Passenger drones – AKA flying cars – are technological marvels. But science fiction has been promising flying cars for decades. So seeing them become reality now feels right. But apparel startup Sene feels like it’s been ripped from the future. It has made a commercially thriving company out of one of the most ingeniously disruptive ideas I’ve ever come across.
Apparel companies make clothes. Then they sell their clothes to customers. It’s the way it’s always been done… at least in our lifetimes. It’s hard to imagine there’s any other way. But there is. And it’s vastly better — reducing customer frustration and making them much happier than they’ve ever been.
Sene reverses the sequence of make and sell. It sells clothes and then makes them. It uses machine learning and artificial intelligence to create a custom fit order for each piece of clothing. Then it makes the customized item and delivers it to the customer’s home.
In reversing the sequence, Sene has unleashed a bevy of benefits, including…
- Capital efficiency and zero inventory. In the clothing industry, $5 billion of unwanted inventory is thrown out every year. It’s an incredible inefficiency and strain on the environment. But it’s historically been shrugged off as the cost of doing business. Thanks to Sene, that’s no longer true.
- Drastic reduction in returns. The average industry return rate is 30%. The biggest reason for returns is lack of fit. Sene’s fit is so accurate that only 5% of orders are remade. That’s what customized fitting accomplishes. It takes 60 seconds for customers to give Sene the information it needs to make them perfectly fitting clothes using premium fabrics. What was previously too expensive for the vast majority of consumers (not to mention unavailable for most women) is now affordable and available to everybody.
- Greater customer convenience. It takes only 60 seconds to begin the process. And only two weeks for your clothes in your unique size to arrive at your doorstep. And Sene’s prices are often equal to or less than what’s available off the rack. It’s a game-changing customer experience. And right now, Sene is the only company that offers it.
- Avoidance of supply chain problems. The pandemic is the ultimate stress test. And Sene passed with flying colors. The company purchases raw cloth from a Los Angeles factory. Fabrication takes place in Japan. The sewing is done in China, and then the piece is shipped back to the U.S. for delivery. The whole process was virtually immune to pandemic-related delays and bottlenecks.
Providing perfectly fitted customized clothes to everybody at no extra cost is truly transformative. Uber – another transformative company – experienced a “quiet” period in its early days when very few people realized how disruptive its ride-hailing idea was. Airbnb also had a quiet start. The hotel industry completely underestimated its disruptive impact early on.
Similarly, this is Sene’s calm before the storm. It shares with Uber and Airbnb not only a deeply disruptive idea, but also the strategy of using proven technology to realize the idea. Sene combines machine learning and data science with just-in-time manufacturing. These components by themselves are nothing new. But Sene has fashioned a transformative company out of their combination.
Some brilliant ideas never get off the ground. This isn’t one of them. The market is fully embracing Sene’s radical approach to apparel retail. Revenue growth tripled in 2021, reaching $3.6 million. And it’s set to triple again in 2022. With a current run rate of $7 million, Sene founders Ray Li and Mark Zheng expect revenue to hit $10 million this year.
I love startups like Sene that figure things out on tight budgets. A lack of money can sharpen execution or kill a company. If it doesn’t do the latter, the startup is far better off for it. Sene has received less than $800,000 in outside capital. It achieved impressive revenue growth and progress despite the constraints of a tight budget. Such progress would not be possible without a high level of execution.
I’m giving founders Ray and Mark a ton of credit for putting a strong growth strategy into action. Ray has the foundational experience to grow startups. He led global rebrands at Interbrand for tech and consumer product goods companies. And Mark has done a great job of running the company’s critical data science and commercial operations. He’s helped the company achieve 70% gross margin rates as well as profitability in the company’s last two reporting months of November and December 2021.
Transformative companies are usually so far ahead of other companies (legacy and newbies alike) that they don’t have serious competitors. Such is the case with Sene. No other company has cracked the code behind customized clothes. The closest one to attempt to do so is Proper Cloth. It also creates custom sizes via a quiz. But it’s only for men’s shirts. Of course, there’s also the traditional customized tailoring using tape measures. But it’s much more expensive and generally not available for women’s attire.
Sene’s upside is hard to pin down. Uber’s upside was vastly underestimated in its early days because no one fully understood what it was doing. It wasn’t considered transformative at the time, just something that provided optionality to people who needed a ride.
The danger is to think of Sene in the same way. Is it a company that simply gives apparel shoppers another option for how to buy their clothes? Or does it offer a different paradigm that will take shoppers by storm, just like how Uber upended the taxi business? I believe the latter is definitely in play.
Sene has that potential. More than that, it’s where the company is headed right now… whether the founders realize it or not. They don’t. Maybe because it’s a scary notion. After all, toppling entire industries isn’t easy. The stakes are raised. Outcomes can lean toward binary endgames: either spectacular success or spectacular failure.
But it’s clear the founders are thinking big. Ray told me that he envisions Sene as a gateway that unlocks access to a wide selection of brands and hundreds of clothing items in the company’s portfolio — all through a simple and quick quiz enabling customized fittings. It’s an ambitious vision that carries transformative possibilities. If fully realized, it would lead to the apparel retail industry reinventing itself in Sene’s image and use of AI.
In which case, Sene would be the magnet that draws a host of imitators and genuine innovators alike. It could spark a new era of apparel retail commerce where the individual’s unique tastes and shapes can be fully accommodated.
For early investors, it’s hard to pass on a company with that kind of upside. At a $12 million pre-money valuation, why even would you?
Security type: Preferred Equity
Valuation: $12 million
Share price: $0.524
Minimum investment: $1,000
Where to invest: SeedInvest
Deadline to invest: January 14, 2022
How to Invest
Sene is raising up to $2 million in this round. You can invest through SeedInvest. If you don’t already have a SeedInvest account, you’ll need to sign up for one. Once you verify your account and are logged in to SeedInvest, visit the Sene deal page.
Then click the button to invest. Enter the amount you want to invest, starting as low as $1,000, and proceed through the required steps. Be sure your investment is confirmed, and then you’re good to go.
This opportunity, like all early-stage investments, is risky. Early-stage investments often fail. The investment you’re making is NOT liquid. Expect to hold your position for five to 10 years. An earlier exit is always possible but should not be expected.
All that said, I believe Sene offers an attractive risk-reward ratio.
The post New Pick: Invest in the Uber of the Apparel Industry appeared first on Early Investing.
Source: Early Investing
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