From Bankruptcy to $87 Million in Funding: How Tamara Mellon Saved Her Namesake Brand
The Jimmy Choo co-founder has faced plenty of hurdles as an entrepreneur. But now, she's clinging tight to her vision -- and finding new levels of success.
Tamara Mellon just wanted to move on.
For most of her career, she'd been defined by one brand: Jimmy Choo. She cofounded the luxury footwear company in 1996, and it quickly became the final word on playful, sexy shoes for women. She grew the business for 15 years until her relationship with the company soured, leaving Mellon feeling overlooked, overworked, and undercompensated. She left in 2011.
Two years later, in 2013, she was ready to launch a new shoe brand. Everything about it would be different. (For starters, she'd name it after herself.) While the rest of the industry releases one large collection each season, she'd release products monthly. Women, she realized, no longer wanted to see autumn clothing on a runway in February, wait until August to buy it, then wait until it gets cold to wear it. "I was thinking about the next generation of luxury," she says.
At first, the industry was intrigued. Investors put in $24 million. Retailers set up meetings. But she hit a wall. She kept hearing the same feedback: She was trying to do things too differently. The timing wouldn't work, people told her. Monthly shipments would be impossible to manage. "I had three investors who wanted me to just go back to fashion's old calendar and build Tamara Mellon the same way I'd built Jimmy Choo," she says.
It was a crossroads. She could do things the way they'd always been done, or she could blaze her own path, despite the discomfort that was sure to follow.
She chose her own path. "And that," she says, "is how I ended up in Chapter 11."
But it would be worth it.
Mellon has long lived a life in the spotlight. The London-born designer is the daughter of the late Tom Yeardye, a Rock Hudson stunt double who was a partner in Vidal Sassoon. Her mother is a former Chanel model from whom Mellon is now estranged. Her ex-husband is the late banking heir Matthew Mellon; they met after attending the same Narcotics Anonymous meeting in the late '90s. This all made her a regular character in the British tabloids. Mellon even joined the press herself for a while: She was an assistant fashion editor at British Vogue, where she got to know the work of bespoke shoe designer Jimmy Choo. In 1996, at her suggestion, the duo went into business.
Jimmy Choo the brand took off and lent Mellon a different kind of celebrity, one she had earned and could embrace. She was even made an Officer of the Order of the British Empire for her contributions to fashion. But not everything from those days would be flattering. She clashed with Choo, who exited the company in 2001. In the decade that followed, the company ping-ponged between private equity owners, and Mellon felt lost. When she finally departed in 2011, she sold her stake for a reported $135 million.
She began plotting her way forward. She wanted to build a new kind of brand, something that was about more than just luxury. She interviewed more than 50 women and learned that the instant gratification of online shopping had changed their expectations. She envisioned a brand that could move as fast as the internet, slashing the production schedule and delivering seasonally appropriate product to consumers each month. "Buy it Wednesday, wear it Saturday," she says.
Mellon lined up Italian manufacturers and raised capital. She built a team, planned designs. But she hadn't anticipated just how challenging this new approach would be. The problem wasn't consumers. The problem was retailers -- particularly department stores she'd done business with at Jimmy Choo. "They didn't know how to make [monthly deliveries] work," she says. "They didn't have the financial planning for it. I tried to put a new model through an old system."
And that system was just not willing to accommodate her. It didn't matter if department store execs liked Mellon's concept; their business was designed around seasonal releases, and they saw no reason to change just to support a startup. So Mellon compromised, releasing her shoes -- and eventually, clothing and accessories -- with less frequency, every three months. The product found some traction, but tensions with retailers remained. She kept pushing; they kept resisting.
By 2015, that tension had damaged the brand. Mellon needed to raise more money, but it would be a down round -- investors believed the value of her company had shrunk. Rather than forge ahead, she saw this as an opportunity to pivot. She'd stop focusing on retailers and instead build an exclusively direct-to-consumer model. That way, she could finally release products as often as she wanted -- while also cutting out the middleman, enabling her to slash prices.
Investors balked. They wanted her to follow retailers' rules. She refused. "I knew the ultimate vision was right," she says. "I just needed some help." So she pulled a high-risk move.
She approached the venture capital firm New Enterprise Associates (NEA), which had previously expressed interest in her proposed direct-to-consumer model. They were still interested. "Tamara is a force -- her track record with Jimmy Choo speaks for itself," says Tony Florence, NEA's general partner. And he saw what she saw: Online sales is the fastest-growing segment in luxury footwear but accounts for less than 10 percent of the market. He was willing to bet that Mellon could seize that opportunity.
Now she just needed to shake free of her existing agreements. In December 2015, she filed for voluntary bankruptcy and laid off 30 staffers. She submitted a plan to restructure and relaunch, maintaining the name. Once she came out of bankruptcy, NEA came through -- leading a $16.8 million Series A round. Mellon was finally free of the past. Mostly.
When Tamara Mellon (the brand) was ready to rebuild, Tamara Mellon (the person) realized she needed someone by her side. "I really wanted a female CEO, someone who'd think outside the box, and had tech and e-com experience," she says. Investors suggested Jill Layfield, who was fresh off 12 years at outdoor e-commerce company Backcountry, which she'd grown to $515 million in revenue. Layfield -- who was being courted by no fewer than 42 companies -- agreed to meet with Mellon, but she had reservations.
"Oh, it was not good," Layfield says of her perception of Mellon before they met. "I'd read [her memoir]. I googled her. I asked people about her. And I did not hear great things. Honestly, the book worried me the most. I was like, She's got problems everywhere! Is she crazy? Will she be mean? I expected The Devil Wears Prada."
About that book: It's called In My Shoes, and Mellon wrote it right after leaving Jimmy Choo. It describes her time there as a power struggle between her and the (all-male) management team put in place by PE firms. It's a series of backstabs, mostly endured by Mellon, and while it paints a portrait of a woman who was undervalued, it also depicts one eager to distribute blame.
In person, however, Layfield found Mellon to be nothing like the finger-pointing narrator from her memoir. "Tamara was very warm and humble about the first version of the business," Layfield says. "She knew what didn't work, and she knew what she needed now to make it work."
Layfield signed on as cofounder and CEO to Mellon's creative director, and the duo got to work. At first glance, they're an odd couple. Mellon is soft-spoken and organizes her thoughts before she speaks. Layfield is loud and unfiltered. Mellon comes from luxury. Layfield spent 12 years selling rock-climbing gear.
But they found common ground as women in business, and as mothers to young daughters. Both saw an opportunity to build a company that supports women -- first at their own office, and then far beyond it. Through this lens, taking care of employees became about more than just giving them equity and generous family-leave policies (though they did that, too). It was about making them feel heard -- and this would require breaking old habits.
Layfield encouraged Mellon to set up her work space at a regular desk, among their staff. Mellon had spent her career with a corner office and two assistants perched outside, but she agreed to try something new -- and discovered that she benefited from the frequent flow of her team's chatter. Soon after, a company-wide Slack channel dubbed "Crazy ideas" was introduced as a judgment-free zone; it's produced some of their biggest hits. "Someone suggested letting customers return shoes whenever they want, with no time limit, and we rolled that out," Mellon says. "Old luxury is intimidating; we want people to feel welcome."
When research showed that the Tamara Mellon shopper is just like the women building the company -- career-minded with an eye on the C-suite -- the team got to thinking about what they, as consumers, would like to see from a brand beyond product and service.
"My daughter is 17," Mellon says. "What does her future look like? She'll be 50 before the pay gap is closed. [Jill and I] thought about what we really care about, and that was equal pay, and women's health."
The team brainstormed ways to authentically join those conversations. Some efforts were simple (offering a 20 percent discount on Equal Pay Day to signify the pay gap), others more complex (driving RVs branded Love Your Mellons around Los Angeles, offering free mammograms).
"We don't want "feminism' to come off as a marketing tactic," says Layfield, who has a quiet habit of offering free shoes to women she sees in the news, like the two who confronted then-senator Jeff Flake in an elevator over his support of Justice Brett Kavanaugh for the Supreme Court. And then, raising her voice to a faux-hysterical shout: "We're not trying to be like, "We're about empowering women for empowerment and feminism and empowerment; did I say "empowerment'?'"
The experiments have so far paid off, in earned media and customer feedback. They see it in ways large and small, like on Instagram, where a follower wrote: "I started browsing over your feed occasionally, and now I go on it every single day. It's not just for the shoes…Every morning there are words of encouragement…It fuels me to work harder."
Today, Tamara Mellon is 42 people strong -- 35 of whom are women. Tom Dean, CTO, is one of seven men. And it's been an education.
"The ladies tell me when I'm being a dumb ass," he says. "We were working on a damaged-product sample sale, and I said, "Ladies, don't catfight.' And [integrated marketing senior director] Caitlin Bray looked at me and said, "Don't be a misogynistic dick.' And I was like, "OK! Fair enough!' "
In March, when the brand hosted an Equal Pay Day event in Washington, D.C., Dean boasted about his employer on Instagram.
"My mother raised six children, and I saw her struggle to pay rent," he says. "Now when I'm talking to my mom, rather than just making money by building content, I feel like I'm making some sort of difference. And hopefully we'll have some impact on somebody, somewhere."
Two and A half years since (re)launch, Mellon's vision has taken shape. She sells a luxury shoe at nearly half the price of competitors'. She treats her team and customers well (free repairs for two years!). She has a store in L.A. with plans for five nationwide by 2021. They've raised millions. But there's more work to do and people to win over.
"It's hard when people say no -- and you will hear no," Layfield says. It's March, and the cofounders are in New York raising their Series C. Despite positive feedback, Layfield says, the experience is a roller coaster. "It feels like we're dating, we get naked, and then the response is, "Ohhh, ewww…no!' And we're scrambling to get our robe back on." (In mid-June, the company announced a $50 million round led by the London-based firm Centricus, bringing their total funding to $87 million.)
The Series C will ideally be their last fund-raise; they aim to break even by 2021. And they're eager to continue evolving the brand for the future -- using new technology to innovate their sales and customer - experience processes.
Last year, for example, the brand joined Apple's Business Chat, which lets customers talk with companies via iMessage, like chatting with a friend. "Eighty percent of our business is mobile, and 80 percent of that happens on iOS devices," Dean says. "We've seen 25 percent of our total data activity migrate to the platform."
And they collect a lot of data: six million pieces daily, a combination of feedback plus sales, returns, and exchange stats, all used to inform future designs. It's paying off; 35 percent of all purchases are by repeat customers.
They're also building on Mellon's first big vision, releasing products more often than the industry standard. The company has trimmed its sample-to-store timeline to three months (traditional retail's is at least six), but it wants to move faster and smarter, and cut back on waste. "If we introduce five styles a month with small production runs, get reactions, and then put a larger order behind the favorites? We cut down on overstock," Mellon says.
Still, challenges remain. They've yet to perfect hiring. They're working on brand awareness. (Tamara Mellon has a respectable 162,000 followers on Instagram; Jimmy Choo has 10.3 million.) And they struggle to explain direct-to-consumer pricing without sounding like a discount brand.
But as long as the customer is happy, they're happy. "We're not the darlings of luxury, and we're OK with that," Layfield says. "We can't be focused on being part of that community. We have to build our own."
That's just fine with Mellon. That community is what she'd worked so hard to leave behind. And now, many years later, she feels like she's done it. "I came from an industry where it was cool to be cruel, but now I feel so validated in my thinking about how to run a business," Mellon says. "This is probably the best company I've ever worked in."
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