5. Keep costs low and focus on cashflow
Mellon learnt the importance of cashflow for a fledging business at an early stage when Julie Townsend, a buyer from Saks in the United States, placed an order for 3000 pairs of Jimmy Choo shoes after she spotted Mellon exhibiting them in Paris.
“Suddenly we had the rarest of good fortunes for a start-up company: positive cashflow. Our sales were £250,000 that first year, with the shop rental costing us £15,000 and only one employee other than Sandra [Choi] and myself,” Mellon says.
6. Innovate
Mellon tried to innovate by creating products where she saw a gap in the market.
Jimmy Choo was one of the first brands to have a “house style” which provided basic shoes that were sold every season and never went on sale.
“When we started out, the shoe industry offered plenty of opportunity to innovate at a purely practical level,” Mellon says.
“Boots for women had always been too wide at the calf, for instance, and nobody had thought about improving that aspect of the fit. So I created a line of boots with the upper portion created very tight.”
7. Avoid legal feuds
In a lesson in what not to do, Mellon spent a good part of her time at Jimmy Choo embroiled in legal feuds with everyone from her business partner to her mother.
The trouble started with Choo himself, who was unhappy with the business structure and complained to his couture clients: “They stole my name; they’re ripping me off.”
Choo went on to sue Mellon and her father for 22 breaches of contract before entering into a deal to sell his share of the business.
“This feuding was not good for business,” Mellon says.
“We’d put enormous effort into building the brand, and internal fighting could tarnish the image of a product that was meant to be glamorous, sexy and fun.”
8. Beware of private equity investment
Private equity investment offered Mellon a solution to her disputes with co-founder Choo, but it also landed her with a new set of headaches.
“I was so desperate to get rid of Jimmy that I talked him into taking the deal. ‘How bad could it be?’ I said. Later, I could only blame myself,” she says.
Mellon says her first “painful lesson” in private equity investment was about having to relinquish control.
“The founder is no longer in charge, and the battle of ideas is always subordinate to the battle of egos,” she says.
“Private equity is like American politics: the endless campaigning, fundraising, and positioning for the next contest is to the detriment of the job you’re actually being paid to do.”
Mellon also realised that “in private equity it’s all about the exit” with most private equity firms wanting to exit in two to three years.
9. The exit is the moment of truth
For Mellon, a sale of Jimmy Choo was “the moment of truth” for her as the founder.
“You’ve worked like a dog to build something from the ground up, often labouring for years without much compensation because, rather than pay yourself the going rate, you’re pouring ever cent back into the business,” she says.
“And no matter how successful the venture, extracting the value of the equity you’ve built up is dependent on multiple factors, most of which are beyond your control: the general state of the economy, the health of your particular industry, the short-term profitability of potential buyers.”
10. Be prepared to walk away
In the end Mellon sold out of her share in Jimmy Choo when the company was sold to Labelux for £525 million.
“Jimmy Choo meant everything to me, but now it was like a love affair in which your partner has cheated on you, physically abused you and run off with another woman,” she says.
Cara Waters is a former SmartCompany editor. Previously, Cara was a senior reporter for the Financial Times’ website and worked for The Sunday Times in London.
