Justin Stefano and Philippe von Borries had never started a company before. Neither had worked in fashion before either.
But in 2005, they left their jobs in law and politics respectively to start Refinery29. Refinery29 is a New York-based fashion content and commerce company.
For a long time, no one took Stefano or von Borries seriously. Now Refinery29 is one of the few new media companies that is expected to exit north of $100 million.
In February, Refinery29 raised a modest $4.2 million Series B round from First Round Capital, Floodgate, Lerer Ventures, and Hearst led by president David Carey. In 2009 it generated $400,000 annually. This year it’s expected to pull in $24 million.
We spoke with Stefano and von Borries about how they grew from from a largely bootstrapped business to a major fashion brand.
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They remember sitting at their first “office” eight years ago – von Borries’ kitchen table – and they remember being broke.
No one wanted to invest in the first-time entrepreneurs. Stefano says he and von Borries didn’t even realise raising money could be an option for them.
When you have no money, you get good at finding ways to make it. Stefano and von Borries were able to scrap together enough ad dollars through a partnership with Glam Media to pay themselves $28,000 per year for the first three years. Eventually they were able to secure a $160,000 investment to hire two part-time partners.
“We launched thinking we needed to make money,” Stefano says. “It trickled in.”
Refinery29 began as a city guide that focused on curating small, great brands in home, music, fashion and design categories. The brands often didn’t have the money or time to market themselves, and Refinery29 became a suitable solution. The brands that benefited most from Refinery29’s coverage were fashion companies and boutiques. So although they knew nothing about the fashion world, Stefano and von Borries refocused Refinery29 to better meet the demand. “We essentially became the new vehicle to talk about incredible, emerging independent fashion,” von Borries says.
The company made a few key decisions that helped it grow into a thriving business. To better promote the boutiques, Refinery29 buffed up an email product which became its main distribution channel. It now has 1.5 million subscribers. In 2009, following a $500,000 investment from angel investors, the company hire a head of sales and started selling advertising internally.
“That [hiring decision] set things on fire,” von Borries says. “We had enough credibility in the marketplace after 3-4 years of building the brand that it was like dropping a match in a barrel of fuel.”
That year, the company generated $400,000. In 2010, revenue quadrupled to $1.6 million. In 2011, it skyrocketed to $7.8 million. Last year, it doubled again to $14.2 million and this year, Refinery29 is expected to generate $24 million.
Most of its revenue to date has come from advertisers. Like many digital media companies, Refinery29 is trying to marry content and commerce for an additional revenue stream. Von Borries says he’s wanted to get into e-commerce from day one, when readers would write in asking where to buy featured items.
Refinery29 launched a “shop” flash-sale section, which let readers buy items straight from the site. Refinery29 holds no inventory; it just takes 20 to 30 per cent of each transaction. Now it’s making the shopping experience more seamless.
Instead of having a standalone shopping section, the ability to purchase an item will be embedded into each article page. Refinery29 expects to generate $3-4 million from e-commerce this year.
“Commerce is meaningful content when the product is great,” von Borries explains. “It’s ultimate marketing efficiency if you can figure out how to convert readers into shoppers, but it’s a lot harder than it sounds. Loads of sites have tried and failed, but we think we’re going to make it.”
Now Refinery29 has 105 employees and 5.5 million monthly uniques according to internal numbers (ComScore pegs the number lower at 1.5 million). 10 million monthly visitors, and 80 to 90 million monthly page views.
Finally, people are noticing von Borries and Stefano.
“We’ve had our eye on Refinery29 for some time,” Hearst President David Carey told Business Insider. “We’ve been hearing a lot about them for well over one year. These guys are really smart. I think they’ve established enormous amounts of credibility in a very short period of time. I have admiration for what they’re trying to do…we love to associate with breakout entrepreneurs.”
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