When Net-a-Porter launched in 2000, Natalie Massenet, the company’s inspiring founder, faced considerable scepticism about the very premise of her new venture. Why would women ever buy expensive clothing online? Wasn’t the internet the realm of mass market, cheap goods—the antithesis of what exclusive brands like Louboutin and Chloe stood for?
As Index was fortunate enough to invest in Net-a-Porter in its early days, we had many spirited debates with Natalie and our peers about the future of e-commerce and whether luxury could ever be compatible with the internet. I’m now reminded of these conversations by recent interactions we have had with Michael Bruno, the founder of 1stdibs, the world’s largest online luxury marketplace, and David Rosenblatt, the current CEO.
Michael’s experience, and the nature of his project, in many ways mirrors Natalie’s. He launched 1stdibs in 2001, after convincing a few antique dealers at Paris’ famed Marche aux Puces to sell some of their pieces online. Like Natalie, Michael understood that millions of consumers around the world would eventually do much of their shopping online, for mass market and big-ticket items alike. In the house of the future, the Black & Decker toaster would be purchased from one site while the long sought after Nakashima side-table would be bought from another.
Today we are proud to welcome 1stdibs to our portfolio—not only because its vision was well ahead of its time, but also because the company has a great business model supported by an outstanding team capable of realizing the full potential of the business. Index has long supported innovative fashion companies—not only were we investors in Net-a-Porter, we also invested in FarFetch, Moleskine, Etsy, and ASOS. More recently, we invested in Nasty Gal, one of the first online-only fashion brands that e-commerce has produced.
1stdibs is a natural addition to this elite group of companies, and represents a convergence of many of the themes we look for: design, luxury, and marketplace. We have been tracking the company for a long time, but two major events made this investment happen now.
First, the company seems to have reached critical mass in terms of the size of its marketplace. We are big supporters of the marketplace model—the type of business where buyers and sellers are connected around the world on a single platform. Marketplaces are not easy to start, as it’s hard to build up both supply and demand and maintain a high level of liquidity. That being said, once a marketplace reaches a certain level of success, it has the potential to grow faster and larger than a traditional e-commerce site. We’ve seen this first-hand with some of our other marketplace investments: Betfair, Etsy, FarFetch, and Viagogo. 1stdibs now has over 1700 dealers (up from 1200 last year) and sells more than 9,000 items per month, which not only makes it an iconic brand, but puts it in the category of super-marketplaces.
Second, last year’s decision by David Rosenblatt, the former CEO of DoubleClick, to take the reins at 1stdibs added to our confidence. David is the natural complement to Michael to run 1stdibs. He was instrumental in creating a new category of online advertising with DoubleClick, which he then sold to Google for $3.1 billion, and subsequently led Google's display advertising business.
Finally, 1stdibs seems to be hitting its stride in terms of building a cult-like following. With any major fashion or design company—and particularly in the online space—this step is critical. We saw a huge success story in the way consumers reacted to Nasty Gal and its founder, Sophia Amoruso. Now the same thing seems to be happening with 1stdibs. I’m continually seeing Michael Bruno and 1stdibs pop up in certain publications. Tom Ford even made 1stdibs his homepage! With this kind of traction, we knew that this was a company with great prospects and we are extremely excited to have them in Index’s portfolio.