How I Raised It with Whitney Casey of Finery
Whitney Casey: Hello.
Nathan Beckord: Welcome. We’re glad you could be here today. So let’s start off with the first question. What is Finery, and why did you start this business?
Whitney Casey: Finery is a wardrobe operating system, and what that means is that we basically find everything you’ve ever purchased past 10 years (sometimes up to 15 years) and pull it all into an online wardrobe for you. Then on that online wardrobe, we tell you when things need to be returned, which is a real problem for women. We also tell you when the things you want are going on sale, so you can really optimize your clothing. We started it because we found that women were spending more on their clothing than they do on their education. And as someone who uses the kind of technology like Tripit, or other software that is developed to manage your trips, your banking, or your music like Spotify and Netflix, at one point you have to ask, “When is there going to be something that’s going to manage the thing that you’re spending the most money on — your wardrobe?” I basically said to a friend of mine, “You know, do you find this to be a pain point?” And after she said yes, it was off to the races.
Nathan Beckord: That’s cool. So, how long how long have you been around?
Whitney Casey: We launched a year ago, but it took a year and a half to build the technology that finds your items.
Nathan Beckord: Gotcha. That’s interesting. I mean, it’s definitely a cool idea. Years ago, before starting my business Foundersuite, I was a consultant and I worked with someone named Christine Elia, who started Closet Couture. This was probably 10 years ago. I don’t think it’s still around, but it was a similar kind of inventory management for your wardrobe, so it’s good to see this idea come to life.
Whitney Casey: The predecessors to this product were all valued in their efforts because at the time, the technology didn’t exist where they could create this, but there was a clear need for it. There are maybe 15 products out there that don’t have the technology to automatically upload your items and find them out there in the ether. I think that was really the pain point with all those products. It’s like you have to spend that time to go through your wardrobe and take a picture of everything, then enter five data points, and you think, “The whole point of this is to make it easier for women.” That’s just a huge pain point.
Nathan Beckord: Yeah, that’s cool. So how much have you raised and over how many rounds? Also what’s the composition — angel, venture, friends and family?
Whitney Casey: Our first product I bootstrapped, and then we did a small raise with a group of friends, like all the women that we really look to, just to make introductions for us and see who really got behind the product. It was really important for us too, to make it “by women, for women, funded by women.” Those women were so instrumental in helping us make the connections we really needed to understand. And that’s one of the first tips; the first group of money that you go after in the friends and family round needs to be so strategic. You should not take dumb money ever. You really have to ask yourself, ”Do I want this product so bad that I’m willing to take money from someone that is so ancillary connected that doesn’t have any excitement about this product? But they will give me money.” That answer should be no because those people will somehow be the biggest Achilles heel, the thorn in your side. Every single thing that you can think of that could happen wrong (if the people don’t believe in it from the beginning) WILL go wrong. They’re just giving you money because they believe in you, or their family friend told them to, or whatever. Do not take it.
Nathan Beckord: Interesting. So how did you identify that first group? Was it five, or six, or more for women?
Whitney Casey: One of them is my co-founder (she’s also a celebrity), and I wanted her to be involved, but then she said that she wanted to invest also. So the best scenario is like co-founders who are both investing, and it really does feel good for other investors to know that you have some skin in the game other than your time. And not everybody has the ability to do that, but you have to make some sacrifices in some way that kind of shows your initial investors, “Oh, I’m willing to put in some of my own capital, not just sweat equity.” Even if it’s a couple thousand dollars, maybe you don’t get the car you want or you don’t have a down payment on anything. You’re not paying off a certain loan at that time. It just shows that you’ve got skin in the game.
Nathan Beckord: How much did you put in of your own money? I think this is an interesting topic… it’s interesting to know what it takes to get to a point where you can raise that first outside capital. So if you’re not willing to share that, you can pass.
Whitney Casey: I had promised the board we would never disclose that, just because that’s how we built the product. But it’s tech, so you have to know it’s expensive even to get to an MVP. I really don’t ever want to do anybody a disservice to try to believe that you can fund yourself and bootstrap tech. You can bootstrap consumer goods products. It depends on how complex they are, but when you’re trying to bootstrap tech, it’s really too complex and too expensive. Engineers are too expensive to bootstrap if you don’t have… I mean, I’m 43 and had a career. I had a best selling book, so I saved that money and put it towards my startup. But if you are 20 and you just graduated and it’s your life savings, I’m just saying that it should be in accordance to what you can earn and what your output is. But it is important to put some in, and when it comes to tech you need to be very careful unless you’re the engineer yourself. Then that’s a totally different story. But I’m not an engineer, so it was very expensive.
Nathan Beckord: Gotcha. Okay. So, let’s go back to fundraising. You got a small cabal of investors. How did you find the other three?
Whitney Casey: The others were found through my co-founder. I came from news, and she has such an affinity for fashion but this isn’t a fashion company, it’s a tech company, but when you try finding women in tech to invest, it’s not going to be easy. Especially out of your friends and family circle. Basically we decided that we were going to do an event. So, we flew to Dallas and we met all of these very fancy people at this opening of a ridiculous store. Then we sat them down.
Whitney Casey: We asked for a meeting with a group. We asked one woman to set up a meeting with a group of five women, and she was the one that invited us to the store opening. She had been an influencer who had a bunch of friends and was literally like, “I’m grabbing everybody I know and making them listen to your presentation.” And so we did, and one of those happened to be “the Man Repeller” (ed note: Leandra Medine, www.manrepeller.com). I don’t know if you know her, but she’s a really big blogger and influencer and just an amazing woman in general, and she said that she’d be an early adopter. Getting people to say they use your technology gets investors excited.
Whitney Casey: 0 You don’t need to put anything on Instagram. Just say that they’re using the product. They don’t have to say it publicly, they just have to tell you. And you don’t have to put that out publicly, but you tell investors like, I have really influenced this influencer who’s using our product, and she’s amazing. She loves and believes in it, therefore the people who follow her feel more comfortable. She’s not out there proselytizing for you, or wanting equity and all that jazz. But her support got all these women really comfortable. She was in the meeting and she was sort of like, “I love this, this is great.” She could’ve said, “I hate this, this is useless.” But that’s the risk you take.
Nathan Beckord: Did you say that was a tech event or a fashion event?
Whitney Casey: So we fashioned ourselves as a tech company, but it’s not always easy to find women in tech. So we went to the fashion group and said, “Would you find this valuable?”” And we were worried because we didn’t want to position ourselves as a fashion company because we are not. So having investors in the fashion space wasn’t optimal for us. We wanted tech investors, but we didn’t have access to them and we knew that we would work with women, and that was really important. So just go where you can, and still show them the value. Like this woman who was one of our investors… she invested in tech, but in fashion tech, and that’s very rare. The other ones were just fashion people.
Nathan Beckord: Gotcha. So where was the company at when you were there? Did you have a working prototype? And how much did you raise in that first round? If you can say that.
Whitney Casey: We had a prototype that we could share. It was in beta, and once we raised the first amount we just called them our angels; friends and family. It was kind of like a rolling round… “we’re going to get to this and once we launch, we want to reach certain benchmarks and then we’re off.” We thought, ”We’ll just raise Series A.” What was really interesting is we met with investors, and we said we wanted to raise $5M in a Series A, and a couple of these VCs said that we should call it a seed.
Whitney Casey: Okay, fine. Call it a seed. $5M is what we want to raise. It just seemed so arbitrary. Okay, sure, whatever you want to call it. But it was actually great advice because there are different benchmarks that these professional investors want to see based on A and B. They do seem very arbitrary because it should be based on what actual space you’re in. So it’s very odd. But it was great advice. I’m glad that this VC gave it to us because then we ran with it and it ended up being perfect. We had a lot more traction than a seed stage usually. We kind of threw them for a bit of a loop there, but we were like, “Hey, we didn’t expect we were going to get this much traction.” It’s not Series A traction of where we have engagement and are looking towards monetization, it’s just that we have amazing potential. So go for the potential.
Nathan Beckord: That’s interesting. So what were the key metrics you were putting in your pitch deck for that seed? Was it the number of people signing up or some other metric?
Whitney Casey: 1 That was really the number. Signups were very high. I would never want to give an entrepreneur advice on what they need to look at, like your one hero metric. You can say, “How am I going to position this company around that metric?” And it may not be sign ups, it may be your engagement. You may have low sign-ups, but maybe you have ridiculous engagement. You have high engagement, high sign-ups, you’re a rockstar, so just go for it. But we all don’t have that and you always have to answer all the questions and you need a solid response. You need to test it out on a bunch of lower tier people that you aren’t really going to be aiming for and get rigorous in your deck responses. Start with your own investors and then branch out from there, and then whatever your hero metric is, I always push the investor back to that.
Whitney Casey: One of the best pieces of advice I got was from Jen Hyman, who is the founder of Rent the Runway which raised a ton of money. She helped me practice my deck and she basically was like, “All right, let’s look at all your weaknesses first, and I want you to basically jump ahead of that. And before you even start your pitch, put those out there.” She was a genius for that because I immediately was like, “Alright, we don’t really know about our engagement. We just launched, and this is a product that has the possibility of being a productivity tool, which means we don’t know if the girls are going to be on it everyday or every month, or whenever she shops most. So we operate in the background, and we’re updating people’s things without them having go to the site. So I just had to get out ahead of that and say “Hey, just so you know, if you’re like looking for a seed stage company that has X, Y, and Z, that’s not us. We are thinking more about the big picture. We have a ton of signups. We don’t know where this product is going to go with that, but we are really hopeful for XYZ, but we’re not that company.” And I would just start out like that.
Nathan Beckord: Interesting. So I’ve never heard that advice, and it seems kind of counter intuitive, but I can see how it can be effective. It’s kind of a risky strategy, but it can be effective. Very interesting.
Whitney Casey: She was like, “Bring out all of your dirty laundry first, and in the way that you want to present it because they’re going to get to it.” That’s their job, and if they don’t get to it, you don’t want them as investors.
Nathan Beckord: Right. I’ve never heard of this before. That’s really interesting. Let’s touch on that a little more. Did it ever happen where you get the dirty laundry out there, and the investors just focused on that, not being able to get past it? They were just too stuck on that? Did that ever happen to you?
Whitney Casey: Only once, but I can’t remember how many meetings we’ve had. But that, wasn’t a right fit anyway. We also had a terrible UX, just terrible. That’s part of the engagement story, and an example of how I got out the dirty laundry upfront. We were going to these tech VCs, and a lot of them now have design and UX partners on the team. Even Lightspeed, or like Google Ventures hired somebody from Facebook who was the queen of UX design.
Whitney Casey: But the key point is, tech companies need to know that UX is becoming a really big factor in whether or not they’re going to fund you. And so I got out ahead of our (bad) UX, knowing that we’d never had a UX designer, knowing that only “this girl” (myself) was the one that designed it and I don’t have my 10,000 hours of experience. But I got an MVP out there, and it needs a lot of work, but it had a lot of signups. So let’s figure it out and we’ll hire for what we need. In other words, if I can do this as a non-expert, then we can handle it with a professional But you see how I got that weakness out ahead? It’s answering the engagement question that’s going to happen later. It’s like telling them about how my inexperience of creating UX is a weakness but is a fixable weakness. So it’s like that whole thing when you go into interviews, when they say, “All right, tell me all about yourself.” Instead, you start the interview with that, so you’re basically setting them up so when they start picking upon you, they now don’t have that material to pick upon.
Nathan Beckord: Yup. That makes sense. And then everything that follows after that is all the good stuff, right? So you’re almost setting the threshold, and now it’s all just exciting cool things on top of that. So how much did you end up raising in your seed round, who are the investors, and how many did you pitch?. What does your funnel look like? How many did you talk to, and how many did you end up with?
Whitney Casey: We set out to raise $4,000,000, as an A, and like I said, we ended up with a seed (and I put that in air quotes), and we ended up being oversubscribed and raised by at the advice of our lead investor, who was NEA and Tony Florence. So I took a very different approach; I met with a lot of founders to get advice on how to do this, and here it is. One is do a ton of research on who you want to approach — all the companies they’ve invested in, etc. and make your list. If you don’t start by picking your investors, that’s just not a scenario you want to put yourself in because it’s miserable.
Whitney Casey: You’re like a masochist if you do that. So really hone in on who’s invested in your space, and who understands your space because otherwise you’ll just end up having a lot of really bad meetings. So, really suss that out and cull that list down, then once you do that, wait and set up all of your meetings within two weeks of each other. Seriously. It’s like a barrage. Look, they all went to HBS. they all went to Stanford. They are all very bright, amazing people and they happen to all know each other. They’re all back channeling like, “Have you heard about this deal?”
Whitney Casey: Then all of a sudden your deal is blowing up. Not because it is, but because you’re having four meetings a day and you are scheduling them like X, Y, and Z. So we did three days in San Francisco, three days in Los Angeles, three days in New York, and even though we’re based in New York, we essentially would say we’re going to be in New York these three days, and so we just hammered it out. It was painful because it was basically like a two-week process because we would have one day in between where we travel, but when you say you’re setting them all up in those times, they don’t want to miss out. The “barrage approach” simply works. The women who raised a lot of money at Away and Lola were the two sort of founders that said to us, “You guys gotta do it this way.”
Whitney Casey: And when we did it like that it was good because all of a sudden after that, a week after, people started calling us saying, “We hear you’re raising, we’d love to hear the deal.” And then we had extra follow-up meetings, and we would add people to the schedule. But we put a date where we weren’t going to keep taking meetings. We then said, “Okay, we’ll stop taking meetings on this day. Let’s circle back with all these people.” We constantly kept them in the mix. Always. One of the investors said to me, “You did such a good job of keeping me on the hook without spamming me.” That’s the key: don’t spam them.
Nathan Beckord: 2 Were you sending a monthly update, a weekly update? How were you keeping them in the loop without spamming? What was the approach?
Whitney Casey: Spammy is like, “Oh, I have another meeting,” or like, “Hey, what’s going on with the, you know.” It’s like trying to get them to the table. I would just say that if we had something, if there was really something relevant, like a big benchmark, like if we were going to be on the Today Show and I was said, “Hey, check it out, blah blah,” that’s not spammy. That’s something cool that they would want to know about. But spammy is when you start to try to get them to the table and you’re trying to say, “We have this meeting here, what are you doing?” Even though they have FOMO, they do not respond to “I’m going to need an answer.“
Whitney Casey: I mean, I had one founder tell me “you need to just tell them that you have a term sheet.” And I was like, “But if I don’t, then what happens?” And she said, “Well, they can’t ask you who the term sheet is from. And I’m like, “Actually no, they do.” They ask you all the time who is on a term sheet and you sound so dodgy if you’re like, “I can’t tell you,” because, to be quite frank, you can. You’re not supposed to be out shopping term sheets, but at the seed stage of the first investment, your lead investor is not going to be like, “Oh, you can’t tell anybody who this.” It just seems ridiculous, so don’t try that. Just don’t.
Nathan Beckord: How did you finally get that first one, NEA, to come in so that you could then concentrate on filling out the rest of the round?
Whitney Casey: How did I basically get them to say, “Fine, we’ll be the ones.” Well, it was a good thing we had a lot of interest. So, I also I sent Tony an email that had some concerns he was focused on, and I had to get him back to where I remember where he was the most thrilled about the product. You have to be a good listener in your first meeting because in your first meeting, everybody’s going to be very excited. Remember what they were most excited about and make sure you can fulfill that thing. You don’t ever want to get them excited about something that you know you can’t really follow through on.
Whitney Casey: But if it’s something you know you can deliver on, then go back and focus on that and you say, “Do you remember? You think this is a huge play.” And you tell them what they were excited about, but you have to listen to them. You can’t be telling them what you’re excited about. You have to really listen in that first meeting. What were their concerns? What were they really excited about? What did you see? Let’s look at their body language. They’re poker players, too. But sometimes when they get really excited, they’ll show you and you have to be paying attention and not be so nervous and worried about your stuff. He was excited about a big platform play. I knew he was not excited about being able to sell data or being able to like have some women have other clothes.
Whitney Casey: He wanted the whole thing. He’s the biggest tech investor in this space. He’s going to go for a platform play. So I sent him an email that reminded him, “Hey, maybe this technology existed before, but so did Uber. They had technology that existed before like X, Y, and Z. Don’t forget the big picture. Remember, this is a huge play when we make it. We will be changing retail, so really just go with whatever. Like he kept saying, this is going to be a big platform. It has to be all encompassing, it has to be the entire life cycle of clothing. I just remember him saying that. So rather than focusing on the unbelievable data that we can get and that we can generate things like a great experience for our users, or about me really caring about the fact that women spend too much on clothes… no, no, no. He wants it to be a big platform play, and I believe we can be big so I feel like I can deliver on the promise that he wants. So after saying that to him and sending him that email, you have to reinforce the things he or she wanted because it is very rare to find a female investor that can invest in a $5,000,000 seed.
Nathan Beckord: Let’s touch on that briefly because there’s so much stuff in the news about female founders, and the dearth of money raised by female founders. Did you ever feel you were at a disadvantage or do you ever have any issues about being a female founder raising a healthy amount?
Whitney Casey: 100 percent. So we really sussed out the list of the people that we wanted to be in the round, and chose folks who had invested in women before. So we knew that had to be a requirement, but then the other thing is that we’re not a consumer goods startup, so it’s not tangible and it’s very hard. For the first part of our pitch, we spent the majority of the time talking about the first three slides which were going to explain to a man why this was a pain point for women, and we spent so much time feeling like this was unfair. Why do we have to do this? Half of the population are women and they feel this pain point.
Whitney Casey: But… get over yourself. You’re going to have to do it. And it’s just like if you were selling to some sector that didn’t understand your product, you learn how to speak and learn how to get them to understand this pain point, and they will. But if you don’t, then you don’t communicate to them. This is crazy, but we used Seamless, Open Table and Yelp as examples. For example, when you’re deciding what you want to eat as a guy, you will go through your phone — these are inventories of places you could eat.
Whitney Casey: So we had two images, one of a man looking at his phone and then you can see what’s on his phone, how he’s scrolling Seamless. And, we had a woman on a subway scrolling through her clothing. So when this guy is thinking about what he’s going to eat, she’s thinking about what she’s going to wear to go eat. And so we married them that way and tried to explain to men that you may think about what you want to eat tonight. Mid-afternoon, a woman will start thinking about what she wants to wear to a dinner perhaps two or three days ahead of time, as well as what she wants to pack. So to really wrap their minds around the fact that this is something that is a real pain point for women, and the fact that we have to stand in front of our wardrobe to decide what we’re going to wear. So it really plays on the accessibility.
Nathan Beckord: Very interesting. Okay, last question: what piece of advice would you give to women founders who are starting this process of raising capital?
Whitney Casey: Well, I think there’s just one other piece of advice that I would be remiss if I didn’t share that an investor once shared with me. The most important thing for a man or a woman is the last five minutes of your meeting. These meetings all last about (depending on how entertaining you are) 30 to 45 minutes, or sometimes an hour. But you start to know when it’s wrapping up, and what you need to do is finish strong and you need to get answers. Stop talking, and start asking questions. This is the most important time. You need to figure out where their mind is. Like the advice I told you earlier about really understanding what they liked. You’ll hear that throughout the conversation because they’ll focus on it, but in the end you need to drill home — what do you think?
Whitney Casey: If you don’t wrap your mind around what they’re thinking and what they’re worried about at the end,, then you are going to be setting yourself up for a terrible conclusion because you may go out thinking that they loved it but they don’t. Then you are wasting your time with them, and you’ll need to move on. And so that last five minutes, if you can really get them answering some really important questions like, “Where are you?” “What is your process like?” “What are the next steps?” You will get from those three questions a real strong feel. You will know where you stand with that investor.
Nathan Beckord: That’s awesome. I think that’s really good tactical, actionable advice that we can take home with you. So this has been fantastic. And for anyone who wants to check out your site, it’s just Finery.com correct?
Whitney Casey: Yes. We have an app, and it’s getting more love, but we just sort of soft launched it so that people can try it out. We’re happy to get all the feedback.
Nathan Beckord: Wonderful. Well, thank you so much. This is really good. Lots of good nuggets in there and I appreciate it. So I wish you continued success, and onwards and upwards for Finery!
Whitney Casey: Yeah. Also, I’m happy to answer any questions from any founders at anytime. Email me. Whitney Casey@finery.com
Nathan Beckord: Wonderful. That’s great.
Whitney Casey: Thank you. I love paying it forward, and paying it back. All right. Thank you, I appreciate it. Have a good week.
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