November 8, 2000 was not a good day for Julie Wainwright. She was the CEO of Pets.com at the time. She had taken the company public to much fanfare just nine months earlier. But on November 8, she closed the company down and laid off her entire staff.
Pets.com went from IPO to complete liquidation in just 268 days. That makes it one of the shortest-lived public companies in history. The same day she shuttered her company, her husband asked for a divorce.
“It failed, and I became sort of a pariah,” Wainwright said in a speech in 2017 at the Vanity Fair Founders Fair. “I was the dumbest person in the Valley. It was a little tough.” A recruiter told her that her career was over because of the Pets.com debacle.
But that was then and this is now. Wainwright is back on top with TheRealReal, a luxury consignment website. She had an epiphany during that dark period in her life in late 2000. She realized her dream job wasn’t going to come looking for her. She had to figure out what her dream job was and then create it herself.
One day, Wainwright was out with a friend who was an admitted designer clothes-loving shopaholic. Her friend was browsing clothes on a rack in the back of a high-end boutique selling secondhand clothing. The shopaholic was thrilled to find authentic secondhand designer clothes from a store she trusted. This got the wheels in Wainwright’s brain turning.
Both of Wainwright’s parents were artists who believed in “upcycling” before it was trendy. She grew up with her mother and father scouting out treasures in the trash, so the idea of reselling someone else’s cast-off Prada handbag or Gucci shoes made sense to her.
Wainwright soon discovered that the market for luxury goods in the U.S. was, at the time, worth $50 billion a year and fast-growing (it’s now worth about $95 billion). She had a wealth of experience in e-commerce from Pets.com. She was confident that she could create a market for secondhand luxury items that Amazon couldn’t copy because dealing in high end designer clothing, shoes, and handbags required a level of expertise and labor that the e-commerce giant would not find worthwhile.
By taking a look into her own closet, Wainwright quickly found 60 items she could resell. Not unlike countless people who have started eBay shops from home, she launched version 1.0 of TheRealReal in March 2011 from her kitchen table. She rented moving trucks to pick up the goods people were listing for consignment.
Unlike the crapshoot of buying off eBay, however, San Francisco, California-based TheRealReal promises to sell authenticated secondhand goods from designers including Louis Vuitton, Chanel, Hermes, Fendi, Rolex, Celine, Chloe, and Prada. In its first year in business, Wainwright brought in $10 million in sales.
People who put their designer goods up for consignment on TheRealReal make as much as 70% of the sale price. People who buy the secondhand luxury goods get them for a fraction of their original retail price. I am a TheRealReal customer and I bought a vintage Celine bag for $75 and a more recent Chloe bag for $150.
Wainwright knew she was onto something, but growing TheRealReal required outside investment. And in Silicon Valley that meant approaching venture capitalists who had full knowledge of her dubious legacy at Pets.com. Adding an additional hurdle — most Silicon Valley VC’s were men. Would they understand the market for secondhand designer clothing, handbags, jewelry, and accessories? It was hard to say.
Unsurprisingly, Wainwright struck out with the men in their 20s and 30s at venture capitalist firms she approached. She didn’t find funding until she got a meeting with a woman VC. It proved to be a good bet for the investor. By 2017, Wainwright’s company had raised $173 million in funding. By 2018, she had raised $207 million. In June 2019, the company raised $358 million through an IPO and soared to a market cap of $1.5 billion.
When the COVID-19 pandemic hit, it almost sent Wainwright back to the drawing board again. She had to lay off more than 1,000 employees after sales dramatically slowed amid widespread lockdowns. The company reported a $56 million net loss for its first quarter in 2021. But there were signs the business was hanging on, even strengthening. Revenue was up 27% from the prior year to just under $100 million.
Now the future now looks even brighter for TheRealReal, which is a standout in the secondhand clothing segment. For the second quarter of 2021, total revenue was up 83% year-over-year at $105 million. The company reported a $70.7 million net loss, including a $11 million charge for a legal settlement.
Although TheRealReal has yet to turn a profit, clothing resale in general is poised for rapid growth, with younger consumers increasingly focused on sustainability. TheRealReal estimates on its website that its business has saved 20,200 metric tons of carbon and 976 liters of water. Popularity of the company is clearly on an upward climb. According to Thinknum data, its number of App Store ratings (a proxy for downloads) has been steadily rising over the past year.
Today, TheRealReal is the world’s largest site for authenticated secondhand luxury goods. The company also has 18 retail locations across the U.S. where customers can sell, meet with experts, and receive free valuations.
Wainwright has achieved her comeback at 64. That dark November day 21 years ago is now far behind her.
About the Data:
Thinknum tracks companies using the information they post online, jobs, social and web traffic, product sales, and app ratings, and creates data sets that measure factors like hiring, revenue, and foot traffic. Data sets may not be fully comprehensive (they only account for what is available on the web), but they can be used to gauge performance factors like staffing and sales.