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Qatch and Nicole Phillips
Improving online shopping, building an ML-based personal stylist that recommends brands and products via text message
Qatch was founded by attorney turned technology entrepreneur, Nicole Philips, and her sister, Raquel Philips, an accountant. Qatch is a company that helps people discover clothing and accessory products along with new brands with personal recommendations delivered via text message.
They began kicking around ideas to improve the online shopping experience at the beginning of 2019, but it was only a passion project that occupied their spare time. Nicole was still a full time attorney working in the retail fashion space. But, by late 2019 they landed on an idea and had a clickable design prototype. For the first version of their product, which would focus on text messaged stylist recommendations, they manually compiled a spreadsheet to manage their product and brand recommendation. A few months later, in March 2020, as much of the globe was sheltering in place and the economy was in free fall, they launched Qatch and sent out their first product recommendations via text.
It was an interesting time to start a business to say the least, especially one focused on improving the online shopping experience. They quickly grew to 75 customers paying $5 a month for recommendations and decided it was time to go all in. In June they added a more robust website where customers could give feedback on products and closed a pre-seed round. Today, they are in the midst of raising a Seed round.
I sat down with Nicole to ask her about what she’s learned from starting a business during the pandemic and how the past year has been. A day before we spoke they announced the big news that model and designer Rocky Barnes is now an investor and advisory board member.
In our conversation, Nicole talks about:
How her career as an attorney led to her founding Qatch
The early version of the product where she manually sent all of the product recommendation texts
How they measured the success of the product as they transitioned from a no code product to a low code product
The importance of not writing off non scalable ways to acquire customers
How she makes sure that potential investors truly care about her business and vision
My questions are in bold; this interview has been lightly edited for clarity.
Thanks for speaking with me today! So, I’m very interested to hear the founding story of Qatch. How did your law degree and life as an attorney lead you to starting a company?
Nicole Phillips: I went to law school in Boston and I practiced law at a big firm for several years. During that time I was very attracted to the retail clients that I was working with and decided that I wanted to focus on that. I went back to law school and got my master's of law in fashion law. That program taught me a lot about the business side, but also the legal risks and liabilities that you need to be aware of in that space.
When I was working for brands and retailers, I was fascinated with the amount of money and technical capabilities that were being developed to help brands improve their operations, supply chain management, but only a little bit towards improving the user experience of customers shopping online. From a consumer perspective, I thought there was a lot of room to improve.
I kept getting frustrated every time I wanted to shop online. I love clothing, I love fashion. I made my career out of it. But it got to a point where I actually hated the experience of going online and shopping for clothes. I wanted to spend money. I just did not want to have to do the browsing myself.
I was telling my younger sister, Raquel, how frustrated I was and we began to talk about how cool it would be if tech could do this or that to improve the shopping experience. It started with this Black Mirror-like idea. Our initial thought was no way that could happen, right? But then we started sharing the idea with some technical people that we knew and they told us there are companies doing something similar. The companies are operating in a totally different industry, but the underlying technology is possible.
We are non-technical founders, building a tech startup, but my background and intricate knowledge of the business side of the fashion industry has been really really helpful to us in developing a business model that keeps the needs of brands in mind balanced with consumer needs.
Qatch stands for quick match, which is what we do for consumers. We also act as a matchmaker for brands, by putting the right products in front of the right users.
Ahh, so you have a relationship with the brands as well? You aren’t merely scraping their websites for merchandise?
NP: No, we have relationships with every brand that we recommend products from. Early on, we thought about scraping, but websites are constantly changing, so it’s hard to get the metadata and inventory management is an issue in the retail space. It’s important to have reliable data for the recommendations. It took us about four to five months to build relationships with half a dozen brands. Once we began recommending products, brands saw how engaged our user base was, and it kind of snowballed from there. We now have over 100 brands that we partner with, and we just launched a Shopify app so that we can tap into the smaller brands that don’t have a technical team, but use Shopify to manage their inventory and sales. Now it’s really easy for them to plug into our system.
The Shopify app is a great idea. Let’s talk about your product. First off, I love that you’ve kept it simple and text message based, rather than building an expensive iOS or Android app. Can you tell me about your initial product, why you chose to go the text message based route, and what the early customer feedback was?
NP: We started out thinking, “OK, let's build a mobile app because that's just what you do, right?” This was in 2019 when we were trying to figure out what the concept would look like. But Raquel and I hate apps on our phone. I have so many apps that I never use. We kept thinking of simplicity. We want to simplify the online shopping experience. We came up with the concept for a text message based system when she sent me a text and I double tapped the message on my iPhone and gave it a heart. That’s when we realized how cool it would be if it was as easy as that double tap to respond to a product recommendation.
Starting with text messages also meant we didn’t really have to build anything. It was a great way to prove the concept without spending a ton of money into mobile development. Once we validated the concept and raised money then we thought we might build a mobile app. But, we couldn't really see a year or two down the line that SMS was going to be as powerful as it was.
The initial product was us manually texting people who were paying $5 per month. We had a very rudimentary recommendation system. It was not an algorithm, it was an Excel spreadsheet, with nested if then statements. If someone gave a heart to this product, then send one of these 50 links.
I’d be texting my husband the grocery list and then switching to text our members. It was so rudimentary, but people were paying us for it, and it very quickly grew to about 75 people. That was in April of 2020 when we realized maybe there is something to this SMS concept, so we brought on a technical expert to join our team. Ben Peleg, is our Chief Data Officer, and he helped put together some low code solutions so that we could continue to validate our concept.
That must have been both nerve racking and exciting to be starting a company just as the global pandemic hit. The economy appeared to be in a free fall, but many people were fortunate enough to be able to do their jobs remotely. Did you see all the people stuck at home with disposable income as a benefit?
NP: The individuals that we were targeting and had initially reached out to were digitally savvy and many of them had safe careers, so they were still spending money. Now they were just buying more pajamas. The great thing about Qatch is that we don’t have inventory. It was easy for us to filter out black tie dresses from our recommendations and instead only show customers comfy clothes.
We also found that there were a lot of older women who I don't think really ever would have shopped online were now forced to shop online. Being introduced to online shopping can be overwhelming. Qatch was a nice introduction to it. We’re sending them products from all of these different brands that they’ve never heard of, but we’re doing it in small bits. We are doing the work for them.
I hate to say that anyone benefited from launching in the pandemic, but it did kind of help us because everyone had to shop online. We were at the right place at the right time. People were shopping a lot with us and we had some really crazy stats early on even though our user base was small. It was really, really exciting.
As you transitioned from a no code product to a low code product, was there a specific metric you were using to measure whether you were building the right features or was it something else?
NP: It was a bunch of different things. We really took the time to talk to as many users as we possibly could. It's great because we already have their phone numbers for the service so we send weekly surveys. We would always listen to what they were saying.
We didn't have a formal referral program or anything, but we were getting a lot of signups and we didn’t know where they were coming from. It was like this spark. We didn't understand exactly what the value prop was and why they were signing up, because it could have been a few different things, but something was working and we just needed more time to figure out what that was.
We very quickly started to outgrow those low code solutions. We had initially switched from Excel to Airtable, which is an amazing product, but our plan had limits to the number of rows we could have for different tables. I actually emailed the CEO of Airtable. I tried like seven different variations of what his email would be before I found the correct one. I told him we loved the product, but couldn’t afford to switch to the enterprise version yet. Is there anything they can do to give us more rows on the current plan? He was amazing and he let us live a little bit longer by saving us some money.
Anyways, there wasn’t one specific KPI. User growth was very good as were repeat purchases, but it was mainly just this feeling our members were engaged. It was hard to know if the numbers were because of the pandemic or our product. We decided we wanted more time to understand which it was. So that’s why we decided to build a system that could scale with us.
What’s your vision for Qatch? How do you see the product evolving?
NP: That's a great question. SMS is amazing and Qatch is SMS-first for now, but we are very methodical in what we're building so that we change as user behavior changes. And it does. Shoppers are fickle. Sometimes they like to shop one way and then the next year it changes. So everything that we're building is so that we can adapt and change with consumers.
We recently built a more interactive website so that our customers could give us more ratings and feedback. It was a really smart business decision for us to build it because it allows us to capture more data points from users, but also increase the session length and the amount of time that users can interact with Qatch. The SMS product is simpler, but after they interact with our text or click a product they are out of the Qatch experience, and then they have to wait for us to text them again the following week. We really want to capture behavior and understand what we can offer our users, and it's really hard to do that just through text.
Our vision for Qatch is to incorporate social proof into the recommendations. We’ve begun to work with influences. Rocky Barnes is one of our recent mega influencers to join the platform. She also invested. In our research 70% of young consumers seek validity of a purchase or product or style before they make a purchase. They get that validation through social media. Now, with Rocky we want to provide our customers with the ability to see what Rocky is loving or liking from her product recommendations. We can offer that social validation within the experience so they don't have to leave and go to Instagram, Facebook or TikTok. They’ll be able to make quicker and better decisions.
That’s a great idea to enable your customers to see what products Rocky is engaging with on your platform.
So this newsletter is called One Year Wiser, and it’s been about a year and half since you launched the website version of your product. Thinking back over the past year, is there anything you learned that you wish you’d known at the beginning of the year or maybe something that you did that you wish you had done earlier?
NP: In the past year, what I wish that I learned earlier is not to write off these non scalable ways to acquire customers. There's little room for pride when you are growing a new business. Don't write off something just because it seems silly or uncomfortable. I mean, cold emailing or a table at a local fair. All of these things that are a little uncomfortable in the sense that it makes you feel small can be hard for entrepreneurs.
Instead you’d rather just pump money into Facebook ads or Instagram. It’s a lot easier to do that, but you really learn how people perceive your product when you reach out to them in a non scalable way. You learn who your target demographic is. You learn such amazing things by being out there and actually communicating with them. And sure, it's not scalable, but it is an amazing way to grow quickly. I wish that I learned that earlier and had more time to do that.
We still do non scalable marketing along with very scalable marketing. But honestly, some of our best customers came from these random table things that I did around Boston or someone that I reached out to and direct-messaged on Facebook because I saw that they had commented in some group that I'm a part of. You've got to try everything.
There are so many things I learned when it comes to fundraising. We closed our pre-seed round earlier this year, and I learned that not all money is the same. It's really hard to turn down money, especially in the early days when you’re worried about keeping the lights on or paying your employees next month. But we have turned down money and I am so grateful that we did because the investors that you take on early are going to help shape the future of your company. They have an ownership in your company. If you take on the wrong investor and you constantly have this back and forth where you don't see eye to eye, it's going to be hard for you to feel like you have a support system that you can lean on.
You need to be able to share your problems with your investors. If they don't know what your problems are they cannot help you. So you really want to surround yourself with people that you can be vulnerable around and people that believe your vision, believe in you and share that excitement. Because of this, it's really important to take the right money. Some investors have amazing networks and they are worth giving up more of your company versus someone who is just going to write a check and then disappear unless there’s a fire. It's really, really important for young founders to be smart, normally you see a big check and you want to take it, but just remember to think and be smart. You're getting into a marriage with these investors.
How do you make sure that the investor truly cares about your business and vision? Do you have specific questions you ask or is it just a gut feeling?
NP: It’s just a skill that I think I have. I feel that I'm very good at reading people. There are a number of questions that I ask to put the investor on the spot and see what they think of your business. I've gotten a lot of questions from other founders that are very successful and have done this a million times. One great example is, “what excites you the most about Qatch?”
I leave it very open ended to see if they just reiterate back to me the things that I've already told them. The good investors don’t do that. They may say something like, “Oh, well, I have this company who I help do x and I can imagine the synergies between you and them.”
You can see it light up in their eyes when you give them the opportunity. I also talk to other founders of their portfolio companies. That is the most underrated tool in the world. Other founders are usually willing to share their experience, especially if it was a bad experience because they don’t want someone else to go through it. So my advice to new founders is to always reach out to other founders that an investor has invested in and do your due diligence on them.
That’s great advice. A lot of entrepreneurs struggle in that first year as they try to find product market fit and the buzz from the launch has worn off. How did you manage to stay motivated and focused after the excitement of the initial launch?
NP: Some days when it could be hard I have to attribute my excitement to my co-founder. She's my younger, smarter sister. Don't tell her I said that, but she is a perfect counterpart to me. We have such different personalities. But if I call her and I am having a down day, she knows what to say to excite me. We'll revisit and say, “remember where we were a year ago, we were texting people from our own phones... look at this amazing thing that we've built!”
She really is my hype man and I also do the same. I know when she's having those off days. I'm very fortunate to have a co-founder that I can go to and chat with.
Also, there are so many inspirational podcasts and hype videos. It sounds silly, but you watch something that just puts life in perspective and you think, “wow, I got it.” But yeah, I'd have to say my co-founder, she's the best.
That’s great to hear. Thanks for taking the time to speak with me.
I hope you enjoyed my interview with Nicole and learned a few things. If you did, give it some love on Twitter with a RT or Like. This helps more people discover my newsletter 😊 -Tyler