Kieran O’Neill and Terry Betts explain how Thread’s algorithm and personal stylists are a successful formula for male shoppers
How many men do you know that want to dress well but struggle to do it by themselves, or would rather run a mile than battle their way through crowds on a busy Saturday? Chances are, quite a few. This is what drove Kieran O’Neill to launch men’s personal styling website Thread.com in 2012 with co-founders Ben Phillips and Ben Kucsan, chief technology officer and creative director respectively.
“It was a problem I had,” explains O’Neill, speaking to Drapers at Thread’s airy, open-plan offices in Whitechapel, east London, alongside head of business development Terry Betts. “I’d go for drinks with friends in [private members club] Shoreditch House and everyone would be incredibly well dressed, but I would struggle to recreate the look on a busy Oxford Street, while online there are just so many products.”
Not that you would know it: O’Neill appears anything but sartorially challenged. Although, of course, he uses Thread.com himself.
Launched with $25,000 from the Y Combinator programme, the seed investor for start-ups that also provided funding for Air B’n’B and Dropbox, Thread’s innovative combination of personal stylists with a powerful algorithm has proved popular with investors. Just last year Thread raised $8m (£5.5m) in its latest round of investment following a £2m seed investment in 2013 from investors led by venture capital firm Balderton Capital, which has previously invested in Yoox. Balderton joins a roster of investors that include co-founders of Google-owned tech start-up DeepMind Demis Hassabis and Mustafa Suleyman, former president of Saks Fifth Avenue Andrew Jennings, chief retail officer at Lane Crawford Sebastian Picardo, and former board director at Marks & Spencer Maurice Helfgott.
The investment is now bearing fruit. O’Neill will not reveal how ownership is divided or any other financial details, but says sales have “trebled” in the last six months.
Online personal styling services for men are not new, and Thread operates in the market alongside Trunk Club and The Chapar.
All three make individual clothing suggestions for members, who can choose what they want to receive, try and buy. However, Trunk and The Chapar rely on personal stylists speaking to the customer over the phone and choosing products held in stock. Thread does not hold stock and can therefore offer a wider selection of product: 200,000 items from 1,000 brands. Interaction with the shopper is entirely digital, via a combination of stylist and algorithm.
Trunk and The Chapar offer free shipping and returns, as does Thread on orders of more than £50. Thread’s returns rate is 30%, so its customers keep 70% of the choices made for them, which is understood to be higher than other online pureplays and personal styling services.
Kieran O’Neill’s CV
- 2012 Chief executive and co-founder, Thread.com
- 2007 Chief executive and co-founder, Playfire
- 2003 Founder, HolyLemon.com
Now aged 28 and named one of Drapers 30 under 30 of 2016, Kieran O’Neill is one of those rare entrepreneurs who can spot multiple gaps in the market. In 2003, aged 15, he created video-streaming website HolyLemon.com, two years before YouTube launched.
By the time he sold it – aged 19 – for $1.45m (£630,000) to US firm Handheld Entertainment in 2007, it had 500,000 users. His second venture, gaming social network Playfire, secured £1.3m from a group of backers that included Sony chairman Chris Deering and Skype founder Niklas Zennstrom in 2009, before it was sold to Green Man Gaming for an undisclosed amount in 2012.
While running Playfire he met a stylist through friends, who opened his eyes to the service. His tech background led to the idea of using an algorithm, and Thread was born in 2012.
O’Neill believes the combination of human skill and science produces a higher “hit rate”.
“The hypothesis was could you combine a stylist and an algorithm together to create something that was better than either could do by themselves,” he says. “The idea was to preserve the bits of a human stylist that are unique – for example, looking at your photos and saying would suit you and answering questions. Then taking the bits a computer can do, such as remembering all of your preferences across multiple years, looking through thousands of items to find the best ones, and looking to see how people like you who have been on the platform for a while behave.”
When a customer signs up to Thread he is asked a series of questions, from which trouser fit he prefers to the price he normally pays for items, what he currently owns, his favourite weekend styles and what he would like help finding.
Customers submit photos of themselves and are assigned a personal stylist, who suggests items based on the user’s answers using the Thread software, automatically teaching the algorithm how he or she thinks the customer would look best. The algorithm then pulls together a shortlist of product for the stylist to review.
The hypothesis was could you combine a stylist and an algorithm together to create something that was better
Customers are asked if they usually shop for designer labels or high street, so Thread can ensure suggestions are within budget and brands can be sure they are listed with others in their price point. Users receive a weekly email containing a mixture of product chosen for them by the stylist and algorithm. The customer clicks through to their personal dashboard and selects the items they want in their delivery – usually ordering three or four items.
Delivery typically takes two days because items are collated at and delivered from Thread’s Warehouse in Whitechapel. Any returns go back to the warehouse before they are sent back to the brand or retailer.
The website also offers content such as style tips and allows users to rate the selections made for them, which feeds into the algorithm.
O’Neill says things finally began to click into place in 2014 when the algorithm was up and running: “We figured out the right way of doing the algorithmic/human combination … it became clear this could potentially become a large business.”
Daniel Waterhouse, partner at Balderton, says: “A lot of people are talking about conversational commerce. We thought Kieran had this magical combination of bringing stylists and computer intelligence together to solve a really difficult problem.”
The investment in Thread has allowed it to refine its algorithm and make some key hires, growing its team to 28 from 12 two years ago. One of those hires was Betts, who joined in March 2015. Having headed menswear buying for Selfridges and Mr Porter, Betts brought with him a wealth of experience and a certain cachet. His remit is to drive new brand acquisition for the site.
“I always knew when the first version of Thread began to work that we would need to find someone who shared the vision for the business and the way the menswear market is changing, but also who had a background in the industry and would be able to have the right conversations,” says O’Neill. “So I went and met 75 different people, and Terry was a very clear fit.”
Terry Betts’ CV
2015 Head of business development, Thread.com
2013 Buying director of menswear, Selfridges
2012 Buying manager, Mr Porter
2010 Senior menswear buyer, Mr Porter
2005 Menswear buyer – international designers and accessories, Harvey Nichols
Betts adds: “Each of the businesses I worked in was a very different proposition. Harvey Nichols was very fashion, Mr Porter was very luxury, and Selfridges was bricks-and-mortar and online, and bigger numbers. Having been in the industry for a long time, I knew there was a different appetite and way men wanted to shop, and it wasn’t quite being fulfilled.
“A lot of that was because no one was really capturing how to talk to them. I know this guy [the Thread customer]. I knew he was out there and wanted to look good, but wasn’t necessarily really fashionable – it’s like that for millions of guys. It really appealed to me as a really broad proposition of how most men would shop.”
Another important recruit was Edward Snelson, who previously worked for Microsoft, and joined Thread as head of applied research to lead on data science in September. Shaunie Brett, who previously worked at The Chapar and Burberry, came on board as style director in November 2013.
Betts says Levi’s and APC are currently selling well in denim, while Richard James is a strong performer in tailoring. Its bestselling sneakers are from Common Projects and Nike, and Topman provides a “great volume partner”. And Marks & Spencer was this week confirmed as Thread’s latest new partner.
Scott Fyfe, menswear director at M&S, says: “Thread’s unique relationship with its customers and personalised shopping experience will open up our menswear offer to a new group of male shoppers.”
I knew there was a different appetite and way men wanted to shop, and it wasn’t quite being fulfilled
Thread is free for the customer to use and the company makes its money by taking an agreed percentage from every sale, although O’Neill declines to reveal what this is – just that it is a standard rate for all brands. The brands and retailers present on the site benefit from being introduced to men that might not normally shop with them, and via the free data insight they get into those customers. O’Neill says there are no plans to sell that data as the business grows.
Currently, around 70% of its customers use Thread on their mobiles, with the remainder split between desktop and tablet. However, while it might seem like a natural fit, Thread is yet to launch an app.
“We definitely will launch one, but we’re still a start-up, so you have to really choose where you spend your time and last year was all about the algorithm,” says O’Neill. The business will work on developing an app this year, but there is no timeframe yet for a launch. It will also look at the opportunities afforded by social media: “A lot of people use the messaging system to talk to their stylist and I see us evolving the business to work with WhatsApp and Facebook messenger.”
Thread’s homepage offers a choice of men’s or women’s but, if you click on the latter, it displays a message saying that it is in the process of looking for women’s stylists.
“It’s a question we get asked all the time,” explains O’Neill. “We actually did do women’s for the first six months and it worked quite well, but we decided we needed to pick one and really get it right, and I think men have more pain there.” He adds that Thread will launch women’s properly at some point in the future.
Thread investor Jennings believes it has the potential to become one of the biggest personal styling websites in Europe: “Kieran is an extremely dynamic, focused, and determined retailer who has lots of ideas. I really liked the whole essence of men’s personal shopping online. My feeling was this had got legs.”
Kieran O’Neill will be speaking at Drapers Digital Forum 2016, which will be held in London on April 28.