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Jessica Lee was on the M&A team at Gap, scouting for potential young brands appealing to a more modern customer that the corporation could snap up, when she decided to set off on her own and found a new mid-priced women’s fashion brand.

Her brand, Modern Citizen, launched online in 2016, with a trendier take on direct-to-consumer fashion than comparable brands like Everlane, more affordable prices than Reformation and a focus on building a community from scratch.

“We’re fitting into [the customers’] lives by defining fast fashion differently. It’s not disposable; it’s actually about a nimble supply chain,” said Lee. “On the customer’s side, that means constant newness and a fashion point of view. For us, it all comes down to the edit.”

Lee joined the Glossy Podcast to discuss differentiating the company in a crowded market, marketing with a non-existent budget and building the brand’s first store.

On sustainability over scale
Modern Citizen didn’t do the traditional rounds of institutional funding with venture capitalists, instead raising a single friends-and-family round in order to focus on organic growth and build a self-sustaining business. That means the brand has been growing without much of a marketing budget, only recently starting to spend on Facebook and Instagram ads. Direct email is the biggest marketing channel for the brand, by far.

“We’ve been building an organic community around a brand that is a self-sustaining business,” said Lee. “That’s different than what’s been en vogue in terms of launching a business. But we’ve spent really carefully in every channel to make sure it pays off and there’s ROI there. And as a result, we’ve focused on the middle and bottom of the funnel, since we couldn’t fill the top. A majority of our revenue comes from returning customers.”

On the brand’s biggest investment
Last year, Modern Citizen opened its first store in San Francisco, which Lee said was the brand’s biggest investment and biggest risk to date. But after testing out a pop-up shop, Lee decided the in-person experience was worth the investment in order to drive more customer loyalty as well as bring new customers to the brand online. Part of Modern Citizen’s store strategy is ticketed events around topics like career, beauty and wellness — not shopping. The brand charges $10 to $15 for tickets and rewards the customers who come with gift cards in the same amount.

“I think we’ve all come to realize that the need for physical stores never went away, but the expectations about the name on the door of those stores did change,” said Lee. “The experience that people want to have when they walk in has changed, and bringing them in for events under the Modern Citizen umbrella means we’re offering more value beyond shopping.”

On exit strategies
Lee said the brand would be happy reaching $100 million to $200 million in revenue, because customers are interested in shopping smaller brands that are accessible but make them feel more like individuals than a billion-dollar brand would. To Lee, that means the fashion industry is going to push more toward the portfolio model.

“The world is becoming more individual, so figuring out how to build an amazing portfolio made up of a network of smaller brands will win, rather than investing in huge brands,” said Lee. “I think M&A activity will change fashion, so we’re trying to be as nimble as we possibly can, so if the right person comes knocking, we can be flexible and open to a lot of possibilities.”