Selling fashion in a flash
Adam Bernhard
The gig: Founder and chief executive of HauteLook, an online “flash sale” marketplace where members can buy designer apparel, accessories, home décor and other products at deep discounts during a limited time period. HauteLook, with headquarters in downtown Los Angeles, was founded four years ago and was acquired in March by Nordstrom Inc. for as much as $270 million in stock. The company had revenue of more than $100 million in 2010 and expects sales to rise 50% to 60% this year.
Background: Bernhard, 42, grew up in Cheviot Hills and graduated from Palisades High School. He attended Cal State Northridge but dropped out during his senior year. “I still have two classes left,” he said. “One day I’m going back to finish them for my mom.”
Starting young: When Bernhard was in fifth grade, his grandmother gave him $20, which he used to buy bubble gum. He took the gum to school on the day of the book drive, when he knew fellow students would have cash.
“I gave gum to all the cool kids. Then I put the gum on my desk, and I sat there and sold gum to the kids for a quarter apiece, and I’d bought five pieces for a quarter. Huge margins,” he said. “I was exploiting my non-cool friends.”
First ride: Bernhard knew he wanted a car when he turned 16, so at age 14, he got a job busing tables at a local pizza joint; he also stocked shelves at a drugstore and worked at a neighborhood gym. His mother matched every dollar he made, and shortly after his 16th birthday, he bought a black Volkswagen GTI.
“Most people decide what they’re going to buy based on what they have,” he said. “I decided what I wanted to buy, and then I figured out how to get the money.”
Hollywood life: After college, Bernhard got a job as a production assistant on the movie “Disclosure,” the 1994 thriller starring Michael Douglas and Demi Moore. After that, he did production and development work for Clint Eastwood’s Malpaso Productions. The two still keep in touch, and Bernhard said he took Eastwood to the Coachella Valley Music and Arts Festival this year.
Quarter-life crisis: When he was 26, Bernhard decided the movie business wasn’t for him and abruptly quit his job. On a whim, he and six friends flew to Switzerland for a snowboarding trip.
Serial entrepreneur: In the late 1990s, Bernhard and a friend teamed up with the owners of Mulberry Street Pizzeria, a small chain of pizza restaurants. Together, they expanded the chain to mall food courts and other locations.
After selling his stake in Mulberry Street, he was approached by a good friend in the apparel business who wanted to roll out his clothing line, Joie, internationally. Bernhard joined the company and began traveling throughout Europe and Japan to set up international distribution channels.
Got the idea: While working at Joie, Bernhard noticed a market for off-price goods — typically excess or leftover merchandise that is sold to buyers at below-wholesale prices — and began selling those items to buyers in Europe, the Middle East and Asia. Many asked if he could find more products, so he left Joie and joined a liquidating business. Within a few years, Bernhard had set up a website, liquid8usa.com, that sold off-price goods directly to consumers.
Bernhard soon improved the website and renamed it. HauteLook launched in December 2007 with four employees in a rundown building at the corner of Los Angeles Street and Olympic Boulevard. Today the site has more than 6.5 million members.
How HauteLook works: The company works with major labels to offer goods that appeal to HauteLook’s “California casual” customer base.
Members sign up for free and receive emails on the latest private sales, which typically offer 50% to 75% off retail prices and last a few hours to a few days. Brands recently featured on the site included Elizabeth & James, Trina Turk, Betsey Johnson and Jessica Simpson.
Designers like the arrangement because selling products on flash sites allows them to place larger manufacturing orders, which drives costs down. And because sales are only available for a few days, brands are able to create buzz without the risk of hurting their images down the line.
Why it works: Bernhard acknowledges that HauteLook and rival sites such as Rue La La and Gilt took off in large part because of the sluggish economy. But he’s predicting the burgeoning industry will have staying power.
“Great brands at great prices will always be in style. The scarcity encourages the consumer to come back every day. We’ve changed the way people think about shopping on the Internet. Up until the private sale business, it was intent-based shopping.... What we’ve done is created this discovery-based way of shopping.”
Secret to success: “I don’t have any fear. If I believe in a product, I can sell it,” he said. “The No. 1 most powerful attribute for a good salesman is you have to be a very good judge of who you’re selling to, who you’re dealing with. One thing is constant: When you’ve made the sale, stop talking.”
