Two Los Angeles-area fashion startups, Pose and Little Black Bag (LBB), have agreed to merge. Pose, which some have called the “Instagram of fashion,” offers a mobile photo-sharing platform focused in the fashion and beauty category. Little Black Bag (LBB), on the other hand, powers an interactive and gamified subscription shopping experience. The companies declined to discuss the financial details of the transaction, although both share Upfront Ventures as a lead investor.
To hear LBB CEO Dan Murillo and Pose CEO Dustin Rosen describe it, both companies were starting from very different points but were headed toward the same target destination: a mobile-first content plus commerce fashion experience unlike anything on the market today.
“Our biggest priority for the next phase of our growth is to address mobile,” says Murillo, who notes that LBB’s mobile traffic has grown 300 percent year-to-date and now represents more than 65 percent of all its traffic. “Pose is already one of the best in this area, in terms of its shoppable mobile media experience, and its cachet as the place that fashion industry insiders go to share content.”
“We knew that we needed to more deeply integrate commerce,” Rosen says. “Little Black Bag has proven to be one of the best at delivering engaging and viral shopping experiences to consumers.”
Upfront Ventures partner Mark Suster offers a similar assessment, describing LBB as fantasy football for women.
“LBB has built a very active trading community,” he says. “Every week you have people who bombard you with trade requests, trying to make their haul better. And Pose has tremendous mobile engagement but needed to find a business model. [Pose only recently began incorporating ads into its photostream and email newsletters.] Both teams were so complementary in their visions that we said, ‘You really ought to talk.’”
To say that “content plus commerce” has been all the rage in the industry would be a gross understatement. But it’s easier said than done for any one company to excel in both areas and to do so in a way that is complementary to one another. Murillo and Rosen believe that they can accomplish this balancing act more effectively by combining forces than by each building toward that goal individually.
Details are scarce about what the combined company will look like, but Murillo says that consumers should expect a single unified experience from the company in early 2014.
“There are generally two primary use cases for mobile devices: communicating – via SMS, photos, social networks – and consuming entertainment – be it news, videos, games, or other content,” Murillo says. “There’s currently no company that combines both social and entertainment around mobile shopping, and that a big void that we hope to address in the market.”
The company has also yet to answer the question of what the go-forward branding will be. Both Pose and Little Black Bag have reasonably strong brand recognition in their respective categories and both stand for very different things. It’s unclear that abandoning either, or both brands would prove advantageous in the long run. As Suster notes, Pose has a shorter URL which is often viewed as more valuable, but both companies have loyal and engaged fans.
Nonetheless, Pose and LBB have already moved into the same office space and are starting to tackle these thorny decisions. Murillo will be the CEO of the consolidated company, while Rosen will assume the Chief Strategy Officer role.
Combined, the company has anywhere between 30 to 40 workers depending on seasonal fluctuations. The CEOs claim that there won’t be any near-term layoffs as a result of the merger, which is not surprising given that the companies have very different core competencies and were each in search of the other’s skill set.
According to the founders and their lead investor, both companies had sufficient capital remaining and were growing healthily such that runway was not a concern had this merger not happened.
“The best thing about it is they both have plenty of cash left – millions,” says Upfront’s Suster. “I’m delighted to have two strong teams working together from a position of strength, rather than the alternative which would have been to have them do it separately from a position of weakness two years from now.”
Little Black Bag has raised $10.8 million across two rounds of funding from Upfront Ventures and DCM, most recent via an $8 million Series B in August 2012. Pose raised its own $4.3 million, including a $3 million Series A round in October 2011 from Upfront Ventures, True Ventures, Mousse Partners, Founder Collective, and celebrity style icon Rachel Zoe.
Above all else, this deal is all about the desire to accelerate the each company’s progress toward their respective mobile content plus commerce goals.
“I think we both had a very clear vision of the path we want march down, and there was just too much alignment in those visions not to find a way to join forces,” Murillo says, noting that he and Rosen have known each other for years dating back to their respective time working at Los Angeles VC firms, Murillo at Greycroft Partners and Rosen at The Mailroom Fund. “It’s always a risk building new features and experiences, but we think we can do so more effectively together.”
“This is really a timing issue,” Rosen adds. “The customer is just recently becoming ready for this type of product.”
There are others in the industry who would take exception to that assessment. As we’ve covered before, while content plus commerce is a hot trend, it doesn’t always prove effective. Male-focused sister companies Thrillist and Jackthreads are perhaps the best example of a success story. But Refinery29, long the poster child of the content plus commerce movement on the women’s side, recently abandoned commerce in favor of its better performing content initiatives. Others still are racing toward the combined business strategy, like StyleCaster, Fab Fit Fun, Houzz, and dozens more companies.
It’s unclear whether the difference in results the various above attempts is a reflection of the viability of the model, the difference in opportunity in the men’s and women’s categories, or simply a case of some companies executing more effectively than others. Whatever the answer, the newly formed Pose+LBB plans to throw its hat in the content plus commerce ring with the hopes that it’s the key toward reaching scale and proving there’s a sustainable business to be built here.
The two companies are obviously still in the honeymoon stage and have months (years) of hard work ahead of them. Regardless of whether they’ll find success in the merger, they appear to be stronger together today than they were separately. Or at least that’s what their parents told them when they ushered them down the aisle.
[Image via WoduMedia]