Wharton Journal: What is olook?
Peter Ostroske: olook is a Brazilian, online fashion brand that delivers the most up-to-date women’s shoe, purse and jewelry designs to its members at prices that are fifty percent less than comparable products on the market.
The success of our business relies on the interplay between three concepts: curation, manufacturing and selling direct-to-consumers online, and offering a new, exclusive collection, every month.
WJ: Your story is pretty impressive. You moved to an emerging market, didn’t speak the language, didn’t know the culture, didn’t have a business partner. Yet you still managed to secure a series A from one of the most prominent VCs in Brazil. How did this all come together? Can others follow in your footsteps?
PO: I think the biggest hurdle for me was deciding that I was going down to Brazil over the summer with or without a job. Going into Wharton, I had a pretty strong suspicion that’s where I wanted to end up after graduation but had been told that getting an internship in Brazil over the summer was not going to be easy.
After validating this rumor, I came to the conclusion that my summer was not going to be about getting a job at all but about doing research. The initial idea was to go to São Paulo for the summer to map the B2C e-Commerce industry in Brazil against what was happening in the U.S. with the hopes of finding a smart idea to build a business around. As I started to think more about the summer, I decided that maybe I could even have a VC sponsor my efforts in exchange for the report at the end of the summer. So, I started sending out Entrepreneur-In-Residence (EIR) proposals to every senior partner at every VC guy I could find in the Spike Database. A few American firms sniffed around a little bit but I ended up receiving the most interest and eventually a few offers from Brazilian VCs.
Overall, I think getting sponsored by a VC was one of the best things I could have done. I had three months to work with a really sharp group of investors who ultimately helped me build the product that they invested in. It was a really great situation for both sides.
And, to your last question, yes, as far as I know, most VCs have EIR programs. So, anyone should be able to self-recruit in with the right sales pitch.
WJ: You decided not to return to Wharton after your first year. This must have been a very difficult decision. Can you walk us through your thought process at the time?
PO: Taking a leave of absence was a pretty tough decision. For me, there were two main considerations. First, are there going to be as many opportunities in the Brazilian start-up landscape in nine months as there are today, or will it become saturated with entrepreneurs? Second, will this particular opportunity still be available?
In response to the first point, I originally had come to the conclusion that no, there won’t be nearly as many great opportunities in nine months but have recently changed my perspective. The opportunities will be different, but the number of them probably won’t significantly diminish. To the second point, I decided that yes, I was really happy with this business idea. I had co-founded a clothing company in the U.S. prior to Wharton and knew that this particular opportunity was not only in a big vertical in a fast-growing market but it was in my wheelhouse.
WJ: There’s been a lot of chatter of late regarding the “personalization revolution,” and about how personalization will be a key differentiator for successful ecommerce companies going forward. What is your view on this? How important has personalization been as a driver of sales at olook?
PO: I think personalization is so important, and it’s definitely a critical component of olook’s early success. Like a number of fashion e-commerce start-ups in the US – ShoeDazzle, ShoeMint, Wantful.com – olook profiles new members by asking them a number of dynamic, picture-oriented questions before making the products available to view. The benefits for members are obvious – they spend more time looking at products they like. For olook, we see higher conversion rates, lower SKU counts and higher engagement on the site overall.
At olook, we are trying to make personalization not just about products but about the entire site’s user experience. So, depending on the member’s profile, her user behavior on the site, her Facebook information and other indicators, we hope to eventually offer her and each member an experience that is unique and that can evolve as the member’s preferences evolve.
WJ: Tell us about the advantages and disadvantages of building an online brand – as you have chosen to do with olook – versus operating as a third-party online merchandiser, like Baby.com.br.
PO: Starting with the biggest disadvantage, we’re a very young brand! This is probably olook’s biggest challenge right now, but it’s also a core component of our business model – manufacturing products so we can sell for close to wholesale prices (think Gilt without the inventory issues).
Basically, we’re betting that consumers will take a chance on our lesser known products because the relationship to price and design is really appealing, they’ll love the product, realize that a better known brand is not worth paying twice as much for and continue to shop with us.
The biggest advantage is relatively high margins – nobody sells olook but olook so although we offer low priced products, we’re not in a price war with anyone.
WJ: Everybody’s talking about Brazil these days. With respect to Brazil’s burgeoning VC / startup ecosystem, is the hype unfounded, or justified?
PO: I think it’s justified. Brazil and Latin America may have been over hyped ten years ago, but there’s too much going right down here to say this is more of the same.
WJ: Thanks for your time, Peter. Any final words of advice for the entrepreneurship community at Wharton?
PO: I miss you guys.