The founder talks to us about setting up a startup, the complexities of online marketing and why they’re not going to set up the 'Tinder of Fashion’.
When Oliver Tezcan stood in front of the Dragon’s Den judges, he wasn’t after investment - he already had it - he was just after the millions of viewers glued to the telly on a Sunday night. The entrepreneur was there for the fame, not the fortune.
In the eight years at ASOS, he’d grown the team from five to 140 people and menswear was making £200 million a year.
And it worked. After 7,000 hits, the site went down. And in the five minutes that his team were busy trying to put the website live again, they captured 13,000 email addresses. The following day, they had their best sales day up till then. Clearly there were many men out there who wanted to shop online for cool, casual, midrange clothes on a website dedicated solely to them.
‘The way men shop is changing, and how they feel about how they look is changing. It always struck me as an opportunity that men online were basically buying from where the girlfriends were buying - TopShop, River Island - but if you’re online only you can just focus on menswear. We felt there was the opportunity to launch the first dedicated menswear retailer online for accessible fashion.’It was the idea that there were many men out there that were fed up of shopping in stores - online and off - which were primarily focused on their girlfriends that pushed Oliver Tezcan set up Idle Man for the ‘guy who wants to look cool but is not a total hipster. He works in a creative environment where he can’t wear a suit; he wants to look cool without looking ridiculous.’ Unsurprisingly, 30% of their customers running up to Christmas were women buying for their boyfriends.
Tezcan knows the fashion business well. He had joined ASOS in 2006 as they were launching their menswear section. In the eight years at ASOS, he’d grown the team from five to 140 people and menswear was making £200 million a year. It was also, crucially, growing faster than womenswear. It was mainly prompted by a frustration that ASOS only had one marketing team and 80% of them were devoted to womenswear. As his stunt on Dragons' Den proved, marketing works.
Tezcan had been thinking of starting up his own business for about a year before he left ASOS in September 2013 and soft launched in January 2014. During the year, he put together a business plan and it was as simple as reaching out to everyone in his network who knew about finance and raising money. He had attracted angel investment from his extended network but decided to check the finer details of the deal with a friend from university who worked for the private equity fund Foresight Group. In the end, they came on as an institutional investor. They are still their principal investor.
Compared with the routes of alternative funding he could have taken, Tezcan is positive about going an institutional investor.
Compared with the routes of alternative funding he could have taken, Tezcan is positive about going an institutional investor. ‘It’s always good to have deep pocketed investors who can go with you on something. They injected a lot of structure into the company, something that I perhaps wouldn’t have done on my own. From the get-go we had a chairman, a non-exec finance director they found in their network. They’ve followed on from their investment a few times so we had the flexibility to put more money in when we needed to. As long as they still believe in the idea, they’ll keep on putting money into it.’
To date, they’ve raised just over two million pounds. In the last round they raised 1.25 million. They’ve been based at the Holywell Centre since August after the building where their previous office was located was repossessed. They were urgently looking for somewhere in the Shoreditch area, and ‘Workspace came to the rescue’.
The main costs in his business are marketing and stock. They buy the stock and store it in their warehouse in Manchester and so suffer from the familiar cash flow problems. Their team is small, there are over twenty of them in the office - mostly marketing, but also in tech and buying.
Marketing is one of their key focuses. When they launched they focused on pay per click campaigns but although those methods were effective, it wasn't effective brand building. They now look to content marketing: ‘Telling stories, getting people on the blog, getting people onto the product pages and building awareness that way.’ People often discover them on the blog and migrate to the website. It also builds their rankings on Google. They target specific groups on Facebook.
Although they don’t market overseas, about 15% of their business is mostly in the US. As they don’t have an international website or distribution office, there are difficulties with zonal pricing and VAT, import duty and free returns. Long term, the goal is to have a US website and a distribution hub in the USA but to keep the head quarters in the UK. Their commerce platform Magento has those capabilities so it’s just a matter of time and ‘bandwidth’, as Tezcan puts it.
‘Mobile is becoming bigger and bigger. It now accounts for half our traffic. But the conversion is bigger on desktop but people use mobile as a growing tool and purchase at home on their desktop computer.’
Tech was initially a problem, as they outsourced to an agency. It was ‘one of the biggest mistakes we made’ Tezcan admits. He didn’t want to have to recruit a developer, front-end developer and a designer. He thinks agencies are a solution for a big business rather than a start-up as they’re expensive and your website will never be their priority because most agencies have one big client. Idle Man recruited an in-house developer as quickly as possible.
‘Mobile is becoming bigger and bigger. It now accounts for half our traffic. But the conversion is bigger on desktop but people use mobile as a growing tool and purchase at home on their desktop computer.’ The conversion is lower, because inputting card details and integrating payment systems directly on to phones is impossible unless you have a native app. If they launched an app, it wouldn’t just replicate the website. It would involve some king of gamification or might work as the ‘Tinder of Fashion’ - there would have to be added functionality.
They’re mostly focusing on building their own label and want to have it as 50% of the mix of the business in 2017. They have a quarter of a million unique visitors a month and 30,000 active customers. And with between 150 and 180 % month on month compared to the previous year, it looks like the Idle Man is going to get more and more busy.