From startup to $600 million: Behind the Culture Kings acquisition

Simon and Tahnee Beard founded Culture Kings in 2008 with the aim of becoming the Net-A-Porter or Farfetch of streetwear. After selling a stake in the business last week to a.k.a. Brands, an online retail platform backed by renowned investment firm Summit Partners, they appear closer than ever to achieving that goal.

While the terms of the deal have not been disclosed, Simon told Inside Retail the acquisition has given Culture Kings a valuation of approximately $600 million and will enable the retailer to accelerate its digital sales and open bricks-and-mortar stores in the lucrative US market. 

The Brisbane-based business currently has dedicated e-commerce sites in Australia, New Zealand and the US and eight bricks-and-mortar stores in Australia.

“We’ve been getting great traction [in the US] online, but having a US partner to really scale and take on that market was the rationale behind [the acquisition],” Simon said.

What the acquisition means for Culture Kings

The acquisition means Culture Kings will be able to tap into a.k.a. Brands’ digital platform, which is “designed to accelerate profitable growth in direct-to-consumer brands by leveraging collective scale and operational support within an asset-light, data-driven playbook of best practices”, according to a media statement. 

Fellow Australian fashion brands Princess Polly and Petal & Pup, and the US-based Rebdolls are already part of the a.k.a. Brands portfolio. 

It also paves the way for Culture Kings to build a bricks-and-mortar presence in the US, with the first store set to open in 2022, according to Simon. It’s likely to be one of just a handful of stores. 

“I’m not talking about opening heaps [of stores], I’m only talking about a few that really resonate and tell the story and create the emotion of the brand, because that’s what we’re selling,” he said. 

“We’re not selling a T-shirt or a hat, we’re selling the emotion that comes with that. And the store is such a crucial part in creating that.”

Why Culture Kings’ stores are so cool

Culture Kings is known for blending the worlds of fashion, music and sport into an immersive offline shopping experience. In addition to stocking over 100 leadings brands, such as Adidas, Nike, Champion, Jordan and Gucci, its stores feature a rotating cast of in-house DJs and interactive games.

However, the retailer still sees itself as a digital-first business, according to Simon. 

“It’s always been our vision [to open] beautiful, iconic, theatre-driven stores to create the feeling and emotion of the brand, and then, the way we transact [is] digital-first,” he said. 

For Sydney-based retail expert Rosanna Iacono, this is Culture Kings’ “greatest strength”. 

“Without a doubt their greatest strength has been their ability to create a compelling experience that is relevant to the Gen Z customer,” Iacono,  a managing partner of strategy consultancy The Growth Activists, told Inside Retail. 

“They’ve curated the customer offering so that it speaks directly to that customer and have done it with a very gritty streetwear edge with a powerful crossover into sport culture. Whilst there are other Gen Z oriented multi-brand retailers like Glue Store or Universal, they come across as fashion first and sport second whereas Culture Kings have reversed this.”

This can be seen in the celebrity athletes and musicians that have flocked to Culture Kings over the years, including Australia-born NBA star Ben Simmons, who invested in a.k.a. Brands in conjunction with the Culture Kings transaction.

“The other thing they’ve done incredibly well is how they have tapped into hype culture and the whole notion of ‘releases’, which creates customer FOMO and increased demand for limited-edition product,” Iacono said. 

How Culture Kings aims to be the ‘GOAT’

But according to Simon, Culture Kings’ transformation from a retail startup into a $600 million global business in just over a decade can’t be reduced to doing a few things well, but rather “doing a thousand things a little bit better”. 

“Moving fast; looking for progress, not perfection; testing and iterating and learning as fast as you can” are core business values. 

“We talk a lot about how to be the GOAT, how to be the greatest of all time,” he said. 

“Whatever role you’re doing, if [you] were the best in the world, how would [you] do it? Trying to drive that critical thinking throughout the [business], not passing the buck like the dinosaur retailers.” 

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