Flattered was founded in 2013 by Gustav Lidén and his girlfriend Hanna Kwiatkowska Tisner, together with the Swedish influencer and entrepreneur Isabella Löwengrip and her business partner Pingis Hadenius.
“My partner wanted to create the best ballerina shoes on the market, and I wanted to start my own business,” says Gustav Lidén, CEO of Flattered. “But we didn’t feel that the idea was unique enough. Then, we got in touch with Isabella and Pingis who were planning to create high-end slippers. Through combining our ideas, we found our niche.”
The four founders met for the first time in March that year. Three months later they had their first sales pitch at one of Sweden’s biggest retailers, who decided to buy 1,600 pairs straight away.
“This was even before we had signed with a factory to produce the shoes. The deal was a sort of seeding capital for us since we made a healthy profit from it,” says Gustav Lidén.
Flattered invested the money by building their own webshop. With the help of exposure on co-owner Isabella Löwengrip’s blog (which is one of the biggest in Sweden), sales numbers slowly started to grow.
“We launched our webshop a bit before the big e-commerce hype took off in Sweden. If we were launching Flattered today, we’d probably think online first. But we started at the other end,” Gustav says.
Becoming a full-time entrepreneur
Gradually, Flattered launched more models and types of shoes with prices ranging from 120 to 300 euro a pair. During the first two years, Gustav Lidén maintained his full-time job at the Swedish Ministry of Finance and worked on Flattered in his spare time. But as the business grew, so did his desire to fully commit to the company. So he left the security and comfort of being an employee with a steady income to pursue his entrepreneurial dreams.
“I wanted to get dirt under my nails and really work hands-on in a business. I’ve always dreamed of running my own company someday, and now I’m doing it.”
But being your own boss is not always glamorous. On the contrary, running a retail business without financial backing can be a very stressful experience. Especially when you, like Flattered, want to grow with new products and expand to more markets.
“There have been periods with anxiety and a lack of sleep,” Gustav Lidén admits. “I’ve woken up at 3 am and started going through the numbers again to make sure that everything is okay. But it’s also the most exciting and rewarding thing to run your own business. You really feel alive as an entrepreneur, for better and for worse.”
Getting help from Klarna’s Merchant Lending
Earlier this year Flattered was one of the first merchants to try Klarna’s new merchant lending product Boost, a service for merchants who need help with working capital or access to financing for smaller shop upgrades.
“Building inventory and marketing new products is expensive. You need to invest before you get paid. That’s difficult if you don’t have the money,” Gustav explains.
“Merchant Lending was very convenient for us. Since KIarna have access to our sales data, they can provide better terms than other lenders with similar types of loans. It’s a very transparent relationship. It’s also easier and quicker to get the money than from traditional banks.”
Being an online merchant, getting a bank loan can be a difficult and time-consuming process. Since Klarna has access to transactional data, it’s easier to evaluate the business and grant quick access to funds. Another perk is that you don’t need to worry about late repayments since the money is deducted as a fixed percentage of your daily revenue.
“When you’re selling to retailers, you take orders up to six months before delivery, which means that you can calculate the revenue. When you’re selling online you need to build up an inventory, and that costs money. The margins are higher, but it’s also riskier, and that’s not something banks like.”
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Venture capital for global expansion
In October 2018, it was announced that Flattered had secured 15 million SEK (1.4 million euros) from investment firm Spiltan, in exchange for a 36 percent stake in the company.
“We’ve reached a level when it’s time to really take the next step. In the beginning, you can be this cute entrepreneur, but when you expand to new markets you need a more professional approach. You need bigger confidence, as well as a company structure and funding. So in order to build that, we needed an investor who could help us,” says Gustav Lidén.
Flattered currently employs eight people, and the plan is to do some key recruitments in the near future. One important task will be to improve their webshop and move it to a new platform that is optimised for selling to bigger markets like Germany and the U.K.
“One lesson is: start raising funds before you get to the point of really needing the money. We were doing well anyway, but it’s better to seek investment before the going gets tough. Be humble about the fact that you need help to build a thriving business. Otherwise, you might find yourself left behind while your competitors have the funds to leap ahead.”