Reboot

Chapter 18Testing and pivoting

The foundations were laid for our next period of growth. Our factory was working well; our team was doing well; our sales were growing steadily. The US concession stores had just opened. The initial data and testing for our concessions was positive. We and our investors were so excited. All that was left to do was execute on the plan.

When tests fail

You may remember in chapter 12 I spoke about fundraising. One item I relegated to the appendix, but deserves mention here to set the scene for this chapter, is the very top line formula that underpins raising large amounts of capital:

• you want to build a behemoth
• you can acquire a customer for much less than their lifetime value (lifetime value is the number you get when you count how many times the customer repeat purchases from you after you acquired them)
• you have a great team with a solid plan on how to do this

then you might be able to raise money to build a big business.

We of course still wanted to build a behemoth. And we had both a great team and solid plan to do it. We had hypothesised that the physical stores — the concessions — would have a very high acquisition rate (people buying shoes, at a rate that's worth more than what we were spending on marketing and COGS) because:

• Our research told us that ‘seeing shoes in real life', alongside the factors listed in chapter 12, would provide the tipping point for many of our mass-market customers.
• Being on the shoe floor of department stores ...