WWD Digital Forum Los Angeles: Mike Karanikolas & Michael Mente from REVOLVE Clothing

Thank you. Yeah, got more than that. Every year, over 40,000 SKUs pass through our website.

I think the key is understanding how to connect with the next generation of retail consumers. That's exactly what's causing pain for the Old Guard and exactly what's causing success for retailers like us. Consumers are still spending on clothing, so you hear about all these headlines of pain in retail, but it's really headlines around the Old Guard where sales are shifting from them to companies like ourselves. As far as connecting with the next generation, it comes down to going about your business in very different ways — everything across the board from marketing strategy to merchandise strategy to customer experience and platform. It's all very different in what we view as the new guard of retailers such as ourselves versus the incumbents.

Definitely. Particularly early in our history we made some moves that were critical. Some Old Guard retailers have caught up to certain things, but we're already three steps ahead on other aspects. Going back to 2003, we understood the importance of selection online — it should be like the flagship store in terms of choice. We also understood that the home has to be a dressing room; consumers can't purchase clothing without being able to touch it and try it on. Old Guard retailers thought that would protect them from online, but out of the gate we offered free shipping and free returns when no one else was doing it. On merchandise strategy: today's consumer is looking for different things. Emerging brands, things that are new and undiscovered, are much more important to today's consumer than consumers of old. We see it across industries — most notably the shift in the beer industry, where 15 years ago you had Miller, Bud, and a handful of others, and now there are hundreds of interesting, desirable, special brands. That's what we bring to the fashion space. In terms of marketing, the millennial generation has a very different relationship with influencers and authority figures. They don't like to be talked down to from a pedestal or a billboard. They draw inspiration from sources that are more authentic and organic, people they can relate to as a friend or partner versus a traditional authority figure.

Definitely. I'm seeing the trend with micro influencers and micro, mini brands — micro big brands.

Our more recent experiences with physical retail have been tremendously successful. The pop-up store at The Grove vastly exceeded our expectations — we were open for a two-month period and it was actually profitable, which really surprised us because it was more of a marketing event for us. I think the future of physical retail is strong and it could play a role in our future, but for us we have so much going on right now that it's not an area of focus.

As far as Alliance goes, we want to continue to pursue and build on that strategy. They're turning out the kinds of brands and designers that our consumer is looking for, so we're looking to add on top of what we've already done. While we do have internal targets, the most important thing is the quality of what we do. We want to grow as fast as we can but also make sure we're doing it the right way. It's going to come down to how well we're able to find new design talent and come up with new concepts for the consumer. We think there's a lot coming, but it's TBD exactly when and what that looks like.

Over 600 million. We're getting near the B word. It is something we see in the near future — whether we get there next year or the year after is still TBD. But growth continues to be strong, and internally we're projecting that by 2018 we'll hit a billion in sales.

I think all acquisitions we look at on a case-by-case basis. I think it's unlikely we'd be interested in something that one might call the Old Guard of physical retail, but with any acquisition it's all about understanding how it fits into what we do — can we add a lot of value there, turn the company around or accelerate growth in a substantial way. For us it's typically been emerging designers and things of that nature. We also think we have a great e-commerce platform and great organizational expertise in connecting with the next generation of consumers, so an acquisition that could plug into that infrastructure and know-how is also something we'd be interested in.

From our marketing standpoint, we made a lot of moves to connect with this generation of consumers. Our marketing strategy is very different — it's very centered around influencers and social media. That's an important tactical move we made over the past four years, focusing our marketing efforts in that way. From a merchandise standpoint, understanding the importance of emerging designers and things that seem special to the consumer. Also understanding the importance of a larger assortment and constantly turning product — today's consumer doesn't want new product four times a year like the traditional schedule. They don't even want new product every month. They want new product every single day. That's what excites them — visiting your website or store and seeing something new and fresh. Every day on Revolve there's hundreds of new styles, so it's interesting to our consumers every day.

Building on that idea of growing too fast is the idea of expectations that were maybe too high. Nasty Gal originally took on venture capital investors, which are great and can add a ton of value, but the way they run businesses and what they expect are very different from private equity investors or other types. With venture capitalists, they're looking to hit a couple home runs paired with maybe a dozen strikeouts. So anytime you as a business decide to take on a venture capital investor, you need to understand that you could just as easily become a strikeout as a home run.

I think it's about the way in which you work with influencers. Regardless of whether there's a required hashtag or not, consumers can sense what content is more authentic versus what content an influencer wouldn't be doing if the sponsorship or payment wasn't there. That's been very differentiated about our social media strategy versus some larger companies — we're building experiences and stories that are authentic. Whether or not payment is exchanged, and it often is not, we're creating parties and experiences that influencers want to experience, and we're creating clothing and brands they want to wear. That's the key with consumers, and they can understand that through the stories we tell on social media.

Having a team that really works well together and understands each other is important. A great team is critically important, but it's also important to understand there's only so much of an extent you can buy a great team. The great team has to be developed and fit in culturally and mesh well with everyone. Most of our critical roles have actually been with the organization five, six, seven, eight, nine, ten years even. We do make the occasional free agent acquisition, but it's largely homegrown talent, and that's been a critical factor in our success.