Victorian goth fairies will love this

The Department is building A.I.-powered fashion search

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Hello there,

The downturn in VC funding activity is an unavoidable topic these days, but if you’re an early-stage founder, you can perhaps take heart from Crunchbase analysis that finds the 40 most active investors haven’t dropped their pace.

The way I look at it: the world still needs new startups, so the world still needs tech investors. While a lot of the froth might have beens skimmed from the market, there are still going to be plenty of startups to write about here in this newsletter, and plenty of term sheets awaiting the best startups out there.

In a related note, one reader asked me last week about the ‘Now Raising’ section which occasionally features a bonus startup in addition to the main profile. I only want to include it when there’s a relevant startup and today there is one, but it’s been moved to where it probably always should be - as a bonus for paying members along with the full version of the main article.

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– Martin

This issue is supported by Manchester Angels. Read more about them in our 26 July issue.

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Welcome to The Department of smarter fashion discovery

The Department co-founders Eleanor Shatova and Alex Nussbacher

A.I. models like OpenAI’s DALL E 2 and GPT-3 have transformed our understanding of creativity. They reassemble the data they’ve learned from in shockingly impressive ways based on prompts from the user. But beyond transforming the worlds of visual art and writing, how else can this approach be applied?

London-based The Department is taking the concept behind these tools and translating them to the world of fashion ecommerce. Have you ever tried to find an item of clothing online and been overwhelmed by the search options? Rather than having to filter down hundreds of items to find the one you want, imagine being able to type in a few words that describe the look you’re going for, and the right thing popping straight up.

“Most shoppers start a shopping journey not by saying ‘I want to look at all of your knitwear, and then I want to filter by green’,” says The Department’s co-founder and CEO Alex Nussbacher. “You are mostly saying ‘actually I need something for a date I have on Friday night and I really want to look good, and I want it to be fun and colourful and interesting’. And that kind of language you could actually use with our technology.”

He says that in user testing, one participant described her personal style as ‘Victorian goth fairy’, and search tech pulled together exactly the right kind of look.

The destination is The Department

It’s impressive stuff for sure, but ‘better search’ isn’t much good if you don’t have somewhere to put it. So The Department is developing a B2B2C offering, aggregating stock from independent clothing retailers. Nussbacher explains that while Shopify and Squarespace have enabled an explosion in independent fashion online in recent years, navigating this landscape to buy ethically or locally produced garments is tricky.

“It used to be that you could launch with Facebook ads; you could buy audience just off of algorithmic targeting. That doesn't really work anymore in that paid social realm, particularly with things like what Apple's doing, locking down tracking… So you can't just launch your brand and expect you'll be able to buy audience through advertising,” says Nussbacher.

The Department hopes to be able to solve this problem by becoming a destination brand that consumers trust to deliver exactly what they want, from sellers they weren’t previously aware of, and earning commission from each sale. 

Nussbacher describes it as “the department store of the future”... a “dynamic, decentralised place that people are going to really find much more intimate, much more tailored to them.

“What we're trying to do is create a discoverable layer where you don't have to just pay for attention, you can earn it by being the right thing for someone to buy, something that someone's going to love…. You can be found without having to necessarily spend tens or hundreds of thousands on advertising.

“Why I like the commission model is it makes it so a brand that's just getting started, who’s just figuring things out, can participate, just like a brand that's bigger and more established can participate.... If we make five sales for you in the beginning, and maybe that's all you can produce, fine. If we’re on commission, we don't price you out from the very beginning. 

“I have a personal politics and fondness for the person who's trying to do something - I think it's that entrepreneurial camaraderie. If you want to go out and start something, I want to be accessible to you. I don't want to sit there and say ‘actually, you have to be an international big brand with this kind of budget to participate here’.”

A.I. chops for Victorian goth fairies

Nussbacher worked as an economic researcher before becoming a data scientist for companies like Uber and Appear Here. Joining Entrepreneur First’s programme last year, he met Eleanor Shatova who would become The Department’s co-founder and CTO. With a background in machine learning and data science, Shatova developed the A.I. behind the startup’s search tech.

Rather than drawing on a database of stock items, like most ecommerce search, The Department’s tech is trained on relevant images and text sourced online. This way, it learns what ‘Victorian goth fairy’ (or whatever your personal style is) looks like and can suggest relevant items from partner sellers.

“Anything where there's imagery and text together in the context of fashion becomes a viable training set, whether it's social media, whether it's old media, whether it's product descriptions, anything is kind of possible,” says Nussbacher. He believes finding the right mix of training sets to get the best result is going to be an exciting challenge.

“I think we're gonna find certain things that resonate with people, we're going to find certain things that perform in a better way. But it's really fun to look at the world and say, ‘actually, everything is on the table here’. Suddenly, so much of the world becomes ‘how do you build this better?’ These are the models that are going to get closer and closer to general intelligence models.”

To date, Nussbacher says The Department has built the first version of its search tech and demonstrated it publicly, and tested various UI designs with users. Backend integrations with platforms like Shopify are also ready, along with a waitlist of brands that want to take part.

Work in progress

The task now is to pull all of this together into a slick consumer product. “The standard’s pretty high; ecommerce is a pretty competitive space. We can't slap something together and have it break all the time. We have to be a really nice experience and decide ‘how do you build something that's really beautiful for a shopper? How do you build that experience that kind of surprises and delights them?’”

But when you’re aggregating other people’s stock, the UX is only one of the quality issues to be concerned about. The quality of the products customers can buy is critically important too, if you want them to come back. Nussbacher is aware of the challenge, and has plans to address it.