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Big Decisions Ahead for Nasty Gal

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You may not know it, but a company called Nasty Gal is the number one growing retailer in the U.S. and the founder is a 28-year-old woman who sports vintage rock t-shirts and unapologetic red lipstick. The founder, Sophia Amoruso, was recently profiled in The New York Times on her fascinating and atypical career path. Her company went from an eBay page selling vintage clothing (that she found while scavenging through Goodwill bins) to earning $100 million in revenue last year. A lot of the growth was due to Nasty Gal’s amazing social media engagement with its devoted customer base, according to The Times.

So now of course comes the inevitable question with any hot company, which is—will she sell, or hold on for dear life? For now it seems, though she is getting a ton of interest, Amoruso wants to be in total control. There have been dozens of reports on how female entrepreneurs often struggle to raise money from venture capitalists. When Silicon Valley came calling, Amoruso appeared uninterested. From The New York Times:

“’They would say, “We want to invest in a woman-owned business — it’s part of our investment thesis,”’ Ms. Amoruso recalled of her discussions with several venture capitalists. Her retort: She didn’t want to be part of their ‘investment thesis’ and didn’t need their money.

“’I don’t think they got it,’ she said. ‘It’s this bunch of guys sitting around saying, “Oh, yeah, let’s start a Web site and put Kim Kardashian’s face on it.”‘”

Amoruso doesn’t seem to want to be associated with the typical fashion startup path, which does seem to include getting a celebrity involved (Rachel Zoe collaborates with ShoeDazzle, Kate Bosworth with JewelMint, and Mary-Kate and Ashley Olsen are with BeachMint). She even had Nasty Gal’s primary office space be far away from the chic part of Santa Monica where other fashion startups like ShoeDazzle and BeachMint reside. At this point she was still in control of 100 percent of her business.

But eventually she did agree to work with Index Ventures, giving them a small percentage of equity in the company, for $9 million. And there have been reports that retailer Urban Outfitters is very interested. Amoruso told The New York Times she was in talks with Urban, but nothing further.

There does seem to be a fear of selling or cashing out, but Amoruso, clearly a very smart woman, does see that it will be difficult to continue to grow without either going public or being acquired. She told The New York Times, “It’s been very charmed, but I’m not willing to rest on my laurels. It’s only going to get harder to keep building from here.”

It is a tough spot to be in, but a pretty great one at the same time. Tory Burch is in a similar position. In less than a decade her company has grown to be worth more than $3 billion. IPO rumors have been floating around the company for the last three years, but Burch says it won’t be happening any time soon. Going public or getting acquired doesn’t mean these woman wouldn’t still be in power, but there is the fear that there companies could change in some way if they “sell out.”

But “selling out” doesn’t have to be bad. Look at Kate Spade. She and her husband sold their stake in the company for $59 million seven years ago. The company is now booming and growing by the day. Spade’s name is still plastered all over it, but she has no hand in it anymore. Now the former just bags brand is poised to possibly overtake J. Crew in revenues, Wedbush Securities analyst Corinna Freedman told Women’s Wear Daily. Clearly everyone benefited with that one.

Just some things for any gal, whether nasty or not, to keep in mind when it comes to business strategy.

Do you think “selling out” is a bad thing? Tell us in the comments!

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