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Op-Ed | Why Are We Ruining Our Best Young Fashion Companies?

Lawrence Lenihan, managing director of FirstMark Capital, argues that the Internet provides a new model for building fashion businesses based on passionate and intimate relationships with consumers, but the maximum market size for these companies is inherently capped, something that overcapitalised entrepreneurs, and the investors who fund them, too often fail to recognise.
Source: Shutterstock
Source: Shutterstock (Shutterstock)

We are ruining potentially wonderful companies out of sheer ignorance of the fashion industry and a lack of understanding of how technology will impact it. We are overcapitalising companies and forcing unnatural, unsupported expansion — and by we, I mean investors and the entrepreneurs who take too much of our money. We are not purposely killing these companies, of course. It’s just that we are not experienced enough with the subtleties of the fashion industry to understand how a relationship with a customer is earned and have misapplied lessons learned in building companies like Amazon and Google.

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