As the erosion of brick-and-mortar stores continues, a New York-based startup, Bulletin, is testing a new retail model. It charges online-only brands up to $2,000 a month to rent space in its physical stores, where it is striking deals with landlords confronted by mounting vacancies. Cofounders Alana Branston, 30, and Ali Kriegsman, 26, first tried an online magazine to promote and sell small brands, but that venture foundered. After two stints with the California startup accelerator Y Combinator, they changed their business plan, raised $2.2 million in venture capital and launched two Bulletin stores, a temporary space in Manhattan’s Soho neighborhood and a Brooklyn store that opened in November. They plan to open two more New York stores by year’s end and one in Los Angeles in early 2018. In this interview, which has been edited and condensed, Branston, Bulletin’s CEO, explains how Bulletin, which has 10 employees, was inspired by an old idea: flea markets.
Susan Adams: Where did you get the idea for Bulletin?
Alana Branston: My cofounder Ali Kriegsman and I were both on the sales team at an enterprise content marketing platform called Contently two years ago, and we had an idea for an online magazine where you could read about cool, small brands producing handmade goods and buy them through links on the site. It was a side project while we worked full-time.
Adams: That sounds more ambitious than a side project.
Branston: Each issue had only six small brands. Ali would write an article about each of them. We built it on Squarespace. We have no technical abilities.
Adams: What was the business model?
Branston: We were taking 30%-40% of everything that sold and the brands shipped their own products. We had a ton of interest from brands but minimal revenue.
Adams: Why didn’t it work?
Branston: It wasn’t a unique idea. It all comes down to getting traffic to the site.
Adams: How did that lead to Bulletin?
Branston: Totally on a whim, we applied to Y Combinator. We couldn’t believe we got accepted to their [now-defunct] fellowship program for companies that are too early to be going through their normal program.
Adams: What did you get from the fellowship?
Branston: It was a three-month remote program where they gave you $20,000 and you worked with one of their partners. We quit our jobs and Skyped with him every week. The program pushed us to try completely different business models. One was having hand-made products sold at restaurants. We went to 20 restaurants and asked them, would you pay us money for this? They all said no.
Adams: What did you do?
Branston: We started really talking to the brands, asking what we could do that would be helpful. It turned out they were very interested in getting more opportunities to sell in person. At flea markets, they had to spend $500 to $1,000 to get access to a booth and they could only do it a few times a year.
Adams: Flea markets sounds like an old idea.
Branston: The idea was to make it cheap and accessible. We’d run markets every weekend and brands would pay $300 for a table and a chair. We found the cheapest spaces we could, in a parking lot or warehouse, so we could get started for no money.
Adams: That must have been hard work.
Branston: It was totally exhausting. We worked seven days a week, in the rain and heat, but we would have 40 brands paying $300 a weekend. We recruited brands with social media followings and they would all promote the space.
Adams: How did you make the leap to stores?
Branston: We decided we needed a more permanent indoor space to create the same kind of experience. The idea was to keep the membership fee model in a store run by Bulletin staff.
Adams: Isn’t New York City real estate prohibitively expensive?
Bulletin’s Brooklyn store.
Branston: It’s expensive but brands pay us from $300 to $2,000 a month, with two months up front, plus 30% of sales. In a normal retail model, you have to buy inventory and then you wait for everything to sell, sometimes at a discount. What’s happening in brick and mortar is working in our favor. There are a lot of stores closing, there’s vacant space everywhere, landlords are flexible and we’re getting good rates. Our stores are profitable before they open.
Adams: How do you attract shoppers?
Branston: We bring in brands that only exist on the Internet and already have an incredible social following. They drive their online audience to our stores. Also as part of the membership fee, brands can book events in our space. A women’s clothing brand called Dokonokolaunched its summer line in our store. Their fans come and buy other things.
Adams: Why did you apply to Y Combinator a second time?
Branston: To do the full program. They give you $120,000 and they help you get your company in shape for fundraising. This time we went to San Francisco for three months so we could go to the Y Combinator office in Mountain View. The program culminates with a demo day where you make a three-minute pitch to 500 investors at once. The next day is called Investor Day. It’s like speed dating. You meet a new investor every 10 minutes. We raised $2.2 million.
Adams: Do you have any advice about how to win over investors?
Branston: Have a great story.
Adams: What was yours?
Branston: We proved how persistent we could be when we told how we went from an online magazine to testing other crazy businesses to flea markets to this model that really works.
Adams: How do you find the brands you carry in your stores?
Branston: We’re all over Instagram looking for the next cool brand but most of our business comes from referrals. We reject 90% of the people who apply online. The price has to be right, it has to be a product our audience will like, that will play nicely with our other brands and that will drive traffic.
Adams: Which brands have been most successful for you?
Branston: One is a spunky, affordable jewelry brand, BITxbrown. Another is SHHHOWERCAP, which makes a re-invented turban-style $43 shower cap.
Inside Bulletin’s Brooklyn store.
Adams: Don’t your shoppers prefer to buy online?
Branston: We have an e-commerce platform where you can buy everything in the store. We ship inventory from the store.
Adams: You’ve called yourself the “WeWork for retail.” How so?
Branston: WeWork has built a brand around a co-working model for like-minded people who are passionate and ambitious. We find like-minded brands that create physical products and we bring them together in a store.
Adams: You’ve described your brands as woman-centric. Did President Trump’s election help or hurt Bulletin?
Branston: It’s definitely helped. We came out of Y Combinator asking, what’s the next store we want to do. We were thinking of a wellness concept or baby products but we’re a female team and there are tons of brands creating products in response to Trump’s election. Every Thursday night in our Williamsburg store we have a Write Night where we serve rosé and you can write your representative about whatever issues are on your mind. Also 10% of our gross sales go to Planned Parenthood.