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Yesterday top Silicon Valley VC Andreessen Horowitz, also known as A16Z, led a $40 million investment in ShoeDazzle, a “Netflix for shoes” startup. ShoeDazzle is best known for being sponsored by Kim Kardashian, but it seems to be a huge business.A16Z Partner John O’Farrell says the company has 3 million “members”, and that the default subscription is $39.95. If every membership is a paying subscriber that would work out to $120 million in revenue PER MONTH, Internet analyst Andrew Chen notes.
But actually, you only pay in a given month when you want that month’s selection of shoes, so the revenue is actually probably much, much lower. But it would be interesting to know what the conversion rate is, and what the growth is. It’s almost certainly on those metrics (and churn) that A16Z invested.
So ShoeDazzle isn’t as big as a casual look at its metrics might indicate. But it certainly seems to be big and generating serious revenue.
It’s also an interesting look at the trend of celebrities going into startups. The way it usually works is that a celebrity will get shares into the company to promote it. It’s win-win, because it’s great marketing for the company. For example, Tyra Banks and Lance Armstrong partnered with Demand Media when it was young, and made millions in its IPO.
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