It’s been a turbulent fortnight for Deciem, the wildly successful beauty brand founded in 2013. First came a video posted to the brand’s Instagram account by maverick founder, Brandon Truaxe, claiming financial crimes within the business. Next, shops were abruptly shuttered. Finally, minority investor Estée Lauder stepped in, and Truaxe was removed as CEO by court order.
Coverage of the story has largely focused on the social media spectacle Truaxe created – which in turn encouraged panic buying in the face of the brand’s potential closure.
That the vast majority of most reports have focused on such gossipy aspects is indicative of the lack of understanding we, the business community, have when we discuss mental health problems and the huge levels of stress that come with running a company.
Although Truaxe hasn’t confirmed his medical status, he reportedly was taken into psychiatric care in the run-up to his ousting from Deciem. This episode has also certainly caused stress for staff – from those working in the shops who may have feared for their jobs, to those close to him, including Nicola Kilner, who has now been appointed CEO.
Jo Ellison at the FT has written an insightful piece on this topic. The mental heath of founders is an area Courier is looking at closely.
Yet another thing that Instagram has changed: our appetite for sneakers. As StockX, a resale marketplace for luxury sneakers and streetwear launches in the UK, its founder Josh Luber explains how smartphones have spurred interest in trainers as a collectible item (plus the challenges of launching a stateside business in the UK).
Streetwear has been covered extensively (including by Courier), but the category is capturing imaginations for good reason. Streetwear brands have the power to make the uncool ‘cool’ (take Supreme’s partnership with US burger restaurant White Castle), generating cash in the process. Fashion houses meanwhile are desperately rethinking their operations in order to copy the model (Burberry is the latest to announce a limited edition ‘drop’).
It’s unlikely coverage of the streetwear effect will be going anywhere soon.
WeWork announced a partnership with Rent the Runway yesterday, in which users of the fashion rental startup can return clothes easily via 15 WeWork locations. For Rent the Runway, it’s a big extension of its physical footprint. For WeWork, it’s the latest sign that the company is taking retail seriously.
Since WeWork introduced ‘WeMRKT’ shops in June, the question has been whether the retail concept is simply a marketing ploy or an innovative (and profitable) idea.
Each WeMRKT shop – intended to be rolled out in existing WeWork locations – will sell products created by WeWork members, from food and drink to clothing brands, who pitch to gain shelf access.
As Digiday notes: ‘WeWork is betting that companies interested in supporting one other will buy each other’s products. It’s a way for consumer startups to make early sales; it’s also a marketing lift, distribution and testing channel for emerging brands.’ In return, WeWork takes a cut of sales.
Last week, Courier visited WeWork’s New York headquarters and saw a WeMRKT in action. More like a small in-house kiosk than a shop, it sells a range of snacks, magazines and other bits and pieces that are useful to have during the working day.
Is one revenue stream enough to sustain a business in a saturated market? And when’s the right time to expand or diversify? We discussed these questions at the latest Courier for Allpress event on Wednesday at Rapha in Spitalfields, London, with Chris Ammerman from Caravan, Claire Ptak from Violet Cakes and Charlie Gladstone from Pedlars.
Do the maths
For Pedlars, a homewares shop in London’s pricey Notting Hill neighbourhood, rent is expensive at £50,000, with business rates roughly £25,000. To offset this, founder Charlie Gladstone added a cafe, which now contributes 50% of weekly turnover. ‘The only way an independent cafe can distinguish itself in London is by having a very [strong] coffee offering as an anchor,’ he said. ‘A blue chip coffee company [like Allpress] is great at nurturing your team.’
Social media can change a business
‘I’ve used Instagram since [I] started,’ Claire Ptak said. ‘People would come in and say, “I saw this cake on Instagram and want it straight away”.’ She also described the impact creating the royal wedding cake for Meghan Markle and Prince Harry had on her business. ‘We went from having 60,000 followers to 210,000 in a single weekend.’
Take a leap of faith
Ammerman explained why he opened Caravan’s second location, in London’s King’s Cross: ‘The area was a wasteland at the time and everyone we trusted told us not to do it. But we fell in love with the site and it was ultimately an emotional decision. Commercially, it gave us the confidence to do more, since it made money from the beginning.’ Although, he said, ‘it was four years before we opened another site. It took us a long time to digest those lessons.’
The sister-and-sister team behind Karma Cans, a startup which delivers office lunches across London, is experimenting with the co-working model for food brands.
Three weeks ago they opened their first Karma Kitchens site, a co-working space complete with kitchen facilities, separate office amenities and millennial pink tiling.
The concept has been a year in the making, and the sisters say the next three months are all about filling the space (which is already at around 50% capacity), and testing and tweaking the model. They have plans to open more spaces in 2019.
There is clearly a need for affordable food production spaces in central London in the face of rising rents, cost of supplies and business rates. More companies are looking into using off-site kitchens in order to service the growing food delivery market – which, according to UBS, is set to be worth over £280bn globally by 2030.
Karma Kitchens’ opening, however, comes just as a similar concept in the US announced it’s closure. Pilotworks expanded massively across the US after receiving around £10m in funding – it also owes the small businesses it works with thousands of dollars.