Mass Customization in Online Fashion E-Commerce: Indochino CEO Kyle Vucko (Part 4)

Sramana Mitra: What did that allow you to accomplish next?

Kyle Vucko: That allowed us to hire a couple of people to really figure out some of the paid acquisition side and continue to refine our processes and scale.

Sramana Mitra: Paid advertising kind of stuff?

Kyle Vucko: Yes, moving into Google PPC. We rode that $250,000 for two years, naturally managing the growth of the business, hiring some people, and figuring out how to do things better. Doing one garment a week has certain challenges but when you start to do a garment a day, you start encountering different levels of problems. You learn a lot too about what you don’t know in terms of how you should scale or things that you haven’t thought about.

Sramana Mitra: What was the cost to acquire a customer? What was the average transaction size of that customer?

Kyle Vucko: I don’t, to be honest. It’s fundamentally different from what it is today. I learned the cost of manufacturing, how you shipped things, the cost of pretty much every part of the process, the type of customers you acquire, and the scale that you do. Every lever of the business has changed as we scaled. Some were better and some worse. To sum it all up, it was getting better but always evolving.

Sramana Mitra: How long did it take you to reach the $1 million mark?

Kyle Vucko: Probably three years.

Sramana Mitra: Did you need more funding in that process or was the $250,000 enough to get you to a sustainable point?

Kyle Vucko: It depends on how you define the world sustainable, because we’ve already used $18 million today. Our company has always been about growth.

Sramana Mitra: To get to the $1 million run rate, did you need to raise more money or were you able to do that organically with the $250,000?

Kyle Vucko: We raised money around that time.

Sramana Mitra: You raised another round right around that time when you were approaching a million dollars?

Kyle Vucko: Yes, but it was with existing people, and adding other smaller investors.

Sramana Mitra: How much was that?

Kyle Vucko: It was a small follow-on to get to the next level.

Sramana Mitra: It was all Victoria local angels?

Kyle Vucko: The round we did in 2008 was an institutional investor.

Sramana Mitra: In Victoria or somewhere else?

Kyle Vucko: Actually, out of Europe. The initial investors that we had brought on in the initial round had close ties to a venture capital fund in Germany.

Sramana Mitra: Shall we say about 2009 is when you were close to a million in revenue?

Kyle Vucko: Yes.

Sramana Mitra: This is a logistically complex business. Custom manufacturing with orders from the Internet has been the Holy Grail of personalization and personalized apparel. I did one of the first fashion Internet companies back in 1999. I do know a lot about the industry. This is something that people have tried to do and it doesn’t scale. But you have been able to scale this. Can you offer some insights on what were some of the strategic things you did to make this work in a sizeable way?

Kyle Vucko: The strategy has evolved over time. Initially, it was hiring multiple tailors and building a quality-controlled process to manage multiple tailors. At a certain scale, that became unscalable. Every tailor did it differently. Every tailor just sees the world differently. At a certain scale, we had to move to factories. We had enough volume at that point where we could go to a single factory and say, “We want you to do it this way.” Since then, we’ve scaled. What we’ve been forced to do strategically was really to evolve our process as we hit scale point.

Sramana Mitra: When you moved from multiple tailors to a single factory, was there custom tailoring factories for suits available in China or did you have to go through some hoops to create one?

Kyle Vucko: No, we had to create it.

This segment is part 4 in the series : Mass Customization in Online Fashion E-Commerce: Indochino CEO Kyle Vucko
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