Xconomist of the Week: Gilt Founders Say Friends Can Work Together

2/2/12Follow @arleneweintraub

At Xconomy’s event yesterday, New York’s Venture Emergence, members of Gilt Groupe’s founding team fascinated a standing-room-only audience with the tale of how, in just four years, they grew from a scrappy startup to one of the most successful e-commerce sites on the Web. Co-founders Alexandra Wilkis Wilson, who is one of our Xconomists, and Alexis Maybank insisted that one of the keys to their success is their close friendship. “Without our very strong relationship, we could have never gotten this business launched so fast,” Wilkis Wilson told the crowd.

But wait, doesn’t that advice run counter to what just about what every business expert says? One should never work with family or friends, right? Wrong, say the Gilt Girls. In fact, they’re so confident in the mixing of friends and business that they co-wrote a book about their entrepreneurship experience, By Invitation Only: How We Built Gilt and Changed the Way Millions Shop, which will be released in April.

The book’s title is partly a reference to Gilt’s business model: It sells fashions, home décor, and travel services in limited-time “flash sales” to people who are invited to be members on the site. But it’s also an apt description of how the co-founders have managed the business from day one—with a strong focus on making sure they have the right people in place to manage a high-growth startup.

Wilkis Wilson and Maybank have been together through both good times and bad. The good: They’ve raised about $218 million in venture capital and are widely expected to pull off a successful IPO later this year or early next year. The bad: Gilt confirmed last week it was laying off 90 people and embarking on a restructuring.

In a chat with Xconomy after their panel presentation, Maybank and Wilkis Wilson downplayed the bad times. “We scaled this business so quickly from zero employees to 900,” Maybank said. “Internal restructuring is part of the normal process in a fast-growing business.” As for how their friendship has helped them endure the ups and downs of entrepreneurship, Wilkis Wilson saidit all comes down to trust. “We were very good friends. That was incredibly important,” she said. “We didn’t have to gain that trust.”

Wilkis Wilson and Maybank met at Harvard Business School and bonded over their shared love of sample sales—limited-time events where deeply discounted fashions are sold. Their idea, quite simply, was to bring the sample-sale model online. During the Xconomy panel, Maybank recalled how in the early days, she and Wilkis Wilson sat “shoulder to shoulder” with their startup team of about a half-dozen in a tiny office in Manhattan’s Chelsea neighborhood, teaching themselves the intricacies of building a website, gaining buzz, and putting in place a customer-support system. All the while, Maybank recalled, “We were deeply afraid no customers would come.”

Building the right relationships was an important part of Gilt’s startup strategy. Maybank said they used the Myers-Briggs personality test on early employees to make sure everyone would be able to work together. “We didn’t want to have a startup team that would derail the business,” Maybank said. The first 10 brands sold on the site all came from references from friends and family, Wilkis Wilson said. In their first two weeks, she added, they used “guerilla marketing” to attract their first 13,000 members. Later on, to lure customers in new markets, Gilt sponsored movie screenings and other events, just so they could get their brand on the radar.

Today Gilt has 5 million members and has branched out into several new product lines, including children’s products and full-priced men’s clothing. The founders’ book, which will be published by Portfolio Hardcover on April 12, will not only provide advice on building a startup, but will also reveal insider details on some of the famous brands that helped make Gilt a success, including Zac Posen, Christian Louboutin, and Valentino.

And what about that old adage that friends shouldn’t be colleagues? Wilkis Wilson is quick to acknowledge that it’s not a scenario that works for everyone. “I don’t recommend you work with just any friend,” she said. But in the case of Gilt, it’s clear this particular melding of personalities works.

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  • http://www.possibilitiesgroup.com Sarah

    Relatiionships are key to creating a successful business. You added the magic of connection with your products, staff and customers to cause people to want to do business with you. Great formula for success.

  • http://www.dailygrommet.com Jules Pieri, CEO Daily Grommet

    Kudos to Alexis and Alexandra on Gilt. I’m delighted they wrote their book. The real story of Gilt deserves to be told–and it is theirs.

    I also founded an ecommerce business with a good friend. We had worked closely together at a big consumer brand and even shared a nanny. After both going our separate ways and working individually on a couple start-ups we reconvened at this company. I never really appreciated what the deep foundation of our working relationship and friendship meant until about twelve months ago. We were sitting on the Acela speeding to New York. We were at a four person table and batting ideas and decisions back and forth, rapid-fire, like we always do. After about three hours the man who was at our table commented, “I have never seen two people get so much done, so fast, and so collaboratively. Were you guys already friends before you started doing whatever you are doing?”

    We just looked at each other dumbfounded, and laughed.

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