Tim FerrissThe Rise and Fall of Gilt Groupe
Tim Ferriss
Thinking in second order effects 0:00
You can get ahead of trends by asking who else benefits when a company does well, and how behavior shifts as a result. In 2003, falling bandwidth prices made video hosting too expensive against ad revenue, but the trend lines showed costs and revenue would cross by 2005 or 2006. That second order thinking should have led to starting YouTube early, and it is no coincidence that YouTube launched in 2005 and became a company worth 300 billion dollars.
Gilt built on flash sales 2:03
Gilt Groupe grew out of the French flash sale concept, offering discounted high end brand merchandise during short sale windows, much like a sample sale people would otherwise line up for in New York. The idea took off fast, with 175 million dollars in revenue in year two and 500 million dollars by year four.
The market eventually caught up 3:02
Brands like Marc Jacobs eventually built their own websites and started discounting directly, department stores improved their sites, and competitors like Farfetch entered the space. Gilt never grew large enough to have real leverage over suppliers, unlike a company such as Theory with far more inventory to sell. Recognizing a falling knife, the company was sold for 250 million dollars to Saks, who later offered to sell it back for five million. Since then, the speaker has avoided e-commerce, viewing it as too solved, unlike fields like cancer research or nuclear energy that still need real building.
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