During TechStars, ToVieFor tried to adapt to be more like a typical, full-price retailer. “This satisfied the brands, and we began to establish partnerships with designers in the luxury category,” Ms. Moore wrote in an email. “But as a result of this change, we lost our competitive edge in the marketplace. We were then going head-to-head with retailers like Net-a-Porter and Shopbop, with no real competitive advantage over these businesses.”
And those businesses may be the only ones that are fitting somewhat comfortably into the clunky intersection between tech and fashion. Kevin Ryan’s Gilt Groupe, an Alley-based luxury retail site, has grown from a small members-only shopping site to a retail behemoth that’s hoping for a 2012 IPO. It generated $270 million in revenue in 2009 and claimed to have done over $400 million last year.
But Gilt doesn’t resemble a new model so much as the old one: good old-fashioned direct retail, with not-very-webby things like warehouses and inventory management. Gilt’s challenges are, in many ways, the challenges of their traditional brick-and-mortar counterparts.
The dilemma for Tumblr and companies like ToVieFor is much different. They have to work with the industry in a way that doesn’t compete with it (a la Tumblr) or figure out how to disrupt it (which theoretically would have been an option for ToVieFor). It’s an attractive opportunity that has interested many high profile angel investors and venture capitalists, from Ashton Kutcher (who invested in fashion startup Fashism.com) to traditional firms like General Atlantic, which funded flash-sale site Gilt Groupe.
Prior to becoming Fashion Director at Tumblr, Mr. Tong co-founded two fashion startups, Weardrobe and Index F. He also worked as a front end developer at UNICEF. None of these positions involved client services or ad sales, which he now handles as fashion director at Tumblr.
“It makes total sense,” said one selected blogger who spoke to The Observer by phone. “They need to start earning money, and writing about brands, product placement, that is a good way to do it.” The Observer explained that, according to Mr. Tong’s proposal, the bloggers would be submitting 15 posts per week, not to their own blogs, but to the Tumblrs owned by the brands paying the fees. “Oh, wait really?” the blogger asked. “In that case, I would definitely want to be paid, because I would no longer own the content.”
“[Mr. Tong] is David Karp’s friend and that seems to be his main qualification for this job,” said one designer who wasn’t thrilled with the idea, either. “Now they are trying to have us pay for Tumblr bloggers to come to our shows, which is ridiculous. We would never pay a journalist to come cover us, so why would we pay Tumblr?”
But the question of who should get paid for what and why isn’t the dicey situation the company is facing. It’s also an issue of the company’s overall responsiveness to brands, and to users—and its knowledge of the space in which it’s trying to compete.
Raman Kia, the Head of Digital Marketing at Starworks Group, laid things out in a post titled “Exposed: The Actual Problem With Tumblr.” “My team and I represent 15 of the most prestigious and powerful brands in the fashion space,” wrote Mr. Kia. “I have this year tried on two occasions to work with Tumblr on a professional level. So, I am coming to the table from a position of truth and authority.
“It came as a surprise to my client that the person representing Tumblr at this meeting had no idea who my client was,” he continued. “Let me just put this in perspective: This is one of the biggest retailer of luxury fashion in the world (did I already say that?) —and probably one of the most reputable and prestigious. It’s like saying I am the Director of Automotive but I’ve never heard of BMW or Mercedes!”