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Cowritten by Oscar Hong and Joseph Zhang
How much of the clothes in your wardrobe do you actually wear regularly? If you’re like most people, the answer is not nearly enough—and that was exactly the case for Rakesh Tondon and Brett Northart, the co-founders of Le Tote.
Le Tote is a subscription-based fashion startup that brings the cost of owning up-to-date clothes down to a fraction of the traditional price. By emphasizing the rewearable nature of clothes, they also reduce waste.
Tondon conceived the idea behind Le Tote when his wife was pregnant with their second child. During the pregnancy, she didn’t want to purchase maternity clothes that she knew would only be worn for a brief period of time. Instead, she wanted to borrow clothes from her friends and return them after, saving herself money and avoiding buying clothes that would “expire” in a few months.
“She didn’t want to buy things for maternity,” Tondon said. “Maternity is kind of a finite period in your life, [so] you don’t necessarily want to spend a bunch of money. So I think that’s kind of where my wife was. [She said] ‘I wish that I could share and swap clothing. I still have to go to work every day. I just don’t want to buy all these maternity clothes.’ And so that’s really what sparked the idea.”
During this period, Rakesh Tondon became good friends with a coworker at JP Morgan, Brett Northart.
When Tondon and Northart’s families met, their wives shared their experiences and realized that they held similar concerns. For Tondon and Northart, an idea manifested. Although they discovered an opportunity to make an impact on the maternity apparel market, a bigger hole existed within the fashion industry itself. From a wider perspective, clothing trends are always evolving, which means that “staying in style” isn’t cheap and can lead to a pileup of unworn, “outdated” clothing.
With their sights set on the broader women’s fashion market, Le Tote was almost born.
Although they had identified a major opportunity to effect change in the industry, the pair was hesitant to enter the startup lifestyle—and for good reason. Coming from careers in investment banking, the fashion industry was completely foreign to them. To add to the intimidation was the fact that they didn’t have much experience in startups. But after enough deliberation, they decided to press forward with their idea.
“We said, ‘we see this huge opportunity. We’re two guys that seem like we understand the problem well enough. If we’re gonna keep talking about it, we likely will never do it’,” Tondon said. “So after about a month and a half of evaluation, we jumped right in. We started the company and quit our jobs. You’d be doing a disservice to yourself if you didn’t take that chance.”
As expected, things proved tough in the beginning and the learning curve was huge. To familiarize themselves with the industry they just entered, they conducted market research.
“You talk to as many people as you know,” Tondon said when describing their early market research strategies. “You talk to and meet with as many people that take your calls. And you read up on as much as you can. Use a lot of common sense. And you have to fake it till you make it.”
During this period, they’d reach out to friends on LinkedIn and send mass emails to friends of friends. They entered the market with zero experience and few people willing to talk, but Tondon found a couple methods worked for maintaining relations.
First, they’d demonstrate that they did their research on that individual by understanding their background. Second, they’d ask the relevant types of questions and follow up.
After they finished their market research phase, they decided to press forward and launch their service. In the beginning, they targeted women aged from 20-26 who would use their service when going out with friends.
While women from that age group may have used Le Tote, Tondon and Northart discerned that their true customer demographic laid in middle aged women who used their services primarily for work clothes. With $200,000 of capital at risk of being lost from their failed venture, they had to initiate a quick pivot.
Aside from developing effective sales strategies, Le Tote needed to attract talent and raise capital to succeed. With his background in finance, Tandon understood the ideas behind raising capital, but the process still proved much harder than anticipated. Likewise, crafting the right team for the young startup wasn’t easy either.
“Businesses like ours require capital,” Tondon said. “So while we came from banking, and we knew a lot of the folks [who] we were going to reach out to, it was really hard to convince them that we knew the business, we knew fashion, we understood retail, and that we could do this. The other hard thing was recruiting people. You know, we didn’t come from technology [backgrounds], and this is a very complex data and logistics business. So understanding who to hire, how to hire, and how to attract these people was really hard. We struggled for the first year with hiring smart people to join the team.”
Eventually, however, things took a turn for the better. More users began using the service. As a matter of fact, too many users were signing up. With such a large demand, they didn’t have enough clothes to accommodate everyone. Rather than turn away customers they couldn’t service—and create angry users and missed revenue—they saw an opportunity: place everyone onto a waitlist unless they referred someone to Le Tote. To be bumped from the waitlist, priority was given to customers you referred others. As a result, this strategy generated even more users, helping Le Tote grow even more.
“Very quickly, we had a waitlist of about 40,000 potential customers,” Tondon said. “We let them in based on the number of people they referred. After we launched and let people in, we got a lot of press. The press was really helpful in finding a lot of this traffic. But I’d say for a year and a half to two years, it was primarily word of mouth and the virality that came from our exclusivity [that drove growth].”
With the help of media coverage, Le Tote was on its way to becoming a major disruptor in the fashion industry. In 2019, Le Tote went on to acquire Lord and Taylor, a company 10 times its size based on revenue.
Advice to Young Entrepreneurs
“I talk to a lot of entrepreneurs, I see a lot of entrepreneurs that give up too early sometimes. What I tell everyone is, ‘I was fortunate that I found my calling for a cause that I believe in early. I didn’t have to go through a lot of failures to understand what my calling was.’
So what I [would] tell to someone else, [is to] really believe in what you’re doing. Don’t do it for the heck of it, because the journeys are really tough. There are a lot of highs, but there are more lows. When you know you go from one low to another, you’re bound to give up if you don’t truly believe in the cause. So truly believe in what you’re doing and be passionate about it. Think hard about why you’re doing what you’re doing, and when you truly can get that idea out of your head, that’s when you should want to do it.
When you’re doing it, really commit to giving your 200%. Work really, really hard. Work smart, but work really, really hard—especially in the early days. That could be the difference between failure and success.
I see a lot of young entrepreneurs say, ‘I gave up because I didn’t have [a] work life balance.’ You should care less about work life balance today. If you want to really create a world class company, you can earn the work life balance at the appropriate time, five or 10 years from now. I’m not saying work yourself to death, but don’t give up just because you chose to not work harder.”
What’s an Interesting Fact About Le Tote?
“The amount of charity work we do outside of what we report. So we’re a company [that] tries to impact people’s lives. And so one of the things that we do is quite a bit of work for women and women’s charities, but we don’t actively talk about it.
We’ve chosen not to do that because we don’t believe that we need to get any marketing mileage out of it. If you read much about us, you’re never going to read the impact were making on people’s lives”
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*Le Tote and Lord and Taylor recently filed for bankruptcy protection. Learn more here*