New York-based ToVieFor, a members-only auction site for women’s luxury goods, has closed up shop after about a year of building the business followed by a spring at TechStars. The site is shuttered, the Twitter account is down, Tumblr is quiet, and co-founder Melanie Moore changed her LinkedIn profile to the past tense. “On the surface, we shut down because we ran out of money,” Ms. Moore said. “However, the root cause of this was a flawed business model. We were attempting to compete solely on price in a world where brands not only do not compete on price, they have essentially formed an oligopoly and set prices (vs take prices). As a result, it was incredibly difficult to convince brands to allow us to change up their pricing structure. And in retail, having those brand partnerships is critical to survival.”
At the beginning, ToVieFor had incredible momentum. The startup won the $75,000 grand prize at NYU’s Stern School business plan competition, debuted at TechCrunch Disrupt and went on to make the cut into the first TechStars NY class that ended April 15. When they applied for TechStars, ToVieFor had revenue, 5,000 users and a four-person team with 15 years of collective industry experience; they were also filling out their board with fashion insiders, including an editor at Gotham magazine and a finance executive with Burberry.com, according to the New York Times, which reported that “the company’s live presentation, said one judge at Stern’s finals this year, Paul Sciabica, executive director of New York Angels, was ‘investment-bank quality.'”
The audience at the TechStars demo day seemed pumped about ToVieFor. It was targeting an industry with a lot of money and Ms. Moore put on a poised presentation (“It’s eBay done right”). But of the total $237,000 raised, which included $12,000 from TechStars, $20,000 from the founders and $130,000 from angel investors, Ms. Moore said, none of the funding came after demo day.
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,” she 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.”
Betabeat asked if she had any regrets. “Nope. Everything that happened, for better or worse, is a lesson I can now take with me to my next company,” she said.
It sounds like there were several lessons to be learned in the company’s whirlwind journey from contest winners to startup darlings. “Throughout the program, it became clear that the business ToVieFor was pursuing had a significant amount of business challenges,” TechStarsNY director David Tisch said in an email. “There were questions around the game layer, how to get brands on board, and the competitive differentiation in acquiring customers. There were also some significant team challenges.”
Co-founder Susanne Greenfield left the company before TechStars started. Co-founder and CTO Eric Jennings left for Singly about a month after TechStars ended, when ToVieFor was struggling to get funding. About three weeks later, Ms. Moore decided to shut the company down.
“I am incredibly proud of how mature Melanie was in the decision to shut down ToVieFor,” Mr. Tisch said. “It was the right decision for where she was at. I am excited to see what she does next.”
Ms. Moore isn’t sure what her next step is yet, she told Betabeat in an email. But she’s evaluating two opportunities at the moment and plans to speak more publicly about her experience at ToVieFor and her take on the fashion industry in the next couple months.
Ms. Moore recently wrote some of her thoughts on the fashion 2.0 space in a blog post called, “Building a Fashion Company on the Internet? Please Stop. Just Stop. And Read This,” about the tendency of investors and web entrepreneurs to overemphasize “discoverability” when the real business opportunities are closer to the supply chain.
“Fashion 2.0 is really not that much different than Fashion 1.0,” she wrote. “In order to win, one must focus intently on building a better product that solves a real problem–you know, just like every other successful business in the world.”