthings for more than you bought them.” [8] She elaborates on this concept in hermemoir, #GIRLBOSS:

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Nasty Gal is Killing It at ECommerce - Here's How They Did It

“Once, I found two Chanel jackets in the same shopping cart. Flip, �ip,�ip—Chanel jacket—�ip, �ip, �ip—another one! I paid $8 for each ofthose Chanel jackets. I listed each of them at a $9.99 starting bid andsold them for over $1,500. I didn’t know what a ‘gross margin’ was, butI knew I was on to something.”

Although for the most part the company no longer deals in vintage, the notion of sellingthings for more than you bought them is still very much relevant. As Forbes reported in2012, 93% of Nasty Gal’s inventory sells at full price thanks to the fact that the companybuys limited runs and avoids accumulating a backlog of merchandise that must then bemarked down. [8]

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Nasty Gal is Killing It at ECommerce - Here's How They Did It

Building a Relatable BrandA perhaps more important component of Nasty Gal’s success is in presentation. Betweenthe girls Amoruso recruited off MySpace to model new �nds, to how the models wereshot, everything exuded Amoruso’s vision for making girls “feel awesome.” Beginning inthe company’s eBay days and continuing to today, Nasty Gal’s signature styling speaks tothe company’s millennial audience in a distinct and tangible way. As Amoruso explains:

"You can turn [an item] into the most covetable piece of vintagebecause you put it on a girl…who’s showing you how to wear it, havingan attitude that’s approachable but still sexy, friendly and cool. There,you have this whole fantasy from this piece that probably started in aplastic bag in the backroom of a thrift store." [2]

For Amoruso, digging through vintage clothing was like “�nding a penny on the street.”She explains:

“At a certain point, I could hold something up on a hanger and knowexactly how it would look on a girl, how I could style it, and how itrelated to what's going on in fashion today. It became a treasure hunt.… it was �nding my future. Being able to turn something that has noinherent value, like a vintage blouse, into something that some girlfeels is total gold—and is willing to pay the price of gold for—just feltreally great.” [9]

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Nasty Gal is Killing It at ECommerce - Here's How They Did It

She asserts that “Nothing will teach you more about perceived value than takingsomething with literally no value and selling it in the auction format. It teaches you thebeauty and power of presentation, and how you can make magic out of nothing.” [9] Thisnotion of making magic out of nothing—of taking something worth a few dollars andmaking it work a few hundred (or more) through styling, photography, and presentationis not only what allowed Nasty Gal to become pro�table immediately, but also one of theprimary reasons Nasty Gal’s customer base grew so quickly. Plenty of shops were sellingvintage clothing, but Nasty Gal was selling something more than that. As Amorusoexplains:

“If I saw a sequined Golden Girls tracksuit on the �oor of a warehouse,I’d take the jacket and sell it. Anyone could have sold it for $9.99. But toput it on the right girl, with the right hair and the right attitude,showing people how they could wear it—that was everything.” [4]

Even after launching a standalone site, hiring staff, and handing over the creative reigns,Amoruso continues to tweak the presentation of certain items in order to make magicout of nothing. For example, when she insisted that a wrap dress with lackluster sales bephotographed on one of Nasty Gal’s most popular models, the dress saw a 400% increasein sales. [8]

A Mission of Making Girls Look & Feel AwesomeIt’s important to stress that, according to Amoruso, the notion of making magic is aboutmore than just making money. In #GIRLBOSS she asserts, “I always knew that Nasty GalVintage was about more than just selling stuff, but this proved it: What we were reallydoing was helping girls to look and feel awesome before they left the house.” She goeson to explain:

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Nasty Gal is Killing It at ECommerce - Here's How They Did It

“I remember perusing a vintage store in San Francisco when the girlworking there confessed to me that to get out�t inspiration beforegoing out on Fridays, she visited Nasty Gal Vintage. I started to realizethat, though I’d never intended to do so, I was providing mycustomers with a styling service. Because I was styling every piece ofclothing I was selling head to toe, from the hair down to the shoes, Iwas showing girls how to style themselves. And though you’ll rarelyhear me advocate giving anything away for free, this realization wasone of the most profound and welcome ones I’ve had with thebusiness.” [1]

This is inextricably linked with the notion of “selling the fantasy,” as mentioned above,and it infuses every element on the Nasty Gal brand, from the aforementioned “freestyling” to the name Nasty Gal itself to model selection and photography—in the eBaydays, Amoruso solicited successful freelance photographer Paul Trapani [1], while todaythe company uses notorious fashion photographer Terry Richardson. [10] Everythingworks together to not only “sell stuff” but evoke a signature experience that Nasty Gal’scustomers have responded to in a major way.

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Nasty Gal is Killing It at ECommerce - Here's How They Did It

Optimizing ECommerceThough much the above is very qualitative in nature, Amoruso has also paid closeattention to Nasty Gal’s quantitative benchmarks and metrics from the very beginning,approaching her eBay store with the same methodical, data-driven zeal that you’dexpect from standalone ecommerce sites with much larger inventory and customerbase. She tracked popular search terms as a means of predicting upcoming trends—asMolly Young explains, “batwing, lamé, and lumberjack were big in 2007; studded andarchitectural and origami in 2008.” [4] She also took note of regional peculiarities at therag houses from which she was sourcing her inventory and optimized her buying tripsaccordingly. During Nasty Gal Vintage’s stint on eBay, the site restricted sellers to a 55character heading and an 80 x 80 pixel image. Amoruso used these constraints to testand optimize her listings. Among other things, she learned that clothes on humans soldbetter than clothes draped on mannequins or the backs of chairs, and that she got moreclicks when a garment’s silhouette was immediately apparent. [4] In addition toobsessing over garment styling and model selection, Amoruso cross posted photos toMySpace, and when bids were unimpressive and comments were negative, she wouldtry a similar garment on a different model to see how conversions increased ordecreased. [8] As she explains in #GIRLBOSS:

“Each week I grew faster, smarter, and more aware of what womenwanted. And each week my auctions did better and better. If it sold,cool—I’d instantly go �nd more things like it. If it didn’t, I wouldn’ttouch anything like it with a ten-foot pole ever again.” [1]

This not only helped her to outperform herself week after week, but to stand out fromher initial eBay competitors. By the time she had outgrown eBay, Amoruso realized thatshe was doing much more than turning a pro�t on vintage clothing—she was usingphotography, styling, messaging, and meticulous testing to tell a powerful story aboutpersonal image and self-worth. More than anything else, this allowed her to forge apowerful connection with millennial buyers, helping Nasty Gal to stand out fromtraditional retailers.

From Vintage Resale to Original Designs

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Nasty Gal is Killing It at ECommerce - Here's How They Did It

In 2008, Amoruso began including a link to her newly-acquired URL,nastygalvintage.com (at the time nastygal.com was a porn site), in her eBay transactions.[7] Because of this, she was accused of taking traf�c away from eBay, as well as shillbidding—an accusation she denies—both of which resulted in her being suspendedfrom eBay in June of 2008. This suspension was just the jolt she needed to spend thenext few weeks getting Nasty Gal ready to launch as an independent website. Leavingthe eBay platform didn’t slow her down. In fact, she sold out her entire inventory the daythe site launched, and Kelly Ripa’s stylist called to see if a sold out jacket was available in asize extra small. Though it obviously wasn’t because the jacket was vintage, Amorusorealized the demand generated by her growing following could no longer be met byone-of-a-kind, vintage items. She approached labels like MinkPink and Jeffrey Campbelland began taking the steps necessary for Nasty Gal to sell new clothes. [7] Because of thecompany’s engaged and growing customer base, it’s unsurprising that in 2012 thecompany began offering original designs. "Designing was the natural next step for us,”Amoruso explained in 2013, “It's going on seven years for me that I've been sellingclothing to the same awesome girl. And we've understood the kind of silhouettes andcuts that she likes over time." [7] To get their independent line off the ground, Nasty Galhired Sarah Wilkinson, formerly of ASOS, as vice president of design, as well as printdesigner Lauren McCalmont, who had worked with luxury shoe designer NicholasKirkwood and womenswear line Peter Pilotto. [7] Weird Science, Nasty Gal’s �rst line ofindependent designs, debuted at New York Fashion Week in September of 2012. [13]Since the debut of Weird Science, Nasty Gal has gone on to launch various collections,including accessories, swimwear, lingerie, and an in-house footwear line called Shoe Cultin August of 2013—with items ranging from $68 to $188. [14] By 2013, 30% of the site’ssales were generated by the Nasty Gal label. [7] Though this �rst line was designed byAmoruso herself, [8] in 2013 she claimed that she was limiting her input to �nal say, inother words: "I approve it or say it needs to be sexier." [7]

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Nasty Gal is Killing It at ECommerce - Here's How They Did It

Image via Nasty Gal

The Social Brand and Word of MouthAs of March 2015, Nasty Gal had 1,174,907 Facebook fans, 208,000 Twitter followers, and 1.5million Instagram followers. Social and word of mouth have been huge growth levers forthe company since the very beginning. As Amoruso explains #GIRLBOSS:

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Nasty Gal is Killing It at ECommerce - Here's How They Did It

“I had friend-adding software, which was totally against MySpace’spolicy. I would look up, say, an ‘it girl’s’ friends and add only girlsbetween certain ages in certain cities. … Soon I had tens of thousandsof friends on MySpace, which I used to drive people to the eBay store. Idid a MySpace bulletin and blog post for every single auction thatwent up on Nasty Gal Vintage. I didn’t know it at the time, but what Iwas doing here included two keys to running a successful business:knowing your customer and knowing how to get free marketing.” [1]

Even after Amoruso made the switch from eBay to NastyGal.com, social has remained animportant element of the company’s growth. It wasn’t long before MySpace wasreplaced by Facebook, and the company’s presence on that platform began to grow aswell. Despite the fact that Nasty Gal didn’t begin paying for advertising until around 2013,[7] by June of 2012, the company had earned $128 million in sales, with gross margins ofmore than 60%. [8] Forbes’ Victoria Barret cites the company’s ability to “translate likesinto sales,” [8] and the importance of Nasty Gal’s social engagement can’t be overstated.Between 2011 and 2013, Nasty Gal’s Facebook followers increased tenfold, growing tonearly 831,055. [7] As Amoruso explained in a 2013 interview with Wall Street Journal’sJohn Ortved, the evolving company’s presence on social media was not merely a tool forgrowth, but a means of understanding and connecting with a target market:

"Nasty Gal really emerged from a conversation. I've probably spentmore time than any other brand reading every last comment. To listento people the way you're able to online is very powerful. I think othercompanies are just starting to �gure that out." [7]

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Nasty Gal is Killing It at ECommerce - Here's How They Did It

Danny Rimer of Index Ventures echoes that sentiment, asserting that, "What led us toNasty Gal was the fact that Sophia had created something extremely special in terms of aconnection between what she was doing and her customer base." [7] Nasty Gal’smillennial customers are undeniably more plugged in to social media, and leveraging thisconnection (even using scrappy, semi-questionable techniques like friend-addingsoftware) has been another integral means of reaching this audience in a way thattraditional retailers have yet to pull off.

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Nasty Gal is Killing It at ECommerce - Here's How They Did It

Fiercely Loyal CustomersIndeed, Nasty Gal’s social presence has been critical in identifying and encouragingloyalty among their ideal customers, who Amoruso described in 2010 as:

“She’s in her late teens or early-mid twenties and super body-con�dent. She knows how to dress for her shape and isn’t afraid ofwearing makeup and short skirts and being sexy. She’s into fashionbut her taste doesn’t just apply to what she wears: It applies to food,interior design, and travel. She wants to have awesome experiencesand be the best-dressed girl around — without spending an arm anda leg.” [11]

Sharon Langlotz, a 25-year-old Nasty Gal customer, explained in 2013 that she �rstencountered the company via a Nasty Gal dress posted on Pinterest. From there, shewent to the Nasty Gal site, and she found the “trendy, not too pricey” garmentsappealing because they reminded her of “the stylish clothing she sees on street-stylefashion blogs.” [7] Langlotz began following Nasty Gal on Instagram, Pinterest, andFacebook, and twice a week she checks the site for new merchandise—“I �ll up myshopping cart and dream,” she explains. She says Nasty Gal has changed the way sheviews online shopping. [7] Langlotz’s experience is not atypical. In June of 2012, 25% ofNasty Gal’s 250,000 customers were visiting the site at least once a day and spending atleast seven minutes there, while the most engaged 10% of users were visiting more than100 times per month. Half of the site’s sales were coming from 20% of customers. [8]

FundingThrough building the distinct Nasty Gal brand, leveraging social media at a time whenmany other retailers were scrambling to �gure it out, and forging a unique connectionwith millennials, Nasty Gal was able to sustain remarkable growth with little outside help.Nevertheless, by 2010 the company was attracting attention from VCs and equity �rms,and in 2012 Nasty Gal decided to raise money in order to further accelerate growth.Amoruso says she chose to go with Danny Rimer and Index Ventures because:

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Nasty Gal is Killing It at ECommerce - Here's How They Did It

"I don't really have any mercenary relationships in the business, andDanny is someone I really like as a person, who I'm friends with, who islike family. … No one was investing in Net-A-Porter, no one wasinvesting in Asos [when Rimer approached them]. Index is contrarianin their thinking, which I am." [7]

The feelings seem to be mutual. “We’ve been really interested in fashion and fashion hasalways been strong in Europe [where Index is based],” Rimer explained in a 2012interview with TechCrunch’s Alexia Tsotsis, “We had not seen anything like this in termsof groundswell and relationships with customers.” [3] To date, Nasty Gal has raised $65million in three funding rounds, the most recent of which was in February of 2015 andresulted in $16 million, led by former Apple executive Ron Johnson with participationfrom Index Ventures. [15] Index Ventures also provided the company’s Series A funding inMarch of 2012 and Series B funding in August of 2012—$9 million and an impressive$40M, respectively. [16]

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Nasty Gal is Killing It at ECommerce - Here's How They Did It

Brick & Mortar StoresOne way in which Nasty Gal has expanded is through the construction of brick andmortar stores. “I’ve created a very human brand online,” Amoruso explained in early 2014,“and our customers really want to engage with us and our product in real life.” [9] The �rstbrick and mortar Nasty Gal store opened in Los Angeles on November 24, 2014, followedby a second store in Santa Monica on March 27, 2015. As LA Con�dential’s Erin Magnerexplains, the recently-opened Santa Monica store will be “a hub where the Nasty Galfaithful can make friends IRL.” [12] Designer Rafael de Cárdenas, who worked withAmoruso on both locations, describes the storefront:

“Clear walkways will lead shoppers through the different brandingexperiences, and there will be central cage-like gathering areas wherespecial items are displayed. The Melrose store has one-way mirrorglass in the �tting rooms so you can see out but no one can see in,and deep blue carpeting that gives off a boudoir feel. Both arerepeated in Santa Monica. The Santa Monica store will also have aproprietary shoe salon, which is nice because shoes is an area ofparticular importance for Nasty Gal.” [17]

Nasty Gal stores feature the company’s own designs as well as pieces from brands suchas Jeffrey Campbell, For Love and Lemons, Cameo, and vintage pieces from Chanel, LouisVuitton, and Moschino. [18] After the opening of the Los Angeles store, Amoruso asserted,“Our girls are just so in love with our clothes and our story. Our brand has a look and asound and a feeling, and I wanted to bring that to life.” [12]

Company Culture

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Nasty Gal is Killing It at ECommerce - Here's How They Did It

An important—though dif�cult to quantify—component of Nasty Gal’s growth isAmoruso herself and the ethos she has constructed around her brand, or, as she explainsin #GIRLBOSS, “I thought I was just picking a name for an eBay store, but it turned outthat I was actually infusing the entire brand with not only my spirit, but the spirit of thisincredible woman.” [1] In a 2014 article for The Cut, Molly Young sums up the companyculture at Nasty Gal:

“Nasty Gal’s of�ce in downtown Los Angeles is a cool girl’s fantasy ofcorporate life. There are potted �ddle �gs, Rihanna on the soundsystem, rainbow sprinkles in the communal fridge. There is a yogaroom. There are printouts of Lil’ Kim and Shelley Duvall taped to thewalls. There are dogs, but only cute dogs of cuddling dimensions:‘We’re a dog-friendly workplace, but the dog has to be under 25pounds,’ says … Amoruso. ‘That’s an of�cial rule.’” [4]

Indeed, it seems that much of the culture at Nasty Gal is an extension of Amoruso herself.Erin Magner asserts that, among Nasty Gal’s millennial client base, Amoruso has become“as much of a celebrity … as the ones that turned up to the Nasty Gal store launch party. …On opening day, 20-something women lined up for hours—one of whom �ew from DCfor the occasion—to take sel�es with the 30-year-old Amoruso as if she were Beyonce.”[12] Both because of the company’s ownership of its overt sexiness as well as Amoruso’sunlikely success story and the recent publication of her memoir #GIRLBOSS, anotherimportant facet of the company’s culture is its purported feminism. As Amoruso explainsin the �rst chapter of her book:

“#GIRLBOSS is a feminist book, and Nasty Gal is a feminist company inthe sense that I encourage you, as a girl, to be who you want and dowhat you want. But I’m not here calling us ‘womyn’ and blaming menfor any of my struggles along the way.” [1]

It’s a brand of feminism that Amoruso admits would make Portlandia’s feministbookstore owners uncomfortable, one that Molly Young captures quite succinctly:

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Nasty Gal is Killing It at ECommerce - Here's How They Did It

“Amoruso is pacing the headquarters of her seven-year-old companywith YSL pumps on her feet and a toy poodle named Donna Summerunder one arm. Wherever Amoruso roams, there are women: womenwith lilac hair and slouchy blazers, women in booty shorts, womenjuggling Starbucks cups and greeting each other with girlfriendlyhugs. One hallway is lined with recent magazine clippings of Amorusofrom the pages of Fast Company and Entrepreneur, which makes herfeel funny, but she has no choice about the clippings: Her mom getsthem framed and mails them over, then bills the company for herservices. More than three-quarters of Nasty Gal’s 300 employees—anumber that does not include Amoruso's mother, who clips on afreelance basis—are women.” [4]

Nevertheless, as we’ll touch on in just a bit, the company culture at Nasty Gal hasreceived criticism as well as praise.

#GIRLBOSS – The Millennial’s Guide to BusinessAmoruso’s business bible/memoir #GIRLBOSS was released by Putman (a subsidiary ofPenguin) in May of 2014. When asked who #GIRLBOSS was written for, Amoruso claimed:

“I have something like 70,000 Instagram followers beating down mydoor every day for a job, like, ‘Oh, my God, I wanna model for you, Iwanna intern for you.’ They say, "Oh, my god, you had shitty jobs too.That makes me hopeful.’ Or I meet women at conferences who tell me,‘I have a 20-year-old daughter who's totally �ailing, but you give mehope for my child.’” [9]

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Nasty Gal is Killing It at ECommerce - Here's How They Did It

She went on to explain that as Nasty Gal grows, she wants to be able to reinforce “what’sat the core of our success,” to tell her story on her own terms, even if that meansadmitting the �rst thing she ever sold online was stolen. “I’m not glamorizing thatlifestyle,” Amoruso says, “but you know: Don’t make my mistakes, or go make your ownmistakes—it’s okay.” [9] When someone tweeted that grown women shouldn’t callthemselves girls, Amoruso responded: “How’s #BROADBOSS? or would you prefer#MATRONBOSS?” She elaborated in a 2014 interview:

“I mean, come on. I don’t like when an old man says, [creepy voice]‘Let’s invite the girls to dinner,’ but I think it’s okay to call girls girls. …And I think it’s okay to call girls bossy.” [9]

The reference to Sheryl Sandberg’s #banbossy campaign is particularly noteworthy,considering that #GIRLBOSS has been called the millennial alternative to Sandberg’sLean In as well as Lean In for the 99%. “It’s easy to get the sense, reading Lean In,” saysMolly Young, “that Sandberg is writing for women who’ve already made it. #GIRLBOSS isfor those who haven’t, which means it is aimed at people who have nothing to lose,which makes it a much riskier and more enjoyable manifesto.” [4] The book does seem tohave been well-received by the “girls” for whom it was written, with mostly positivereviews on both Amazon (where 87% rated it 4 stars or higher) and Goodreads (where60% rated it 4 stars or higher). As Amoruso explains:

“On my book tour, we had girls waiting around for the event to start,and they’re exchanging business cards… whether they havebusinesses or not. This generation is super ambitious. They want tonetwork and better themselves and learn everywhere they can. That’sthe next step—mobilizing our girls around doing more than shoppingin the stores.” [12]

Ultimately, the company culture at Nasty Gal as well as the publication of #GIRLBOSShave been important ways for Amoruso to stay true to the Nasty Gal brand and broadcastit to a wider audience as well as engage with her current fans.

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Nasty Gal is Killing It at ECommerce - Here's How They Did It

Potential ConcernsDespite the inspirational, rags-to-riches story, the impressive online following, and thetwo beautiful storefronts, Nasty Gal has faced some challenges over the past year, facingthe �ckle nature of millennials and younger shoppers to �nd what’s next and new andperhaps buckling under their own success, the pressure of increased funding and theexpectations that come along with it. To begin, in September of 2014, Nasty Gal laid off upto 27 employees, including executives, PR, tech staff, and employees from the company’sKentucky-based ful�llment center, representing a 10% cut in staff overall. [19] Amoruso’sstatement to TechCrunch regarding the layoffs reads:

“We made some changes yesterday in order to strategically re-organize the business to �t our vision of the future. We are building apowerful brand that leads the market and are committed to creatingsomething that has never been created before. We are excited toopen our �rst two stores in the near future and continue to build theteam to support that growth. Part of these changes were to workexclusively with agencies on the PR side, which we have done in thepast and we know performs for the business. Our Technology teamwas affected as well. I’m hell-bent on Nasty Gal continuing to be greatat what we always have and raising the bar for what an Americanfashion brand can achieve. Best, Sophia” [19]

Amid controversy over the layoffs, Adele Chapin of Racked.com pointed out that thecompany’s Glassdoor stats were quite discouraging: explaining that only 30% ofemployees would recommend working there while just 42% approved of the CEO. Asone reviewer explained:

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Nasty Gal is Killing It at ECommerce - Here's How They Did It

“PR and hype can't mask what's really going on here. You drink thekool-aid for the �rst few months working here, then start to realize it'sall just smoke and mirrors. Terrible leadership, some extremelycondescending managers and employees, and people that try toohard to be ‘cool’. There are of course a handful of people who arefantastic, super smart and well intentioned, but they are probablysoon to leave. I have never worked in a place where so many peopletalked so poorly about their co-workers. There is a complete lack ofteamwork and willingness to help each other and work toward acommon goal...but there really is not common goal at all, because thecompany lacks any sense of direction and has no clearly de�nedgoals.” [20]

For a company whose culture—in particular, the personality and story of the CEO—is sointegral to its success, Nasty Gal’s Glassdoor page is indeed troubling. Furthermore, as ofMarch 2015, those numbers have fallen to 29% and 28%, respectively. [22] Amoruso hasremained obstinate about the fact that Nasty Gal will remain an independent company.When asked in March of 2014 whether Nasty Gal might get acquired, she asserted:

“No. No. No. I wanna take this as far as I can. If being under the wing ofsomeone else seems like a good idea at some point, I'd consider it. ButI'm not a very good employee, so it would have to be someone prettyspecial. I'm having fun with my autonomy.” [9]

Page 21Nasty Gal is Killing It at ECommerce - Here's How They Did It

Nasty Gal is Killing It at ECommerce - Here's How They Did It

By contrast, she has been more open about the notion of hiring someone else to serve asthe company’s CEO. Amoruso explained in May of 2014 that she had consulted withJ.Crew CEO Millard Drexler over whether she should hire a CEO, and though heapparently told her she was “crazy,” she nevertheless asserted that the day may comewhen she decides to step down. [4] Similarly, Rimer said that “one of the best thingsabout Sophia is that she actually continues to question, as the business grows, whethershe is the right CEO.” [4] At the time he too asserted she should be running thecompany. Nevertheless, Amoruso did eventually decide to abdicate her role. On January12, 2015, she announced that Sheree Waterson, who formerly served as the company’spresident, would take her place as Nasty Gal’s CEO and also join the board of directors.Amoruso now serves as Founder and Executive Chairman and leads the Creative andBrand Marketing functions. Before joining Nasty Gal in February of 2014, Waterson was anexecutive at Lululemon, Speedo North America, and Levi Strauss & Co. [21] News ofAmoruso’s stepping down broke just one day after ModCloth’s Eric Koger announcedthat Matthew Kaness would take over as Koger’s role as ModCloth CEO. It’s noteworthythat ModCloth, like Nasty Gal, began as a tiny vintage resale shop (ModCloth even startedout on eBay) that went on to produce original designs, garner attention from investors,and subsequently endure layoffs before eventually handing the reigns of the companyover to a clothing industry veteran. In February of 2015, Gigaom’s carmel DeAmicisspeculated that the relatively small funding round of $16 million was yet anotherindication of trouble at Nasty Gal, explaining:

“This is a comparatively small amount for Nasty Gal, since its lastround was a $40 million Series B, led by Index. Normally rounds getbigger as the company grows unless there’s trouble with the businessand investors decrease their valuation expectations.” [15]

DeAmicis went on to speculate, however, that Nasty Gal’s notoriously cautious leadershipperhaps “didn’t want to raise any more money than absolutely necessary.” [15] With thecompany now under new management, time will tell if the past year’s events weremerely a rough patch or if Nasty Gal is indeed, as one former employee asserted, “allsmoke and mirrors.” [20]

Page 22Nasty Gal is Killing It at ECommerce - Here's How They Did It