In January of last year, Adam Goldenberg reached one of the largest-ever deceptive advertising settlements with the Federal Trade Commission, with one of his companies agreeing to pay more than $26 million in penalties for peddling a miracle weight-loss powder. Seven months later, he received a different kind of honor: JustFab, his e-commerce startup, was valued at $1 billion by investors, making it a “unicorn, ” Silicon Valley’s most coveted achievement.
The journey of Goldenberg and his longtime partner, Don Ressler, from the murky fringes of internet marketing to the pinnacle of paper wealth in Silicon Valley is the story of how two men, for a decade, have been conning consumers into subscriptions for anti-aging shampoo and wrinkle cream under the guise of “brand-building” and “innovation.” Since at least 2004, consumers have accused the men’s businesses of exploiting their credit card information and sticking them with unwanted charges — complaints that are stacking up at JustFab and Fabletics.
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When we started this business I couldn’t tell you the difference between a peep toe and a Mary Jane.But I did know that in terms of scale, I have never seen something with this much potential. Don and I were confident we could create a
Adam Goldenberg and Don Ressler are probably not the first guys one would think of to launch a fashion company. But, with the introduction of JustFab, these co-CEOs set out to reshape fashion e-commerce.
Developing Passion for Fashion
JustFab co-founders and co-CEOs Adam Goldenberg and Don Ressler know how to spot trends, grow businesses and develop industry-leading brands, and they do it with a combination of passion and fun that is rarely found in an industry that takes itself a little too seriously.
Adam founded his first company, Gamers Alliance, at the age of 15, which he sold three years later to MySpace parent company, Intermix Media, in 1999. He quit high school and moved across the country to join Intermix as Vice President of Strategic Planning. By the age of 20, Adam was promoted to Chief Operating Officer, becoming the youngest COO of a publicly traded company. It was at Intermix that Adam first met Don, an entrepreneur and brand building specialist who sold his own company, FitnessHeaven.com to Intermix in 2001. Don’s endeavors had lead him to generate over $1 billion in sales and raised more than $100 million in capital for various Internet companies.
The pair became fast friends, and when Intermix was acquired by News Corporation in 2005, Don and Adam were quick to start their own company. In 2006, they created an e-commerce brand incubator platform called Intelligent Beauty. After Adam and Don established several brands as health and beauty market leaders, the guys began to conceptualize a new kind of personalized shopping experience that could live online. They wanted to merge social interaction with cutting-edge fashion, and they wanted to do it at an affordable price.
To capitalize on this largely untapped opportunity, Adam and Don operated under the principle that for fashion to work online, it needed to be fun, engaging, and highly social. The pair prepped for a major expansion of Intelligent Beauty and set about creating a personalization platform, hiring style consultants and designers, and building out an attractive and affordable subscription model. The result was JustFab, a style community where “members” receive a selection of shoes, handbags, and accessories tailored to their taste each month for $39.95.
“We’re not merely shipping out shoes, bags and accessories once a month, we are changing the subscription model and keeping engagement high” notes Don. “JustFab shows women how to wear each item by providing style boards and demonstrating complete looks on models. We want to inspire women with their whole wardrobe and provide style tips from leaders in the field. We also want them to connect and share with each other because fashion is something that evokes a response.”
But Don and Adam are maybe not the first guys one would think of to launch a major women’s fashion brand.
“When we started this business, I couldn’t tell you the difference between a peep toe and a Mary Jane, ” admits Adam. “But I did know that in terms of scale, I have never seen something with this much potential. Don and I were confident we could create a transformational business, so we brought in the best design, creative, and style teams in the industry who share our vision for delivering the highest quality product at the best price.”
Enter Kimora. Fashion icon and renowned businesswoman Kimora Lee Simmons was looking for a new challenge, and she was intrigued by what her longtime friend, Don, was doing. She attended some early JustFab functions and got excited by the company’s potential. It wasn’t long before Kimora officially made JustFab her fashion home, joining the company as president and creative director.
“Kimora is a force of nature. No one knows the fashion business like Kimora. She built Baby Phat into a nearly billion dollar business. She has a phenomenal eye and a commitment to making great style affordable and accessible to every woman. She also knows how to cultivate a fan base through social media, ” says Don. “Her decision to join us and whole-heartedly devote her time, energy, and considerable talent to JustFab was perhaps the greatest industry validation we could get. She’s not just lending her name or her image – Kimora is in the office 3-5 days a week and we couldn’t be happier with all she brings to the table.”
All of the pieces were falling into place for JustFab. Subscriptions grew faster than expected, and customers loved all elements of the service. It was time to expand. As the business grew more rapidly than anticipated, Adam and Don knew they needed venture partners to ensure that JustFab could scale into the global brand they envisioned. That’s when one of their existing investors introduced them to Matrix’s Josh Hannah. It was a natural fit on both sides.
Josh was known as a seasoned entrepreneur, who co-founded Betfair and made it an international success. He also spotted an opportunity with the once struggling eHow. Josh purchased the company and turned around in an astonishing fashion. He was everything Adam and Don looked for in an investment partner, with a personality that instantly fit JustFab’s culture. Factor in Matrix’s history of success and its backing of rising fashion companies and this was an ideal match.
“JustFab perfected the subscription model, while nailing personalization and delivering great quality products, ” says Josh. “Adam and Don also have the pedigrees to aggressively grow the business. They have a knack for bringing in the right surrounding team to accomplish their goals. I am even more excited about JustFab’s future today than when I first met them – and that says a lot. Their enthusiasm is contagious, and it motivates the team to excel.”
Now with millions of customers around the world and millions in revenue, JustFab is doing just fine.