From strip club to West Elm: The journey of e-commerce company Minted
Minted founder Mariam Naficy studies people's shopping habits like an anthropologist. When she visits new countries, she loves going to malls, people-watching and trying to understand what they're buying, why, and how. "I can tell a lot about culture based on how people shop," Naficy says. "I would argue that the mall is a great place to get an education."
It's fitting then that she is now taking her e-commerce start up Minted into physical stores. Minted, which sells artistic paper goods like wall hangings and greeting cards, has partnered with West Elm stores to stock some Minted products nationally.
It's a big move for the company, which just raised a $41 million Series C in a round led by private equity firm Technology Crossover Ventures. Like the founders of other e-commerce stars Warby Parker and Quirky, Naficy believes there's value to be had in brick-and-mortar sales.
"It expands the target audience. It brings our physical decor products to life," Naficy says. "It's nice to be able to see it in front of you."
West Elm is thrilled about the partnership. "People right now, they're so interested in where their food comes from and what's the back story of the type of food they're putting in their body," West Elm PR Director Nicole Sutliff says. "We really feel like our customers are interested in that in designing their homes as well."
West Elm stores are a far cry from Minted origins. Minted had a rough beginning and was barely making money for awhile. In fact, the first company office was in the seedy part of Broadway, smack-dab between strip clubs. "It gave us character," Naficy says.
The company's founding principle was crowdsourcing design contents. It would post challenges like "create a wrapping paper with personalized photos on it." Artists would submit their drafts, and Minted would choose the best ones to produce and sell.
But back in 2007, when the word crowdsourcing was merely a glimmer in the public consciousness, Naficy was afraid to go all in on her concept. She decided to hedge her bets by launching Minted with both branded content and crowd-sourced designs together. "It was dead silence, nothing sold the first few weeks at all," Naficy remembers. "It was poor timing. Selling luxury designer product heading into a recession."
They almost went under. But they managed to raise a round from IDG Ventures in 2008, mere weeks before the recession hit. A friend of Naficy's who headed up a private equity fund called her and said, "I feel like something is about to happen to the market. You should go raise money right now."
Naficy was in Seattle on vacation at the time. "I dropped everything, called everyone in the company, and got a pitch deck done in 24 hours," Naficy says. "I met with any investor who was in town, because they were all gone on vacation." She struck the deal with IDG Ventures, and two weeks later Lehman Brothers failed and took the global economy with it.
"We escaped near disaster. It's like the cat with nine lives," Naficy says.
In the years since, the company has built up its resources. They were scrappy, saving money for three years, focusing on the product, and keeping their heads down. "But in 2011, we picked our heads up and realized, 'Wait, e-commerce is now hot and everyone's raising money. Let's go raise a Series B,'" Naficy says.
The company became cash flow positive last year. Its traction led private equity firms to offer it money, and it decided to finally raise the big round -- the recent Series C announced earlier this month.
It's in acceleration and growth mode, and the West Elm partnership represents that.
When unique, startup-y processes become more mainstream, that crystallizes their role in commerce. What was once a big experiment with Minted -- crowdsourced design -- is now being sold to the masses via West Elm. And in doing so, it legitimizes the endeavor and makes it more likely to succeed long term.
The maker movement meets big retail. And in Minted's case, crowdsourcing meets the maker movement.
"If you buy something at a West Elm, it's not the small store down the street, but you're able to tell your friends and family this comes from this small textile artist in Texas," West Elm's Sutliff says.
"In 2007, people would frown over the word crowdsourcing and say, 'What are you talking about?'" Naficy remembers. "Investors were not convinced."
We can build a retail business that lasts forever if we don't tie retail decisions to one particular person. Even designers have bad years. Humans on their own are fallible, but humans when put together as a crowd can be right more often…We're uncovering trends a lot faster than if we were a group of five brainstorming on our own.