My Favourite Failure: From the outside my lingerie business looked amazing but I’d got the key numbers wrong - Emma Parker

0:00This might sound like the plot of a spy novel, but UK startups are increasingly at risk of state actors trying to steal their assets. Take one Scottish renewable manufacturer that was harnessing wave power. They were visited by a 60-strong delegation led by a senior Chinese official. A couple of months after that, some of their laptops were stolen. Guess what happened next? Yup, pictures emerged showing a Chinese firm making a product that was virtually identical. This is why we're working with the National Protective Security Authority and the National Cyber Security Centre, the UK's security experts.

0:35They got in touch with us because they seized such a growing threat facing UK startups. How are they responding? With the launch of a new campaign, Secure Innovation. It's not just your cybersecurity that matters, but your physical security too. If you want to get a better handle on your security, check out npsa.gov.uk forward slash innovation and download their free quick start guide. There's a link in the show notes.

1:22Emma Parker is the founder of Playful Promises, a company behind a few lingerie and swimwear brands including a lingerie brand of the same name. What's funny though is she lost that business despite the outside world thinking it was going big guns. Emma failed but managed to pick herself back up and ultimately prevailed. This is how she failed and how she recovered.

1:50In 2005 Emma thought there would be demand for a lingerie brand that offered lots of different sizes. She also had an inkling that e-commerce would be big. And funnily enough, not everyone thought that. So when I actually started, I did create a website and it predictably back in like 2005 sold nothing. It sounds hard to believe that things like Instagram didn't exist in 2005, but it didn't. and it was really hard to reach consumers if you didn't have a massive advertising budget to support your e-com site with print and television advertising so what I actually did was I started doing parties and I made all my friends host parties and I went there and I sold lingerie to all their friends and so started a kind of word of mouth business that way and then I also went to the erotica show, which doesn't exist anymore either.

2:46And I had a stand there and it was really scary because I had made up a whole load of stock that I'd paid for using all the money I had. And I was standing on this stand with my stock terrified. And then at the end of that, I can't remember if it was three or four days to show, but at the end of it, I'd actually sold every single item on my stand. And then that's when I realized I was like, okay, there is a demand for what I'm doing. I just, I can, you know, push on. demand there was people loved it but that wasn't the problem the business always performed commercially terribly so we sold loads of stuff but because of my lack of experience at that time i costed everything incorrectly and i didn't really understand margins i mean saying this i feel so daft now but the time in my excitement i'd never really had a job i did a law degree and i decided i didn't want to be a lawyer and then i got a job in a bank and i didn't want to be a banker.

3:41And I was like, you know what, I really want to be an underwear designer. So then I went to London College of Fashion, and then I started my business. So I'd never really worked in a commercial environment. So everything that I've done in my business, I had to kind of learn myself the hard way. So when I did the pricing, I didn't put in nearly enough margin. So why I, it took off really fast, and I got into Topshop. And you know, that time there were loads of lingerie boutiques. I was in Henry Bendel's in America. I was in Barney's in America. And it was incredible. I remember walking into Bendel's, I think it's on Fifth Avenue.

4:18And I'd made these star side knickers and they had this massive display of like the Zodiac in tubes with all my underwear coming down the tubes. And I'm like, for little me, that was like amazing. But I had not a pot to piss in because I, oh, am I allowed to swear? So I had not a pot to piss in because I'd costed everything incorrectly. So it was a very double-edged sword. It appeared that we were doing really well and we were everywhere. But financially, in all honesty, it was a little bit of a disaster. Emma realised two years in that she'd made a fundamental error. She hadn't factored in anything between the cost of making the goods and the price she got for selling them, like staff, marketing or shipping, for example.

4:59She was operating on a 20 % gross margin, which is only viable for an industry like hers at massive scale. To everyone looking at it, the business is going amazing. And at this point, I was still working from home and I had like a home office and people coming in and out. And I was just like, this is a complete disaster. I can't pay people who I owe money to. This is a disaster. I also got caught up in a bit of a difficult situation because a company called Hustler came to the UK and then they actually went into administration, didn't pay me as well. And I just didn't have enough resources to pull through.

5:39Emma always needed to sell more things to pay for the previous things. She says she didn't even know what cash flow management meant back then. The company went into administration, but she managed to do something very important. She kept the IP.

6:21Maybe some people who have seen the value in what I'm doing, I can approach them and then they could use the IP and we could carry on trading. So when I saw that this brand Snooty Booty was copying what we were doing and there was a company called Mantric who were trying to grow this brand, I basically called them up and I was like, you basically started a brand because you're copying what I'm doing. I've had a lot of problems. Why don't you just use my brand name and you can then rebuild what I already started? And they kind of agreed that they were trying to copy what I was doing and that they thought I did have a place in the market.

7:00And so they then licensed the name from me. So the business is dead, but the brand lives on through this company, Mantric. Things went well. and then they met ASOS. Which was really exciting. Somebody moderately famous wore the stuff and they were in the news. So then ASOS, because they used to be seen on screen and they only bought things that celebrities had worn. So anyway, we started working with them and we started supplying them and they quickly became the biggest customer of the brand. And we were designing things for them every single month so they could launch new products every month.

7:36However, the people I'd licensed the name to, for some reason really did not believe that e-com was the future. And because it was a lot of work, because they didn't buy from the catalog and we had to develop like 10 to 12 new products for them every single month, which now it's not really a lot. It was a lot at the time. They just didn't want to do it. And then also the designs were getting further and further away from my brand. and I said to ASOS, I'm like, have you ever considered having an ASOS brand? And that means we can design anything you want and put ASOS labels on it. And ASOS were like, that's really interesting.

8:15We were actually going to ask you if you'd be interested to do that. So that in effect meant that we were one of ASOS's first ever private label suppliers. And I didn't even know the word private label meant then but I obviously do now. And so it was great and we were making it but the guys at Mantric just were like, actually, you can do this by yourself and work with them. And we'll carry on doing your brand, but we don't want to be involved in the private label and the product development. We don't think it's got any value. I was like, okay, sure. Well, really quickly, the account with ASOS grew to be like over a million pound account.

8:51And it was profitable this time because now I know what margins are. And so I priced it correctly. And then very soon I was able to take the license back from Mantric and I was able to relaunch it on e-com and able to work on rebuilding it. And then very fortuitously, because this isn't anything to do with anything that I could control, social media came along. And I think one of the most amazing things about social media, especially in the early days, was it in some ways it democratised the access to consumers. Because you did not need to have massive TV and print advertising budgets to be able to reach people.

9:36It's easy to forget what the business landscape looked like pre-social media, how difficult it was to build a B2C startup on a budget. But Emma was in the right place at the right time. And of course, she did a good job. She says luck and timing are often overlooked in entrepreneurial success. And she's right. You certainly can't be successful if luck or timing are against you. She says a business like hers needs to be operating at a 65 to 80 % gross margin. And that's what she did having learned from her follies. She says it had gone wrong the first time around because she'd been bad at maths, but that's not the truth.

10:14I felt a bit daft.

10:19I said, you know, I made a sort of thing about not being very good at maths earlier. At school, I was really, really good at maths. But obviously, margin is slightly, it's sort of slightly different. It's about understanding business operating costs, but I felt really quite daft. And especially as well, because you know how different people get self-esteem in different ways. And I was like, I was never the prettiest girl, but I was always one of the cleverest girls. So to have made such a terrible, terrible kind of hash of my business, it kind of made me think about, you know, how I define myself.

10:54And is it important to think about yourself in these ways? And actually, maybe it's not that, maybe it's not that important, if you know what I mean, these kind of sort of labels that you might have grown up with, and that you can sort of move beyond them basically. She had always identified as one of the smart girls so her business failing rocked her. I think it's actually really important to separate yourself from what you put out in the world. I was married at the time I went into administration and it put an awful weight on that relationship because it becomes so tied to my identity of who I was that I was probably insufferable to be around, if I'm really honest with you.

11:43As I've sort of got older and got married a second time, my husband's very understanding that playful promises often does come first. And I've gotten responsible for paying wages for lots of people. I've got responsibility. I'm very careful that it's only part of myself and that I reserve time for hobbies. I reserve time for my husband. I reserve time for myself to refresh myself. She's spot on. You've got to put so much into your business to make it work, but you still have to draw a line around your personal life. It's easier to do this the second time around. I didn't take her advice with my first startup, but I hope you can act on this wisdom before it's too late, because if you don't, and if you don't succeed with your company, which, let's face it, is the most likely outcome, it'll leave you in a hell of a bad spot.

12:38That was Emma Parker, who lost her business and then won it back. Thanks for listening to this episode. I've been your host, Dan Murray-Surter. If you like this episode, please subscribe or follow us and leave a review. We love to hear what you think.