ModCloth: From Campus Dorm to Internet Sensation

In 2002, Susan Koger began operating an online store specializing in vintage clothing from her dorm room at Carnegie Mellon University.  “I’ve always had a huge passion for vintage clothing and I was finding all these pieces that didn’t exactly fit me, but I couldn’t pass up the deal,” Susan explains. With the help of (now spouse) Eric Koger's own Web hosting company, she launched the site and received an order the first day.

Upon graduating in May, 2006, Susan couldn’t imagine herself going out into the world and getting a “real” job or applying to large corporations. Lucky for her, she didn’t have to. With words of encouragement from CMU professor Frank Demmler, they conducted a survey asking customers if they’d still buy items from the site even if they were not true vintage pieces, but vintage-inspired clothing. A surprising 95 percent of the customer base said “yes” and with a bit of faith and optimism, Susan and Eric invested in the venture.

Walk into the ModCloth.com offices today, located in a Strip District warehouse, and you'll get a behind the scenes look into the world of operating an online apparel store.  The brains behind ModCloth, now Creative Director Susan Kroger and now Executive Officer Eric Koger, have turned what once was a dorm room operation into a fast growing company that supports 29 local employees and over one million visitors to the site each month. "We decided to stay in Pittsburgh because it has an ideal climate for a bootstrapped start-up," says Susan. "It has the perfect mix of low-cost space, low-cost of living and therefore labor, and high availability of creative talent."

A Combination of Skills
It took more than an intimate knowledge of the target demographic and a knack for fashion to build ModCloth. “Finding investors has been hard," says Eric. "My uncles were our first backers, but we pulled together our first Institutional round thanks in part to the MIT Enterprise Forum and Innovation Works. We now have investors from Pittsburgh, San Francisco, Philadelphia and Alabama.”

In addition to finding funding, ModCloth relies on technical expertise and knowledge of online marketing, says ModCloth’s board observer, Des O’Connor, the executive in residence at Innovation Works, the largest investor in seed-stage companies in the region. “Eric is an expert in Search Engine Optimization and has created a network of referring sites that draws potential customers from around the globe. He has created a scenario where ModCloth pops up as the number one Google listings for terms as non specific as Retro Clothing or Indie Clothing.”

Many of ModCloth’s technical innovations remain under wraps or in development. In addition to technology, knowledge of the fashion industry is a must. Susan and Eric had to do their research when it came to finding tradeshows that specialize in vintage inspired clothing. “We did our research and heard that Magic was the tradeshow for apparel. We thought we definitely had a concept here and thought we should take the time and money and got to Vegas to buy,” Susan says.

Today, Susan travels all over the country visiting tradeshows and looking for small designers with unique clothing. Part of the concept is to find pieces that appeal to her target audience, but at a reasonable price. “We bring the uniqueness of high fashion down to a lower price point for the girl who wants to stand out at her high school, college or wherever she may be,” Susan explains.

Big Plans
With an annual growth rate of 600 percent two years in a row, success has come quickly. “We’ve been in it from the very beginning to make it huge and grow it quickly, make our presence known," Susan says. "We talked about making it big, but never really imagined what that would mean, like having 29 other people work in the offices and just everything that comes along with that."

Not only has ModCloth filled a fashion niche that is one-of-a-kind for the Pittsburgh region, and afforded numerous opportunities for employment in the fashion industry.  In 2008 alone, ModCloth increased its staff from seven to 31, employing some of Pittsburgh’s most talented individuals from copywriters to merchandising directors and graphic designers. “The company is a place where ideas are fully explored, a place where bad ideas do not exist and where every idea can be and is turned into something great. It has permitted creative and talented people to find their perfect “home” – workplace,” ModCloth stylist Vasil Tsarev says.

With a goal to be trendsetters in both fashion and e-commerce, ModCloth projects growth of three to four times its current rate in the next year with plans to hire more. “Pittsburgh is the ideal climate for a boot-strapped start-up. It’s a lot harder to get investor capital relative to San Francisco, but there are organizations like Innovation Works that are trying to improve that. But once you get it, you can do more with it here than almost anywhere else because of the awesome pool of talented people in the city and the low cost of space,” Eric says.

Check out ModCloth.com.

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Natalie Coccia is an intern at Pop City and a communications coordinator for DSN Innovations.

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In the pictures: Top: Eric, Susan, and Winston
Group: Alicia Barnes, Joe DeFerrari, Marne Orenich, Liz Bensink, Natalie Robb (back), Mara Coombes (front), Maggie Glover, Crystal Smith (back), Susan Kroger (front), Rachel Mehl, Molly Prosser, and Danielle Bouchette

Photographs copyright Brian Cohen