From Doghouse To Penthouse: The Remarkable Recovery Of The RealReal’s Julie Wainwright

Forbes
September 9, 2015

By Ryan Mac: Julie Wain­wright is star­ing down the shaft of an arrow. She wig­gles her toes and cocks her head to focus on a set of blue and yel­low rings 50 feet away. Pulling the bow­string to the cor­ner of her mouth, the for­mer CEO of Pets​.com lets her shot fly. It wob­bles before miss­ing the tar­get, wide left.

I won­der if it’s because of my heels,” she says, look­ing down at her Chloé wedges. Her next four arrows miss the mark as well.

Wain­wright, a sprightly 58-​​year-​​old, hadn’t done archery in years. But on a gloomy August day in San Fran­cisco she sug­gested we visit an indoor range to give her a brief dis­trac­tion from run­ning The Real­Real, her addic­tive con­sign­ment site. On track to do $200 mil­lion in rev­enue this year and with $83 mil­lion in fund­ing at a FORBES-​​estimated val­u­a­tion of $300 mil­lion, the startup is in a much bet­ter place than Pets​.com ever was.

Say what you want about it, but we did some­thing oth­ers weren’t able to do in cre­at­ing a brand with that sock pup­pet,” she says, refer­ring to Pets.com’s still iconic mascot.

While Pets​.com crashed and burned, The Real­Real has filled a void in the high-​​end lux­ury mar­ket. Many one-​​percenters can’t be both­ered to list their designer dresses or jew­elry on eBay EBAY +0.00% and then ship those goods to buy­ers. But as Wain­wright found, they will con­sign their wares if some­one else does the grunt work. That’s the genius of The Real­Real, which receives about 130,000 items a month.

Thwack. The final arrow from Wainwright’s quiver hits the blue ring clos­est to the bull’s-eye, and she lets out a small yelp of sat­is­fac­tion. The Real­Real, says its CEO, will be prof­itable by next year.
While the idea of sell­ing used items on the Web is hardly new, The Real­Real is lead­ing the way in a crowded pack of play­ers on the quest to build bet­ter mar­ket­places. With eBay try­ing to be every­thing to every­one, star­tups are cre­at­ing online bazaars for all kinds of goods, from used cars to apparel. Posh­mark, Thread­flip, ThredUP and Twice (acquired by and folded into eBay) have raised mil­lions to let women sell worn Levi’s jeans or J.Crew sweaters.

The Real­Real turns up its nose at those items, focus­ing instead on lux­ury brands like Gucci and Alexan­der McQueen. In 2014, accord­ing to a report from Bain & Co , there were $73.7 bil­lion in sales of per­sonal lux­ury goods in the U.S. mar­ket alone, cre­at­ing a huge resale oppor­tu­nity for Wain­wright. The con­signors, includ­ing Yahoo CEO Marissa Mayer and Khloé Kar­dashian, keep from 60% to 70% of the online sale price.

Because The Real­Real focuses on goods with higher mar­gins, the com­pany can afford to send a white-​​glove concierge to a person’s home to eval­u­ate the goods, which are then packed, stored and listed by the com­pany. While most con­sign­ment star­tups use tech­nol­ogy to reduce the human ele­ment, The Real­Real has 400 employ­ees and is hir­ing more, from pho­tog­ra­phers who snap six pho­tos of every item to authen­ti­ca­tors who sniff out fakes by check­ing a bag’s ser­ial num­ber or exam­in­ing the thread­ing on a skirt. “EBay still does about $2 bil­lion in lux­ury goods on its plat­form,” Wain­wright says, “and yet they have a tremen­dous amount of fakes on it.” (An eBay spokesper­son says the com­pany doesn’t break out sales for the fash­ion cat­e­gory and that less than .025% of all 2014 eBay list­ings were iden­ti­fied as “poten­tially counterfeit.”)

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