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An E Tailer's Labor Pains


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An E-Tailer's Labor Pains

eStyle's McCartney faces a tougher Web--and a new baby

In late May, there was a decidedly expectant mood at eStyle Inc.'s Los Angeles office. Founder and CEO Laurie McCartney was due to give birth to her second child on June 10, and signs of the impending arrival were everywhere. Sitting on McCartney's desk was the book Baby Names Keepsake by photographer Anne Geddes. But she had little time to leaf through it as staff members rushed in and out of her office, pulling McCartney away for last-minute meetings. "They all wanted to squeeze time in with me before the due date," says McCartney, laughing.

That date was the latest entry on McCartney's milestone-filled calendar. On Feb. 14, she closed $45 million in privately placed financing for her fledgling dot-com, eStyle Inc., which sells clothing and accessories for expectant mothers through its site babystyle.com. That brought her total funding to $61 million. Then, on Apr. 18, her company launched a second site, kidstyle.com, which sells its own line of clothing. It has all been rather heady. But now, McCartney is bracing for the challenge of her life: juggling the huge job of raising a toddler and a newborn with the increasingly daunting task of running an e-tailer in an economic environment that has suddenly turned hostile to dot-coms.

In recent weeks, a pile of specialty e-tailers has been dropping all around her, including fashion site Boo.com and gift site Violet.com. And the chances of taking eStyle public, which McCartney had been counting on, have all but vanished for now. If McCartney is worried, the serene, soft-spoken 33-year-old entrepreneur doesn't show it. "Motherhood is all about being flexible in a fast-paced environment, being tolerant, and welcoming change," she says. "Working in the Internet is the same." Her backers, too, remain squarely behind McCartney. "I'm on the boards of seven companies, and I have to say I've been soul-searching the least with this one," says Diane Daggatt, an analyst for Paul Allen's Vulcan Ventures, an eStyle backer. "They are on a clear path to profitability."PROBLEM-SOLVER. McCartney, whose husband, Michael, is an investment banker at Donaldson, Lufkin & Jenrette Securities Co., did a bit of soul-searching of her own before taking the leap into the high stakes world of e-tailing. Over the course of a short but eventful career after graduating from Harvard business school, she has worked as a reporter for Worth magazine, as a mergers-and-acquisitions trainee at Morgan Stanley Dean Witter, and, most successfully, as an executive at Walt Disney Co. There, she was on a team that helped turn around Disneyland Paris' shaky launch by overhauling everything from the way tours were booked to menus at concessions. "She had a unique ability to be a very rigorous thinker and problem-solver," says Larry Murphy, former chief strategic officer at Disney.

Then, in late 1997, with e-commerce taking off, McCartney bolted again. The idea for eStyle came easily enough: She hated shopping for maternity clothes and baby gear during her first pregnancy. "It was hard work, schlepping to five or 10 stores," she recalls. "I thought: `What if I could find everything I wanted under one roof?"' From then on, McCartney's strategy has been to capture women at the earliest stage of motherhood--pregnancy--and then hold onto them as their kids grow to about age 10. Moms who want to decorate their kid's room can, for example, pick the "Nantucket" decor for a toddler's nursery and buy everything instantly instead of having to go to different stores to buy matching sheets and furniture.

The concept seems to be catching on: Traffic on eStyle has more than doubled in the past four months. Still, according to Media Metrix, which tracks Web site usage, eStyle lags far behind eToys Inc.'s BabyCenter.com, which caters to a much wider audience by offering a huge selection of products. McCartney refuses to reveal sales figures, and profits are still off in the future.FULL-TIME SITTER. McCartney is giving it everything she's got. A high-energy pragmatist who rises before dawn, McCartney doesn't hesitate to hire the help she needs to focus on her business, including a full-time babysitter. But even more important is her husband, whom she says is always around to pitch in. Says McCartney: "He's a real hands-on dad."

Supportive staff and family aside, winning over venture capitalists was no easy task. At first, the mania for superstores such as Amazon.com caused some potential investors to question McCartney's strategy to be more like a boutique. And as more and more would-be dot-com tycoons flooded investors with proposals, McCartney's concept risked losing its initial appeal. "When I first went to see the company, I had seen so many e-tailers trying to make it on the Web that I was not so excited," says board member Daggatt.

Eventually, McCartney convinced Daggatt and others that a well-chosen but limited assortment had more appeal than the usual superstore approach. Just weeks after her first son, Jack, was born, McCartney secured her first $1 million in funding and began building eStyle in earnest. She hired six employees, who crammed into her 2,000-square-foot house along with the babysitter and the family's golden retriever. The house was so cramped that staff members set up makeshift workplaces on the stairs. The newborn, with his feedings and diaper changes, only added to the chaos. After opening the door to welcome Lori Matloff, eStyle's general manager for commerce, McCartney asked Matloff to hold Jack for a second. "He promptly spit up all over her new suit," McCartney says. "I said: `Welcome to my startup!"'

Like a lot of eStyle's staff, Matloff followed McCartney from Disney. To get the most out of their financing, the team opted for a conservative marketing plan. Whereas e-tailer Boo.com burned through its entire $150 million in funding in a matter of months by carpet-bombing the airwaves with expensive ads, eStyle has been more selective in its approach. McCartney began by placing brochures in obstetrics and gynecology offices and by sending postcards to customers for them to hand out at their Lamaze classes. And, in a coup, eStyle signed supermodel Cindy Crawford as company spokesperson and columnist for the site. The idea to write "Cindy's Corner," where she answers e-mail on everything from toys to what she wore when she was pregnant, appealed to Crawford, she says, "especially considering that I was seven months pregnant when Laurie approached me."

By early 1999, eStyle had moved into offices in downtown Los Angeles and now employs 175 people. McCartney often brings her toddler to her toy-filled office, both to be near him and to watch him play with toys sold by eStyle. Those he likes get a "Jack Approved" stamp on the site. McCartney sleeps only five hours a night, using Jack's sleep time to strategize and test the site. Colleagues report that they often receive e-mails from her written at 3 a.m.TO-DO LISTS. For McCartney, multitasking is nothing new. The youngest of seven children growing up in New Jersey, she had to work hard to keep up with her older brothers and sisters. At age five, recalls sister Helenmarie Rodgers, McCartney started writing daily to-do lists. "She always had a goal in the back of her head," Rodgers says. That's pretty much the way it has been ever since, from high school, when she was up every morning at 5:30 a.m. to work out with the swim team, to her days at Disney.

At eStyle, it's no different. She has already scheduled her return to the office two weeks after the birth of her daughter for a round of meetings. But proving that eStyle can survive the e-tailing shakeout is going to take more than just hard work and long hours. In the end, it might prove even tougher than caring for a newborn and a toddler.By Arlene Weintraub in Los AngelesReturn to top


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