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How 2 Tech Guys Built a Billion-Dollar Clothing Company Revolve for Millennial Women(Inc.)

CREDIT: Courtesy Company Revolve.

Revolve co-CEOs Michael Mente(left) and Mike Karanikolas

The article first appeared on the Inc.

The fashion industry is not for the undisciplined--or the slow-moving. Customers change their preferences seemingly as fast as they can scroll through their Instagram feeds.

All of which makes the story of Los Angeles-based e-commerce clothing brand Revolve especially noteworthy. Founded in 2003 by Michael Mente and Mike Karanikolas, the company is reportedly on track to pull in more than $1 billion in sales this year. The Wall Street Journal recently reported that Revolve--known for its daring, trendy clothing--may be preparing for an initial public offering late this year.

(The company declined to comment on its plans.)

How is Revolve not just still standing but actually sprinting in circles around competitors? It's a case study in how fashion has become a business not based only on style but also on data.

Unlike most fashion company founders, Mente and Karanikolas had no experience in fashion. What they did have was an analytical approach, thanks to their data science and business backgrounds. Mente dropped out of an entrepreneurship program at University of Southern California to join a software startup in L.A.--which would later go bankrupt--where he met his co-founder Karanikolas. Karanikolas, who studied computer engineering at Virgina Tech, works on the data side of the company.

The initial big idea behind Revolve was to build an e-commerce site that stocked as many fashionable brands as possible, according to chief marketing officer Raissa Gerona, who joined the company in 2010. That worked for a while, but when the recession hit in 2008 and they saw their competitors selling merchandise for half-off, Revolve decided to buckle down and focus on creating a special product for a very specific audience: Millennial women.

The company scouts for niche designers that can't be found at Barneys or Macy's and analyzes how the brands perform on the site. Revolve can tell the designers exactly what customers are looking for, such as more mid-length dresses or a particular shirt color. The company says that designers who are receptive to this data often will see their sales improve.

"Everything the company does stems from data," says Gerona.

The company's inventory process is another example. Revolve's reordering platform automatically pushes out a notification to buyers on a daily basis when an item is selling quickly. A tagging system--which tracks every detail on a piece of clothing from its length to its buttons--allows the team to easily distinguish or collect data on the designer, look, and cut. While the automation helps, humans ultimately step in to make the decisions. "If we take a risk on a trend and can see it doing extremely well, we can qualitatively distinguish how future styles will sell," she says.

With a data-driven back end, Revolve also sets itself apart on the front end with a savvy social media identity. Since 2009, the company has used hundreds of fashion experts and influencers instead of professional models to showcase its brands.

Scroll through Revolve's Instagram--with its 2.4 million followers--and you'll see photos of these influencers, clad in the company's clothing, taking tropical weekend getaways, brunching with friends on Sundays, or attending Coachella. The attraction is not just the clothing but also the aspirational lifestyle that caters to the Millennial audience. "Our customer wants a piece of that lifestyle," Gerona says.

Read more on the Inc.

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