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Since it was founded in 2003, Los Angeles-based online apparel retailer Revolve has grown, slowly, deliberately, and profitably. Last year, the company sold selling $440 million worth of apparel, from bohemian 70’s dresses and low cut bodysuits to stacked heel sandals.
If you’ve never heard of Revolve, that’s by design. Co-founders Michael Mente and Mike Karanikolas haven’t chased tech blog hyped or venture capital-fueled growth, and it hasn’t hurt them. While buzzy, VC-backed competitors like Nasty Gal and Gilt Groupe undergo layoffs and sell for a fraction of their valuations, Revolve beat its 2015 revenue projection by 10% and expects to grow 40% to 50% next year. "Chasing revenue and growth without really understanding the guts of the business is something that venture capital will push you to do," Mente says. "We're trying to build a business for the long term that we wanted to own forever." Mente and Karanikolas (known to their 400 employees as "The Mikes") see a future where Revolve is a $1 billion company. Not a "unicorn" startup with a $1 billion valuation, mind you—$1 billion in actual sales.
Fortune: What's the most important aspect of your company?
Mente: Listening to our customers guides us every step of the way. There's only one boss--the customer, and they have the ability to fire the whole company anytime they want.
What has changed since you started Revolve 13 years ago?
Consumer tastes and preferences have shifted away from what we view as stale mass market brands—people want new, emerging designers in categories like home, apparel and food. It’s like with craft beer—10 years ago there were like five different beer brands available. Now there are thousands.
It stems from being connected to thousands of people on the Internet. That has changed the perspective of our customers. They care about how they present themselves and what choices they have. They want to be unique and special, and they need to express their individuality.
E-commerce has had a rough time lately, with many of your peers and competitors undergoing layoffs or selling. What does that mean for you?
When [some of these startups] emerged from nowhere and there was a lot of hype, we watched and thought, 'Is there something there?' We thought we were the ones missing something. But it's important to stay focused. It validates the old school approach of growing the business from the ground up, taking the opportunities that are there, but also getting to the $1 billion level at the appropriate pace.