If it needs a constant supply of bigger idiots to keep growing...well, one needs a lot of capital coming in to provide the illusion of success. Investors are piling on because they see these amazing numbers from a shoe store and believe this company has found a new way to sucker people out of their money. And, they have...but, only new people who don't realize it's a scam. So, they need a ton of money to keep reaching new people.
Their investor, in a comment in a prior thread here at HN, claimed JustFab could offer such amazing deals(!) by foregoing advertising and new customer acquisition costs. But, I bet that's a tremendous lie. I bet they have to spend vastly more on marketing than most shoe stores, because they have to trick an ever growing pool of people into signing on for their bullshit VIP service or their growth will halt. Much like Groupon has tremendous customer acquisition costs, and a very high touch sales channel, JustFab is gonna have to figure out how to keep the funnel working, because old customers aren't going to be a thing they get to have.
I would give good odds on the following:
1. Their customer retention numbers are misrepresented. Probably not blatantly false, but certainly misleading by omission. Their funnel is so misleading as to make it impossible they are actually making people happy with their subscription service.
2. Their profit numbers required juggling of expenses to make it look good. As with Groupon, they're probably trying to pass off ongoing marketing expenses as one-time expenses. This would be a lie. But, it would not be the first time a venture-backed company lied.
3. Their investors are expecting a bigger fool to come along to relieve them of their stake long before the house of cards comes crashing down. They are probably right. It will probably be big, dumb, and slow money that is trying to look smart and agile. Unfortunately, big, dumb, and slow money is often money that most effects less wealthy folks.
Needless to say, I am not impressed with this company, its tactics, or its investors. It is a toxic culture that accepts this kind of shady dealings as "business as usual". This kind of thing shouldn't keep popping up every few months...investors should be ashamed of themselves for taking part in this. If the world were sane and just, they'd all lose their money, and a bit of their credibility. But, the world is not always sane or just. They'll probably make out like the bandits they are, just as the early investors in and founders of Groupon made a killing (while the last round of investors lost a fortune). Dishonesty pays off if the lie is big enough, it seems.
Their investor, in a comment in a prior thread here at HN, claimed JustFab could offer such amazing deals(!) by foregoing advertising and new customer acquisition costs. But, I bet that's a tremendous lie. I bet they have to spend vastly more on marketing than most shoe stores, because they have to trick an ever growing pool of people into signing on for their bullshit VIP service or their growth will halt. Much like Groupon has tremendous customer acquisition costs, and a very high touch sales channel, JustFab is gonna have to figure out how to keep the funnel working, because old customers aren't going to be a thing they get to have.
I would give good odds on the following:
1. Their customer retention numbers are misrepresented. Probably not blatantly false, but certainly misleading by omission. Their funnel is so misleading as to make it impossible they are actually making people happy with their subscription service.
2. Their profit numbers required juggling of expenses to make it look good. As with Groupon, they're probably trying to pass off ongoing marketing expenses as one-time expenses. This would be a lie. But, it would not be the first time a venture-backed company lied.
3. Their investors are expecting a bigger fool to come along to relieve them of their stake long before the house of cards comes crashing down. They are probably right. It will probably be big, dumb, and slow money that is trying to look smart and agile. Unfortunately, big, dumb, and slow money is often money that most effects less wealthy folks.
Needless to say, I am not impressed with this company, its tactics, or its investors. It is a toxic culture that accepts this kind of shady dealings as "business as usual". This kind of thing shouldn't keep popping up every few months...investors should be ashamed of themselves for taking part in this. If the world were sane and just, they'd all lose their money, and a bit of their credibility. But, the world is not always sane or just. They'll probably make out like the bandits they are, just as the early investors in and founders of Groupon made a killing (while the last round of investors lost a fortune). Dishonesty pays off if the lie is big enough, it seems.