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Massachusetts is going back to its roots as a home for textile innovation — but instead of mile-long mills along local rivers, the new weave of companies are focused on the web.
Latest to the game is ThredUp Inc. in Cambridge, which launched at the beginning of the year, just two months after founder James Reinhart conceived of the idea as he stared at his closet and didn’t want to wear anything he saw. He joins a field that already contains local companies Salem-based Fashion Playtes Inc., custom shoe design and sales company Sole Envie Inc. of Boston, T-shirt maker Spreadshirt Inc. of Boston and the elder of the market, Boston’s ShoeBuy.com Inc.
A student at Harvard Business School, Reinhart starting wondering how, in a recessionary economy, he could make a business out of helping people mix up their wardrobes.
The result is ThredUp.com, a website that matches users who have something to trade with those similar size, style and tastes, and then facilitates a peer-to-peer exchange by selling prepaid shipping envelopes. If that sounds a bit like a Netflix Inc. for clothes, that is no coincidence.
“Reed Hastings, the CEO of Netflix, is an adviser and a friend of mine, and I defer to what they have been doing,” Reinhart said.
ThredUp seems to have tapped into young adults’ growing interest in saving money while still being stylish. After a mention on the popular youth culture e-mail magazine UrbanDaddy.com, ThredUp, which launched its beta trial in September, saw its number of registered users explode.
“That went out four days after we launched, and within the first four days after we had UrbanDaddy, we had 3,500 users,” Reinhart said.
According to Reinhart, the used-clothing market in the United States is a $5 billion business, but it is “absurdly inefficient.” To become the default standard for improving that inefficiency, ThredUp is seeking a first official round of funding in the $500,000 range, to add to the $78,000 in friends and family money taken so far.
With that new funding, ThredUp can develop the tools it needs to move into what it projects to be its killer app market: used children’s clothing. That will help it reach profitability, which it projects will happen by the third quarter of 2010. To do so, Reinhart knows he and his two co-founders Oliver Lubin and Chris Homer, will have to reach 30,000 registered users. As of early October, the site’s members had climbed to 4,712 during its closed beta.
Also focusing on the children’s clothing market on the web is Fashion Playtes, which closed its first venture round last month, bringing in $1.5 million from New Atlantic Ventures and LaunchCapital. Fashion Playtes, which runs the custom children’s clothing design website www.fashionplaytes.com, entered into its first partnership deal, with the long-running children’s website Kidscom.com, in September. That exposure saw the site’s user numbers soar, according to CEO Sarah McIlroy. “It’s kind of a test for us to see what we can do with traffic. Right now, we are in alpha,” McIlroy said.
New Atlantic partner Scott Johnson was effusive about the site’s growth from the Kidscom integration. “It was like a step function,” he said.
Such success has McIlroy looking at other partnerships and is encouraged with the site’s growth pattern, which will likely bring it to a hard launch by early next year. “We are thrilled with the time on site the girls are spending,” McIlroy said, who hopes to launch the site in beta this month and attract even more tween girls who want to design and produce their own clothes. “What girl doesn’t want to be a fashion designer?” she said.
Fashion Playtes focuses on new clothes for tween girls — an $11 billion per year market, according to Johnson — ThredUp is going to start with exchanging shirts for men before expanding into other items. He believes he is sitting at the edge of a vast, poorly tapped market. “It’s not another ‘nice to have,’ it is essential to have,” Reinhart said.
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