20VC How To Think About FounderCategory Fit, Why The Biggest Opportunities Are In Category ReArchitecture & What Can Be Done To Increase The Amount of Women In VC with Nadia Boujarwah, Founder & CEO @ Dia & Co

Abstract
Summary Notes

Abstract

In this episode of "20 minutes VC," Harry Stebbings interviews Nadia Bajawa, founder and CEO of Deer and Co, a startup offering premier plus-size clothing and styling for women. Bajawa shares her journey, emphasizing the personal experiences that led to Deer and Co's creation and its mission to address the underrepresentation and supply-side failures in the plus-size fashion industry. With over $20 million in funding from top investors like Alfred Lynn at Sequoia, Bajawa discusses the importance of category creation, customer devotion, and the challenges and strategies of securing venture capital. She also touches on the broader implications of sexual harassment in the VC industry, advocating for more female VCs and a culture that supports women's voices.

Summary Notes

Introduction to the Podcast and Guest

  • "20 minutes VC" podcast hosted by Harry Stebbings.
  • Guest is Nadia Bajawa, founder and CEO of Deer and Co.
  • Deer and Co. specializes in plus-size clothing and styling for women.
  • The company has raised over $20 million from investors like Alfred Lynn at Sequoia and Nextview Ventures.
  • Nadia's background includes roles as CFO and COO at Frieda Nelly, and in marketing and strategy at Diane von Furstenberg.
  • Acknowledgement of Alfred Lynn and Rob Go for introducing Nadia to the podcast.
  • Mention of sponsors Cooley, a global law firm for startups and VCs, and Zoom, a video and web conferencing service.

This is the 20 minutes VC with me, Harry Stebings at H debbings 90 96 on Instagram and at H stepbings with two B's on Snapchat. I always so love to see you there and for the show today, I'm thrilled to welcome a very special guest to the show as Nadia Bajawa joins us in the hot seat today.

This quote introduces the podcast and the host, Harry Stebbings, while expressing excitement for the guest, Nadia Bajawa.

Now, Nadia is the founder and CEO at Deer and Co. The startup that provides premier plus size clothing and styling for women. To date, they've raised over $20 million in funding from some of the best in the business, including the likes of Alfred Lynn at Sequoia and the team at Nextview Ventures.

This quote provides background on Nadia Bajawa and her company, Deer and Co., including its focus on plus-size women's fashion and its successful fundraising efforts.

Founding Story of Deer and Co.

  • Deer and Co. was founded based on personal experiences with plus-size fashion.
  • Nadia and her co-founder, Lydia, were inspired by a New York Times article about plus-size fashion bloggers.
  • They identified a significant market of 100 million plus-size women in the US.
  • The goal of Deer and Co. is to solve the retail problems faced by this community.

Dear really is a business that was founded from very, very personal experience, both for me and my co-founder, Lydia.

This quote explains that Deer and Co. was founded on personal experiences that Nadia and her co-founder shared, which is a common motivator in entrepreneurship.

There are 100 million women in the US who wear a size 14 or above, which is what the industry classifies as plus size.

This quote highlights the large market size for plus-size clothing, emphasizing the potential impact of Deer and Co.'s mission.

Category Creation in Business

  • Category creation is seen as a key to building value and enduring success.
  • Owning a problem in the minds of consumers allows a business to define a new category.
  • Deer and Co. aimed to create a new category in the market due to the constrained nature of the plus-size clothing industry.
  • The issue is seen as a supply-side failure, with plus-size women spending less due to lack of options.

To be successful in an enduring and transformative way, you really have to be able to own an important problem in the minds of your consumers.

This quote emphasizes the importance of solving a significant problem for consumers as a way to create a category and build a successful business.

The actual industry side, this is one of the most artificially constrained markets that we think exists.

This quote points out the limitations within the plus-size clothing industry, suggesting that these constraints are not due to lack of demand but rather supply-side issues.

Core Supply Side Failures

  • Failures occur at every stage of the value chain for plus-size customers.
  • Design educators do not teach how to create successful garments for plus-size consumers.
  • These failures extend to manufacturing, brands, and retailers, who do not see plus-size women as their core customers.
  • The shopping experience for plus-size women is broken, with limited options and uncomfortable environments.

Truly, it is a failure almost at every place in the value chain for this customer.

This quote identifies the widespread issues in the supply chain for plus-size clothing, suggesting systemic problems that need to be addressed.

Overcoming those challenges that would require additional investment becomes much, much harder.

This quote explains that the lack of focus on plus-size customers by the industry makes it difficult to invest in the necessary changes to improve the situation.

E-commerce Challenges for Plus-Size Women

  • Plus-size women face unique shopping challenges, such as concerns about size availability and fit.
  • Traditional e-commerce has not solved the issue of fit for plus-size women.
  • There is a need for a new combination of experiences to address the psychological, emotional, and functional aspects of retail for this demographic.

"ms being too small to not being sure whether or not your size may be carried in a store are really things that impact the customer experience."

This quote highlights the difficulties plus-size women encounter when shopping, including the lack of certainty that their sizes will be available, which negatively impacts their overall customer experience.

Founder-Category Fit

  • Founders should build businesses around problems they are uniquely suited to solve.
  • Founder-category fit is crucial alongside the choice of category and its architecture.
  • A distinct perspective and unrelenting commitment can set a founder up for success.

"I think it really comes down to building a business from the point of view of a problem that you want to solve."

Nadia Bajawa emphasizes the importance of founding a business based on a problem the founder is passionate about and equipped to address, which is key to success.

Challenges in Attracting Early VC Interest

  • Having a distinct and contrarian view on a category may require a leap of faith from investors.
  • Dia & Co initially failed to attract VC interest due to their contrarian perspective on the plus-size market.
  • Early funding challenges led to bootstrapping with friends and family investments before gaining traction and attracting institutional investors.

"It's tough, because I think the flip side of really having a distinct and contrarian view on a category is that it takes a leap of faith for other people to also see it."

Nadia Bajawa discusses the difficulty in securing early VC interest when the business concept challenges existing market perceptions, requiring investors to take a leap of faith.

Bootstrapping and Customer Engagement

  • Bootstrapping allowed the company to focus on core customer needs without distractions.
  • Engaging with customers on a personal level provided deep insights into their needs and the value they find in the product.
  • Unscalable early processes are essential to learn and build the foundation for scaling the business.

"There was nothing fancy about what we were doing. We were shipping product in free USPS boxes. We were buying inventory at stores and shipping it to customers."

Nadia Bajawa describes the early, unsophisticated methods of operation during the bootstrapping phase, underscoring the focus on fundamental customer needs rather than extraneous details.

Inflection Point for VC Interest

  • The transition from VC non-interest to interest was primarily driven by clear traction.
  • Demonstrating significant run rate revenue and customer engagement made it easier to secure institutional funding.
  • Early traction with limited resources highlighted the potential for success to investors.

"By the time that we had founder collective re emerged in conversations, the business was already doing millions of dollars in run rate revenue."

Nadia Bajawa explains how demonstrating solid traction with significant revenue was a turning point in gaining VC interest and support.

Key Performance Indicators

  • Assessing business performance regularly is crucial for understanding growth and challenges.
  • The specific metrics used as indicators of success can vary depending on the business model and goals.
  • For Dia & Co, the focus was likely on metrics that demonstrated customer engagement and revenue growth.

"I think it was just traction."

Nadia Bajawa suggests that traction, likely reflected through key performance metrics, was instrumental in convincing VCs to invest after initially passing on the opportunity.

Long-Term Customer Relationships

  • The importance of long-term relationships with customers as a measure of business health.
  • Evaluating customer experience improvements over time as an indicator of relationship strength.
  • The significance of the duration and value created for customers over their engagement with the business.

"on long term relationships with our customers. And so the metrics that we think are most indicative of the overall health of the business and the impact that we're able to have on the community that we serve is what that relationship looks like over time."

This quote emphasizes the focus on long-term customer relationships as a key metric for assessing the health and impact of the business, highlighting the importance of sustained interactions and the evolving customer experience.

Role of Amazon in the Market

  • Commerce is not monolithic; different categories have distinct economics and opportunities.
  • Amazon's role as a market maker and its effect on market expansion.
  • The unique position of some companies to create market demand rather than just capturing existing demand.

"I think for sure in some categories, Amazon is a market maker and really enabling market expansion."

Nadia Bajawa acknowledges that Amazon can be a catalyst for market growth in certain categories, suggesting that its presence can be beneficial rather than solely competitive.

Market Expansion vs. Market Share

  • The distinction between capturing existing market share and expanding the market.
  • The strategic focus on creating new demand within a category.
  • The unique approach of some companies, like DiA, to market expansion.

"True market expansion is what's most important, to be able to interact with our customers in a way that not only shifts dollars that are being spent either in a different channel or with a different company towards us, but really being able to create dollars for the first time is something that we are uniquely positioned to be able to do."

Nadia Bajawa explains that for DiA, success is defined not by taking market share but by expanding the market and creating new demand, which is a distinctive strategy in their category.

Industry Consolidation and Standalone Businesses

  • Industry consolidation varies by category, with some being inherently consolidatory.
  • Personal ambitions of founders and preferences of the board influence a company's potential outcomes.
  • The feasibility of standalone businesses versus the need to be part of a larger platform.
  • The ambition to fundamentally change the landscape for a specific community.

"I think in our case we've always been very clear about the scale of our ambitions and the commitment that we have to fundamentally change a landscape for a community of over 100 million women."

Nadia Bajawa states that DiA's clear ambition from the start has been to significantly impact a large community, an ambition that is shared with their board and influences their approach to potential industry consolidation.

VC Sexual Harassment Wave

  • The significance of the national conversation on sexual harassment.
  • The bravery of women coming forward to share their experiences.
  • The tech industry's role in bringing the conversation to the mainstream.
  • The opportunity for lasting change and the responsibility of the entire tech ecosystem.

"I think this is probably the most important conversation that we're having as an industry at the moment."

Nadia Bajawa highlights the crucial nature of the discussion around sexual harassment within the industry and the broader national context, recognizing the impact of individuals who have shared their stories.

Professional Boundaries in VC Relationships

  • The need for benchmarking professional behavior within the VC industry.
  • The challenges in defining what constitutes professional conduct.

"Can I ask? I think there kind of needs to be a certain case of benchmarking to an extent, and just kind of outlining what is professional and not professional."

Harry Stebbings expresses the need for clear benchmarks to define professional behavior in the VC industry, acknowledging the complexity of the issue.

Importance of VC-Founder Relationships

  • The trust and partnership between founders and VCs are essential for success.
  • Relationships should be consistent across different gender pairings in the VC-founder dynamic.
  • Acknowledges the distinct power dynamics and the necessity of being cognizant of them.
  • Emphasizes the personal nature of these interactions and the investment in long-term relationships.

"The relationship that I am able to build, the trust, the partnership that we have with the members of our board and with our investors is critical to our success."

This quote highlights the significance of strong relationships between founders and investors for the success of a company.

"And making sure that that happens in the same way that it would happen with a female VC and a male founder. A male founder and a male VC or two females in the same situation needs to absolutely be the case."

Nadia Bajawa stresses the importance of equitable relationships in VC dealings, regardless of gender.

Quick Fire Round: Insights and Preferences

  • Nadia Bajawa shares her immediate thoughts on specific prompts in a quick-fire question round.
  • Discusses her favorite book, the difference between customer centricity and devotion, valuable advice received, favorite newsletter, changes in the VC world, and the future of Dia.

"Desert island is tough if it's desert island, I'm probably taking nonfiction. But as it relates to our current conversation, I think one of the books that articulates best how we think about our customers, a book called competing against luck, which really talks about how you come to identify exactly what your customer is hiring you to do and building a business around that, which I think is critical."

Nadia Bajawa chooses "Competing Against Luck" as a book that aligns with her customer-focused business philosophy.

"I think nearly every company will tell you that they are customer centric and that has to do with getting products out faster and cheaper and kind of all the functional benefits of being able to serve a customer. I think customer devotion is something completely different."

Here, Nadia Bajawa differentiates between customer centricity, which focuses on product efficiency, and customer devotion, which is about understanding and building an emotional connection with customers.

"The best piece of advice that I've applied to the deer journey is probably something that I learned a lot earlier from my wise, wise mother, who is full of one liners. And one of my favorite is she always says, you don't have the luxury of thin skin on the front lines."

Nadia Bajawa shares a piece of advice about resilience and the importance of having a thick skin in business, especially on a personal venture like Dia.

"I think one of the most insightful newsletters that I read is one called loose threads written by a guy named Richie Siegel."

Nadia Bajawa recommends the "Loose Threads" newsletter for insights on the retail industry.

"I think one of the biggest opportunities that we have for change in the world of VC is really in having more women venture capitalists."

Nadia Bajawa advocates for more women in venture capital to address gender dynamics and potential missed opportunities in funding.

"The next five years at DIA are exciting, I think for us. We are really excited, I think, for the opportunities that we have to set a new trajectory for this category overall and really be a part of making completely new experiences."

Nadia Bajawa expresses optimism about the future of Dia and its role in creating new experiences for its customer base.

Acknowledgements and Promotions

  • Harry Stebbings thanks individuals who introduced him to Nadia Bajawa.
  • Promotional mention of Cooley, a law firm specializing in startups and venture capital.
  • Endorsement of Zoom, a video and web conferencing service.

"What a fantastic guest it was to have on the show there. And again, a big thank you to Mika at Founder Collective, Rob, go at next for you and Alfred Linus Coy, all for the introductions."

Harry Stebbings expresses gratitude for the introductions that led to Nadia Bajawa being a guest on the show.

"Cooleys form more venture capital funds than any other law firm in the world. With over 50 years of experience working with vcs, they help vcs form and manage funds, make investments, and handle the myriad of issues that arise through a fund's lifetime."

Harry Stebbings promotes Cooley as a leading law firm in the venture capital space, emphasizing its extensive experience and services.

"Zoom is a top rated conferencing app across various user review sites, including G two, Cloud and Trustradius, and you can sign up for a free account, not a trial. Just visit Zoom us."

Harry Stebbings endorses Zoom, highlighting its high ratings and the availability of a free account, not just a trial.

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