From Pets.com’s Sock Puppet To Lightly Worn Prada, CEO Makes A Comeback

SAN JOSE, Calif.

People said she was the biggest joke in the valley. Her company was deemed “stupid.” As for her career? She wondered if it was over.

It’s been 16 years since Julie Wainwright shut down Pets.com, the online pet supply store that remains the symbol of dot-com era excess.

“I wallowed way too long,” she said. “Then you get tired of yourself.”

Now Wainwright is back with a successful luxury consignment company, and she has leveraged the experience and publicity of her Pets.com failure to bring attention to her latest endeavor.

Despite the conventional wisdom that it’s OK to fail in Silicon Valley, the reality is often very different. Wainwright knows the score better than anyone.

Stigma lies over a failed company like a fog. Its employees, investors and leadership have to grapple with the hit to their reputations. Many people go into a self-imposed hibernation, hoping that the cursed venture will be forgotten. Depression is not uncommon.

And starting over again with a new company? Not easy.

But Wainwright is back, this time as founder and CEO of The RealReal, a full-service online consignment store based in San Francisco that sells high-end brands and luxury goods. Khloe Kardashian and Marissa Mayer are reportedly among its “consignors,” people who sell their lightly used Prada shoes and rarely worn Chanel suits.

Founded five years ago, The RealReal has more than 600 employees and is on track to reach nearly $400 million in sales this year, the company says. Wainwright says the company aims to go public within the next 18 months.

Having closed a $40 million Series E round in the spring, bringing The RealReal’s total investment to $123 million, Wainwright can afford to be a bit philosophical about Pets.

It’s hard to overstate how much media attention Pets.com received during its 20-month life and afterward. Known for its wisecracking sock puppet mascot who appeared in the firm’s 2000 Super Bowl ad, Pets lost money on sales as it clamored to gain customers. It burned through millions.

“It made me sick to my stomach that I had to close the company down,” said Wainwright, who prior to Pets.com was the CEO of Reel.com, which she sold to Hollywood Entertainment for $100 million. There was a personal cost too. Before its collapse, Wainwright held a 3 percent stake in the firm worth $10 million at the firm’s IPO price, Forbes reported.

Wainwright remembers how pundits called her the “biggest joke in the valley,” described the concept of Pets.com, to ship dog food, as “dumb.” (Now, of course, there are a bunch of online companies in the business of shipping dog food.) And how the media wrongly claimed the firm went bankrupt, she said.

“People were mad, and it was an easy target,” she said.

Wainwright laid low, for nearly a decade.

“I felt lethargic, could not experience joy and was emotionally drained all of the time,” she said, adding that she knows now she had a mild form of depression. “I found exercising daily and doing creative works and being with creative people helped lift the depression.
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She gained some insight watching sports figures talk about losses. Their attitude made an impression on her. And she asked herself, “Are you going to stick there in your misery or are you going to move on?”

She moved on, even if the rest of the world didn’t. Though the ghost of Pets.com has faded, it remains the go-to symbol of dot-com excess.

In a recent Stephen Colbert skit, the comedian introduces a character named “Julie Wainwright.” He calls her the “former human resources manager of Pets.com”, not even the former CEO. Naturally, she is holding a sock puppet.

“My first reaction was OMG; my second was, I might as well roll with it and play along,” she said.

When Wainwright came up with the idea for a high-end, full-service consignment store, she had to overcome Pets.com’s legacy in meetings with investors.

She also had to overcome the indifference with which mostly male venture capitalists viewed her idea. “I’ve only bought one pair of shoes in five years,” one said to her.

“Luxury to most male venture capitalists is hardware, cars, audio,” Wainwright said. Today, 25 percent of The RealReal’s customers are men.

Her largest hurdle was overcoming the dominance of eBay, which long ago cornered the online market in consumers selling to consumers. Most investors couldn’t imagine a viable market for anyone else. And in the clubby world of tech investors, many had worked at eBay or PayPal or knew someone who had. They weren’t eager to fund an upstart competitor.

But Wainwright knew something that they didn’t, there is a lot of trapped wealth in people’s homes in the form of a Gucci bag or a Chanel knit skirt. Many don’t want to bother with selling directly to others. If she could extract those items, authenticate the brands, verify their quality and handle the transactions, there was a promising business opportunity.

Now with The RealReal gaining momentum, Wainwright says her biggest challenge is managing growth.

“I started it, I’m older, I failed,” she said. “While I didn’t want to fail, it made me more bold in approaching this business.”

And make no mistake: Wainwright’s success is particularly sweet this time around.