Trunk Club arrives for men who hate shoppingSeptember 8, 2011: 7:30 AM ET
A clothing service "for men who don't enjoy shopping" has arrived, and has $11 million in new funding.
Trunk Club, a personalized men's fashion start-up whose customers include NHL star Mike Modano and Google exec Charles Warren, today announced that it has raised $11 million in Series A funding. U.S. Venture Partners led the round, and was joined by Greycroft Partners, Apex Venture Partners and Anthos Capital.
So I spent some time on the phone with company founder and CEO Brian Spaly, to better understand the company, why it's based in Chicago and what Spaly's past VC and PE experiences have taught him about the financing market. Here's the edited transcript:
Fortune: What's the background of Trunk Club?
Spaly: Before Trunk Club I was founder of a men's clothing company called Bonobos. So I like to think of myself as an active entrepreneur who helps make men look awesome without having to do a lot of work. My mission is to get guys into clothes without them having to search through thousands of options on a site like Zappos (AMZN).
So we launched the company in December 2009. Guys can sign up, have a personal stylist and return what they don't like.
Is it a flesh-and-blood stylist, or some sort of fashion algorithm?
It's an actual person. We'll never be Pandora for fashion, in part because I don't think you can do it. The only room in the fashion business for technology is internal, to make our consumer-facing products better. For example, we look at photos on a user's social networks like Facebook – with their permission – to get a better idea of what they like to wear.
We have a couple of million dollars in inventory here, so if you have a wedding rehearsal dinner tomorrow night and need something to wear, we'll probably be able to get it for you. A huge cornerstone of our service is convenience, and having a college-educated, empathetic person to interact with.
College-educated? How come?
Well, it's not a prerequisite, but for me it often reflects that the people we're hiring really are thoughtful and not just a $10 per hour blue jeans bar type of person. Most of our stylists are in their late 20s or early 30s, and have worked at places like ADP selling payroll or in pharma sales. Our guys aren't fashionistas, but they know how to ask good questions.
How were you funded before this round?
We raised a little over $2 million through an angel round and a seed round. The only institution, before this deal, was Anthos Capital, which also participated on the Series A.
Why are you based in Chicago, as a fashion company?
When we launched here, our investors felt it made sense to be in San Francisco or New York or even Los Angeles. But there really is a great talent arbitrage play here in Chicago. We get mountains of resumes, because we don't have to compete with the frothy Bay Area market or the other fashion startups in New York and Los Angeles. Perhaps it's a slightly smaller talent pool, but it's an unbelievable advantage when trying to build out our team.
Your prior startup also raised VC funding. What lessons, if any, did you apply from that experience to this one?
I had left Bonobos right before they kicked off the process that led to the large round with Accel and Lightspeed, but I still had a lot of shares so paid close attention to the process. I think I learned that it's a lot like dating, in that the more experience you have in managing multiple suitors is important. The key is to focus in on firms where the partner shares our vision for the next five years. We had a lot of folks come in and want to do the deal – including some big-name venture capitalists, who wanted us to completely pivot our business model. The reason we picked USVP is because Ted [Maidenberg] really shared our vision of how and where we want to spend our money.
Speaking of which, what is this $11 million being used for?
It will help us make a massive investment in technology for sales-force productivity, sales-force management and customer portal functionality that eventually could be Apple-level. We're kind of like a wealth management firm, substituting wardrobes for assets. A lot of that is personal, but wealth management clients also like to check in on things online. So we need to build out a tech infrastructure that can better support those needs.
Prior to Bonobos, you were an associate in private equity. How did you transition from that to entrepreneurship?
I thought private equity was a wonderful way to learn more about finance and deals and investing. But while I was working at Parthenon Capital in Boston, I'd come home at 9 or 10 at night, turn on the sewing machine and make something to wear for the next day. It was obvious that other guys at Parthenon weren't doing anything like that, and then I went to Stanford and it really became clear that I was different than the guys who planned to return to PE or banking or consulting.
I have a ton of respect for my brethren in PE, but also realize that I never got a change to sell at Parthenon or my prior job with Bain & Co. Now, every day I'm selling. At Bonobos, I sold 500 pair of pants out of the trunk of my car. It's an experience I think many people in PE could use, because it would help them better understand their portfolio companies – since all of those people are selling something.