Where Data Meets Denim How Revolve founders Michael Mente and Mike Karanikolas, a duo with backgrounds in finance and engineering, used data to take the fashion world by storm. You would think that finance, computer engineering, and fashion have nothing in common. But Michael Mente and Mike Karanikolas, the founders of the wildly popular online clothing company Revolve, would beg to differ. It’s true that when they first met each other at a software startup, they never thought fashion was in their cards. After all, Mente was a finance guy and Karanikolas was a computer engineer. They weren’t exactly cozying up to the catwalk. And yet, a series of unfortunate events led Mente and Karanikolas to the retail business, which ended up yielding quite the fortunate outcome—together, they built a billion-dollar business that serves as inspiration for any entrepreneur looking to get into the online apparel game. Using their respective strengths in analytics and number crunching, they developed a hunch that there was a gap in the market when it came to places young, millennial women could buy fashion brands online. Their hunch proved to be correct. From there, it was Revolve's famously prescient marketing strategy — in particular, the company's influencer marketing — that set them apart from other online clothing brands coming onto the market. "We had first-mover advantage and recognized power of social early on. We’re been working with influencers before they were even called influencers — before instagram even existed," Karanikolas says. With their near-perfect product-market fit and the love of influencers like Chrissy Teigen, Chanel Iman, and Jessica Alba, the California-based company has grown from being a small online store to an iconic billion-dollar business. Challenging the Mainstream Mente and Karanikolas were both working at the software startup NextStrat when the dotcom bubble burst, kicking off a recession that eventually led to the company’s collapse. That’s when the duo started to brainstorm ideas for a new venture. They knew they made a great team and had a feeling they could achieve big things together, it was simply a matter of finding the right opportunity. Given their math and engineering backgrounds, they approached the research process of finding that new endeavor in a very methodical way. Ecommerce was on the rise, and after digging into keyword search data, they noticed there was growing interest around online apparel. There were other attractive aspects of the apparel business too, such as the fact that it promised high gross margins and was a relatively untouched market in the late 90s and early 2000s. “There were a lot of questions about whether apparel made sense online at that time,” Karanikolas says. “But any time there’s a new space, that means there’s room for innovation. We recognized that online represented a wealth of opportunities, and it was just a matter of figuring how this new medium worked for apparel and how to make it appealing for consumers.” It didn’t take them long. From Denim to Dominance Mente and Karanikolas launched Revolve in 2003 with $50,000 of their own savings. That meant carefully watching cash flow was extremely important, which forced the duo to be highly disciplined about how they made decisions. Even early on, they leaned heavily on data to inform what products to sell. The core of their business model was to sell clothing from other brands, start with existing numbers, and then test and iterate as they identified what worked and what didn’t. For instance, they initially assumed denim would be one of the hardest types of clothing to sell online, since fit is so important and there are lots of size variations. Through data analysis, however, they discovered that people actually did shop for jeans online and even returned them less frequently than other clothing categories. So for the first year or two of running Revolve, denim made up a majority of their business, which led to th