Mapping Economic Barriers

99 Dresses

Nikki Durkin was a naive 19 year old in Australia when she started her company, 99dresses, an eCommerce platform that enabled ladies to exchange designer clothes with users all over the world. She launched 99dresses in Australia and had received very positive reviews for nearly 9 months. She applied to a business planning competition and paid a friend $500 to be a part of her ‘team’ and she won first place with a $10,000 prize.

Eventually, Nikki dropped out of college and wanted to move her startup company to the United States. She got into a Y Combinator in Silicon Valley where she eventually signed a $1.2 million seed round with a group of investors. The next day as she flew back to Australia, when her 2 co-founders told her they decided to leave the company.

Nikki felt completely blindsided and felt uncomfortable accepting the seed round investment without a team in place to execute her vision. One by one, the investors started to pull out of the round and everything was crumbling to pieces. However, she found 5 investors that were willing to invest in her vision and she took it as a sign to move forward. She found a new business partner and they started the slow process of moving their company to the U.S.

After some Visa issues, she was finally awarded a work visa. After that, she moved to New York to relaunch her company and within 3 months, her stocks skyrocketed to a point where individual users had spent thousands of dollars on trading individual items. Growth then started to decline because the average value of listed items started to decline which is where the fee for 99dresses came from. Due to technology issues within their app and a waning interest, customers started to drop off and transactions plummeted.

Nikki went to her investors again hoping for some bridge funding to tide her over from this massive hit that the company had taken. Though she had a lot of people that seemed interested, she could not find anyone to invest in her again. She found out later that other partners did not like how competitive the market was with all of the competition focusing on designer fashion. At this point, they had very little cash left and very little time to find someone else.

After a few more valiant efforts from both Nikki and her team that she had created throughout this process, she decided to shut down the app gracefully with the few weeks of cash they had left for the sake of her team and the community.

Read the full story here: https://medium.com/female-founders/my-startup-failed-and-this-is-what-it-feels-like-c5d64b3ae96b

In this case study, we saw a few different areas that contributed to the ultimate demise of 99dresses. The largest of these issues was that Nikki could not find anyone to invest in her for bridge funding because there was no clear plan to bring the company back from the hit it had recently taken, both financially, and in the loss of its customer base. Also, it is important to look at what competitors are doing to stay relevant in the industry. In this case, the plans to scale up were not well received by customers which led to the shut down of the company.