When José Neves was asked about Farfetch’s future in February, he said there were no plans to take the fashiontech scaleup public. Seven months later on Friday September 21 the company had a massively successful IPO, raising $884m on the New York Stock Exchange which saw the value of the company jump to $8.2bn in one fell swoop.
However, the success of Britain’s latest e-commerce unicorn didn’t come out of nowhere. In fact, it’s been in the making since Neves founded the company back in June 2007, since which the luxury-clothing marketplace has grown from strength to strength. “Farfetch is a wonderful example of a homegrown unicorn – a London-based business which has exceeded all expectations,” said Carl Reader, business coach, director at the accountancy firm d&t and author of The Startup Coach, when speaking to Elite Business. “There are a number of lessons that potential entrepreneurs can learn from their success.”
Fortunately, for you, Elite Business has taken a deep dive into the business’ history to find the key insights entrepreneurs can use to boost their own startup journey.
(1) Know your market
While some founders can reach the stratosphere with willpower and luck alone, for most it’s vital to understand their space. And Farfetch founder’s success is a stark reminder of this fact. “José Neves really knew his market,” said Erica Wolfe-Murray, founder of Lola Media, the intellectual property consultancy, when speaking with Elite Business. Indeed, fashion runs deep in Neves’ blood – his grandfather famously ran his own shoe factory. However, when the Farfetch founder grew up he wasn’t that interested in fashion. Instead he preferred to sit in his room and learn how to code.
Still, something must’ve struck a chord as he launched his own footwear brand Swear in 1996 and opened tailoring shop B-Store on Savile Row in 2001. Given his background it’s hardly surprising he’d go on to launch a successful e-commerce fashion portal. “When you work in an industry, you learn so much both at the heart of the business but also around the periphery,” argued Wolfe-Murray. “You pick up whispers, hints, tips – all of which build your instincts. Jose had those years under his belt and used them to his advantage.”
(2) Be passionate
Launching a new venture isn’t for the faint of heart. “It can be long hours, lonely time spent cajoling clients, customers, staff, banks, lawyers [and] investors to believe in your vision,” said Wolfe-Murray. “So if you’re not passionately in love with it, you won’t have either the vision or the stamina to carry it off.” And seriously, would you like to spend your life doing something you’re don’t love doing?
(3) Be ready to evolve
Survival of the fittest isn’t just an axiom attributed to Charles Darwin but also a maxim entrepreneurs should take to heart. This is especially true given how it refers to a species’ ability to adapt to changing circumstances, which is something Neves’ enterprise excelled at. “Farfetch is one of fashion’s only unicorn businesses,” Neeta Patel, CEO of the New Entrepreneurs Foundation, the entrepreneur skills charity, told us. “It has got to this point thanks to a business model that consistently adapts to changing customer needs.” From tweaking its algorithms so it gets more hits even if online searches don’t include its brand to launching its own fashion accelerator, Farfetch has never been afraid of modifying its recipe for success. “It’s an important lesson for other startup founders looking to Farfetch for inspiration – be open and accepting of change as you scale without losing what the company stands for,” advised Patel.
(4) Have the right leader
From Steve Jobs to Elon Musk, great leaders inspire employees to scale startups into unicorns. And according to Antoine Baschiera, CEO and founder of Early Metrics, the startup rating firm, Neves’ combination of soft and hard skills has been vital for Farfetch’s success. “The recent IPO is testament to successful leadership and truly shows that the ability to persuade others that your vision is worth buying into is of paramount importance to every startup,” Elite Business heard. Neves has been able to share his vision and played an active part in getting it off the launchpad. “[He’s] present in the business and has been from the start,” Baschiera recalled. Equally, it’s important to recognise when you may have the vision but not the right leader chops. In those cases it can be better to find a new CEO to lead the day-to-day business while you focus on being innovative. Hey, it worked for Google.
(5) Stay in shape
Long hours and constant deadlines are hardly ideal if you’re trying to stay healthy. However, Neves has attributed part of his success to dedicated exercise each and every day. And he’s definitely on to something. Research has proven that when a CEO is shown to exercise frequently, then the value of the company will go up. “Staying in shape through exercise is one of the most effective ways to improve your mental health,” said Patel. “Regular exercise can have a profoundly positive impact on depression, anxiety, ADHD and more. It also relieves stress, improves memory, helps you sleep better and boosts overall mood.” So while launching a startup is less of a sprint and more of a marathon, training for an actual race could help you go the distance.
(6) Stay in there to the end
It’s easy to be wowed by the recent IPO but it’s important to remember Farfetch isn’t an overnight success. “It has taken it many years to get itself to this position,” said Andy Hodgetts, senior corporate finance manager at Buzzacott, the accountancy and HR consultancy, when speaking to Elite Business. Indeed, it’s taken the fashiontech firm over a decade to stitch this success together. “Businesses that wish to follow in its steps need to put in a long-term strategy which lays out the journey they wish to take, where they sit in the market, where the opportunities are to grow and to keep an honest focus on their aims,” continued Hodgetts. Even though growing fast can be alluring, remember that there is a such a thing as being fashionably late – even in business.